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【The G20 – More than just a Summit Meeting!】The Fight against Data Hegemony

-How Japan can lead rulemaking in the era of digital technology-

Data is becoming known as “the oil of the 21st century.” Underestimating either its value or impact on society would be a significant error. With this in mind, rulemaking for data is one of the major focal issues for the G20 (group of twenty major countries and regions) meetings in June 2019.

The United States and China have been engaged in a trade dispute in the form of punitive tariffs imposed on each other, mainly focusing on the U.S. trade imbalance with China. In the background, the two countries are also engaged in a fight for hegemony both in terms of the economy and security. The world is now faced with the development of a new and expansive area over which the digital economy is set to reign supreme, overwhelming the unprepared in a tidal wave of innovation. Therefore the world is paying close attention to the directions that the discussions at the G20 meetings that will take place in June 2019 and focus on future approaches to rulemaking for data distribution in a new era when data is considered a dynamo in the creation of value.

Data governance is essentially a sovereign right of each nation, but this fact is also the source of contention between the different nations of the world which often have conflicting priorities and ideas on what those rights include, imply and entail. The United States, which is home to many IT giants, and China, which is strengthening digital protectionism, have been reacting against excessive regulations on data, while European countries have been imposing very strict regulations over the handling of personal information and data transfer. The fact is that massive differences exist in the various stances that G20 member countries take on data distribution that cover topics from restriction of cross-border transfer of data that has domestically accumulated to free flow of data as a general rule.

Japan-oriented concept may motivate member countries to discuss the issue.

In this situation, a concept that Japan is proposing to other G20 member countries has the potential to produce a breakthrough in their discussions on the issue.

The concept, called “Data Free Flow with Trust (DFFT),” regards the free flow of data within a trustworthy framework as a source of innovations. This is a new, unique approach to data developed by Japan, which has advantages in manufacturing and real data that industries can obtain from their manufacturing floors. If G20 member countries develop a healthy, competitive environment based on this concept, they will be able to prevent data monopolies and, as a result, companies are likely to enjoy more efficient production and other benefits. This concept will also contribute to the idea of Society 5.0, Japan’s policy aiming to achieve economic growth and solve societal challenges through improvements in productivity.

The annual meeting of the World Economic Forum (Davos Meeting) was held in January 2019. At the meeting, Prime Minister Abe stated that Japan intends to use the G20 summit meeting in Osaka in June 2019 as the first opportunity to start global-level deliberations on data governance, which is a truly historic decision, showing that Japan will exhibit leadership in pursuing the security of personal information and improved sophistication of data management through appropriate rulemaking. Following this, he also proposed the establishment of a framework under which the member countries of the World Trade Organization (WTO) can advance negotiations, aiming to build consensus before starting such negotiations. On June 8 and 9, 2019, the G20 Ministerial Meeting on Trade and Digital Economy will be held prior to the G20 summit meeting, and taking this opportunity, the G20 member countries will embark on discussions on these issues.

Source: The Prime Minister’s Office website

Member countries should connect DFFT to economic growth.

Mr. Hiroaki Nakanishi, Chairman of the Keidanren, said that “it is important to connect DFFT to the economic growth of Japan and the rest of the world,” showing support for the DFFT policy as a representative of industry. Chairman Nakanishi, one of the members who attended a media briefing of the Davos Meeting together with Mr. Hiroshige Seko, Minister of Economy, Trade and Industry, and Dr. Makoto Gonokami, President, Tokyo University, further said that there are high hopes and significant international pressure in anticipation of Japan’s leadership [in the field of data distribution], expressing the positive response that he felt at the meeting.

Industry players are interested in Japan’s approaches to developing new opportunities for increasing numbers of countries and regions to hold discussions on establishing high-level rules.

High-level rules are necessary.

On May 8, 2019, a private association representing the electronic information industries in Japan, the United States and Europe released joint recommendations as an initiative in advance of the G20 Ministerial Meeting on Trade and Digital Economy. In the recommendations, the association highlighted anew the significance of promoting cross-border data flow, and, based on this stance, it requests the G20 member countries to encourage a wide variety of companies to incorporate themselves into global value chains and to promote economic growth through: prohibiting countries from adding the construction of industrial-scale IT-related facilities or infrastructure in their countries and disclosure of confidential source code and other data as prerequisites to obtaining business licenses and other permissions; and vitalization of the growth potential of the digital economy.

Mr. Jun Nakaya, who is a member of both the Committee on Trade and the Japan Electronics and Information Technology Industries Association (JEITA), and a participant in formulation process for the recommendations, said the following: “In the era of digital technology, development of competitive environments is an urgent challenge for companies. I hope that the G20 meetings this year will motivate member countries to hold continuous, constructive discussions.”

Last updated:2019-06-10