Japanese and Chinese Strategies and their Game of RCEP negotiations on Rules of Data Flow

Abstract

The Governments of Japan and China have negotiated with each other whether they should adopt in their FTAs a data free flow rule and other data flow rules which were introduced in the TPP agreement. While Japanese industry demands adopting the rules in Japan and in other countries, the Chinese Government argues that data flow should be subject to the precondition of security. According to a game theory model, which was constructed by the author, Japan and China are expected to agree on limited rules on data flow for their FTA. They actually agreed on limited data flow rules in the RCEP agreement in 2020. The Chinese government announced in September, 2021 that they requested to join the CPTPP agreement. According to the model, we cannot expect China to agree to adopt the current TPP data flow rules soon. To promote TPP data flow rules in the world from a long-term perspective, Japan should make data flow rules more economically beneficial for any country by widening data flowing areas, for example, through increasing member countries/economies of the TPP agreement.