Today, our social and economic activities are underpinned by the movement of data across international borders. They help us connect with family and friends; they support research addressing global challenges; they enable the co-ordination of production along supply chains; and allow firms, notably smaller ones, and people to access global markets. In sum, cross-border data flows have become the lifeblood of modern day social and economic activities.
However, as more and more data crosses international borders, concerns across a range of policy areas have amplified. For instance, for privacy and data protection, there are concerns that, when data is transferred abroad, it might not receive the same, or the desired and expected, degree of protection. Cross-border data flows also raise issues in the context of national security, intellectual property protection, digital industrial policy and regulatory reach. These concerns have led to a growing adoption of regulation which conditions (or prohibits) the transfer of data across borders, and/or data localisation measures which mandate that data be stored or processed domestically.
To make the most out of the evolving digital environment, policy makers increasingly need to balance the trade costs of regulating data policies with the trust benefits of data safeguards. This has come to be known as data free flows with trust. This joint OECD-WTO report provides empirical evidence on these issues with a view to helping policy makers weigh the potential opportunity costs and benefits involved in their regulatory choices.
This report does not aim to offer a precise measurement of the economic impact of the current regulatory landscape. Nor does it aim to pit approaches against each other. Rather it is an effort to identify how different data-related measures might affect economic activity and to provide a baseline for assessing the relative magnitude of potential effects through a set of hypothetical scenarios.