"China, Vietnam, and India Strengthen Data Regulations... Caution Needed Against Digital Trade Barriers"

Martial Arts, Publication of the Report on 'Status of Cross-Border Data Movement Regulations in Major Countries'

[Asia Economy Reporter Han Yeju] Amid increasing data localization measures by major exporting countries and regulations on cross-border data flows, concerns have been raised about the emergence of digital trade barriers.

The Korea International Trade Association (KITA) International Trade and Commerce Research Institute released a report titled "Current Status and Implications of Cross-Border Data Flow Regulations in Major Countries" on the 14th.

With the advancement of digital technology, data utilization has increased across industries and scales, leading to a rise in data localization measures and regulations on cross-border data flows worldwide. More than half of these regulations have been legislated in the past five years, and 38 new data localization policies are currently proposed or under review.

These data regulations are more strictly enforced in non-OECD member countries compared to OECD members. Among data regulations in non-OECD countries, 83% prohibit both local storage and cross-border transfer, whereas only 31% of OECD member countries impose such restrictions. Sixty percent of OECD member countries require only local storage.

The primary purposes of regulating cross-border data flows are generally for national security, regulatory supervision, and personal data protection to fulfill public policy objectives. However, some measures are analyzed to be used as tools to protect domestic industries from foreign competitors.

An analysis of data regulation levels among Korea's 21 major export partner countries showed that three countries fall under the strictest Level 3, six countries under Level 2, eight countries under Level 1, and four countries under Level 0, which has the lowest regulatory level.

Countries classified as Level 3?China, Vietnam, and India?require domestic storage and processing of data and also mandate government approval for cross-border data transfers. Level 2 countries include Australia, Indonesia, T?rkiye, and Russia, which require data localization but allow cross-border data transfers if certain conditions are met. Level 1 countries such as Germany, the United Kingdom, Japan, and Singapore do not require data localization but permit conditional cross-border data transfers based on the data protection policies of the destination country.

Recently, to respond to regulations on cross-border data flows and data localization measures, there has been an increase in trade agreements including provisions on "cross-border information transfer by electronic means" and "location of computing facilities." Agreements such as the United States-Mexico-Canada Agreement (USMCA) and the U.S.-Japan Digital Trade Agreement (USJDTA) recognize only the exceptions stipulated in the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS).

Cho Sanghyun, head of KITA's International Trade and Commerce Research Institute, stated, "As our digital industry actively expands overseas, regulations on cross-border data flows by major export partner countries can act as barriers to our companies." He added, "We need to consider supplementing existing free trade agreements (FTAs), participating in plurilateral digital trade negotiations, pursuing adequacy recognition for bilateral and multilateral personal data protection frameworks, and building foreign regulatory data databases and data trade-related statistics." He also emphasized, "Promoting voluntary adequacy recognition systems by companies, such as APEC CBPR, and, in the long term, efforts to develop and enhance the utilization of private sector technologies are necessary."

This content was produced with the assistance of AI translation services.