The Data is in the Details: Friendshoring, Data Flows and the Role of Digital Trade Rules

The label 'friendshoring' has recently emerged to describe an approach to supply chains that focuses on ensuring they can be relied upon, trusted and secured as opposed to just maximising their economic efficiency. Aspects of friendshoring have a longer history in the context of cross-border data flows, which have been (and are increasingly) subject to restrictions aimed at protecting privacy, cyber-security and national security interests. Data flows are critical to the functioning of modern supply chains and are themselves important sources of value. While the goals of data flow restrictions are often laudable, data friendshoring is not without risks and costs. It can have an uneasy relationship with existing trade rules, and spillover effects for other policy interests (including in relation to internet governance and the strength of the rules-based trading system). This article sets out the connections between friendshoring and data flow restrictions. It then examines the role that trade rules play in relation to data friendshoring, including the uncertainty of the application of certain current trade rules to data friendshoring and the benefits that digital trade rules can contribute in relation to data friendshoring. These benefits includes ameliorating the risks associated with data friendshoring, providing greater certainty for those involved in these arrangements, and enabling on-going discussions between potentially fragmented regimes to help rebuild trust over the longer term.