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| Proactive caution: Israel’s approach to AI regulation Related reading: Garante alleges OpenAI's ChatGPT violated GDPR

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For the time being, Israel has chosen to forgo formal artificial intelligence legislation. Instead, it has established a strategic policy grounded in existing regulatory frameworks, "soft law," and globally accepted principles to create a dynamic structure aimed at harmonizing regulations across industries and activities.

A pivotal moment was marked 13 Dec. 2023, when Minister of Innovation Science and Technology Ofir Akunis endorsed a policy paper delineating AI principles, regulation and ethics. As of that date, this paper constitutes Israel's official AI policy.

As per the 2023 report by the Israel Innovation Authority, the high-tech industry contributes 18% of Israel's GDP. This is nearly twice the industry's share in the U.S., making it the most productive sector in the Israeli economy. The high-tech sector also accounts for 50% of all Israeli exports. With more than 400,000 individuals employed, the number of high-tech employees has tripled in the past decade relative to the general economy.

Ziv Katzir, who heads the National Program for AI Infrastructure at the Israel Innovation Authority, noted last year that despite Israel's reputation as a frontrunner in the commercialization of AI technology, the country's AI research efforts are not as extensive as they could be.

Given these circumstances, it is not surprising that Israel's AI policy emphasizes enabling regulations that foster innovation. Yet with a significant reliance on global markets and a strategic objective to retain its status as a technological leader, and with high value to human rights, Israel not only welcomes universally accepted ethical AI principles but also actively participates in the establishment of international AI standards.

The result is a government policy characterized by a highly adaptable and dynamic regulatory framework, providing ample opportunities for national-level learning and adaptation. However, the successful implementation of this policy is questionable due to the reasons outlined in this article.

A uniform regulatory policy 

The policy paper posits a uniform government regulatory policy as the initial stepping stone. Under the policy, it is paramount that regulations influencing AI development and use in the private sector are harmonized to fulfill the government's policy objectives. These objectives include fostering AI advancement, safeguarding human rights and public interests, and mitigating risks associated with technological innovation. A consolidated policy is especially crucial, considering that AI is a swiftly progressing technological and innovative domain with substantial economic value, impacting all aspects of life.

Contrarily, Israel will refrain from enacting an AI act, at least in the foreseeable future. In essence, the time is not ripe yet. A law, being a rigid form of regulation, may fail to synchronize with the globally evolving regulation, potentially leading to an escalating burden on Israeli companies to comply with a local AI law while navigating the complexities of international commerce.

The underlying message is clear. Israel does not intend to impede its powerful global position and the progress of its most valuable national asset by becoming a legislative trailblazer in AI regulation. Instead, the adopted policy is adaptable, considerate and not excessively daunting.

A layered regulatory structure

The policy paper establishes a three-tiered structure, with incumbent regulators forming the foundation, a governmental knowledge center orchestrating the regulators' activities, situating this center at the core of the framework, and a steering committee at the apex to guide and strategize.

In February 2023, the Israeli government adopted Decision No. 173 aimed at bolstering Israel's technological leadership. Section 3 of the decision mandates the Ministry of Innovation Science and Technology to establish an AI knowledge and coordination center with the backing of the Ministry of Justice. It will be formed as an intergovernmental professional entity endowed with the authority and resources to foster a dynamic and flexible approach toward AI regulation.

The center's responsibilities are broad, though none include decision-making. They encompass: 

  • Spearheading coordinated initiatives to implement the AI policy, and identifying and mapping AI applications. 
  • Facilitating planning, coordination and collaboration among regulators to minimize overlapping and contradictions in industry regulations and enhance certainty and uniformity. 
  • Providing guidance to industry regulators in reviews of the necessity for AI regulation in their respective industries and in characterizing and promoting such regulation as required. 
  • Advising the government on regulatory and policy matters, including issues related to the design, updating and development of the policy and overseeing the policy's implementation. 
  • Leading Israel's representation and participation in the development of regulation and standardization in international forums by synchronizing efforts of all Israeli representations in such forums. 
  • Developing and disseminating tools for regulators and the public for responsible AI use. 
  • Establishing platforms for dialogue and knowledge exchange with industry, academia, the third sector and the government.

A steering committee will be instituted to guide the knowledge center, provide it with a comprehensive perspective on AI-related government and private market developments, enhance the center's expertise and capabilities, and amplify its impact.

The steering committee will comprise relevant stakeholders with pertinent governmental functions such as privacy, law, regulation and budget, and with a dominant representation of innovation and technology. As per the policy, the committee will serve an advisory role only. It will provide guidance to the knowledge center and submit recommendations to the government as a specialized AI advisory body.

The centralized governmental hub for AI regulation will neither possess substantial decision-making authority nor enforcement powers. The enforcement functions under the policy, i.e., the existing regulators, will retain their current powers to enforce the adopted AI principles. However, with the possible exception of the Protection of Privacy Authority, the other relevant regulators may lack the necessary capabilities to formulate their segment-specific AI guidance, let alone enforce it.

Consequently, the regulatory structure is heavily reliant on the ability of a nonregulatory entity to equip the regulatory bodies with the necessary knowledge, tools and additional resources.

Will it work?

Will the flexible and highly adaptive structure prove successful in establishing a significant mechanism to ensure responsible AI development and use? The onus of proof primarily lies with the Ministry of Innovation Science and Technology, which will house the AI knowledge center and bear responsibility for its proper functioning.

The authors of the policy paper underscore they cannot overstate the importance of endowing the knowledge center with suitable resources to execute its functions effectively. It goes without saying that, particularly in times of an ongoing armed conflict, the provision of adequate funding to the knowledge center is questionable.

In conjunction with foreseeable budgetary constraints, a successful regulatory scheme will necessitate existing regulators, such as the Ministries of Health and Education, the Banks Commissioner, and the Consumer Protection Authority, to grapple with an entirely new regulatory realm, demanding substantial specific professional skills and knowledge. It will also necessitate coordination efforts between the governmental center and the existing regulators. It is indisputable that these regulators will also require additional resources for this purpose.

Furthermore, in the absence of specific statutory authority to enforce regulatory guidance, it is plausible that some of these regulators may avoid conducting any AI-related enforcement activities.

It appears that the primary catalyst for the Israeli AI tech industry to embrace responsible and ethical AI practices will be the contractual obligations imposed by their international clients and other counterparts. Conversely, the governmental AI policy is likely to exert only a marginal impact.

Nonetheless, the successful execution of the framework is not merely a governmental victory. On the contrary, it will fortify the entire Israeli AI industry and generate public benefits while safeguarding human rights and curtailing unethical and malicious use of AI.

Therefore, while the onus of proof lies with the government, it is also essential that professionals, researchers, and practitioners across all pertinent disciplines contribute to the success of this policy.

IAPP Global AI Legislation Tracker

This tracker identifies AI legislative policy and related developments in a subset of jurisdictions. It is not globally comprehensive, nor does it include all AI initiatives within each jurisdiction.

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