New approaches to data and big data in trade agreements
Autorin
Prof. Mira Burri
University of Lucerne
Digital trade and data governance have moved up on the agenda of policy-makers – on the one hand, because the value of data to modern economies has exponentially grown, and on the other, because this has triggered regulatory challenges in all areas of societal life, such as regarding privacy protection. In the last two decades, trade agreements have become an important platform for rulemaking, which goes beyond mere liberalization efforts and effectively shapes the regulatory environment with respect to data. The comment offers a brief overview and contextualization of these developments.
Introduction: From E-Commerce to the Data-Driven Economy
The critical importance of data for all economic sectors seems nowadays uncontested. Beyond the somewhat flawed mantra of data being the “new oil” (The Economist 2017), many studies point to the enormous potential of data to enable more efficient business operations, more innovative solutions, and better policy choices in all areas of society (Manyika et al. 2011; Mayer-Schönberger and Cukier 2013; Henke et al. 2016). It is noteworthy that this transformative capacity refers not only to “digital native” areas, such as search engines and social networks, but also to “brick-and-mortar” businesses, such as those in manufacturing and logistics (Manyika et al. 2011). The COVID-19 pandemic has only augmented the value of digital transactions and the significance of data-driven platforms (e.g., WTO 2020). Emerging technologies, like Artificial Intelligence (AI), are also highly dependent on data inputs (The Royal Society 2017). With regard to trade, it can be argued that we have moved on from the age of electronic commerce (e-commerce), where goods and services were traded online to economies, and indeed societies, driven by and dependent on data. This shift has frequently been discussed in association with the Fourth Industrial Revolution (Floridi 2014; Schwab 2017). At the same time, and as has been well documented, the increased dependence on data has brought about a new set of concerns. The impact of data collection, use, and re-use on privacy has been widely acknowledged by scholars and policymakers alike, while also being felt by regular users of digital products and services. The risks to privacy have only augmented in the era of big data (e.g., Mayer-Schönberger and Cukier 2013; Burri 2019), which presents distinct challenges to the protection of personal data and, by extension, to the safeguarding of personal and family life (e.g., Tene and Polonetsky 2013; The White House 2014; Gasser 2016; Pan 2016; Council of Europe 2017). Governments have not been idle and have responded to these concerns in a variety of ways. In terms of external safeguards, states have sought new ways to assert control over data—in particular, by prescribing measures to “localise” data, its storage, or its suppliers, so as to keep it within the state’s sovereign territory (e.g., Chander 2016; Ferracane 2021). However, erecting barriers to data flows affects trade and may endanger the realisation of an innovative data economy (USITC 2013, 2014), even in a domestic context (e.g., Ferracane 2021). Many of the innovations that we are used to in everyday life—streaming, cloud computing, the app economy, or, if we think in more future-oriented terms, the Internet of things (IoT) and AI—would not function under restrictions of cross-border data flows (e.g., Chander 2021).
In terms of internal safeguards, the preoccupation with the perceived perils of big data has triggered the reform of data protection laws around the world, as perhaps best exemplified by the European Union (EU)’s adoption of the 2016 General Data Protection Regulation (GDPR). Such reform initiatives are not, however, coherent. Indeed, they are culturally and socially embedded, reflecting societies’ constitutional values, relationships between citizens and the state, and the role of the market, among other factors (e.g., Burri 2021a). The striking divergence in both the perceptions and the regulation of privacy protection across nations—and, in particular, between the fundamental rights approach of the EU and the more market-based, laissez-faire approach of the United States—has meant that conventional forms of international cooperation, and agreement on shared standards of data protection, appear highly unlikely (e.g., Schwartz and Solove 2014; Burri 2021a).
