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Does tech harmonisation strike the right chord?

Theodoros Evgeniou and Ludo Van Der Heyden
06 Jun 2023 00:00:00 | Update: 05 Jun 2023 23:06:31
Does tech harmonisation strike the right chord?

Regulatory harmonisation – the practice through which tech regulators align policies and procedures across markets – has been a trend since the end of the Second World War. It is heralded as a tool that enhances trade, ensures product safety, fosters innovation, and even increases mutual dependence and, thus, promotes world peace. The EU is an evolving example of what can be achieved through harmonisation. It also lays bare the limits of this practice.

For it is no longer clear, even as regulations grow worldwide, that harmonisation is always desirable, or indeed realistic. In fact, some of the biggest names in tech argue that technological progress should be paused, and countries are now imposing restrictions on one another’s innovations. The US, for example, prohibits semiconductor chipmakers from selling advanced chips to China; and Italy, among other countries, has blocked access to ChatGPT.

We live in a world shaped by rising nationalism and widening inequalities, which presses us to address a critical question: How can we build a digital world that is safe and beneficial for all? Is it enough to call for, say, China and the US to adopt the EU’s rules on digital services and artificial intelligence, while China and the EU adopt American financial regulations?

We don’t think so. In fact, we argue that calls for regulatory harmonisation to “tackle collectively” the risks posed by technology are misguided if the goals of the intended regulation and the values that are key to successful implementation are not examined prior to such calls, or at least simultaneously with them.

Any continued push for harmonisation without an agreement on goals and values will prove counterproductive and risky. It is this debate about goals and values that needs to take place regarding global technology. We face dire consequences if we don’t get global technology regulations right, which absence of this debate will lead to.

It’s no surprise that the World Economic Forum’s 2023 global risk report warns that technology will “exacerbate inequalities” and that cybersecurity threats will “remain a constant concern” for the future. Meanwhile, the United Nations Human Rights Office reports that new technologies – specifically spyware, surveillance technology, biometrics, and AI – “are being misused worldwide to restrict and violate human rights”.

In fact, leading tech figures such as Elon Musk and former Google chief executive Eric Schmidt are now convinced that humanity’s survival is at stake stake if we do effectively govern technological progress.

The second risk of harmonising regulations pertains to implementation. International regulators often work together to craft similar guidelines and technical requirements. Yet not all jurisdictions achieve the same desired outcomes. As we can easily imagine, organisations will lobby for terms that serve their own interests.

Enforcement and implementation also tend to be uneven across regions, countries, and even among regions in the same country. In this aspect one could look to Switzerland as one example of effective regulation. The Swiss government delegates most regulatory authority to the cantons. At the local level, goals and values are more easily shared and understood, hence people are less likely to violate or circumvent laws. . Things work well because regulation is decentralised and adapted to the culture of the region within an overall federal framework.

Conversely, lawbreakers rationalise their actions by accusing regulators of lacking an understanding of their goals or their ways of working. Take the financial sector for example. Prudential regulation aims to ensure the stability of both financial institutions and the economy. They do this by mandating control mechanisms for risk management at a macro level. Yet, some bankers repeatedly come up with creative ways to increase their financial gains – personal or corporate – while concealing risks.

The global financial crisis and, more recently, the Silicon Valley Bank collapse and the demise of Credit Suisse are examples of how well-intended regulations can fail. They also reflect the gap between the spirit of laws and their impact on different actors, each of whom is driven by the pursuit of their own goals and values.

There is another, perhaps bigger, problem with aligning regulations: Laws can be copied, but the copy leaves the spirit behind. Laws can be copied, cultural contexts cannot. Different cultural contexts will affect how the laws are implemented and enforced.

There is a further risk about how this problem could play out on the global stage: Nations adopt the regulations of the others to spur trade and investments, only to drop those rules once they have sufficient size and clout.

If that happens, legal harmonisation will have created a new and fragile global power balance. This could lead to unpredictable potential consequences. Some are outright frightening, including the weaponisation of AI systems as Trojan horses.

To mitigate these problems and ensure that regulations are effective across diverse markets, we must foster trust and commitment in these markets and across the regions where these markets are operating.

The National