15 Asian nations that together represent around 30 percent of the world’s population and GDP have signed a trade deal that means e-commerce operators in member nations will not be required to store customers’ data in their nation of residence.
The Regional Comprehensive Economic Partnership (RCEP) was agreed to by China, Japan, South Korea, Australia, Indonesia, Brunei, Cambodia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The deal aims to harmonise tariffs and regulations across the member nations, with a view to trimming them over time in the service of promoting trade and economic growth.
Among the measures aimed at achieving those outcomes is an e-commerce agreement that, as the full text of the agreement explains in Chapter 12 [PDF] dedicated to e-commerce: “No Party shall require a covered person to use or locate computing facilities in that Party’s territory as a condition for conducting business in that Party’s territory.”
There’s also the following provision: “A Party shall not prevent cross-border transfer of information by electronic means where such activity is for the conduct of the business of a covered person.”
Australia’s explainer document [PDF] says that means signatories will make “commitments to ensure that parties do not prevent business data and information from being transferred across borders.”
A section of the Australian document titled “Addressing data localisation barriers” spells out the commitments as follows:
The deal excludes the financial services industry and will allow member nations to write their own exceptions to implement measures for security and public policy reasons.
Other tech-related items of interest in RCEP include:
- Developing regional e-commerce standards to facilitate paperless trade across the region;
- Keenly-priced mobile roaming across the region;
- Easier access to leased lines connecting member nations;
- A commitment to maintain current policies of not imposing import duties on digital goods;
- Cyber-security co-operation and capacity-building efforts.
While RCEP is very broad, it is not unexpected or radical. Negotiations for the agreement stated in 2012 and most of the signatories are already enmeshed in bilateral free trade agreements. RCEP extends those bilateral deals across the region but doesn’t take any into new territory. Nor does it differ markedly from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which includes Chile, Canada, Mexico and Peru, but not the USA which decided not to participate when the Trump administration took power in 2017.
However, the deal is significant because China does not have a free trade agreement with Japan and has few multilateral trade deals. As Japan has many such agreements in the Asian region and around the world, RCEP will facilitate the flow of goods and data to China at a time the USA would rather that happen less.
RCEP is also notable because India decided not to join, with the data-sharing requirements one of its objections. Signatory nations hope India will join and have offered it a fast-track process to do so.
While the deal was signed over the weekend, RCEP must now be ratified by member governments before coming into force. There is little sign that any of the participating nations will have much trouble getting it through their respective legislatures.
Once formally signed-off, the agreement will cover 2.2 billion people and around 29 percent of global GDP, making the RCEP zone Earth’s largest trading bloc. ®