Digitrade Digest #63
UK and South Korea sign global data transfer deal, China to adopt new cross-border data flow rules and more
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UK
UK, S Korea sign first global data transfer deal; promotes digital trade
BusinessStandard: The decision follows nearly a "year's worth of positive, productive, and enlightening discussions on how our respective nations value, protect, and promote the protection of personal data," Lopez added.
The countries agreed to contribute to a healthier and more sustainable global data ecosystem based on free and safe data flows.
"We agree to work with our other strategic partners on multilateral initiatives, such as the Global CBPR Forum and the OECD's work on Trusted Government Access to Data," the UK said.
Jong in Yoon, South Korean Commissioner of the Personal Information Protection Commission, said that strengthening cooperation between the UK and the Republic of Korea "based on the shared recognition of high standards of protection can contribute to forming a healthier and more sustainable global data landscape".
South Korea was one of several countries earmarked for an international data adequacy initiative aimed at "unlocking the benefits of free and secure cross-border data flows now the country has left the EUa.
Google, Mastercard and Microsoft were among the companies advising the UK government on this deal as part of an International Data Transfer Expert Council.
China
China to adopt new rules for cross-border data transfer in Sep to ensure security, guide firms
Globaltimes: The Cyberspace Administration of China (CAC) announced the Measures on Security Assessment of Cross-Border Data Transfer, whose draft version was already revealed to the public last November. The Measures stipulate the circumstances under which domestic companies should report to government departments for a data security assessment before they are allowed to transfer any data out of China.
Such circumstances include transfer of data generated by operators of critical information infrastructure, or transfer of personal information by a data processor that processes personal information of one million or more individuals.
Data processors that transfer personal information of 100,000 individuals, or sensitive personal information of 10,000 people since January 1, 2021, should also undergo the security review before transferring personal data abroad. The draft version did not mention the backdated requirement.
The Measures also require data processors to conduct a self-assessment for cross-border data transfers. They should consider factors such as legality, legitimacy and necessity of transfer, as well as the risks such data transfer might bring about.
The significance of the Measures' rollout is that it helps establish a work mechanism that clarifies the working procedures of data transfer safety assessment, which often bothered local cyber information officials in the past, Zuo Xiaodong, vice president of the China Information Security Research Institute, told the Global Times on Thursday.
The Measures are rolled out as China becomes more stringent on data security as the rapid development of the internet economy is also posing data security risks. A number of Chinese internet giants faced regulatory scrutiny for data security violations over the past year or so.
In July 2021, China's cyberspace regulator ordered app stores to remove ride-hailing giant Didi Chuxing over violations of regulations regarding collection and use of personal information, shortly after its debut on the New York Stock Exchange. Didi Chuxing delisted from the New York Stock Exchange in May.
Experts said that the rollout of the Measures would provide a clear legal framework for companies to follow, which will benefit a wide range of internet companies that wish to list overseas.
Digital Trade
3 digital innovations making global trade easier, faster and safer
WEF: Digital trade agreements are a package of measures between governments designed to make trade easier in the digital age.
In February this year, the United Kingdom signed a digital trade deal with Singapore that includes shared digital systems for e-invoicing, e-payments and other electronic documents, according to law firm Pinsent Masons.
The UK government said the deal would “end outdated rules” for exporters of goods and services, cut costs and “pave the way for [a] new era of modern trade”.
Singapore has also signed a digital trade agreement with Chile and New Zealand. The deal is designed to help trade flow between different regimes, with benefits including enhanced security, quicker cargo clearance and faster payment processing.
The World Economic Forum is working with partners to develop a unified set of global rules for digital trade. In a blog, Ziyang Fan and Mike Gallaher of the Forum’s digital trade team say: “Existing digital trade rules are outdated, complex and fragmented, if they exist at all.”
They argue that modernizing digital trade rules would advance digital trade, create more jobs, lower costs and reduce inefficiencies.
5 ways to advance digital trade in the post-COVID world
WEF: Here are five ways we can overcome these challenges for digital trade – without protectionism – and create more jobs, human connections and creativity.
1. Advance forward-looking trade agreements. An important first step would be moving forward with the Joint Statement on E-Commerce Initiative, launched at last year’s World Economic Forum Annual Meeting in Davos, which seeks to modernize rules governing digital trade. The Japanese government has shown tremendous leadership with its Digital Free Flow with Trust framework, which has the potential to address privacy concerns between the US and Europe as well as stem the tide of data flow restrictions.
With or without the WTO, progress on digital trade through bilateral and regional trade agreements will continue. The US-Mexico-Canada Agreement (USMCA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Digital Economy Partnership Agreement (DEPA) demonstrate how innovative governments are uniting to modernize trade commitments and address challenges facing the global digital economy. We need to find ways for these agreements to benefit not just a few countries and regions, but the whole world.
2. Promote greater interoperability. Existing digital trade rules are outdated, complex and fragmented, if they exist at all. While the ideal approach is to create a set of global rules, this is difficult given countries’ and regions’ economic, political and cultural differences. One set of “golden rules” that make these different rules interoperable is the key. Take cross-border digital payments, which face divergent regulatory and technical standards. To increase interoperability, policymakers could establish open banking guidelines, agree on “passporting” of payment licenses from one country to another or adopt Financial Action Task Force standards. In the case of digital trade in services, as another example, online license depositories could allow professionals to verify their qualifications in their local jurisdictions for potential cross-border licensing.
3. Digitize trade documentation. With restrictions on physical movement, the COVID-19 pandemic disrupted supply chains and exposed the fact that international trade is a paper-heavy system that relies too much on physical documentation. Digitizing the trade process could make international trade more resilient, reduce costs and lower the barrier of entry for SMEs. A good first step would be adopting policies recognizing and permitting electronic signatures, transactions and records, such as UNCITRAL’s Electronic Transfer Records. Leveraging the public-private cross-industry digital platform is another solution.
4. Close the digital divide. World leaders must address the digital divide between developing and developed countries, and among different social and racial groups within any countries, which the crisis may exacerbate. From aids to social programs, we must strengthen digital development for all. Greater investment in digital infrastructure, connectivity and technical education would benefit developing countries significantly more than misguided policies such as data localization and tariffs on digital goods and services.
5. Build trusted technologies for all. Digital technologies have the potential to reach more people, lower costs and reduce inefficiencies, especially for SMEs. However, the digital trade system will only work if people trust it, especially in the absence of human interactions. We must build trusted technologies for all participants, including stronger data privacy protection, better online dispute systems and algorithms that don’t discriminate against minorities and smaller players. This requires true public-private partnership and a human-centred approach.