Regulation of Data Localization Measures in WTO Law

An open internet and freedom of cross-border data distribution is critical for the evolution of digital trade.

While governments are struggling to maximize the opportunities for economic growth via utilization of big data on the one hand, they face challenges in controlling the risks associated with data flows and achieving other public policy goals such as privacy and cybersecurity protection on the other. The latter legitimate concern accounts for the proliferation of data localization measures among many countries.

The WTO Agreement, especially the General Agreement on Trade in Services (GATS), is the most important legal text governing data localization measures. While the GATS faces several limitations in regulating data localization measures due to the fact that most of the GATS was negotiated when the internet was in its infancy, in comparison, for the last decade, FTAs have developed rules on data flows in e-commerce chapters and complemented the multilateral rules. This is especially the case with the rules provided in CPTPP. FTAs, therefore, could also work as ’model rules’ for future multilateral negotiations.