International Chamber of Commerce: Cross-Border Data Flows Key for Supply Chains
Cross-border data flows are a "supply chain imperative," the International Chamber of Commerce (ICC) said in a policy paper Wednesday.
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According to recent Organisation for Economic Co-operation and Development (OECD) studies, the ICC said, "cross-border data flows can drive a 145% increase in exports for every 0.1-point reduction in digital restrictions." The OECD also found that full fragmentation, where all economies fully restrict their data flows, could cut global GDP 4.5% and exports 8.5%, ICC said.
Data flows enable real-time coordination, logistics, compliance and customer responsiveness, the ICC said. But growing regulatory fragmentation, including data-localization rules, inconsistent privacy laws and incompatible standards "act as a non-tariff barrier to trade."
These digital trade barriers disproportionately affect micro-, small and medium-sized enterprises, the ICC said. Among other problems, data flow restrictions hamper key supply chain functions such as traceability, customs clearance, risk analysis and deployment of digital tools such as the Internet of Things and predictive analysis, it said.
The ICC called for coordinated international action to address growing regulatory fragmentation.
Among other things, it recommended that the World Trade Organization pursue multilateral rules to enable trusted, secure and predictable cross-border data flows, and that risk- and evidence-based approaches be promoted to determine when exceptions are needed to the default position of allowing cross-border flows.
Avoiding data localization rules and supporting mutual recognition of standards would ensure open and interoperable data frameworks, the ICC said. Confidential business information should be protected in trade and data policies via enforceable safeguards, it added.