A Plurilateral “Single Data Area” Is the Solution to Canada’s Data Trilemma

September 2019

Susan A. Aaronson and Patrick Leblond

IIEP working paper 2020-8

Summary: With its relatively small population, Canada faces a challenge in terms of the amount of high-quality data that it can generate to support a successful data-driven economy. As a result, Canada needs to allow data to flow freely across its borders. However, it also has to provide a high-trust data environment if it wants individuals, firms and government to participate actively in such an economy. As such, Canada (and other countries) faces what can be called the data trilemma, whereby it is not possible to have simultaneously data that flows freely across borders, a high-trust data environment and a national data protection regime; one of these three objectives has to give so that only two are effectively possible at the same time.

To resolve the data trilemma, Canada should work with its key economic partners — namely the European Union, Japan and the United States — to develop a single data area that would be managed by an international data standards board. The envisioned single data area would allow for all types of personal and non-personal data to flow freely across borders while ensuring that individuals, consumers, workers, firms and governments are protected from potential harm arising from activities such as the collection, processing, use, storage or purchase/sale of data. If Canada and its economic partners share similar norms and standards for regulating data, then allowing data to flow freely across borders with these countries no longer risks undermining trust, which is crucial to a successful data-driven economy.

America’s uneven approach to AI and its consequences

April 2020

Susan A. Aaronson

IIEP working paper 2020-7

Introduction Excerpt: The world’s oceans are in trouble. Global warming is causing sea levels to rise and reducing the supply of food in the oceans. The ecological balance of the ocean has been disturbed by invasive species and cholera. Many pesticides and nutrients used in agriculture end up in the coastal waters, resulting in oxygen depletion that kills marine plants and shellfish. Meanwhile the supply of fish is declining due to overfishing. Yet to flourish, humankind requires healthy oceans; the oceans generate half of the oxygen we breathe, and, at any given moment, they contain more than 97% of the world’s water. Oceans provide at least a sixth of the animal protein people eat. Living oceans absorb carbon dioxide from the atmosphere and reduce climate change impacts. Many civil society groups (NGOs) are trying to protect this shared resource. As example, OceanMind uses satellite data and artificial intelligence (AI) to analyze the movements of vessels and compare their activities to historical patterns. The NGO can thus identify damaging behavior such as overfishing

Data Governance, AI, and Trade: Asia as a Case Study

April 2020

IIEP working paper 2020-6

Introduction Excerpt: The arc of history seems to be bending again towards the dynamic nations of Asia (Gordon: 2008). The countries and territories of the Asia Pacific region are both a locus for trade and a source of technology fueled growth. In 2017, Asia recorded the highest growth in merchandise trade volume in 2017 for both exports and imports (WTO: 2018, 32). UNCTAD reports that exports of digitally deliverable services increased substantially across all regions during the period 2005– 2018, with a compound annual growth rate ranging between 6 and 12 per cent (table III.1). Growth was the highest in developing countries, especially in Asia (UNCTAD: 2019, 66).

Artificial intelligence (AI) is already a leading source of growth for many Asian countries. The AI market in the Asia Pacific was estimated at around US $450 million in 2017 and is expected to grow at a compounded annual growth rate of 46.9% by 2022 (Ghasemi: 2018). Several analysts believe Asia’s AI growth will soon overtake the US (Lee: 2018; Ghasemi: 2018)

Data Is Dangerous: Comparing the Risks That the United States, Canada and Germany See in Data Troves

April 2020

Susan A. Aaronson

IIEP working paper 2020-5

Summary: Citizens of the United States, Canada and Germany know that the online world is simultaneously a wondrous and dangerous place. They have seen details about their activities, education, financial status and beliefs stolen, misused and manipulated. This paper attempts to examine why stores of personal data (data troves) held by private firms became a national security problem in the United States and compares the US response to that of Canada and Germany. Citizens in all three countries rely on many of the same data-driven services and give personal information to many of the same companies. German and Canadian policy makers and scholars have also warned of potential national security spillovers of large data troves. However, the three nations have defined and addressed the problem differently. US policy makers see a problem in the ownership and use of personal data (what and how) instead of in America’s own failure to adequately govern personal data. The United States has not adopted a strong national law for protecting personal data, although national security officials have repeatedly warned of the importance of doing so. Instead, the United States has banned certain apps and adopted investment reviews of foreign firms that want to acquire firms with large troves of personal data. Meanwhile, Canada and Germany see a different national security risk. They find the problem is where and how data is stored and processed. Canadian and German officials are determined to ensure that Canadian and German laws apply to Canadian and German personal and/or government data when it is stored on the cloud (often on US cloud service providers). The case studies illuminate a governance gap: personal data troves held by governments and firms can present a multitude of security risks. However, policy makers have put forward nationalistic solutions that do not reflect the global nature of the risk.

