Setting principles for the digital economy: Establishing a G7 Data and Technology Forum

March 22, 2021

The digital revolution is rapidly transforming the global economy, creating benefits and opportunities as well as risks and challenges. Mastercard and more than 20 other global companies* have announced their support for a new digital governance initiative, proposing the creation of a Data and Technology Forum by the G7 countries to strengthen international governance coordination and consensus. We believe that this is essential to ensure that the digital economy works for everyone, everywhere.  

As representatives of companies headquartered in different countries and engaged in different sectors of the economy, we urge the G7 to establish a new forum to discuss and agree on core principles that will guide their respective efforts to improve governance of the digital economy.

The digital revolution is rapidly transforming the global economy, creating benefits and opportunities as well as risks and challenges.

New technologies and systems – such as autonomous vehicles, artificial intelligence, quantum computing, robotics, 5G, and the “Internet of Things” – promise to boost productivity and growth across virtually every economic sector, improving living standards and quality of life.

As the global economy becomes increasingly digitized and automated, however, these technologies give rise to operational risks, such as hacking and data breaches, and regulatory risks from underdeveloped, poorly designed, or inconsistent legal frameworks. They also implicate important societal interests related to privacy, competition, and algorithmic bias.

The COVID-19 pandemic accentuates these opportunities and risks. Digital technology is facilitating testing, contact tracing, diagnostics, and vaccine development. It is enabling remote work and learning, electronic transactions for purchases of goods and services, and socially distanced interactions. At the same time, this greater reliance on digital technology has highlighted the importance of addressing related public policy concerns in a coherent manner.

In response to these concerns, some governments are moving quickly to regulate, often without sufficient expertise, adequate public input, or coordination with other governments. The resulting potential for fragmented regulation will not only stifle innovation but also poses threats to digitally-driven economies absent effective channels for international cooperation to comprehensively assess and manage risks.

Policy recommendation

Establishing a secure, trusted, resilient, and appropriately regulated digital ecosystem is critical to the future of the global economy. Just as the world’s leading economies established the Financial Stability Board (FSB) in response to the 2007-2008 global financial crisis to help identify and address vulnerabilities in the global financial system and promote coherent policymaking across jurisdictions, a similar forum is urgently needed for the digital economy. We believe G7 governments should take the lead and act now to create a Data and Technology Forum (the “Forum”) to strengthen international coordination and cooperation on assessing risks and developing solutions to technology-related public policy interests.

The Forum would not be a supranational regulator. Instead, like the FSB, it would provide a channel for member governments to discuss and coordinate policy across the range of digital and technology-related governance issues, and where possible, mitigate overlapping, incongruent, or conflicting measures. The Forum would seek to enhance consultation and cooperation among national policymakers and regulators. It would promote consensus on policy principles, regulatory approaches, standards, cooperative arrangements, and taxonomies. Its aim would be to facilitate regulatory and policy coherence, data connectivity, and commercial interoperability. National governments would of course remain solely responsible for making and implementing policy in their respective jurisdictions.

Proposed forum structure and activities

The forum would oversee and task workstreams in key areas, such as cybersecurity, artificial intelligence, cross-border data flows and related privacy issues. Just as the FSB drew on the work of existing international standard-setting bodies in financial regulation, the Forum could draw on the work of organizations such as the OECD, APEC, and the WTO, as well as technical standard-setting bodies. Where work has been well-advanced in other international bodies, such as the FSB’s workstreams on digital issues relating to financial services, the forum would have consultative mechanisms to avoid overlap or divergence.

The forum also would provide an opportunity for governments to consider policy matters affecting the digital economy from a horizontal, cross-industry perspective. Through the Forum, governments would pursue regulatory coordination, cooperation, and coherence through iterative processes. Like the FSB, the Forum would task, inventory, and superintend workstreams managed by national representatives on policy-related aspects of the digital ecosystem. This would allow national policymakers to exchange views and develop a shared understanding on key issues of concern arising from the application of specific technologies. The Forum – through policy and regulatory dialogues and working groups – could then seek consensus on common objectives and principles to address risks and promote opportunities, with an eye to interoperability and harmonization with existing frameworks and regulations.

Levels of regulatory alignment may well differ depending on the subject addressed. Even where some policy differences appear currently insurmountable, the Forum would usefully serve as a venue for regular information exchange and dialogue, providing a framework to address such divergences where possible. On such issues as cross-border data flows, where countries may have divergent views, the goal would be to explore and promote coherence through approaches, such as the APEC Cross Border Privacy Regime, that facilitate interoperable systems. Where governments are of the view that policy or regulatory action is premature or unnecessary, they could share information and exchange views on impacts in their markets.

Establishing a formal channel for multilateral cooperation could also increase public trust in the digital economy, which is essential to ensure its continued growth. On issues where governments reach consensus on regulatory principles or standards, national implementation of those principles or standards could facilitate cross-border market access or interoperability regimes through regulatory deference decisions or other mutually-agreed procedures. To ensure trust in the system, the Forum should explore the utility of independent verification or certification mechanisms, as well as peer review processes, that could validate implementation – by both private parties and governments – of standards developed in international bodies under Forum-coordinated workstreams.

To support its work, the Forum should establish mechanisms for regular and broad-based private sector participation. This would ensure that the most current developments and practical impacts are reflected in the Forum discussions. Over time, the Forum should consider, for example, establishing standing private sector committees on specific issues.

Next steps

We stand ready to work with governments to promote trade, innovation, inclusive growth and development through a strong and secure digital economy. We believe G7 Leaders should at their next summit agree to establish the Forum to begin work on issues where there is presently significant policy and regulatory activity, including the following:

  • Cooperation on cybersecurity. The Forum should superintend existing workstreams on cybersecurity to ensure coordination and enable coherent, effective policy and regulatory approaches. Forum members could also task officials focused on cybersecurity to consider new issues, such as trusted networks and other issues critical to promoting secure, resilient, compatible, and stable policy frameworks.
  • Regulation of cross-border data flows. The Forum should discuss and promote agreement on emerging rules that facilitate cross-border data flows in relevant fora, such as in the WTO, which are essential to the functioning of the digital economy. At the same time, the Forum should explore ways to manage divergent views and approaches that stem from different jurisdictions’ unique policy preferences, risk appetites, and economic interests.
  • Alignment of AI frameworks. A number of countries have worked together to develop and endorse voluntary AI principles even as they are considering regulation of AI, including by sector or application. The Forum should oversee workstreams on AI to promote common approaches based on shared principles.

*Aflac, Amgen, Applied Materials, Citi, Dell Technologies, Dow, ENGIE, EY, GM, GSK, IBM, Mercedes, NEC, Nexi, Nike, NTT, Qualcomm, Schneider Electric, Siemens, SoftBank Group, Toyota, UL, Visa, and Zoom