Cross-Border Data Transfers & Innovation

Cross-border data transfers are critical to research and development (R&D) and other innovative endeavors in today’s connected economy. Indeed, technological innovation today is inherently transnational. As the World Trade Organization has stated, “for data to flourish as an input to innovation, it benefits from flowing as freely as possible…” Governments can foster innovation with a mix of policy tools that includes greater cross-border access to technology; the ability to share knowledge, ideas, and information across global digital networks; and improved international digital connectivity. As summarized below, cross-border data transfers are integral to every stage of the innovation life cycle.
  • Data Transfers & Core Innovative Processes. Cross-border data transfers play an integral role in R&D and other core innovative and creative functions. For example, in semiconductor design, R&D depends on access to research data from entities across the world, as well as collaboration, joint research, and the exchange of ideas and knowledge among teams of inventors, designers, and other innovators in different countries. All these activities also rely on cross-border cloud computing and data analytics.
  • Data Transfers & Regulatory Approval and Licensing Processes. Transferring data across borders is also critical to advancing governmental approvals and licensures for new and innovative products. These include a wide array of connected devices—from aircraft and vehicles, to medical devices and diagnostics, to machine tools and robotics. For example, doctors rely on life-enhancing connected medical devices that diagnose or treat endocrine, cardiovascular, oncological, or neurological conditions, which in turn depend on device producers’ ability to share comprehensive safety and operational data with health regulators in multiple jurisdictions.
  • Data Transfers & Intellectual Property Application Processes. Innovators must transfer information across borders to apply for intellectual property (IP) rights with authorities in different countries. Access to data from multiple countries—such as prior art references—is an integral part of the patent application examination process. Likewise, transferring data (including inventor files, etc.) across borders is critical to advancing local innovation in developing countries through the international Inventor Assistance Program (IAP), which provides under-resourced developing country inventors with gratis legal representation from around the world.
  • Data Transfers & Exportation of Innovative Products. Cross-border data transfers are also necessary for servicing and supporting many exported products. Data localization mandates and data transfer restrictions can directly impede the ability to provide service or support, impairing international trade. With so many innovative exported products functionally dependent on satellite or other cross-border data communications (e.g., IoT software applications in the aerospace, automotive, and agricultural machinery sectors; legitimate music and video streaming services; scientific publication databases), cross-border data transfer restrictions make it much more difficult for innovators and creators to sell or provide support to their products abroad.
  • Data Transfers & the Dissemination of the Benefits of Innovation. Cross-border data transfers are necessary to bring the benefits of innovations to populations at large. Data transfer restrictions and localization mandates directly undermine objectives of technology transfer and dissemination across countries and populations in a manner conducive to social and economic welfare. In concrete terms, a country that unnecessarily limits cross-border data transfers limits its own workers’ and citizens’ access to technologies and data sources that are critical to development, innovation, and the transfer of technology.

Sources: Global Data Alliance, Cross-Border Data Transfers & Innovation (2021).