Sylvia I.

Kasiti
BIT-008-0064/2009
ICT & SOCIETY
ASSIGNMENT 1

1. Trans-border data flow

Flow of electronic data across political boundaries, such as between states or countries,
a process which can cause legal conflicts, such as who owns a particular piece of
information, and who may use it.

2. Importance of regulating trans-border data flow

The importance of efficient trans-border data flows to the conduct of modern-day

business and international trade has to be kept in mind in evaluating the growing trend
to emphasize the privacy aspects of trans-border data flows. Balance must be struck to
protect the privacy of personal information while allowing freedom of flow of non-
personal information necessary to fulfill the legitimate and wide-ranging needs of
society.

National regulation of Trans-border data flow generally reflects three areas of concern:
• Privacy protection
• Economic issues
• National sovereignty considerations.

PRIVACY PROTECTION

During the 1970s many countries passed privacy legislation to protect their citizens from
the growing ability of computerized telecommunications systems to store, process and
transmit vast quantities of personal data. European and Scandinavian countries led the
way with legislation that defined the types of data that could be collected, required
registration of databases containing personal information, and restricted transmission
abroad of personal data.

An important concept in the privacy area is the idea of "equivalent protection" For
example; France may refuse to allow personal data to be transmitted to the United
States for processing if it feels that American privacy protection is not equivalent to that
of France. Customer data, payroll information and employee resource files containing
information on key overseas management personnel may all be subject to Trans-border
data flow restrictions.

Some privacy legislation has been interpreted to protect "legal" persons (corporations)
as well as natural persons. For the multinational enterprise, this means that a competing
firm might be able to demand access to the multinational's marketing information
collected on that competitor.

To alleviate some of the confusion caused by the lack of uniformity of privacy protection
laws, in 1980 the organization for Economic Cooperation and Development (OECD)
published voluntary guidelines on personal privacy protection and Trans-border data

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ICT & SOCIETY
ASSIGNMENT 1

flow. The OECD guidelines address issues such as its own collection and use of
personal data, specification of purposes for which data is collected, security safeguards
that should be provided, the right of the individual to obtain knowledge of the existence
of personal data files and access to those files, and the accountability of the party
collecting, storing and processing personal data for compliance with the OECD
principles.

ECONOMIC ISSUES

In the economic sphere, regulation of data flow can be used to protect local industries.
Brazil has some of the toughest data laws in the world. Companies located there must
buy Brazilian equipment and use locally developed software if it is similar to that
available elsewhere. In general, Brazilian data must be processed within the country.

Protectionism is not limited to developing countries. Germany requires substantial local

processing of data before international transmission as a condition for access to the
private leased lines used by multinationals. Canadian banking law requires initial
processing of data within the country; financial records may not be transferred outside
the country without government approval. Loss of jobs as data flows outside the country
is a prime Canadian concern. The Canadian government estimated that more than
20,000 data processing jobs were lost by 1985 due to foreign processing of Canadian
information.

Protection of public monopolies is another economic issue prompting restrictions on

Trans-border data flow. In most European countries, the PTT (post, telephone and
telegraph) is controlled by the government. Access to telecommunications services is
vital to the Multinational enterprise’s information system. In many cases, they have used
private leased lines to develop the most efficient and cost-effective communications
networks. Some PTTs, such as Germany's, are raising rates on private leased lines to
bring them up to the volume-sensitive rates charged on public networks. If
Multinationals are forced to use public networks, communication costs could increase
substantially while the integrity and security of Trans-border data flow may be markedly
reduced.

Compliance with economic regulations of Trans-border data flow can decrease

timeliness of data, reduce the economies of scale allowed by centralized processing
and generally inhibit the efficiency of the Multinational's information system. But most
frightening to many Multinationals is the possibility mat data could be taxed as a
commodity. Although it seems unlikely that a workable method to determine the value of
data could ever be developed, France has consistently raised the taxation issue over
the years. Recently France has proposed a plan to levy customs duties on imported
software on the basis of its "intrinsic value," instead of using the value of the tapes or
disks carrying it, the usual practice in the past. Multinationals fear that this could lead to
the taxation of other types of corporate information, such as trade secrets and patents.

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BIT-008-0064/2009
ICT & SOCIETY
ASSIGNMENT 1

NATIONAL SOVEREIGNTY CONSIDERATIONS

National sovereignty issues include cultural infringement, technological dependence

and national security. Concern over cultural infringement and technological dependence
is primarily concentrated in the developing countries. In today's world, control of
information provides a fundamental basis for power. Most computerized information
resources are located in the developed market economies. Third World countries are
concerned with building their local capabilities so that they, too, can take advantage of
the available information resources. Restricting Trans-border data flow can not only
protect local industry in an economic sense, but may guarantee retention within the
country of valuable information.

An overlapping issue is the maintenance of cultural integrity. Trans-border data flow

contributes to a cultural homogenization that is not welcomed by all countries. Cultural
pollution from abroad can be detrimental to developing nations trying to achieve the
unique cultural identity necessary for national unity.

Developing countries are also concerned with national sovereignty issues. Many nations
feel that decisions are made where data is processed and stored. By raising obstacles
to data transmission to multinational enterprises headquarters, some feel that they can
cause more decisions to be made at the subsidiary level, where local management will
take into consideration the national interest. If successful, this strategy could result in
government-enforced decentralization of decision making in the multinational.

National security considerations have also contributed to Trans-border data flow

regulation. All though most Trans-border data flow legislation requires computer security
safeguards for data, some countries do not allow the transmission of encrypted
information for national security reasons. Sometimes only unsophisticated encryption
techniques may be used. Not only does this make it riskier for the multinational to
transmit proprietary information, but it also makes compliance with local data legislation
more difficult.

3. The Trans-border stages of the society

NATION BUILDING STAGE

Manifest in nation states of relatively recent origin, such as are found in Africa, Asia and
Latin America.
At this stage, the national states tend to guard their boundaries jealously vis a vis
neighboring states to ensure necessary differentiation from the outside. The implication
for border areas generally include forced fragmentation for pre-existing cultural

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homogeneity with different fractions forced to develop along divergent paths and to
nurture different loyalties, languages, values and economies in accordance to the
dictates of the sovereign authorities under whose different jurisdiction the fractions of
the pre-existing homogeneities have been placed.
Cross-border relations in Africa fall under the nation-building stage.

CO-EXISTENCE STAGE

Neighboring states may be said to have achieved some satisfactory degree of internal
integration and self-confidence leading to relative stability of their borders and the
evolution of co-existence and/or interdependent borderlands. E.g. USA and Canada.

INTEGRATION STAGE

REFERENCE

Information Systems and Transborder Data Flow

Journal of Systems Management; Cleveland; Jan 1992; Waples, Elaine;Norris, Daniel
M.;

Margins of insecurity: minorities and international security

By Sam C. Nolutshung