1、Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data FlowsB R I E F I N G P A P E RJ A N U A R Y 2 0 2 3ContentsIntroduction1 Data Free Flow with Trust(DFFT)2 Policy and business challenges2.1 The policy angle2.2 The business perspective3 Recent policy processes and available tools3.1

2、The policy layer3.2 The tool layer 4 Call to action4.1 Institutional mechanism4.2 Business tools for interoperability and beyond5 ConclusionContributors Endnotes34556778999101112Cover:Gettyimages/AF-studio Inside:Gettyimages/AliseFoxDisclaimer This document is published by the World Economic Forum a

3、s a contribution to a project,insight area or interaction.The findings,interpretations and conclusions expressed herein are a result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum,no

4、r the entirety of its Members,Partners or other stakeholders.2023 World Economic Forum.All rights reserved.No part of this publication may be reproduced or transmitted in any form or by any means,including photocopying and recording,or by any information storage and retrieval system.Data Free Flow w

5、ith Trust:Overcoming Barriers to Cross-Border Data Flows2IntroductionThe movement of data across country borders is essential to the global economy carrying information and enabling innovation,value and wealth.When data flows across borders,it is possible to deliver more to more people and produce m

6、ore benefits for people and planet.Many countries are putting forward regulations to constrain data flow in order to deal with the challenges of privacy,national security and intellectual property,or for economic reasons such as protecting domestic jobs.Such restrictions,even if well-intentioned,can

7、 lead to regulatory fragmentation and challenges for business,especially when combined with data localization requirements.If undermined,this could ultimately weaken global trade flows and limit the societal benefits for all.Unfortunately,the current fragmented approach has stalled(or even potential

8、ly set back)policy efforts to implement frameworks for cross-border data flows.This paper highlights the importance of such data flows and urges global leaders in the public and private sectors to take collective action to work towards a shared understanding of them with a view to implementing“Data

9、Free Flow with Trust”(DFFT)an umbrella concept for facilitating trust-based data exchanges through policy mechanisms and concrete tools for businesses.However,it is important to note that the paper focuses mainly on business-to-business(B2B)data transfers across borders.The aim is not to provide a d

10、efinitive or exhaustive list of policy recommendations and tools that can address the immediate and long-term challenges.Rather,it is to review the current challenges facing DFFT,take stock of progress made so far,offer direction for policy mechanisms and concrete tools for businesses and,more impor

11、tantly,promote global discussions about how to realize DFFT from the perspectives of policy and business.Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data FlowsJanuary 2023Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data Flows3Data Free Flow with Trust(DFFT)1 1Glob

12、al data traffic reached 230 exabytes,or 230 billion gigabytes,per month in 2020 and is forecast to more than triple,to reach up to 780 exabytes per month,by 2026.1Digital trade has been the fastest-growing area of global trade over the past decade,growing by 5.4%each year on average and contributing

13、 more to global growth than the trade in goods.2 One study shows that by 2023 cross-border B2B commerce is expected to account for two-thirds of digital trade($1.78 trillion).3For global businesses,recent research led by Japans Ministry of Economy,Trade and Industry(METI)identified a range of indust

14、ries and operations that involve cross-border data transfers.They include:a)providers and developers of online apps;b)transfer of data to an overseas outsourcer;c)real-time data collection and analysis from other countries via the internet of things(IoT);d)provision of platform services and internet

15、 as a service;and e)cybersecurity services.For instance,by using an IoT platform to collect and analyse real-time data on utilities operating conditions,operating environments,repairs,etc.,for devices sold globally,the companies will be able to predict the occurrence of failures and produce optimize

16、d maintenance plans based on such data.4 In short,activities in these areas produce essential products and services that enhance peoples quality of life.Cross-border data policies must respond to these economic and social impacts while being mindful of the importance of securing trust.At the G20 in

17、2019,Japanese prime minister Shinzo Abe declared the launch of the“Osaka Track”on“Data Free Flow with Trust”(DFFT),a vision for data flows in which openness and trust in data flows coexist and complement each other.5 In fact,members of the G7 countries have recognized that“DFFT underpins innovation,

18、prosperity and democratic values”.6 This vision has also been carried forward to the latest G20 in Bali,where the G20 Bali Leaders Declaration clearly mentioned,“We remain committed to further enable data free flow with trust and promote cross-border data flows.”7 In parallel with the policy dialogu

19、e at the intergovernmental level,there have also been active discussions among multistakeholders to help and complement intergovernmental dialogues regarding cross-border data policies through public and private partnership.For instance,the World Economic Forum published DFFT-related white papers,“E

