Japan, EU Discuss Cross-Border Data Free Flow in Osaka; Digital Trade May be Added to Existing Economic Partnership

Reuters file photo
European Union flags fly outside the EU Commission headquarters in Brussels in September 2019.

Japan and the European Union reached a broad agreement to add provisions for cross-border data free flow to the existing economic partnership agreement (EPA) between Japan and the EU at a high-level bilateral economic dialogue in Osaka City on Saturday in conjunction with a trade ministerial meeting for the Group of Seven advanced nations.

The dialogue was attended by Foreign Minister Yoko Kamikawa; Economy, Trade and Industry Minister Yasutoshi Nishimura; and Valdis Dombrovskis, executive vice president of the European Commission for an economy that works for people.

At the start of the dialogue, Kamikawa said: “I welcome the broad agreement reached. We’d like to accelerate the procedure so that we can finalize the draft text for early signature.”

Nishimura also stressed, “[The provisions] are rules that are extremely meaningful for the business community.”

The agreement commits to cross-border data free flow “in principle” and prohibits measures that would hinder data distribution, such as a country requiring that servers storing data be located within its borders.

The agreement also leaves room for both sides to take appropriate policy measures to ensure the reliability and security of data distribution in the event of the emergence of digital technologies that would adversely affect individual internet usage or corporate business activities.

With China and other countries in mind, the provisions also aim to pressure them not to justify measures that overly inhibit data distribution for self-centered reasons.

The purpose of establishing common rules on cross-border data free flow is to increase predictability when companies do business. With clear rules, it is possible to reduce the risk of companies being suddenly subject to unexpected regulations, making it easier for them to make decisions on investment and business expansion.

Japan intends to deepen its economic relationship with the EU by stimulating digital trade — the online buying and selling products and services.

International rules for data distribution have been negotiated at the World Trade Organization, too, but no agreement has been reached due to differences in various countries’ positions.

Japan is calling on other countries to realize its concept of Data Free Flow with Trust, and is looking to use common rules with the EU as a successful example to expand the number of countries and regions that will agree to them.

The EU, which places importance on the protection of personal information, is cautious about transferring data outside the EU. The EPA with Japan, which entered into force in 2019, does not include rules on data distribution, and negotiations on the issue began last year.

During the dialogue, the two sides also exchanged views on measures to strengthen cooperation in the field of economic security, as well as the release of treated water stored at the Fukushima No. 1 nuclear power plant of Tokyo Electric Power Company Holdings Inc.