Trans-Pacific Partnership Trade Agreement May Authorize Cross-Border Data Flows
The text of the Trans-Pacific Partnership (“TPP”) agreement was released to the public for the first time today. The TPP has yet to be ratified by the twelve Pacific Rim nations that negotiated the agreement, including the United States, where it has encountered opposition in Congress. The nations that participated in the negotiations for the agreement are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.
Article 14.11 of the Electronic Commerce chapter of the agreement relates to “Cross-Border Transfer of Information by Electronic Means.” Paragraph 2 states: “Each Party shall allow the cross-border transfer of information by electronic means, including personal information, when this activity is for the conduct of the business of a covered person.” The definition of “covered person” in Article 14.1 excludes financial institutions, but otherwise applies to any national or enterprise of parties to the agreement.
Arguably, this provision obligates TPP signatories to permit cross-border data flows, although this requirement is subject to a fairly broad exception in the next paragraph. Paragraph 3 states:
Nothing in this Article shall prevent a Party from adopting or maintaining measures inconsistent with paragraph 2 to achieve a legitimate public policy objective, provided that the measure:
(a) is not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; and
(b) does not impose restrictions on transfers of information greater than are required to achieve the objective.
Thus, it appears that signatories would still be free to restrict cross-border data flows as long as the restriction reasonably relates to a “legitimate public policy objective” and is not applied in an arbitrary or discriminatory manner.