20、xploring International Data Flow Governance”,“A Roadmap for Cross-Border Data Flows”,*“Data Free Flow with Trust(DFFT):Paths towards Free and Trusted Data Flows”and“Rebuilding Trust and Governance:Towards Data Free Flow with Trust(DFFT)”,with the aim of helping policy-makers move forward with DFFT w

21、hile involving multiple stakeholders.8,9,10,11*Recommendations from these multistakeholder approaches include:a)allow data to flow by default;b)establish a level of data protection;c)prioritize cybersecurity;d)hardwire accountability between nations;e)prioritize connectivity,technical interoperabili

22、ty,data portability and data provenance;and f)future-proof the policy environment.12Multistakeholder approach to cross-border data flowsBOX 1Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data Flows4Policy and business challenges2Despite ongoing discussions to advance DFFT,the politic

23、al reality and landscape remains a patchwork of national regulations based on objectives on economic development,protection of privacy,and other human rights and national security concerns.13 The resulting geopolitical fragmentation and approaches to policy present challenges to fully realizing DFFT

24、.Data policies vary widely with regard to the cross-border transfer of personal data,but can be categorized into three basic models:(1)open safeguards;(2)pre-authorized safeguards;and(3)limited transfers.14,15 These models may eventually converge,but the current diversified landscape of policies and

25、 regulations creates costs,operational complexity and uncertainties for businesses and other entities seeking to share data across borders.The policy angle2.1Cross-border data transfer modelsTABLE 1Open safeguardsApproaches that tend to leave discretion as to how to safeguard transfers to the privat

26、e sector,often on the basis of public guidelines.They include private-sector adequacy,contracts and ex-post accountability.Pre-authorized safeguardsMechanisms under which public-sector approval is required prior to transfer based on a series of transparent criteria.These include public-sector adequa

27、cy and other ex-ante legal instruments such as contractual clauses or binding corporate rules.Limited transfersThese impose strict and less transparent requirements on cross-border flows of data for companies and other organizations,and may include case-by-case and ad-hoc authorization by the govern

28、ment following a security assessment.They often include a condition for storing and sometimes processing personal data within the country of origin.Limited transfers can often apply to less well-defined categorizations of data such as“important”or“critical”data.A recent OECD report shows that a grow

29、ing number of countries are adopting data localization rules explicit requirements that data be stored and/or processed within their territory.Data localization measures are also becoming more restrictive:in 2021,two-thirds of such measures involved both storage requirements and flow prohibitions.16

30、 The economic effect of those data localization rules is alarming.For instance,according to an Information Technology&Innovation Foundation(ITIF)report,several studies show that data localization and other barriers to data flows impose significant economic costs in several countries:“reducing U.S.GD

31、P by 0.1-0.36 percent;causing prices for some cloud services in Brazil and the European Union to increase 10.5 to 54 percent;and reducing GDP by 0.7 to 1.7 percent in Brazil,China,the European Union,India,Indonesia,Korea,and Vietnam”.17 Another piece of research from Frontier Economics shows that th

32、e difference between a path that is moderately liberalizing and one that is moderately restrictive is worth a little over 1.5%in EU GDP per year,which is equivalent to approximately one year of GDP growth for the EU according to the IMFs long-run forecasts.18Data Free Flow with Trust:Overcoming Barr

33、iers to Cross-Border Data Flows5In the context of global regulatory fragmentation and rising data localization,research efforts have shown that companies are facing a range of barriers.19,20,21 One of the most recent efforts is the METIs report,based on interviews with the private sector.22The repor

34、t identified the following barriers:a)overlapping regulations within countries,which may be caused by digital silos among domestic regulators;b)lack of legal transparency resulting from multilayered regulatory requirements;c)lack of legal stability due to frequent changes in requirements and related

35、 research costs for companies;d)insufficient understanding by regulators of the business realities of cross-border data flows;e)significant costs associated with obtaining certification for data handling;and f)lack of clear definitions of“cross-border flows”,“personal data”and other concepts.The bus

36、iness perspective2.2Cross-border data transfers and business pain pointsTABLE 2Types of cross-border data transfersExamples of business pain points1Product development by online app companies Barriers to entry are too high for start-ups and SMEs as laws and regulations vary from country to country2T

37、ransfer to a foreign third-country company for outsourcing Unclear if data integration and data access among multiple regions across borders constitute a“cross-border transfer”Companies are required to ensure the same protection and management systems in the destination country as in the source coun

