cross-border data flows

Making E-Commerce and Digital Trade Work for Smaller Firms

Making E-Commerce and Digital Trade Work for Smaller Firms

The list of obstacles could go on.  The point is that the promise of selling globally comes with increasing challenges.  Hence the very good news that the World Trade Organization (WTO) has launched talks in Geneva to begin to create some global rules to sort out some of these issues.  For smaller firms, global rules can at least ensure that added expense and time becomes a necessary part of doing business, rather than an irritating element of doing business with some countries. The size of the “prize” is huge.  Estimates are all over the place on the current size of the digital economy, but Asia tends to lead the way.  An extremely useful series of reports just released by the Hinrich Foundation on eight economies in the region (five out now: Vietnam, China, Indonesia, Malaysia and Australia) shows how much additional trade might be gained from eliminating barriers to digital trade. 

Why Policy Matters to Me: The Example of Cross-Border Data Flows

In another APRU presentation, presidents noted the increasing integration of the cyber and physical worlds.  Using artificial intelligence to innovate for the future sounds nice, but if not communicated to policymakers, it will not work as anticipated.  Why not? Governments can shut down data flows.  They can do so and they will do so. Government can do so by a variety of regulations that will make it difficult, complicated, expensive or even impossible to move information.  Government will do so in many markets because many officials do not understand the needs of academics or companies. They do not understand the issues because the stakeholders in the system do not see that policy matters. Until and unless these exchanges take place better, we will not get the policies that make sense for everyone.  Policy frameworks are not just the province of someone else—created by governments and driven by ideas drafted from somewhere else.  Policy is supposed to be created for the benefit of stakeholders.  But it requires that stakeholders actually participate in crafting policy.

Taking Data Seriously

These individual pressures have to be balanced with the needs of companies.  To effectively scale, firms are increasingly interested in building infrastructure that does not always match geographic boundaries of countries.  Citizen data and information of all sorts can be moved across borders and firms generally desire more movement rather than less.  Businesses have strong reputational reasons for wanting to protect customer information.  Governments, of course, are deeply concerned about protecting the rights of their own citizens and the security of their countries.  Officials have to balance the sometimes competing demands of business and consumer privacy or business and national security issues.  Toss into this volatile mix rapidly changing technology and a legal structure that moves on a much slower timescale and it becomes clear why rules on managing data flows in Asia has started to fragment. 

The Power of Digital Services for Consumers

The imposition of restrictions on the movement of information, particularly financial data or personal data, also risks changing the landscape.  I could not have booked my hotels or paid for my car rental, if I had been unable to move my own data across borders.  Yet governments are increasingly interested in stopping exactly these types of transactions.  Not simply to keep me from traveling, of course, but a collateral impact of many poorly thought-through policies will be to hamper the freedom of consumers to operate globally and for firms to attract customers from anywhere.  Even restrictions on the location of data servers could impact my ability to book hotels in Greece.  It could easily drive up the costs of delivering services and make it too costly for some smaller firms, like tiny hotels in Arachova, to advertise on some sites.