Digital Protectionism Hampers Entrepreneurship But Trade Negotiations Offer Hope, Says Panel

“If you’re talking about provisions that we would like to see in trade agreements going forward, one would be a robust ecommerce chapter that guarantees the flows of information across borders while protecting legitimate interests like privacy,” said Jake Colvin, Vice President of Global Trade Issues at the National Foreign Trade Council, noting that the pact should also include intellectual property protection. “We would like to see no local server requirements to do business and to be able to send information across borders.”

Due to the on-going government shutdown, President Barack Obama was unable to attend a TPP negotiation round this week on the sidelines of the Asia-Pacific Economic Cooperation summit in Bali, opting to send Secretary of State John Kerry in his place. The APEC forum may also usher in greater customs harmonization, said Colvin, adding that APEC, TPP and TTIP have the potential to influence World Trade Organization (WTO) progress.

The WTO trade facilitation agreement ideally would “harmonize the simplified customs regulations to permit all customs information to put online and easily accessible. That’s the sort of thing that I think would help small businesses and individual businesses,” said Colvin. “There are talks underway at the Asia-Pacific Economic Cooperation forum and other forums to try to raise the de minimis to try to permit small businesses and people who ship small amounts of things across borders to be waived exempt from customs regulations,” said Colvin. The WTO effort to implement a trade facilitation agreement that builds off the 2001 “Doha Round” negotiations continues to stumble, but WTO Director-General Roberto Azevêdo is optimistic about an impending December summit in Bali (see 13092026).

The disclosure of the NSA surveillance activities by Edward Snowden earlier this year continues to encourage global governments to adopt protectionist policies toward data flow, however, said the panelists. The Brazilian government is pushing policies that will scale back Brazilian internet openness, said panel moderator and Vice President for Public Policy at the Software and Information Industry Association Mark MacCarthy. The move to restrict internet data flow is one example of a broad international response that threatens to curb the economic development benefits channeled through the web, said MacCarthy.

“We are seeing, in a number of jurisdictions, the tendency for countries to look at information and data as something that needs to be protected and preserved, to be protected within national boundaries for a variety of reasons…protection against government surveillance of foreign countries, the development of internal data processing resources and other public policy issues that need to be taken into account and considered as we look at the flow of information across borders,” said MacCarthy.

There has also been a backlash against the surveillance among European governments, the panelists said, and some are choosing to address the issue through Transatlantic Trade and Investment Partnership (TTIP) negotiations. The revelations have caused debate over privacy frameworks in TTIP. The U.S.-EU pact would potentially cover half of global GDP and 30 percent of world trade but negotiations remain in the rudimentary stages. The Obama Administration canceled the second round of TTIP talks this week in Brussels due to government shutdown.

“Traditional trade barriers need to be addressed in a digital world. It is therefore vital that the Transatlantic Trade and Investment Partnership, the TTIP, also eliminate barriers to ecommerce,” said Swedish Minister Counselor Andreas von Uexkull, noting the threat posed by privacy disputes. “It would be devastating if we would get stuck on this issue, not being able to move a TTIP agreement that is broad and would start to open up our markets,” he said. "I see a lot of dangers by not putting that issue on the sidelines.”

The U.S. and EU should avoid harmonizing privacy policies in the pact in order to steer clear of conflict, said MacCarthy. The privacy framework, however, is the “elephant in the room” that will need to be tackled, said Colvin. Other countries are also pushing localization policies in order to preserve state-owned enterprises, according to Colvin, adding that such policies should not be accepted in trade pacts. “You also see localization requirements that are done often to protect local monopolies,” said Colvin. “Ethiopia, I believe, last year criminalized the use of Skype to protect its national carrier. That sort of thing should be the first to go.” Ethiopia dismissed the accusation.

The free flow of information across international borders democratizes access, enables the growth of innovative business models and builds trust among people separated by significant distances, said the panelists.

“With digitization, global marketplaces are bigger like eBay and phone apps. And it opens the door for more SMEs and even one-person firms that reach a global marketplace instantly. We call these companies micro multinationals,” said Uexkull, referring to small and medium sized enterprises. International Trade Commission analyst Martha Lawless was unable to attend the discussion due to the on-going government shutdown. -- Brian Dabbs