38、try when transferring data across borders to a third country3Real-time data analysis from abroad via IoT1 devices no personal data is included Growing regulations on non-personal data as new data categories such as“security information”emerge.Often vague in scope and prone to sudden change Case-by-c

39、ase review processes for data localization rules could undermine the advantages of real-time monitoring,a basic capability of IoT4Real-time data analysis from abroad via IoT devices personal data is included “Personal data”definitions extend not only to laws but also to guidelines and administrative

40、 notices,making them difficult to implement and interpret5Provide platform services and IaaS2 Requirements for cross-border transfers are highly complex,necessitating frequent customer agreements6Providing cybersecurity services Region-specific certifications may be required for security-related inf

41、ormation,in addition to global rules and standards,imposing a significant cost burdenNotes:1.IoT(internet of things);2.IaaS(internet as a service)Source:Fumiko Kudo,Ryosuke Sakaki and Jonathan Soble,“Every Country Has Its Own Digital Laws.How Can We Get Data Flowing Freely between Them?”,World Econo

42、mic Forum,2022:https:/www.weforum.org/agenda/2022/05/cross-border-data-regulation-dfft/(Taken from“Issues from the Companys Perspective”in the METI report,p.10.)One company stated that the definition of and provisions governing the cross-border transfer of“personal data”,which extend not only to the

43、 main text of the regulations but also to the guidelines and administrative agreements,are difficult to interpret.23 Another company commented that when data is transferred across borders to a third country,businesses are asked to ensure that their counterparts provide the same level of protection i

44、n their data management system and operation as the data-origin country even though the counterparts are in a different regulatory jurisdiction;abiding by these regulations puts a disproportionate burden and responsibility on businesses.Examples of barriers to cross-border data flows BOX 2It is hope

45、d that such barriers will ultimately be eased through bilateral agreements,deliberations at the G7 and G20,and dialogue at other international organizations.Since it will likely take time to address these barriers,businesses also need tools to navigate todays differing regulatory approaches and inst

46、ruments,and to mitigate the risks associated with cross-border data flows.Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data Flows6Unilateral policies and regulationsDomestic approaches that enable the transfer of certain types of data to countries outside the domestic territory unde

47、r certain conditions:25 Open safeguards:these rely primarily on the transferring entity to ensure the continued protection of the public policy objectives involved without being generally prescriptive as to how these requirements must be met Pre-authorized safeguards:these are generally characterize

48、d by a greater involvement of the public sector ex-ante to ensure trusted data transfers.They include:the required incorporation into contracts of specific clauses preapproved by the public sector;the public sectors preapproval of organizations binding corporate rules;or domestic certification schem

49、esIntergovernmental-level processes Deliberations by the G7 and the G20 Multilateral approaches Standard-setting efforts and research and analysis initiatives promoting dialogue among multilateral organizations(e.g.OECD,United Nations,World Trade Organization,World Bank)Regional arrangements Standar

50、d-setting or binding agreements among regional partners (e.g.Asia-Pacific Economic Cooperation APEC,Association of Southeast Asian Nations ASEAN,the European Union EU)Preferential trade agreements Treaties that remove barriers to trade and set rules for international commerce between two countries o

51、r among a small group of countries26(e.g.Comprehensive and Progressive Agreement for Trans-Pacific Partnership CPTPP,EU-UK Trade and Cooperation Agreement,UK-Singapore Digital Economy Agreement)Recent policy processes and available tools3As a recent Organisation for Economic Co-operation and Develop

52、ment(OECD)report described,many existing agreements,processes and initiatives seek to promote trusted cross-border data flows.24 Countries have developed a range of policies and regulations to unilaterally govern the flow of data across borders in an effort to establish trust.In addition,a range of

53、processes in intergovernmental fora have helped advance cooperation.These include:a)deliberations by the G7 and the G20;b)standard-setting efforts and research and analysis initiatives promoting dialogue in multilateral organizations;c)standard-setting or binding agreements among regional partners;a

54、nd d)a variety of preferential trade agreements.The policy layer3.1TABLE 3Policy process for cross-border data flowsAt the G7 summit in Germany in 2022,digital ministers considered DFFT as one of six ministerial-level points of discussion and adopted a“G7 Action Plan Promoting Data Free Flow with Tr

55、ust”.This includes:a)strengthening the evidence base for DFFT;b)building on commonalities in order to foster future interoperability;c)continuing regulatory cooperation;d)promoting DFFT in the context of digital trade;and e)sharing knowledge about the prospects for international data spaces.27In the