Developments in Global Trade Law
Against this backdrop of a complex and contentious regulatory environment, data and cross-border data flows have become important topics in global trade law discussions. With the stalemate at the multilateral forum of the World Trade Organzation (WTO) (e.g., Burri 2015, 2017)—and despite the current revival of the e-commerce negotiations (WTO 2019; Burri 2021b)—new rule-making has unfolded predominantly in preferential trade venues of a bilateral or regional nature (Burri 2015, 2017; WTO 2018). A project of NRP 75 (“The Governance of big data in Trade Agreements”) has traced these developments in free trade agreements (FTAs) and analysed their evolution along with the positioning of stakeholders. It has done this by comprehensively mapping all data-related norms, so as to facilitate the understanding of the big picture of digital trade regulation and its implications. This comment showcases some of the project’s results, stressing the critical importance of trade law and linking with the discussions of the main article of the ELSI White Paper on data sovereignty (Viganò’s main article) and data protection in a fluid technological environment (Schneble’s main article).
The regulatory landscape has indeed profoundly changed in recent years and our careful analysis of more than 350 FTAs attests to the heightened preoccupation of policymakers with digital trade, which has translated into an increased density and bindingness of the commitments that the parties have agreed to.[i] In the context of these new developments in international economic law, relevant questions that may be asked are whether any nascent trends can be discerned and, perhaps even more importantly, what the real implications of the intensified rule-making on data are. The next sections briefly address these pertinent questions, while also providing a basis for recommendations of a more proactive approach by Switzerland.
Evolution and Trends in Data Flow Rule-Making
First, it is important to note that the new regulatory framework, which has been substantially shaped by FTAs, goes well beyond WTO rules and the mere attempt to reduce trade barriers in the areas of goods and services trade (Burri 2017; Burri 2021c). The framework deals with distinct aspects of digital trade and cross-border data flows, striving for legal certainty for the businesses involved and a level of interoperability between the different domestic regimes. Particularly noteworthy in the latter context is the increased number of rules on free data flows and the prohibition of data localisation measures (Burri 2021c). The 2018 Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP), agreed to by eleven countries in the Pacific Rim,[ii] and the renegotiated NAFTA, now referred to as the “United States-Mexico-Canada Agreement” (USMCA), are particularly important in this sense. They have created the most comprehensive template for digital trade governance so far by including a number of new features, such as provisions on domestic electronic transactions, personal information protection, Internet interconnection charge sharing, location of computing facilities, unsolicited commercial electronic messages, net neutrality, and source code.
Second, it is notable that the United States has played a key role in this process and has sought to endorse liberal rules in the implementation of its “Digital Agenda.” The emergent regulatory template on digital issues is not, however, limited to US agreements; it has diffused and can be found in other FTAs. Singapore, Australia, Japan, and Colombia have been among the major drivers of this diffusion (Elsig and Klotz 2021). We have also recently seen the adoption of particularly detailed dedicated digital economy agreements, such as the ones between Chile, New Zealand, and Singapore (Digital Economy Partnership Agreement, DEPA), and between the United States and Japan (Digital Trade Agreement, DTA). Embedded features of all these agreements is that they provide for free data flows, compatibility with lower standards of domestic data protection and priority is given to trade over privacy protection (Burri 2021b).
Third, the EU has been, in general, cautious when committing in the area of digital trade (e.g., Burri 2017), particularly when inserting rules on data in its free trade deals. It is only recently that the EU has made a step towards such rules, whereby parties have agreed to consider in future negotiations commitments related to the cross-border flow of information. Such a clause is found in the 2018 EU-Japan Economic Partnership Agreement (EPA) and in the updated trade part of the EU-Mexico Global Agreement. In both of these agreements, the parties commit to “reassess,” within three years of the agreement coming into force, the need to include provisions on the free flow of data in the treaty. This signalled a repositioning of the EU on the issue of data flows, which is now fully endorsed in its currently negotiated deals with Australia, New Zealand, and Tunisia, which include in their draft digital trade chapters norms on the free flow of data and data localisation bans. This repositioning has been confirmed by the now finalised post-Brexit Trade and Cooperation Agreement (TCA) between the EU and the United Kingdom. However, the newer commitments are also linked to the high data protection standards of the GDPR, which enshrine data protection as a fundamental human right and include a number of safeguards for the EU’s current and future measures in this area. It is apparent, therefore, that personal data protection has become an important topic on trade negotiation tables, as well as a major battlefield between the key stakeholders (e.g., Farrell and Newman 2019; Burri 2021a).
