by Katie Keith

On June 16, 2011, the United States Chamber of Commerce organized a forum for business leaders addressing challenges to the free flow of electronic commercial information. Panelists included academics, government officials, and policy and privacy directors from Google, AT&T, GE, Citigroup, and IBM. The event was moderated by leaders from the Commerce Department, and Secretary of Commerce Gary Locke provided the keynote address. A full agenda can be found here.

The participants were unanimous in their recognition of the economic role of e-commerce and the need for market-oriented solutions to promote innovation and expansion. Secretary Locke pointed to the $10 trillion of business conducted online, and one speaker noted a recent OECD report which found that broadband and information and communication technology applications are very likely to exceed the economic effect of any other technology, including electricity and steam technology.

Business leaders, however, report that foreign governments increasingly restrict the free flow of information with implications for the economy, business community, and consumers. The number of countries with such restrictions has increased tenfold since 2002 and can have a pronounced economic impact. For example, a conservative estimate of the impact of an Internet shutdown in Egypt reflected direct losses of $90 million.

Panelists emphasized that existing restrictions and market entry barriers have resulted in a slowing of technological innovation and prevented companies from offering products and services that depend upon the free flow of information. Panelists focused particularly on these issues:

  • Modernization of international trade agreements.  Panelists highlighted the need for the modernization of international trade agreements to reflect technological innovations. Most World Trade Organization agreements were developed before the digital age and have limited businesses from offering data overseas.
  • Local data requirements. Some countries have required companies to locate servers within national borders in order to operate within that country which can raise additional privacy and cybersecurity concerns and serve as a barrier to market entry. The panelists noted such restrictions in Kazakhstan, Indonesia, Russia, Taiwan, and China among others.
  • Regulatory overreactions by governments concerned about privacy and cybersecurity. Though countries have legitimate concerns, the panelists emphasized that these issues can be addressed through technological advances instead of burdensome regulations.
  • The lack of a global framework to serve as a regulatory floor. One panelist characterized current laws as little more than Band-Aids to a bigger problem.

In his keynote address, Secretary Locke noted the publication of a forthcoming report from the Commerce Department outlining policy directions that the United States should take to improve the free flow of information.  The report will review existing foreign restrictions and the impact on the economy, innovation, global trade, and investment.  As a potential policy solution, the Secretary identified the option of treating such restrictions as non-tariff trade barriers and using existing trade tools accordingly. Other potential policy solutions identified during the forum focused on the need to:

  •  Adopt domestic privacy and cybersecurity regulation to create baseline standards;
  • Harmonize and simplify laws governing the protection and use of data;
  • Enhance the Trans-Pacific Partnership Agreement obligations;
  • Consider the free flow of information and role of the internet in future trade negotiations; and
  • Develop public-private partnerships, flexible voluntary standards, and industry best practices.

The forum provided a strong sense of current and future priorities on international data issues and signaled a willingness by the Obama administration to engage stakeholders on ensuring the free flow of information on a global scale.  Though European regulators have long focused on cross-border data transfer issues, the United States seems increasingly wary of the economic effects of foreign restrictions and the forum signaled a renewed commitment to addressing these issues.