56、 same year,at the G20 summit in Indonesia,the chairs summary of the G20 Digital Economy Ministers Meeting described the importance of further work to identify“commonalities,complementarities,and elements of convergence between existing regulatory approaches and instruments enabling data to flow with

57、 trust,in order to foster future interoperability”.28Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data Flows7The tool layerAlong with these policy discussions,technological,legal and other tools have been developed to mitigate the business risks associated with data-sharing and to p

58、romote smoother cross-border data flows.One tool to mitigate legal risk and reduce compliance costs is the use of model or standard contractual clauses for cross-border data transfers.Authorities have developed clauses that are recommended or even required for contracts between entities seeking to s

59、hare data across borders.When incorporated into contracts,these clauses are automatically considered sufficient for the lawful transfer of data.Examples are“Standard Contractual Clauses”for data transfers between EU and non-EU countries29 and“ASEAN Model Contractual Clauses for Cross-Border Data Tra

60、nsfers”for data transfers between ASEAN nations.30An additional tool to mitigate legal risk and reduce compliance costs is the deployment of data marketplaces operated by data marketplace service providers.These bring capabilities to conduct trusted data transactions more efficiently,providing trace

61、ability,security and compliance with regulations.Data marketplace operators,acting as neutral trusted third parties and data exchange experts,can also assist parties engaged in cross-border data exchanges,in regards to evolving regulations,reducing the burden of risk assessments.Another set of tools

62、 consists of privacy-enhancing technologies/techniques(PETs).PETs are technological measures that have the potential to fundamentally redefine the dynamics of data-sharing by eliminating or greatly reducing the risks associated with collaboration.31 They include:a)differential privacy;b)federated an

63、alysis;c)homomorphic encryption;d)zero-knowledge proofs;and e)secure multiparty computation.Though each technique has its limitations and needs to be researched further,PETs have the potential to facilitate cross-border data flows while ensuring regulatory compliance.3.2Differential privacyWhere noi

64、se is added to a dataset so that it is impossible to reverse-engineer the individual inputs.Federated analysisWhere parties share the insights from the analysis of their data without sharing the data itself.Homomorphic encryptionWhere data is encrypted before sharing so that it can be analysed,but n

65、ot decoded into the original information.Zero-knowledge proofsWhere users can prove their knowledge of a value without revealing the value itself.Secure multiparty computationWhere data analysis is spread across multiple parties so that no individual party can see the complete set of inputs.Key tech

66、niques for managing data privacyFIGURE 1Source:World Economic Forum,“The Next Generation of Data-Sharing in Financial Services:Using Privacy Enhancing Techniques to Unlock New Value”,2019Those tools will likely be more powerful for businesses as more countries will authorize and standardize them for

67、 cross-border data flows.This will require more policy dialogue that involves all relevant actors.Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data Flows8Call to action4What are the logical next steps to realize DFFT?As mentioned above,the chairs summary of the 2022 G20 Digital Econ

68、omy Ministers Meeting described the need to work towards identifying“commonalities,complementarities,and elements of convergence between existing regulatory approaches and instruments enabling data to flow with trust,in order to foster future interoperability”.32 Given the regulatory fragmentation a

69、round the globe,securing interoperability among existing approaches and instruments at the international level is the basic direction of actions that policy-makers and other stakeholders can take now.Based on this understanding,solutions should include both an institutional mechanism to secure inter

70、operability at the international level and practical tools for global businesses to mitigate the risk and cost of moving data across borders.Given the regulatory fragmentation,the next step in the policy layer should be for the G7 countries,in collaboration with international organizations,to establ

71、ish an institutional mechanism with the aim of securing interoperability by coordinating measures to enable smoother and more coherent data flows between countries,including those with differing data-protection approaches,while protecting trust.33,34At the same time,discussions across other fora sho

72、uld also be encouraged to continue whether at the OECD,at the G20 under the Digital Economy Working Group or the Trade and Investment Working Group,or in the World Trade Organization(WTO)in the context of the Joint Statement Initiative on E-commerce.It will be important that these cut across policy

73、silos,including in the digital and trade communities.In the long term,it will be possible to expand the functions of the institutional mechanism,once established,which will then cover not only the facilitation of data transfers across borders but also the development of global governance framework t

74、o unlock the value of data for the common good while protecting trust.In order to develop a cross-border governance framework,there needs to be further discussion among multistakeholders at the international level in terms of accountability,transparency and representation.Institutional mechanism4.1A