Fourth, beyond the competing models of the US and the EU, there are a great number of states that still need to define a clear approach towards digital trade and, in particular, data flows. China, another key actor and one typically associated with highly restrictive policies that seek to protect its national sovereignty to the fullest, has recently taken some interesting steps in this regard—specifically, the China’s commitments on conditional data flows under the 2020 Regional Comprehensive Economic Partnership (RCEP) and its newly expressed wish to join the CPTPP. The United Kingdom is another actor to watch out for. Although it has strong links with the EU, including in the area of data protection, the UK has, post-Brexit, taken a more liberal stance on the international stage, pursuing membership of the CPTPP as well as an agreement with the United States. Switzerland belongs to the group of late-comers in the domain of digital trade policy and has for an astonishingly long time not defined a discrete strategy. The newly developed model chapter on e-commerce follows the EU’s approach but remains somewhat uninspired and less innovative in comparison to the US-led agreements and, especially, to the digital economy partnerships, such as the one between Chile, New Zealand, and Singapore, which touch upon newer issues like digital identities and AI (Burri 2021a).
Concluding Remarks
The era of big data has ushered in new challenges for global trade law. Policymakers face the extremely difficult task of matching the existing, largely analogue-based, institutions and rules of international economic law with the dynamic, scruffy innovation of digital platforms (e.g., Benkler 2011; Yu 2014) and data that flows regardless of state borders. At the same time, and which only makes the task more demanding, it is evident that the future regulatory framework will have immense effects on innovation and the fate of the data-driven economy (e.g., Chander 2014, 2021), as well as on fundamental rights beyond the economic domain, such as the protection of citizens’ privacy. Despite the importance and the urgency of finding appropriate governance solutions, global trade law has so far not undergone a radical overhaul, and legal adaptation has been slow and patchy. Where digital trade rules have been adopted, FTAs have become the preferred venue. These agreements partly compensate for the lack of progress under the umbrella of the WTO. More importantly, however, they create rules that address new trade barriers, such as data localisation measures, as well as new and pressing concerns, such as the acute need to interface trade and personal data protection mechanisms. Above all, FTAs provide a regulatory environment that reflects the practical reality of digital trade and ensures a level of legal certainty for all actors involved.
Understanding the existing rules on digital trade and their evolution over time is absolutely essential for future attempts by individual states and the international community to grapple with the digital challenge. It may also be important for other actors, such as companies, think-tanks, non-governmental organisations, and even individual citizens, who may wish to become more actively engaged in the rule-making processes of trade agreements, which tend to be carried out behind closed doors and with little-to-no stakeholder involvement (e.g., Cho and Kelly 2013). The experience gathered in FTAs is also invaluable for the ongoing, reinvigorated efforts in the WTO to reach an agreement on e-commerce–as well as in the new, bolder deals that go beyond existing commitments and look at a range of emerging issues, such as digital identity, AI, electronic invoicing, and open governance data.
As a final thought, it should be stressed that the data economy has placed greater demands on regulatory cooperation. As the complexity of the data-driven society increases, enhanced regulatory cooperation seems indispensable for moving forward, since data issues cannot be covered by the traditional “lower tariffs, more commitments” stance in trade negotiations, but entail the need for reconciling different interests and providing oversight. In this context, while the paths for engaging in and advancing regulatory cooperation would ideally be followed in the multilateral forum of the WTO (e.g., Mitchell and Mishra 2021), preferential trade venues can serve as valuable governance laboratories. Though it has so far made only a hesitant start in this direction, Switzerland could play an important role in the future as a legal entrepreneur, both in the multilateral and preferential trade venues.
[i] The information stems from our own dataset, TAPED: Trade Agreement Provisions on Electronic Commerce and Data. The TAPED dataset is available for general use and has been developed under the creative commons (attribution, non-commercial, share-alike) license at the University of Lucerne website (https://www.unilu.ch/taped) (Burri and Polanco 2020).
[ii] Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
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