GENEVA, Switzerland – A recent report by the WTO Secretariat and the Organisation for Economic Cooperation and Development (OECD) reveals significant economic implications tied to regulatory systems governing cross-border data flows and data localisation. Released on February 10, the report emphasizes the advantages of open data regimes combined with protective safeguards, advocating for more unified regulations in addressing data governance challenges.
Titled “Economic Implications of Data Regulation: Balancing Openness and Trust,” the analysis highlights the critical role of data flows in driving social and economic interactions. Furthermore, it addresses the increasing trend of regulations imposing conditions on data transfers or requiring domestic storage and processing of data.
The findings indicate that the consequences of these regulations are often misunderstood, particularly in the context of balancing the facilitation of data flows with the essential safeguards required for data protection during international transfers.
Utilizing insights gleaned from business questionnaires and extensive data flow analysis, the report aims to enhance policymakers’ understanding of the economic benefits associated with their regulatory decisions. It explores both the costs linked to data flow restrictions and the potential rewards stemming from heightened trust in economic transactions framed within robust data protection regulations.
Notably, the report asserts that global strategies that harmonize the free flow of data with the necessary trust safeguards could yield superior economic results for nations regardless of their developmental status. If all economies embraced open regimes with safeguards, global exports could increase by 3.6 percent and global GDP by 1.77 percent, with the most pronounced benefits occurring in low and lower-middle-income countries, which could see GDP growth exceeding 4 percent.
Conversely, the report warns that complete fragmentation—where each economy imposes stringent restrictions on data flows—would likely lead to a 4.5 percent decline in global GDP and an 8.5 percent drop in exports.
Moreover, the absence of regulations governing data flows could yield negative repercussions for the economy. While eliminating data flow regulations might decrease trade costs, it would simultaneously erode trust, according to the report’s findings.
Regarding mandates for local data storage or processing, the impact varies based on the specific measures enforced. The analysis suggests that developing economies would gain the most from eliminating data localisation requirements.
