5 ways to ensure trust when moving data across borders

Throughout the COVID-19 pandemic, we have seen the range of online services soar. Today, they provide a lifeline to many, bringing deliveries, medical assistance, entertainment and livelihoods via teleworking to people under lockdown. In a very diverse region like South-East Asia, for example, new digital services consumers due to COVID-19 amounted to one in every three.

This lifeline would not be possible without data moving across borders. Data transfers enable local sellers to retail their goods and produce for a global audience. Small businesses depend on leading business software to collaborate with or talk to their customers.

The pandemic has advanced the trajectory of global consumption of data forward by five years. According to Gartner analysts, 26 billion connected vehicles, industrial equipment and household items are ready to transmit data across borders in the world. Small businesses in Viet Nam will use connected sensors to track production or predict disruptions; service engineers in the Philippines will work seamlessly with partners in Japan; and an entirely new era of medical tourism will be possible in Thailand, with doctors performing surgery from other countries.

Yet this is not to say that the massive data traffic is without risks. Governments want – rightly – to safeguard privacy or other users’ rights, tax revenues or uphold public order even when data moves abroad. An ever-smaller group of governments also want to force businesses to store data and servers locally to create jobs, despite overwhelming empirical evidence to the contrary.

Mapping options for data cooperation

If no country trusted their neighbours and restricted data transfers, thinking “better safe than sorry”, the global internet would fall apart very quickly. This fragmentation needs to stop, otherwise home-delivered meals and groceries might get prohibitively costly due to less competition. And your streaming options might look even worse.

Starting in 2019, we worked with global experts to map options for data cooperation between nations. One such vision is “Data Free Flow with Trust”, launched by Japan’s Presidency of the G20. But such a balancing act won’t materialise in just one process; it involves multiple tracks on trade, privacy and industrial standards, combining binding and voluntary rules at regional and global levels. And these rules could apply to governments, businesses or users alike. And they may not be shared by all G20 members.

Through recent public-private dialogues held in India, the Philippines, Thailand and Viet Nam, we explored the benefits of such deeper cooperation on data governance. Each country has its unique circumstances and will see a different dividend from digitalisation. But all four economies want to revitalise their manufacturing sector – which calls for rapid adaptation of digital productivity tools – or are seeking to expand their IT and outsourcing sectors, which will require trusted means to import customer data from markets abroad.

Reciprocal trust and harmonised privacy rules lead to more effective remedies when things go wrong. After all, two jurisdictions with similar laws or effective legal assistance against cybercrime and security breaches do not need to localise and restrict data to ensure their data is protected.

How to get the balance right

Governments and stakeholders need to cooperate more closely across borders in parallel to negotiating data openness in modern trade deals. Here are five suggested actions from our public-private dialogues on how to get this balance right:

1. Governments must quickly negotiate two-way mechanisms for data with some countries, where data can be transferred abroad in compliance with all local laws. Recent developments have shown that every country – regardless of economic maturity or constitutional order – is able to maintain such transfer mechanisms to interact with the world.

2. Countries should consider setting up bodies to review their data transfer policies and implementation on a regular basis. A new proposal has been put forward to the G7 along these lines.

3. In the longer term, policymakers must engage in deeper cooperation on rules that protect our data through global and regional forums within a broader group of countries. They need to work towards common principles for privacy, cybercrime and enforcement standards. And there should be direct linkages between such cooperation and openness via trade agreements or transfer mechanisms.

4. Technical standardisation and industrial cooperation on new technologies (like IoT, AI, big data or automation) are happening very rapidly, albeit ad hoc, and with little participation from developing countries. Industrial standard-setting needs to be global to promote inclusiveness, learning and future compatibility across all markets.

5. The internet economy is user driven. Public-private interaction is necessary to help policymakers understand the impact of their rules and what is needed to speed up the digital transformation. Otherwise, the digital divide will quickly exacerbate into a manufacturing competitiveness gap across Asian economies.

Unleashing the benefits of new technologies

Global cooperation on data governance is unlikely to happen overnight – or be universal at the onset. Instead, governments can make headway by finding the right approach with neighbours or most key trading partners. In every relationship, there needs to be an openness that reflects the degree of trust. And that’s how we, step by step, can unleash the benefits and mitigate the risks of new technologies.