International Data Localization Laws Harm Emerging Tech Businesses

July 22, 2021–Data localization laws in countries around the world will hamper the future of data-intensive tech businesses and innovation, a conference heard Tuesday.

Data localization laws restrict the storage and movement of data to within a country’s borders, and global experts at an Information Technology and Innovation Foundation (ITIF) event on Tuesday said this will imperil future enterprise.

“Data localization makes the internet less accessible and secure, more costly, and complicated and less innovative,” said Cory, “the value of data comes from how it’s used–not where it’s stored.”

Those restrictions can include barriers to what information people can see on the internet, which is largely what tech giants like Google and other social media companies require to sustain their businesses.

In the past few decades, and especially during the pandemic, countries all over the world have begun to embrace digital transformation.

In a new report about global data localization barriers, panelist Nigel Cory, associate director of trade policy at the ITIF, explained the number of data localization policies in force have more than doubled over the last four years.

The ITIF data found that in 2017, 35 countries had implemented 67 barriers. Today, there are 62 countries involved with 144 barriers and dozens more under consideration.

Need new framework for laws to embrace global tech companies

With these statistics, the panelists urged policymakers around the world to develop a new framework that better accommodates the growing global tech economy by removing the “unnecessary and time-consuming” barriers.

“Among the many lessons that we learned during the pandemic, one of the clearest is digital technologies, data, and the internet are essential for the global economy to function,” said Jason Oxman, CEO of the Information Technology Industry Council, based in Washington, D.C..

Oxman said one in three small and medium enterprises would not have survived during the pandemic without access to digital tools. Over 60 percent of businesses say technology helped them overcome barriers to exporting their products and services.

Some governments are developing a digital policy approach that impacts the global innovation ecosystem and restricts the ability of businesses, workers, and consumers to deploy and make use of digital products and services across borders, the conference heard.

“These are an essential component to ensure the global economy can function, while also providing assurance to any users of digital services that their information is safe and secure,” Oxman said.

“Countries should create obviously robust data privacy and government frameworks that protect consumers and address national security concerns, but policymakers should do so in a transparent, targeted way,” Cory said.

The United States of America has a position that data localization is a threat to American businesses, and it has made that view part of its trade negotiations in treaties like the U.S.-Japan trade deal, the Trans-Pacific Partnership, and the United States-Mexico-Canada Agreement, which renegotiated and updated NAFTA.

According to the U.S. International Trade Commission, “protection from localization laws is essential for U.S. carriers seeking to manage data processing and network management functions from a centralized location.”