What Are We Talking about When We Talk about Digital Protectionism?

December 2018

Susan Ariel Aaronson

IIEP Working Paper 2018-13

Abstract: For almost a decade, executives, scholars, and trade diplomats have argued that filtering, censorship, localization requirements, and domestic regulations are distorting the cross-border information flows that underpin the internet. Herein I use process tracing to examine the state and implications of digital protectionism. I make five points: First, I note that digital protectionism differs from protectionism of goods and other services. Information is intangible, highly tradable, and some information is a public good. Secondly, I argue that it will not be easy to set international rules to limit digital protectionism without shared norms and definitions. Thirdly, the US, EU, and Canada have labeled other countries policies’ protectionist, yet their arguments and actions sometimes appear hypocritical. Fourth, I discuss the challenge of Chinese failure to follow key internet governance norms. China allegedly has used a wide range of cyber strategies, including distributed denial of service (DDoS) attacks (bombarding a web site with service requests) to censor information flows and impede online market access beyond its borders. WTO members have yet to discuss this issue and the threat it poses to trade norms and rules. Finally, I note that digital protectionism may be self-defeating. I then draw conclusions and make policy recommendations.

Data is Different: Why the World Needs a New Approach to Governing Cross-border Data Flows

November 2018

Susan Ariel Aaronson

IIEP Working Paper 2018-10

Executive Summary: Companies, governments and individuals are using data to create new services such as apps, artificial intelligence (AI) and the Internet of Things (IoT). These data-driven services rely on large pools of data and a relatively unhindered flow of data across borders (few market access or governance barriers). The current approach to governing cross-border data flows through trade agreements has not led to binding, universal or interoperable rules governing the use of data. Trade diplomats first established principles to govern cross-border data flows, and then drafted e-commerce language in free trade agreements (FTAs), rather than through the World Trade Organization (WTO), the most international trade agreement. Data-driven services will require a different domestic and international regulatory environment than that developed to facilitate e-commerce. Most countries with significant datadriven firms are in the process of debating how to regulate these services and the data that underpins them. But many developing countries are not able to participate in that debate. Policy makers must devise a more effective approach to regulating trade in data for four reasons: the unique nature of data as an item exchanged across borders; the sheer volume of data exchanged; the fact that much of the data exchanged across borders is personal data; and the fact that although data could be a significant source of growth, many developing countries are unprepared to participate in this new data-driven economy and to build new data-driven services. This paper begins with an overview and then describes how trade in data is different from trade in goods or services. It then examines analogies used to describe data as an input, which can help us understand how data could be regulated. Next, the paper discusses how trade policy makers are regulating trade in data and how these efforts have created a patchwork. Finally, it suggests an alternative approach.

Data Minefield: How AI is Prodding Governments to Rethink Trade in Data

April 2018

Susan Ariel Aaronson

IIEP Working Paper 2018-11

Key Points: No nation alone can regulate artificial intelligence (AI) because it is built on crossborder data flows; countries are just beginning to figure out how best to use and to protect various types of data that are used in AI, whether proprietary, personal, public or metadata; countries could alter comparative advantage in data through various approaches to regulating data — for example, requiring companies to pay for personal data; and Canada should carefully monitor and integrate its domestic regulatory and trade strategies related to data utilized in AI.

Governance Spillovers of Labour Provisions in Free Trade Agreements

by Susan Ariel Aaronson (George Washington University)

IIEP Working Paper 2017-2

Most people know that governments such as the US, EU, and Canada use labour rights provisions in trade agreements to improve labour rights. They believe that policymakers in the developing world will be willing to improve labour rights governance with the incentive of the trade agreement. But in this paper, Aaronson argues that these provisions have broader and equally important spillover effects upon governance. These provisions:

  • empower workers and other citizens;
  • facilitate a feedback loop between the developing country government and its citizens on a broad range of issues affecting trade;
  • promote wage and income equality, which is conducive to development, social stability and democracy;
  • help policy-makers to better integrate labour rights with other public policies (such as fiscal policy, anti-corruption policies, or criminal laws); and
  • can help citizens and policy-makers gradually improve governance, increase productivity and advance social cohesion in the community.

