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Data flows in international trade: what are the governance options?

Tue Nov 26, 2019
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We explore options for the governance of data flows in international trade, as discussed at the World Trade Organization’s 2019 Public Forum

International trade requires data to be shared between countries, but doing so raises concerns about privacy, data-flow governance and trust. These issues and more were discussed at the recent World Trade Organization Public Forum 2019.

Lawrence Kay, Senior Policy Advisor at the ODI, explores the debate.

Building trust in the governance of data flows in international trade will require a range of organisations to play roles at the sector, national, regional, and international levels. This could mean data protection regulators working together, trade deals setting mutual expectations, or international bodies establishing standards. But beyond a few initiatives nobody yet knows what those roles should be, who will play them, and which countries will take part.

The World Trade Organization’s (WTO’s) recent Public Forum 2019 in Geneva was a good opportunity to garner a range of answers to such questions – think several days of panels on trade topics, attracting government officials, trade specialists, business lobbyists, civil society representatives, and other interested parties from around the world. I wrote a long Twitter thread on my observations.

Many panel discussions included the cross-cutting topic of data flows, not least when questions of services trade, technology and suchlike arose. We’ve been thinking about this as part of our research projects, and recently summarised what affects the flow of data-enabled international trade.

Data policy and economic exchange

Policy for data privacy and sharing mostly starts at the national level, so when we start looking at trade we have to look at domestic regulation and how it affects the ease of trade. Notions of data privacy are different around the world; and, as the European Centre for International Political Economy has shown, national data restrictions can inhibit cross-border trade in services. Restrictions on cross-border flows include stipulations that data created in a jurisdiction must be stored and analysed there; or that if the data is to go elsewhere, then it must only do so if the receiving jurisdiction accords with a given standard.

Countries and regions aren’t in the world by themselves and they need to find ways to cooperate with others on how to treat data so that they can have economic exchange. But should they do so by agreeing standards with one or a few other countries; establish regional bodies; or go for one international standard? Existing answers to this include:

  • the General Data Protection Regulation (GDPR), which seeks to harmonise the standards of other jurisdictions to the European Union’s.
  • and the Centre for International Governance Innovation’s idea for a single data space between between Canada, the European Union, Japan, and the United States, managed by an international data standards board.

These and many other options are part of international regulatory cooperation (IRC) – mechanisms between countries for understanding their respective domestic rules and aligning them where they wish.

At the ODI, we’re currently researching the ways in which countries might use IRC to create trusted and stable international relationships for data sharing. The Organisation for Economic Co-operation and Development (OECD) has put arrangements on the spectrum from least to most legally binding, and we’re working within this framework while looking at a few others, such as that from the New Zealand Institute of Economic Research.

International coordination of data issues

There was discussion of IRC for data at several sessions and I put one question to nearly all the panels I attended: ‘At what level should international coordination of data issues take place?’. The most interesting comments for thinking about respective levels are below – they were made at different sessions, so aren’t responses to each other – and give a helpful sketch about how multiple levels of international governance might work at the same time.

  • Hamid Mamdouh of the law firm, King and Spalding, argued that the WTO should be the interface between national standards-setting, and questions of trade restrictiveness, and that the Joint Statement on Electronic Commerce (a statement of intention to commence WTO negotiations on trade-related aspects of electronic commerce) was the way to start it. This suggestion would mean the WTO would consider effects on trade restrictiveness of data regulations and would be at the top of international consideration of data in trade issues – without setting standards itself.
  • In keeping with Mr Mamdouh’s point, Michael Hahn of the World Trade Institute argued that the WTO needs to provide a framework around ‘coalitions of the willing’ – leading on data, privacy, AI and other issues, keeping other members connected to the discussions and avoiding unnecessary complexity through having many preferential trade agreements.
  • The representatives from Japan argued for the Osaka Declaration on Digital Economy. Michikazu Chihara of the Japan Electronics and Information Technology Industries Association (JEITA) said that he expected the ‘Osaka Track’ to lead to WTO rules for digital liberalisation and a comprehensive e-commerce agreement, and that this needed to be accompanied by a global system of mutual recognition and certification that would have a bearing on data.
  • Keerthika Subramanian of the Institute of Electrical and Electronics Engineers described the Global Initiative to Standardize Fairness in the Trade of Data, which is seeking to establish a ‘fair trade data standards framework’ for the use of personal data in trade, starting with the healthcare sector.
  • Manfred Elsig of the World Trade Institute mentioned his work with Mira Burri of the University of Lucerne on ‘Governance of Big Data in Trade Agreements‘, and argued for leading economies to demonstrate what is possible for data flows through future trade agreements.
  • Amar Breckenridge of Frontier Economics suggested peer review for digital regulation –  the OECD describes peer review as ‘…an examination of one state’s performance or practices in a particular area by other states.’
  • Jean-Christophe Graz of the University of Lausanne talked about his book – The Power of Standards: Hybrid Authority and the Globalisation of Services – and argued for engaging domestic groups on standards for data and that there needs to be regulatory ambiguity between domestic and international standards, managed  flexibly through ‘hybrid power’ in institutions.
  • Julia Nielsen of the OECD argued that the problem of trade rules for digital and data issues can be narrowed by bringing countries together and having regulators communicate more, but that we shouldn’t expect harmonisation.

Trust, data, international trade: next steps

None of these were a complete answer to the question of how to coordinate internationally on rules around data, and it would have been unreasonable to expect them to be. But the breadth of responses suggests that consideration of what to do for building a trustworthy data ecosystem in international trade has really begun. The ODI will be making its further contributions in the new year.

Get in touch

Please get in contact if you’d like to discuss these issues further.