Let data move more freely across borders: business-tech alliance

Where there is free flow of data, there is economic growth, advocacy group says. Today's existing 'trade rules were written to ship widgets rather than bytes.'
Written by Joe McKendrick, Contributing Writer

A coalition of business and technology companies has crafted a call urging that governments update their international trade rules to the realities of the digital age.

While technology has created a global market for digital communication and commerce, that market is not seamless -- it is hampered by a growing prevalence of "digital protectionism," with many countries enacting or pursuing restrictive policies governing the provision of digital commercial and financial services, technology products, or the treatment of information to favor domestic interests over international competition.

The proposal -- backed by a number of companies and business groups and issued under the aegis of the National Foreign Trade Council, urges the creation of a "consistent and transparent framework for the treatment of cross-border flows of goods, services and information." The ability to move information freely across borders has proven to be an economic plus for the global economy, proponents say:

"Access to computers, servers, routers and mobile devices, services such as cloud computing…and information is vital to the success of billions of individuals, businesses and entire economies. In the United States alone, the goods, services and content flowing through the Internet have been responsible for 15 percent of GDP growth over the past five years."

Along with the NFTC, the proposal is supported by Citi, Google, IBM, Mastercard, Microsoft and Visa, as well as associations including the Business Software Alliance, Coalition of Services Industries, Software & Information Industry Association and U.S. Council for International Business.

For example, the report relates, look what happened to Egypt's economy when the government attempted to shut down the Internet during the revolution last spring:

"When Egypt shut down the Internet for five days earlier this year, the OECD estimated that the country incurred a direct cost of about $90 million. But that figure does not take into account the cascading costs associated with the negative effects on the real economy, including the untold number of companies and individuals around the world who lost business opportunities or were less productive because of the shutdown and the potential long term negative impact on Egypt’s outsourcing industry – all of which Forbes estimated to amount to an additional $110 million."

As Jake Colvin, vice president of the NFTC, put it, today's trade rules on the books were written for the industrial age:

"Trade rules were written to ship widgets rather than bytes. The Internet and networked technologies have created new ways of delivering products and services and entire new industries that spur economic growth and create jobs, but which also pose new challenges for the trading system."

The industry coalition says the US government should seek international commitments on several key objectives, including: prohibiting measures that restrict legitimate cross-border data flows or link commercial benefit to local investment; addressing emerging issues involving the regulation of the digital economy; promoting industry-driven international standards, dialogues and best practices; and expanding trade in digital goods, services and infrastructure.  "Governments should work to resolve emerging legal and policy issues raised by cross‐border data flows," the report adds. "If not properly managed, new regulation in these areas could become significant non‐tariff trade barriers to the digital economy. There is increasing evidence that governments are using the pretext of legitimate policy objectives – such as law enforcement, cyber‐security or consumer protection – in order to restrict digital trade."

This post was originally published on Smartplanet.com

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