Aaronson used a comparative case study approach, examining both the language and studies of the effects of the provisions. For example, she finds that since 2005, U.S. agreements have included provisions in the labour rights chapter related to procedural guarantees and public awareness. The provisions require parties to encourage public participation in the development of labour rights policies. They also require that all persons have “appropriate access to tribunals”, that the “proceedings are fair, equitable, and transparent … open to the public”, give all parties the right to seek review, and educate their public about the law. Taken in sum, these provisions could empower workers (on the demand side of labour rights) through rules on public awareness, public participation, and due process rights. The EU and Canada have begun to adopt similar policies.

Aaronson provides several examples of improved governance. In Guatemala, policymakers learned to coordinate labour rights and fiscal policy so that companies could not get subsidies or avoid taxes if they were found to violate labor rights. Mexican officials learned to protect the rights of Mexican guest workers in the U.S. In 2013, with help from U.S. and Mexican civil society groups, guest workers came together to form the Sinaloa Temporary Workers’ Coalition to defend the rights of guest workers in Mexico and abroad. In 2014, the group complained to the Mexican Ministry of Labor regarding recruitment fees. The Ministry investigated and found 27 violations of the law, resulting in fines. In this example, Mexicans held their government accountable for violations of the law at home.

Aaronson notes that no one has yet done a study as to whether these provisions and consultative bodies actually empower workers. Nonetheless, in a 2016 study of trade and labour rights, the ILO noted that “the impact of labor provisions depends crucially on, first, the extent to which they involve stakeholders, notably social partners such as unions and NGOs.” Workers who are aware of their rights and able to challenge executives and government officials’ decisions are empowered. Over time, empowered workers can promote greater income equality through improved productivity and better share in profits through wage increases. Some analysts argue that this process can advance development, social cohesion and democracy, and can ensure that more people meet their potential. Moreover, these provisions may help to legitimize trade agreements and help them to gain a base of public support.

Redefining Protectionism: The New Challenge in the Digital Age

by Susan Ariel Aaronson (George Washington University)

IIEP Working Paper 2016-30

Twenty-first century protectionism is a slippery concept. With the introduction of digital trade, it is important for scholars and policymakers to rethink how they define, measure, and address protectionism. This is most clear in the United States where attitudes towards digital trade and digital protectionism have been murky at best.

While the digital is important to all countries, it is particularly important to the United States, where digital trade represents nearly 55 percent of U.S. service exports and has generated an annual trade surplus of over $150 billion. In a principal effort to limit digital protectionism and maintain an open internet for the advancement of the free flow of information, the United States made the move to create binding rules to govern trade in the Trans-Pacific Partnership and was the first country to call out digital protectionism in other nations. Policymakers now understand that information, whether it is created or altered within their county, is an asset. Therefore, measures that restrict content, limit the flow of data, or impose standards that keep out foreign competition could threaten the generativity of the internet as a whole.

However, many governments disagree with the scope and breadth of U.S. claims about digital protectionism. For example, Canadian and Australian policymakers are determined to protect the privacy of their citizens’ health records and require such information to be stored on local servers to an extent that tends to outpace U.S. standards. Adding to the confusion, U.S. arguments against digital protectionism are often inconsistent. For example, in a 2013 report on foreign trade barriers, U.S. officials complained about Japan’s uneven, and Vietnam’s unclear, approach to consumer privacy. At the same time, the United States has argued that China’s failure to enforce its privacy laws is harmful to digital trade.

Despite the importance of digital trade and digital protectionism, the United States has not thought out its stance on questions like: Is a policy truly protectionist? How harmful are these policies to U.S. interests? Are trade sanctions an appropriate response, and which agency should be responsible for making these decisions? As digital trade takes up a bigger portion of the global economy, policymakers and companies will need clarity. Given the stakes, it is important that the United States takes a leading role in defining digital protectionism.

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