International

Digital tech and prosperity, the Japanese experience

Our world is filled with challenges common to all humankind, such as climate change, environmental destruction and COVID-19. In addition, slowdown in economic growth, widening income disparities and other economic problems are prevalent in various parts of the world. The key to overcoming these common human challenges is innovative technologies.

We are in the midst of the so-called Fourth Industrial Revolution, a technological revolution that will once again fundamentally alter the way we live, work, and relate to one another. As Professor Klaus Schwab, the founder and executive chairman of the World Economic Forum has explained, the First Industrial Revolution mechanized production with water and steam, the Second used electricity to power mass production, and the Third leveraged information technology for automation.

In this Fourth Revolution, technologies will fuse and blur the lines between the physically and the digital, all supported by IoT, AI, 5G communications and other advanced technologies.

These technologies have the potential to solve the challenges facing humanity to create a happier and more prosperous society with more liberty. For instance, AI-based predictions of COVID-19 have played a major role in preventing the spread of infections in various countries. By using algorithms to match the supply and demand of human flows and logistics around the world, we can reduce the environmental impact and realize economically efficient distribution of people, goods, and information. With robots undertaking simple and dangerous tasks, humans will be able to spend more free time in safety.

Japan is aiming to achieve a human-centered society, named “Society 5.0,” where high integration of cyberspace and physical space can promote economic development and solve societal issues. We believe the profile of societies as described resonates with the philosophy of the Global Technology Governance Summit (GTGS).

Areas of focus

Free flow of data. To maximize the benefits of the digital economy, we need to unleash the potential of data, which requires an environment where data can circulate securely based on trust. In January 2019, at the annual meeting of the World Economic Forum, Japan proposed to the world the concept of “Data Free Flow with Trust (DFFT)”. Since then, the importance of DFFT has been reaffirmed and discussed at various opportunities including summits convening G7 and G20 countries and the OECD.

In recent years, Japan has agreed on digital rules in international agreements towards the realization of DFFT. Building on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (a trade agreement that came into effect in 2018), Japan has signed on to the Agreement between Japan and the United States of America concerning Digital Trade (US-Japan Digital Trade Agreement) in 2019 and the Agreement between the United Kingdom of Great Britain and Northern Ireland and Japan for a Comprehensive Economic Partnership and Regional Comprehensive Economic Partnership (RCEP) Agreement in 2020 to promote the free flow of data together with other countries in the region.

What these rules have in common is that they combine free flow of data with measures for trust assurance such as protection of personal information, online consumer protection, and cybersecurity measures. Japan has shown that balancing data free flow and trust constitutes the foundation of data distribution across borders. In the future, Japan will seek to formulate global data flow rules covering the entire world based on DFFT through the WTO Joint Statement initiative on E-commerce and reassessment of the need for free flow of data provisions in the Japan-EU EPA.

As an advocate of DFFT, Japan will continue to promote rules for safe and reliable data transfer across borders with nations that share our values.

Designing and Implementing Agile Governance. In today’s world of rapid technological and social changes, it is important to redesign the traditional, fixed governance framework and focus on a more flexible approach based on “agile governance.” Agile governance is a tool to help citizens, companies and policy-makers join build new public governance models for the Fourth Industrial Revolution, as outlined in a white paper published by the WEF in 2018 in collaboration with Japan and the WEF’s Global Future Council on Agile Governance. These models ensure policies that are adaptive, human-centred, inclusive and sustainable.

This concept continues to gain support. 2019’s G20 Ministerial Meeting on Trade and Digital Economy stressed the need for “Governance Innovation” aimed at agile and flexible policy making. In 2020, the “Agile Nations” agreement was established to promote international cooperation on agile governance. This March, Japan published its own report on outlining its vision for agile governance.

One agile governance practice introduced in many countries – including Japan – is the “regulatory sandbox”. The regulatory sandbox is a framework where companies are allowed to conduct demonstrations without being subjected to existing regulations for a limited period of time and with a limited number of participants in cases where the implementation of a new technological business model is difficult under the current regulations. The knowledge gained from these demonstrations can be used to revise regulations. One feature of the regulatory sandbox system in Japan is that it targets a wide range of fields without limiting the scope of demonstration.

For example, in the field of pharmaceutical development, the reliability of data is ensured by having people directly confirm which clinical trial data was obtained from which medical records. Recently, a demonstration using the sandbox system has confirmed the reliability of a method that directly records data from development documents into an electronic system without the need for human intervention, using blockchain technology that makes it difficult to falsify data. This has since produced significant results, including the commercialization of the system by the business operator that conducted the demonstration.

This approach of reviewing the rules through demonstration tests, rather than applying conventional regulations to prohibit innovative technologies, is a mechanism for practicing agile governance. By working together to enhance the flexibility of governance and sharing the knowledge gained, countries can maximize the benefits that digital technology can bring to the world.

Looking ahead

At a time when the world is facing common challenges represented by COVID-19, climate change, environmental destruction and widening disparities, it is crucial that countries once again share awareness of the issues and values, share data, and establish new governance to realize a prosperous and free society globally through the use of technology.

In this context, the launch of the Global Technology Governance Summit is extremely significant, as various stakeholders from around the world exchange views on the governance of technology. We are confident that such discussions will play an important role in shaping the rules of the world in the future.

Japan looks forward to sharing as much knowledge and experience as possible and contributing to the ideal future the global society aspires to realize.

The writer is Minister of Economy, Trade and Industry of Japan