Regulation

Japan, Australia Back X-Border eCommerce Data Regulation

More than 70 nations are planning to restart World Trade Organization talks in an effort to create a standard set of rules to govern the sharing of eCommerce and cross-border data.

The nations, led by Australia, Japan and Singapore, are concerned over the potential for a “splinternet,” which is when Internet commerce and the flow of data around the world become fragmented. This is especially worrisome due to the ongoing trade war between the United States and China, as well as overall differences between China and the west over the accessibility of data.

So far, China has not signed on to the statement, which is expected to be announced at the World Economic Forum in Davos, Switzerland.

“We felt we couldn’t wait any longer to do this,” said a minister involved in the talks, according to The Financial Times. “International trade is changing, and the WTO risks becoming irrelevant.”

The current rules, which have not been revised since 1997, only apply to the financial sector. Data from McKinsey Global Institute shows traded services and the exchange of cross border data have grown 60 percent faster than trade in traditional goods since 2007.

In the meantime, China has wanted what the minister called “watered down rules” to maintain control over cross-border data flow. This doesn’t mean, however, that the nation couldn’t join the call for more cohesive regulation.

“Everything for them is about [social] stability, so it is hard to know whether [their objections to the talks] are a short-term or long-term strategy,” the minister noted.

Still, China’s current approach could cause more trade tensions between Beijing and the west, with multinational companies openly complaining about the issue.

“I think western companies are at a turning point in terms of what they’ll sacrifice to be in the China market,” said one trade lawyer in Davos representing large U.S. multinationals.

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