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Matthew P. Goodman: The most important thing in data governance

Updated: Jan 6, 2023

Matthew P. Goodman, Simon Chair of Political Economy at CSIS

Matthew P. Goodman is senior vice President of Economics and serves as the Simon Chair of Political Economy at CSIS. He directs the CSIS Economics program, which focuses on international economic policy and global economic governance. He is also a life member of the Council on Foreign Relations and chairman Emeritus of the Board of Directors of the Japanese-American Institute in Washington, D.C. Goodman holds a Master's degree in International Relations and a Bachelor of Science degree from the Johns Hopkins School of Advanced International Studies (SAIS) and a PhD in Economics from the London School of Economics (LSE). His main research areas are Asian economics, Europe, global economic governance, Southeast Asia, trade and international business.

Responses to Intellisia Questions on Data Governance

The most important thing in data governance

1.In your article Advancing Data Governance in the G7, you mentioned the release of Schrem2.0 in 2019. Will Schrem 2.0 facilitate the harmonization of different privacy standards in this area? Could this serve as a basis for the development of global data governance rules?

By invalidating the U.S.-EU Privacy Shield, the Schrems 2.0 decision by the European Court of Justice was disruptive to a vast range of businesses that rely on standard contractual clauses to move data between the United States and European Union. This disruption may be a catalyst for deeper and more meaningful transatlantic debate on data governance, but the U.S. and EU's regulatory approaches to data privacy are very different and will take time to reconcile.

The decision has usefully prompted work by the OECD to develop principles on government access to private data.

The development of unified global data governance rules is unlikely in the near term, given the vast range of stakeholders and differing priorities and philosophies toward the treatment of data. However, it is possible to envisage countries coming together around shared principles for governing data governance, establishing a forum for coordination, and eventually enabling interoperability across different sets of domestic or regional rules.

2.Progress has been made in this area: Access, control, and sharing of data; Cross-border data flows; the impact of data on business models, market dynamics, and market structure; Data measurement and classification. And it is important to establishing international consensus on data governance. Which one do you think should be a priority to help quickly build an international consensus on data governance?

There are many important dimensions of data governance, but among the most important are enabling free flow of data across borders and restricting use of data localization requirements. These are important not only to facilitate global commerce but also to allow health, safety, and other important data to flow as needed.

As described in our recent briefing note, “Governing Data in the Asia-Pacific,” there has been useful work on these issues in the Asia-Pacific region. APEC has worked for a number of years to develop a system of cross-border privacy rules (CBPR), and so far nine APEC member economies have begun to implement CBPR. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) incorporates important commitments on data governance, including agreement not to restrict cross-border data flows or require data localization. Similar disciplines have been incorporated in regional trade agreements such as the Singapore-Australia Digital Economy Agreement.

Data flows and data localization are also important elements of the Joint Statement Initiative on E-Commerce in Geneva under the auspices of the WTO. During the group’s most recent meeting, members revisited text proposals on cross-border data flows and data localization and highlighted the need for clear rules on data flows to promote innovation and post-pandemic economic recovery.

3.You mentioned that rules could be developed through various regional economic agreements to bridge the gap between data regulatory systems. Is there any weakness in this approach? In what ways?

Regional economic agreements come in many shapes and sizes: enforceable trade agreements, non-binding principles, informal economic partnerships, and so on. This allows for an iterative process and flexibility across differing governance mechanisms and priorities, where a “floor” or minimum compliance level can be agreed among many, and smaller, like-minded groups can raise the standards further among that group. However, this is a more piecemeal result that will have gaps and must evolve over time. Given the lack of feasibility in agreeing to one global set of rules or standards in the near-term, a network of interoperable regional economic agreements, combined with international dialogue and standard-setting work, is a more likely – and still productive – outcome.

4.A G7 Dialogue on Data Governance will be held in 2021. What are the main differences on data governance within the G7? Which area of data governance most likely to reach consensus first?

The G7 has been active in advancing common approaches to data governance. At their meeting in late April, G7 Digital Ministers agreed on an action plan encompassing joint work in six key policy areas. One of these was to develop a roadmap for cooperation on “Data Free Flow with Trust” (DFFT), the concept endorsed by G20 leaders (including China’s President, Xi Jinping) in 2019. Under the roadmap, G7 members will build evidence on the impacts of data localization, build on OECD work on data regulation, support OECD work on government access to data, and outline data sharing best practices across priority sectors. Operationalization of DFFT by the G7 would provide a strong foundation for global action in this critical area.

Interviewer: Tang Yingyi

Interview date: June 16, 2021



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