Digital Trade Regimes and the Regulatory Logic of Data Flows in FTAs

Purpose This article investigates the evolving landscape of digital trade regimes within Free Trade Agreements (FTAs), with a specific focus on the regulatory logic governing cross-border data flows. It aims to deconstruct the diverse approaches taken by leading FTAs in addressing this critical aspect of the digital economy, thereby identifying distinct regulatory models and their underlying political and economic drivers. Understanding these divergences is crucial for navigating the complex challenges of global data governance in an increasingly interconnected world. Design٫methodology٫approach The research employs a multi-faceted approach. Firstly, it establishes a novel analytical framework comprising three distinct regulatory models: Data Liberalization٫Trade-Led Governance, Data Sovereignty٫State-Centric Governance, and Digital Protectionism٫Defensive Governance. This typology is developed through a comprehensive review of existing literature on data governance, digital trade law, and digital protectionism. Secondly, a comparative analysis of key FTAs, including the CPTPP, USMCA, and RCEP, alongside auxiliary examples like the Digital Economy Partnership Agreement (DEPA) and the Singapore-Australia Digital Economy Agreement (DEA), is conducted. This analysis scrutinizes specific provisions related to cross-border data flows, data localization, privacy, source code disclosure, and public policy exceptions. The methodology then proceeds to a deep analytical discussion, examining the political economy, industrial policy, and geopolitical factors influencing these regulatory choices, and analyzing the implications for global data governance, including the dynamics of convergence and divergence, and the concept of "formal convergence and substantive divergence." Findings The comparative analysis reveals a spectrum of regulatory approaches in FTAs concerning cross-border data flows, moving beyond a simplistic dichotomy of liberalization versus restriction. While some agreements, like the CPTPP, lean towards a strong liberalization model, others, such as RCEP, exhibit a more nuanced and potentially divergent approach, reflecting differing national priorities. The USMCA presents a hybrid model. Key findings indicate that data localization requirements are often a point of contention, with variations in strictness and exceptions. Approaches to privacy and personal data protection also differ significantly, ranging from broad commitments to robust, rights-based frameworks. Furthermore, the analysis highlights the increasing importance of exceptions for public policy and national security, which can be interpreted and applied in ways that create barriers to data flows. The study identifies the emergence of "formal convergence and substantive divergence," where agreements may adopt similar language but allow for distinct national interpretations and implementation. Originality٫value This article offers significant original contributions to the literature. Firstly, it proposes a novel and comprehensive typology of regulatory models for cross- border data flows in FTAs, providing a more granular understanding of the diverse regulatory logics at play. This typology moves beyond existing conceptualizations by explicitly linking theoretical assumptions, legal design patterns, trade obligations, and political-economic drivers. Secondly, the rigorous comparative analysis of major contemporary FTAs, applying this new typology, offers a unique and empirically grounded insight into the practical implementation of digital trade provisions. The deep analytical discussion on convergence versus fragmentation, and the introduction of "formal convergence and substantive divergence," provides a crucial conceptual lens for understanding the complexities of global digital governance. This research holds significant value for policymakers, legal scholars, international trade negotiators, and businesses seeking to navigate the increasingly complex and fragmented landscape of digital trade regulation. It offers a framework for understanding regulatory differences, anticipating future trends, and designing more effective and equitable digital trade regimes.