Digital Balancing Act Roundtable

On July 10, 2020, NBR convened a virtual roundtable as part of its Digital Balancing Act project. The event examined how trade agreements and standards-setting bodies drive data governance in the Indo-Pacific, as well as how data governance will shape new technologies such as 5G and AI. The discussion was moderated by Ashley Johnson (NBR) and featured remarks by Jeffrey Ding (Oxford University) based on his recent NBR commentary “U.S. and Chinese Strategies for Developing Technical Standards in AI”; Clara Gillispie (NBR) on how countries are establishing policy and digital infrastructure for 5G networks; Robert Holleyman (Crowell and Moring International) on the role for bilateral and multilateral trade agreements in data governance; and Benjamin Shobert (Microsoft) on the role for governance in precision medicine, healthcare system productivity, and public health.

Participants emphasized the importance of data governance issues for technological innovation and economic development in the 21st century, particularly with respect to the regulation of large datasets. This issue has become increasingly salient in the context of both the Covid-19 pandemic, which has exposed the importance of public health data and cross-border data flows, and the growing Sino-U.S. rivalry.

Strategic competition between the United States and China for technological superiority and concerns over data security and privacy continue to intensify. Notable examples include opposition to Huawei’s role in global 5G networks and actions by the Committee on Foreign Investment in the United States (CFIUS) in the iCarbonX case. Panelists, however, noted that international data governance does not strictly follow the lines of geopolitical competition. It is also important to consider how domestic factors shape global progress. For instance, multiple Chinese technology companies have opposed each other on certain 5G standards.

Privacy remains one of the foremost challenges facing data governance because it often necessitates a tradeoff between strengthening personal protections and facilitating rapid development of certain services. Panelists noted that this issue is especially urgent in Asia, where many countries’ digital privacy regimes are weak or nonexistent. For instance, only four of the ten ASEAN member states have a domestic agency responsible for data protection and privacy issues. Panelists also identified challenges with developing an international framework for de-identification of sensitive data in large datasets that will be acceptable to countries with widely divergent views on privacy. Such a framework is needed if those datasets are to be built and used across borders. Although no one has developed a comprehensive solution to data privacy, some countries in the Indo-Pacific, including India, South Korea, and Japan, have taken leadership in developing digital privacy regimes.

Additional challenges identified by participants include features of trade agreements—such as national security exemptions—that constrain their ability to serve as vehicles for international data governance. The Digital Economy Partnership Agreement (DEPA) between New Zealand, Chile, and Singapore was highlighted as a groundbreaking digital trade agreement due to its modularity, which allows like-minded countries to coalesce around rules over time. DEPA also includes provisions that will allow it to evolve as the technological and economic landscape shifts—an approach that will likely become more common in future digital agreements.

DEPA’s emphasis on facilitating digital trade for small and medium-sized enterprises shows that the value of data as currency extends beyond the tech giants whose competition for global market share commands most of the headlines. Panelists noted that adaptability and recognition of common interests for data governance are central to the broader global innovation environment.

Finally, the panelists identified a few additional areas for consideration, including the balkanization of data governance—and the digital world more broadly—into U.S.- and Chinese-led spheres. They expressed optimism that some countries in Asia have begun reconsidering localization requirements. Moreover, they argued that the scenario of total balkanization—though certainly costly—would not be as devastating as some fear.

The panelists acknowledged the challenges inherent to regulating new technologies in a fast-moving industry with sensitive privacy and security implications on an international scale. They acknowledged that national security and sovereignty concerns will be prioritized, but emphasized the importance of international cooperation and harmonization of standards to promote the safe development of technologies like AI, especially in safety-critical industries. All panelists agreed that continued expert analysis of global data governance issues is imperative for informing the decisions of policymakers.