Ex Machina
We may need a Bretton Woods pact on data regulation
Suggestions of an international agreement on data should be taken up for the harmonization of data rules
In September 1929, when the US stock market crashed, countries around the world scrambled to put in place measures to protect their economies from the economic repercussions that began to reverberate globally. However, rather than stemming the rot, these protectionist measures—tariff barriers, currency devaluation and discriminatory trade blocs—created an unstable international environment that ended up making things much worse. Many historians believe that had it not been for the advent of World War II, the repercussions of the Great Depression would have stayed with us for much longer.
The experience of living through the 1930s was so unnerving to world leaders that in July 1944, while World War II was at its height, 44 Allied nations came together in Bretton Woods, New Hampshire, to participate in what was officially called the United Nations Monetary and Financial Conference. By the time the conference concluded, participating countries had decided that instead of each continuing to use the gold standard, they would make the US dollar the global currency for trade, which would in turn be benchmarked against gold. In order for this new global arrangement to work, the summit’s participants committed themselves to a fixed exchange rate between their domestic currencies and the dollar, and to refrain from trade wars involving a cheapening of their currencies to increase exports. This agreement, which came to be known as the Bretton Woods Agreement, also resulted in the establishment of the International Monetary Fund, a multilateral agency from which member countries could borrow in order to adjust their currency’s value when they didn’t have the funds to do so themselves.
While opinion is divided over the success of the Bretton Woods deal (particularly given that US President Richard Nixon permanently decoupled the US dollar from its gold anchor in 1971), there is little doubt that the agreement was responsible for the way in which the world approaches the international flow of funds to this day. It created a playbook for multilateral policy-making that requires countries to co-operate with one another in order to achieve global objectives, even if that calls for them to make short-term domestic sacrifices.
In my article last week, I pointed out that there were, at present, three different approaches to data governance being practised by countries around the world. With each passing year, these differences were hardening to a point where it was becoming hard to find common ground. And yet, given our increasing dependence on data for almost everything we do, I argued that the fragmentation that this divergence causes will cause complications we can ill afford. I made the case for countries to find common ground by agreeing on a base normative framework for governance, upon which we can then layer regional variations as required.
In a speech delivered at the Oxford Internet Union in September last year, Elizabeth Denham, former information commissioner of the UK, made an impassioned plea for a new Bretton Woods pact for data. “Our current approach to data protection,” she argued, “considered nation by nation, can only take us so far. If we are to unlock the full potential of data driven innovation, supported by public trust in how data is used, we need an international approach to data protection standards. We need an international solution.”
How would this work in practice? In the first place, Denham suggests that we should give up trying (as the EU been doing since its General Data Protection Regulation came into effect) to get all countries in the world to enact a uniform global law. Instead, we should look to create a global alliance, membership to which would be open to nations with a demonstrated commitment to data protection backed by independent regulation, which would allow them to transfer low-risk data to fellow member countries. To be clear, this sets the bar for membership far lower than a GDPR-adequacy requirement would, but still provides individuals the assurance that their data will be subject to the same protections around the world.
If we take this idea to its logical conclusion, we would need to create a brand-new multilateral institution for data that can be tasked with the responsibility of coordinating a regulatory dialogue between nations in order to achieve a sufficient level of regulatory harmonization. In keeping with the role that such an organization needs to play, it has been suggested that it should be established along the lines of the Financial Stability Board—with a mandate to monitor and make recommendations on global data governance and cross-border data flows.
Given the velocity of modern data flows and the variety of different digital pathways that they can traverse, nothing short of a technological solution will ensure compliance with the common regulatory principles that are eventually agreed upon. This will call for the development of a normative framework that can be directly embedded into national digital infrastructure—so that we are assured that data flowing through these systems meet basic data governance requirements. One of the primary objectives of such a Data Stability Board could be to develop a common set of technical standards and protocols for all aspects of data governance that member states could hard-code into their national systems, thus ensuring that they are interoperable, not just domestically, but among one another.
Rahul Matthan is a partner at Trilegal and also has a podcast by the name Ex Machina. His Twitter handle is @matthan
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First Published:9 Mar 2022, 06:52 AM IST
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