June 21, 2016
By Nicholas Hodac, Government and Regulatory Affairs Executive, IBM Europe
Digital Trade may seem like an abstract concept, but its reality is a European bank using state-of-the-art cyber security centers around the world to protect customers’ data 24/7. Or a European SME that exports cutting-edge video-editing software to Hollywood or Bollywood. Or a major European car company that uses a global cloud infrastructure for its global car-sharing app so that customers can find the cheapest and fastest way to travel.
Acknowledging the critical contribution of digital trade to the worldwide economy, the EU and US are working to make TTIP a trade agreement that’s fully aligned with society’s digital future. Digital Trade is one of the most important components of the TTIP negotiations, but it risks getting drowned out because its positive impact is underappreciated. Yet every study – including 2015 research from the Lisbon Council – shows that Digital Trade can visibly move the GDP needle.
As we approach the next round of negotiations on July 11, here are three things the TTIP negotiators should focus on:
- The ability to transfer data freely and securely across borders, in compliance with data protection rules. Data flows are the basis for the internet to be an international trade platform. Data localization is, to quote European Commission Vice-President Andrus Ansip, “a dead end.” Having access to advanced analytics using data from across the globe is a big competitive advantage to companies of all sizes. And access to data-driven insights is being made available to more and more people, putting the power of data analytics in the hands of citizens rather than in the hands of a select few.
- The removal of local content requirements and local performance requirements. This is an area in which the Trans-Pacific Partnership (TPP) agreement provides a helpful precedent, and where TTIP should be even more ambitious. For instance, several countries around the world will only give access to their digital markets if businesses provide access to source code and/or encryption keys to the software they use. And there are countries that impose the use of local technologies as a requirement for public procurement contracts, meaning the best technologies are not always used and the end result suffers. This trend towards “digital protectionism” runs counter to the interests of countries who want digital services to play a key role in their strategies for long-term economic growth.
- Cooperation when making regulations. As technology evolves at lightning speed, lawmakers in the EU and the US are grappling with whether and how to regulate it – and set standards for it. The case for compatible approaches to the Internet of Things (e.g., platforms, standards, data ownership, reference architectures) and how IoT technology is rolled out (healthcare, connected vehicles, smart manufacturing, etc) couldn’t be stronger. For example, if hospitals in the US and the EU want to send electronic health records across the Atlantic for analysis that could help identify disease causes, track epidemic outbreaks, develop innovative treatment plans or drive broader research, the formats must be compatible so that results can be achieved quickly and at low cost. Proper cooperation on digital standards and compatibility will allow technologies developed in Europe to be exported seamlessly to the US.
Effective Digital Trade provisions in TTIP would send a strong message that protecting global data flows is the key to fostering growth and innovation. It would encourage the termination of unsound practices in some parts of the world, and could form the starting point of a plurilateral agreement on Digital Trade at the WTO.
We live in an age where the global movement of data can change life for the better. It can help people access innovative medical treatments, or it can help researchers find new answers to some of the world’s most challenging questions.
The right thing – in fact, the only thing – for governments to do, is to enable data flows, compatible laws and compatible data formats – while fully respecting data protection rules – so that these technologies can be used to do the most good possible. Digital trade has upsides for all of us. The momentum to reach a TTIP deal – with strong digital provisions – must not be lost.
Nicholas Hodac is Government and Regulatory Affairs Executive for IBM Europe. IBM is a member of the American Chamber of Commerce to the EU.
AmCham EU Trade