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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

[table id=20 /]

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.