Digital Trade and Data Privacy

Based on its well-established multilateral regulatory framework, international trade law is called upon to address the digital transformation of the global economy. However, a (re)contextualisation of international trade against the backdrop of a global digital economy means that new dimensions of cross-border trade must be accommodated in pre-existing rule-based trade governance. By virtue of the inherently global architecture of the Internet, the protection of natural persons in the processing, storage, and dissemination of personal data—operations that are fundamental to a digital economy—is necessarily intertwined with trade rules. Moreover, the importance of data as a resource exacerbates the tension between the economic liberalisation of the processing and cross-border transfer of personal data and regulatory restrictions thereof for non-economic reasons—most notably for the protection of fundamental rights. This chapter develops and outlines the resulting nexus between digital trade and data privacy in the context of international trade and provides an introduction to the resulting research questions.

The digital paradigm has far-reaching implications for the global economy and for cross-border trade. Digital technologies are driving a new phase of global economic integration. With respect to international trade, it is generally acknowledged that the digital transformation changes what is traded, who trades and how trade is conducted. Data has emerged as a vital economic resource in the digital economy, leading to an exponential increase in global data exchange and a surge in cross-border data flows. The economic shift from tangible to intangible assets in a digital economy is resulting in the emergence of a digital paradigm for cross-border trade. This chapter is dedicated to illustrating the novel dimensions of cross-border economic activity in the era of digital globalisation. This chapter lays the groundwork for analysing the development of regulations for these new elements within a trade context and provides a background for analysing the nexus with data privacy regulations.

International economic law faces a variety of challenges arising from digital business models and an increasing convergence of global markets in the era of digital globalisation. Against the backdrop of a successful tradition of multilateral regulation, the rule-based system of global trade law has been mobilised to address some of the transnational challenges related to digital globalisation. The convergence of trade governance and digital governance has put significant pressure on the pre-existing international trade regime. The cross-cutting challenges of the digital transformation involve all areas of the multilateral trade framework for goods (GATT), services (GATS) and trade-related aspects of intellectual property (TRIPS) implemented by the 1994 Marrakesh Agreement establishing the World Trade Organization (WTO). This chapter addresses the phenomenon of the digital transformation of cross-border economic activity in the context of the regulation and governance of global trade under multilateral trade law and current trade agreements.

Cross-border data flows, which encompass a broad and diverse range of economic and non-economic dimensions, raise a number of new trade policy issues. However, as the status of data and data flows in International Economic Law remains ill-defined, no effective multilateral governance is currently exercised with respect to the digital transformation of trade. Notably, the proliferation of national data governance frameworks is a critical element for regulating trade in the digital economy, but one that receives only limited consideration under WTO law. As digital globalisation accelerates, a patchwork of country-specific data governance frameworks threatens to fragment the global data sphere and thus increase barriers to digital trade. The debate on transnational data governance is particularly pronounced with regard to data privacy laws, as these are a common element of domestic data governance and the global landscape of data privacy regulations is characterised by considerable heterogeneity. As a result, the impact of national data privacy laws on the cross-border flow of personal data is one of the most contentious issues associated with digital trade. This chapter provides an in-depth examination of the regulation of data flows through data privacy rules and explores the rationale behind a contemporary data privacy collision in digital trade.

The multilateral framework of the WTO, by virtue of its principles of non-discrimination, its transparency requirements, and its enforceability through the WTO dispute settlement system, has proven capable of facilitating global economic liberalisation in the industrial economy of the twentieth century. However, the incumbent system of international trade governance does not adequately address the socio-economic transformation and the complex trade policy challenges presented by a data-driven digital economy. The nexus of digital trade and data privacy in its conceptual ambiguity and polycentric normative underpinnings epitomizes the exigent challenges for trade governance in a global digital economy. This chapter examines and develops approaches for a recontextualisation of trade law against the backdrop of digital globalisation as well as for a reconciliation of digital trade and data privacy.