Global data flows support global value chains (GVCs) and create new opportunities for participation in international trade. The global flow of Internet and data allows companies to adapt to the CMO to offer their own specific service. In the case of Korea, for example, this is a special opportunity for new and smaller Korean companies to participate in supply chains in Asia. Trade rules are important to facilitate digital trade and curb public regulations that may limit digital trade opportunities. The World Trade Organization (WTO) was negotiated in the late 1980s and early 1990s, before the internet flourished. Nevertheless, WTO rules are relevant to digital trade. The General Agreement on Trade in Services (GATS) is of particular importance, given the increased room for trade in services. While WTO members have committed to providing a service, they must also allow data to flow across borders where it is necessary for service delivery. Therefore, “data location” measures that increase the burden on foreign suppliers. B could be inconsistent with the national treatment obligation of the GATS, for example by requesting a local presence.
A WTO member might attempt to justify a measure of location of the data under the Section XIV GATS waiver, as this is necessary to obtain a listed list of exceptions in the public service. The guarantee of cybersecurity is another reason to require the location of the data. The view here is that geolocation of data reduces the risk of unauthorized access. Another reason to limit the flow of data is the control of access to content accessible online, usually for moral, religious or political reasons. For example, Iranian censorship, which aims to create the halal Internet, limits access to content deemed offensive to Islam. China blocks access to 11 of the world`s top 25 sites out of the 3,000 banned foreign websites. Globalization has entered a new phase, guided by the increasing digitization of international trade. Data flows are the conveyor belt of this transformation. New avenues are being created for trade, innovation and productivity growth, but there are also risks. In my chapter in the book “Growth in a Time of Change” that I have just published, I see new opportunities and new political challenges.
As the opportunities offered by digital technologies grow, governments and regulators need to determine how they can benefit from digitization while preserving the integrity of their national rules. In this context, data offshoring measures have increased significantly around the world. Governments can also require that data be located, as regulators need access to data to meet their regulatory obligations. The most frequent data are in the financial services sector, where data location requirements are justified on the grounds that financial supervisors must remain in place if they need access for regulatory purposes. For example, in 2018, India introduced the requirement for payment system managers to store data at the local level so that supervisory authorities can effectively perform their supervisory function. The ability to move data seamlessly and globally supports new business models, stimulates research and development, facilitates international cooperation and alters international trade. Already, about 12% of the world`s merchandise trade passes through international e-commerce. E-commerce offers a potentially important opportunity to increase the participation of small businesses in international trade, given that a website gives them an immediate international presence and e-commerce platforms offer embedded services, such as financial payments and logistical assistance.