On April 14, 2015, the American Chamber of Commerce in China (“AmCham”) published a report, entitled Protecting Data Flows in the US-China Bilateral Investment Treaty (the “Report”). The Report is part of AmCham’s Policy Spotlight Series. While in principle addressed to the U.S. and Chinese teams that are currently negotiating the Bilateral Investment Treaty, the Report has been made public. It thereby provides insight into the emerging issue of data localization for the benefit of a much wider audience.

The Report analyzes the impact of data localization policies, challenging the widely held (but potentially false) belief that greater data security can be achieved through local storage of personal data. In challenging this belief, the Report highlights the magnitude of the possible adverse economic impact of data localization policies and their potential effect on innovation. The Report contrasts data localization policies against the more liberal policies that are intended to foster freer international flows of personal information, which have been adopted in several jurisdictions in the Asia-Pacific region. The Report concludes by advocating against the adoption of data localization policies, recommending instead the inclusion in the Bilateral Investment Treaty of provisions that would foster and protect international transfers of data by service providers.

Hunton & Williams and its Centre for Information Policy Leadership (the “Centre”) participated closely in the drafting of the Report. The final document reflects policy positions taken from the international perspectives frequently advocated by the Centre and lawyers at Hunton & Williams. The Report also includes a clear reference to the Accountability principle, a concept the Centre helped develop as a guiding principle to govern cross-border data flows. In addition, the Report conspicuously references the APEC Cross-Border Privacy Rules system.

The Report was publicly released at a panel discussion event held at AmCham’s facility in Beijing on April 14. Hunton & Williams partner and Centre Principal Manuel Maisog participated as a panelist at this event. Reflecting the importance of the data localization issue, the event was well attended with nearly 60 attendees. In an article published by the Wall Street Journal, Maisog said that data localization policies have the potential to undo the benefits of a global, integrated Internet.

In May and June of this year, delegations from the Centre will travel to Singapore and Hong Kong to meet with data protection authorities, and further expound upon and advocate the adoption internationally of the Accountability principle. These will be the next steps in the Centre’s continuing advocacy for robust cross-border data flows, and against data localization policies, in the Asia-Pacific region.