The Internet, Cross-Border Data Flows and International Trade

Abstract

The Internet is becoming a key platform for commerce that is increasingly happening between buyers and sellers located in different countries, thereby driving international trade. Additionally, as the Internet enables cross-border data flows this is also underpinning global economic integration and international trade. For instance, cross-border data flows are now intrinsic to commerce, from Internet-based communications like email and platforms such as eBay and Facebook that bring buyers and sellers together, from the financial transaction to purchase the product in other countries to the downloading of the goods and services. Despite the growing significance of the Internet for international trade, governments are restricting the Internet in ways that reduce the ability of businesses and entrepreneurs to use the Internet as a place for international commerce and limits the access of consumers to goods and services. Some of these restrictions are being used to achieve legitimate goals such as preventing cybercrime or restricting access to morally offensive content, but may be applied more broadly than necessary to achieve those objectives. In other cases, Internet restrictions are targeting foreign businesses and the sale of goods and services online in order to benefit local ones. Such Internet restrictions are discriminatory and harm international trade. This paper discusses the importance of the Internet and cross-border data flows for international trade. It proposes steps that governments should take to apply existing international trade rules and norms and identifies where new trade rules are requires to further support the Internet and cross-border data flows as drivers of international commerce and trade.