75、s mentioned,standard or model contractual clauses for cross-border data transfers as a legal tool and PETs as a technological tool are being developed for global businesses to mitigate the risk and cost of moving data across borders,given the existing differences in regulations.Other technological t

76、ools,such as data marketplaces and a standardized interface that allows organizations to share specific data safely,should be developed further to foster interoperability and facilitate cross-border data flows.Another potential approach is to develop a repository for cross-border data transfer regul

77、ations to improve the transparency of rules,on the assumption that the regulations are different in each region.This would be a highly accessible repository for cross-border data transfer regulations,through application programming interfaces(APIs)and a better-visibility user interface.If developed,

78、it would allow users to explore,track and analyse the different regulatory approaches,and it would make all of the regulations it contains available in machine-readable format through an API.In addition,the repository would not only facilitate compliance for the private sector but also encourage the

79、 public sector to initiate regulatory dialogue with other countries by using it as a foundation for the dialogue.Moreover,granular data classification could also be an option.This approach can reduce costs through more targeted risk profiling and compliance requirements.Developing simple and standar

80、dized ways to classify business data with granularity would help companies avoid the tendency to see all data as“sensitive”,a situation that hinders cross-border data flows,allowing some data to be unlocked not only for commercial purposes but also for the public good.While establishing granular dat

81、a classification is not an easy task,it would be valuable to increase efforts to agree on a common taxonomy of data types through multistakeholder approaches at the international level.35Business tools for interoperability and beyond4.2Data Free Flow with Trust:Overcoming Barriers to Cross-Border Da

82、ta Flows9Conclusion5The global data policy landscape remains complex and will likely become only more so as a growing number of countries adopt data localization practices;what is worse,such data localization measures are becoming more restrictive.Taking collective actions to mitigate the costs and

83、risks caused by geopolitical fragmentation and to fully realize DFFT is thus needed now,otherwise DFFT is likely to remain a vision that will never materialize.This paper proposes,therefore,that public-private collaboration is required to fully realize DFFT by overcoming complex geopolitical fragmen

84、tation through building and enhancing trust.Public-private partnerships,gathering expertise and wisdom around the globe,should result in the creation of an effective and trusted mechanism to foster further interoperability while also developing concrete tools for businesses to mitigate the risk and

85、cost of moving data across borders.The authors hope that this paper will provide a valuable contribution to the discussion among policy-makers and other stakeholders as they design new cross-border data governance models.Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data Flows10Contr

86、ibutors This initiative is a multi-industry,multistakeholder endeavour.The briefing paper is a combined effort of all stakeholders involved based on numerous discussions.However,the opinions expressed herein may not necessarily correspond with those of each individual involved with the project.Lead

87、authors Tomoaki Nakanishi Executive Director,Japan External Trade Organization(JETRO),San Francisco,USA;Fellow,World Economic Forum Satoru Hori Senior Researcher,Hitachi America;Fellow,World Economic ForumCo-authorsNada Al-Saeed Executive Director of Strategy and Research,Bahrain Economic Developmen

88、t BoardJulien Chaisse Professor,School of Law,City University of Hong KongTenzin Chomphel Project Coordinator,Data Policy,World Economic ForumZiyang Fan Head of Digital Trade,World Economic ForumNoboru Koshizuka Professor,Interfaculty Initiative in Information Studies,The University of TokyoFumiko K

89、udo Project Strategy Lead,Centre for the Fourth Industrial Revolution JapanTakuya Kudo Partner,McKinsey&CompanyJavier Lpez Gonzlez Senior Economist,Trade and Agriculture Directorate,Organisation for Economic Co-operation and DevelopmentDidier Navez Senior Vice-President,Strategy and Alliances,DawexS

90、upheakmungkol Sarin Head of Data&AI Ecosystems,World Economic Forum Stefaan G.Verhulst Co-Founder,The GovLab,Tandon School of Engineering,New York UniversityGabriela Zanfir-Fortuna Vice-President for Global Privacy,Future of Privacy Forum Acknowledgements We would like to thank the following individ

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114、gital-economy-report-2021.Data Free Flow with Trust:Overcoming Barriers to Cross-Border Data Flows13World Economic Forum9193 route de la CapiteCH-1223 Cologny/GenevaSwitzerland Tel.:+41(0)22 869 1212Fax:+41(0)22 786 2744contactweforum.orgwww.weforum.orgThe World Economic Forum,committed to improving the state of the world,is the International Organization for Public-Private Cooperation.The Forum engages the foremost political,business and other leaders of society to shape global,regional and industry agendas.