The U.S. proposal is "very aggressive in terms of asking for binding rules that allow data to move" across borders over the Internet, Jonathan McHale, deputy assistant U.S. trade representative for telecommunications and electronic commerce policy, said during a panel discussion.

The scheme also provides leeway for governments to address privacy, security and consumer protection concerns, McHale said.

The United States and 10 other countries - Australia, New Zealand, Chile, Peru, Mexico, Canada, Singapore, Malaysia, Vietnam and Brunei - are tackling the Internet issues in negotiations on a proposed regional free trade agreement known as the Trans-Pacific Partnership pact. A final deal in those talks is not expected until mid- to late-2013.

U.S. companies such as Microsoft Corp, Citibank, IBM, and General Electricp Corp have pushed for trade rules that protect the free flow of information over the Internet.

They complain that even when Internet curbs are intended to address legitimate concerns, business can suffer if the rules are unclear, arbitrary, unevenly applied or more restrictive then they need to be to achieve their objective.

Google Inc and big telecommunication companies such as Verizon Communications Inc have also expressed concern about the increasing number of governments that require companies to locate data centers within their countries as a condition of being allowed to provide services.

These companies want to be able to store data remotely, such as in the cloud, and still service these markets.

Countries in the TPP talks have relatively few restrictions, but the United States wants to establish "a presumption that data should flow" before new barriers emerge, McHale said.

It's a difficult area of negotiations because many countries are still struggling with their own domestic regulations in the area, but "I'm confident that we'll be able to come up with a meaningful provision" on data flows in the final pact, he said.

(Reporting by Doug Palmer; Editing by Eric Walsh)

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