July 21, 2014

US PEC on Cross-Border Data Flows in TTIP and other FTA

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The US President Export Council discusses its proposed data flow provisions (June 19, 2014) as a means to counter the rush to privacy protection and denounces privacy measures of foreign governments as a trade barrier and digital protectionism. No further arguments are provided to back up these claims and allegations.

CHAIRMAN McNERNEY:
.. Ginni, you warmed up earlier today over breakfast, on cross-border data flows, but why don’t you give us a summary of the second letter on cross – data border flows?

MS. ROMETTY [IBM]: Okay. Well, first, I should say that the Administration has taken a number of actions already in this area. It is both cross-data flows, cross-border data flows, as well as data localization. In fact, these are a threat not only to operation globally, but also to business globally, and, frankly, it is a threat to how governments can even operate and the benefits they get. So the past two years, both Secretary Pritzker and Ambassador Froman have been very helpful in their attempts, in their efforts here, because we have seen some successful rollback of troubling policies. I think many people are well aware of the India Preferential Market Access policy that got pulled back.

And, quite clearly, since the Snowden revelations, what has happened is you see an increase now in governments who are advocating and promoting local and digital protectionism.  Just to list some of the countries, Brazil, Turkey, Russia, Indonesia, Vietnam, Nigeria, India.

They are in the forms of cross-border or the data protection or keeping data local. Honestly, they are many times often a condition to do business there.

So while privacy and security, those are often the reasons stated for this, outright stated, this is really a form of protectionism and it is really often driven by local competition, local commercial competition.

I don’t think anyone would argue that you need data. It is the lifeblood of an economy, it is for our governments, it is for our businesses, for small and medium enterprises, as well, to succeed around the world.

While privacy and security are essential, it is just really important that we believe that any local requirements for this, it will actually just create trade barriers and do nothing for privacy and security at the end of the day.
So we would advocate that we really work together to defeat any of this digital protectionism and in the short term, please continue, the Administration,to  do what  we’ve  been doing. As  these creep up, we go work on the bilaterally, but as we spoke about earlier today with Ambassador Froman, the most important thing is to intensify the focus on all the trade agreements to be sure that they actually — that there are rules there that prohibit that and protect, that we are able to move data and not have to store data locally.
I’d  just  end  on  the  point  that this  isn’t  about a technology industry issue. This is every company’s  issue.    It  is  every company,  every  industry and, frankly, all governments, as well, and their ability to both create economic prosperity and move jobs.

CHAIRMAN McNERNEY: Yes. Taken to an extreme, it would impair our ability to conduct business globally. So threading this needle between being sensitive to local sensitivities on privacy on one hand, but not allowing agreements to wrap — local in terests to wrap themselves in that cloak to, in essence, produce a protectionist environment is what I think is the point.