Summary paragraph: What international regulatory cooperation (IRC) options are there for striking the balance between privacy and cross-border data sharing in international trade?
Author: Lawrence Kay
In our blog on why international regulatory cooperation (IRC) matters to data sharing in international trade, we explained why trade policy faces a tough balance between domestic rules for data privacy and the benefits of deeper cross-border data sharing, and why IRC might help with the balance between the two.
But what IRC options are available for making that balance?
The Organisation for Economic Co-operation and Development (OECD), has developed a framework for IRC – International Regulatory Co-operation: Better Rules of Globalisation – arguing that using IRC in more and better ways could maximise the gains from globalisation.
Some of these gains have been captured over the past few decades through international collaboration over standards for the Internet, the Web, and other technology – having profound effects on billions of people. But coordination around the socioeconomic effects of international data sharing is nascent: the EU’s General Data Protection Regulation is only a few years old while the APEC Cross-Border Privacy Rules System was only endorsed by its members in 2011. There are few, if any, effective international councils for the discussion and regulation of data in emerging technologies like artificial intelligence.
Striking the right balance between domestic rules for data privacy and the benefits of deeper cross-border data sharing in trade could mean countries working together in many different ways, and the OECD’s typology of IRC helps with delineating the options available. The typology has 11 categories, ranging from integration and harmonisation through supranational or joint institutions – such as GDPR being developed by the European Union – to dialogue and informal exchange of information, as with the Global Data Commons initiative. Integration and harmonisation are hard to achieve and become more so as a larger number of countries are looking to coordinate, but can significantly reduce friction for companies; discussion and information sharing are less demanding but may not reduce friction as much. The spectrum between these gives policy-makers a range of tools, different mixes of which might be necessary as many countries seek to collaborate.
OECD international regulatory cooperation typology
|OECD type||OECD definition||Examples|
|More coordination||Integration and harmonisation through supranational or joint institutions||National regulatory competences give way to supranational law-making and institutions. |
Regulatory co-operation takes place through harmonisation of rules.
|European Union’s General Data Protection RegulationGeneral Data Protection Regulation|
|Negotiated agreements such as treaties and conventions||Formal regulatory co-operation signed by states and considered binding in international law, with the respective parties agreeing regulations, obligations, and responsibilities. |
Treaties, conventions, and protocols are examples.
The co-operation is sometimes supported by an organisation.
|Agreement between the Government of Australia and thAgreement between the Government of Australia and the Government of New Zealand on Trans-Tasman Court Proceedings and Regulatory Enforcemente Government of New Zealand on Trans-Tasman Court Proceedings and Regulatory Enforcement|
|Regulatory partnerships between countries||Formal, broad agreement between countries that they will cooperate to promote better quality regulation and minimise regulatory divergence.||Regulatory cooperation agreement fRegulatory cooperation agreement for the UK-Singapore FinTech Bridgeor the UK-Singapore FinTech Bridge|
|Inter-governmental organisations||Treaty-established membership in organisations that promote regulatory co-operation.||OOECDECD, with 36 developed countries as members|
|Regional agreements with regulatory provisions||Formal regional agreements with regulatory provisions that aim to facilitate trade and integration, perhaps through a regional trade agreement.||LatLatin American Integration Associationin American Integration Association between 13 countries in Latin America|
|Mutual recognition agreements (MRAs)||A common vehicle in international law which states use to recognise and uphold legal decisions taken by organisations made in another state.||TraTrans-Tasman Mutual Recognition Arrangementns-Tasman Mutual Recognition Arrangement between Australia and New Zealand|
|Transgovernmental networks||Loosely structured, peer-to-peer connections that develop through repeated interaction between government officials and memoranda of understanding, rather than by binding agreements. Can often occur outside the auspices of respective foreign ministries.||United Nations Development Programme Regional Innovation Centre Asia-PacificRegional Innovation Centre Asia-Pacific|
|Formal requirements to consider international regulatory cooperation when developing regulations||Requirements on responsible domestic authorities to consider international standards when developing regulations, and how such consideration might lead to assimilation of the international standard into the domestic approach.||Roadmap for EU-US ReguRoadmap for EU-US Regulatory Cooperation and Transparencylatory Cooperation and Transparency between the European Union and the United States|
|Recognition of international standards||Incorporation of an international standard in legislative instruments by means of a reference to the standard, or the copying of text from the standard into domestic legislation.||Republic of Ireland’s Sustainable Development Goals National Implementation Plan 2018 - 2020Sustainable Development Goals National Implementation Plan 2018 - 2020|
|Soft law||Non-binding co-operation, such as through codes of conduct, guidelines, roadmaps, and peer review.||United Nations Economic Commission for Europe, E-Commerce Self-RegulatoryE-Commerce Self-Regulatory Instruments Instruments|
|Less coordination||Dialogue and informal exchange of information||Conferences, fora and similar settings where regulators meet to discuss issues.||Transatlantic Economic Council between the European Union and the United States|
There is, unfortunately, not much research on which of these mechanisms are most effective, and when. There is a range of case studies on initiatives – the World Trade Organization coordinated a reduction in trade barriers through the Agreement on Technical Barriers to Trade (TBT) and the Agreement on Sanitary and Phytosanitary Measures (SPS); mutual recognition agreements between Australia and New Zealand have been effective; and the European Union has tried to raise timber standards with developing countries through its Forest Law Enforcement Governance and Trade Initiative – but little comprehensive guidance beyond the OECD’s suggestions for IRC participants to seek political commitment and share costs and benefits.
This leaves policy-makers who need to design IRC schemes for the governance of data sharing in trade with some, but not much, guidance on what works. In our blogs on modern regulatory demands in trade – regulation and combinatorial innovation, and anticipatory regulation – and examples of cooperation over frontier technology like the Global Financial Innovation Network, we explore how policy-makers might use some of the options in the OECD table.
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