According to the U.S. International Trade Commission, digitally enabled service exports from OECD countries neared $1.6 trillion in 2011, and a recent International Trade Commission report estimated that U.S. GDP could increase by an estimated $16.7 to $ 41.4 billion if barriers to digital trade were removed. Those statistics spurred a recent House Subcommittee on Commerce, Manufacturing and Trade hearing on cross-border data flows, which asked if digital trade restrictions could hurt U.S. jobs.
The Marketing Research Association (MRA) weighed in with Subcommittee members prior to the hearing to support free digital trade and the pressing importance of maintaining the U.S.-European Union (EU) Safe Harbor, ”the primary protection for the conduct of digital commerce and research.” Moreover, MRA emphasized “the importance of ‘harmonization’ of the U.S. and EU privacy regimes as a part of this hearing, but not in the traditional way that the term is used. There may be great value to both sides of the Atlantic in bringing our privacy approaches closer together. However, the concept of harmonization should focus more on modeling EU law after the strong enforcement mechanisms and self-regulation of the US. American trade negotiators should charge ahead with such a mandate.
At the hearing on September 17, Subcommittee Ranking Member Jan Schakowsky (D-IL-09) reveled in the new digitally “interconnected world,” and said she looked forward to discussing the steps needed for the U.S. “to remain the undisputed leader in the Internet economy.” However, she voiced her regret that some countries are raising privacy as an impediment in trade negotiations and pursuing “data localization” laws. For instance, Brazil recently considered a proposal to mandate that companies doing business in Brazil maintain, on servers physically located inside Brazil, a copy of all data relating to Brazilian operations and citizens.
Much of the privacy concerns driving these restrictions, according to Rep. Jerry McNerney (D-CA-09), relate back to the Edward Snowden revelations about government spying last summer.
Subcommittee Chairman Lee Terry (R-NE-01) lashed out at overseas privacy critics of the U.S., saying, “It is simply not accurate to say that there are not privacy protections in the U.S. Over 300 federal and state privacy laws on the book s in the U.S. prove otherwise. FTC enforcement proves otherwise. And our marketplace shows otherwise. We have more privacy and risk officers in the U.S. than anywhere else in the world. Companies are reacting to the market and giving consumers more control – like Facebook’s recent policy announcement that permits users to remove themselves from categories of advertising.”
Ranking Member Schakowsky emphasized in return that, despite all those privacy laws, the U.S. lacks a “comprehensive” privacy law and she voiced her support for “taking that step.”
Rep. Marsha Blackburn (R-TN-07) referenced the continuing investigations of the House Privacy Working Group she co-chairs (and upon which McNerney and Schakowsky also sit). One of the things she said the group has learned is that “restrictions on data flows have emerged as the primary non-tariff trade barrier to the international marketplace” and are clearly a “form of digital protectionism “
Linda Dempsey, VP of international economic affairs at the National Association of Manufacturers, stressed the importance of the U.S. speaking “with one voice” against digital trade barriers which are being enacted “under the guise of security or privacy concerns.”
Sean Heather, vice president of the U.S. Chamber of Commerce’s Center for Global Regulatory Cooperation, told the Subcommittee that the rise in foreign data trade restrictions “inappropriately conflate concerns about access to data for national security and law enforcement purposes with commercial use of, and access to, data. Other restrictions are rooted in government efforts to bolster domestic industry and support national companies. Ultimately, however, instead of creating jobs, these rules reduce efficiency, increase costs to local businesses, and block access to customers abroad, as they simultaneously prevent local consumers from buying the best products and services.”
Laura Donohue, professor of law and director at the Georgetown University Law Center’s Center on National Security and the Law, discussed with the Subcommittee the differences in privacy law between the U.S. and EU, where the EU has an omnibus all-encompassing law and the U.S. has narrow privacy laws targeted at specific circumstances and kinds of data. Donohue recommended pursuing a more “overarching framework” for U.S. privacy law, like Schakowsky suggested.
Chairman Terry agreed with MRA about the need to gird U.S. trade negotiators in support of freer data flows and maintenance of the U.S.-EU Safe Harbor for data transfer, saying that they “cannot falter” in those endeavors. He concluded that, “When it comes to trade, the U.S. cannot allow protectionism—under the pretext of privacy—to threaten U.S. jobs and U.S. competitiveness.”
Terry and Blackburn both made the top 10 list of government players in consumer data privacy in 2014.
UPDATE: Chairman Terry and Rep. Peter Welch (D-VT) sent a letter to Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman on October 24, contending that surveillance "reforms should not be used as a tool to obstruct the uninterrupted flow of commercial data between countries. Interfering with cross-border commercial data flows puts global economic growth, fair competition, and U.S. jobs at risk."
Welch cochairs the House Privacy Working Group with Blackburn.
Terry and Welch conclude that today is "a critical time for the U.S. to stand firm. Trade agreements must acknowledge and support the growth of international trade through e-commerce, and cross-border data flows are the backbone of this growth. We urge you to secure enforceable commitments to free and open cross-border data flows around the world, for the sake of U.S. businesses and for a prosperous global economy.”