Battles to come over TPP for tech

Posted on 20th January 2016

Policy Analyst Logan Finucan discusses the opposing camps fighting over the tech-related provisions of the Trans-Pacific Partnership (TPP).

The hard work of negotiating the largest multilateral trade deal in history may have wrapped up last October in Atlanta, but the battle over its ratification is just getting started.   Lawmakers now weighing the Trans-Pacific Partnership (TPP) face competing pressures from many familiar constituencies such as exporting corporations, organised labour, and protected industries.  They are also hearing many new voices from tech and Internet constituencies not previously interested in trade agreements.

TPP goes beyond simple tariff barriers and includes critical provisions enshrining unrestricted cross-border data flows for most sectors, governing technical regulations of ICT products, establishing basic privacy and consumer protection standards, protecting source code from forced disclosure, and harmonising intellectual property rules.

Many traditional American technology giants, without abandoning manufacturing, have come to take an increased interest in electronic services, while many newer, purely data-focused companies have little to no interest in physical goods.  TPP, by locking in free cross-border data flows and heading off requirements to localise data centres in specific jurisdictions as a precondition to operating, offers a potential boon to companies such as these and keeps the door open to key markets for America’s competitive cloud computing, Internet, and software as a service industries.  At the same time, however, specific provisions leave large loopholes in at least two chapters – financial services and procurement – blunting its benefits for many electronic service companies.

Companies which do not rely on cross-border data flows also have much to like.  Software firms scored a big win by receiving protection of their source code.  Specific language prevents the forced disclosure of proprietary source code or mandated installation of back doors, curbing a growing government practice in the Pacific region which some fear could be used for industrial espionage.  Meanwhile, device manufacturers will benefit from lower non-tariff barriers, such as local content and testing requirements, as well as a formal framework to continue addressing other such barriers.

The agreement has, however, found itself on the receiving end of the nascent but increasingly self-confident online rights constituency.  Leading digital rights advocacy organisations such as the Electronic Frontier Foundation, Fight for the Future, and Public Knowledge have come out swinging against the agreement, lambasting its provisions on intellectual property rights and the alleged lack of transparency in its negotiating process.

These ‘post-material’ groups are no less engaged than those with traditional material interests, like autoworkers’ unions.  Despite the unprecedented nature of any internationally binding provisions on privacy, consumer protection, and free data flows, no agreement is likely to meet the standards of these groups on these and other issues such as copyright, online rights, and civil society participation.  They will not be appeased by anything short of the death of the agreement.

Moreover, these groups have demonstrated an impressive capacity to mobilise diffuse cyber-libertarian anger.  Those familiar with the swift demise of SOPA/PIPA in the United States, as well as that of ACTA in the European Union, know full well the fiery determination of these communities as well as their growing political influence.

Despite its potential benefits for businesses, the tech industry remains reluctant to engage publicly, for reasons which are not always clear.  After many months of silence, endorsements have finally begun to trickle in from ITI, Technet, and IBM, however the reaction from the industry has been less than whole-hearted.  Some problematic provisions do disproportionately affect specific companies and give them good reason to hesitate.  Others with potentially more to gain may also be cowed by the agreement’s opponents, however.

As a result, the extent of the tech lobby’s involvement in the debate remains unclear.  Currently, there are few powerful actors making the case that TPP is a forward-looking trade agreement which will increase the competitiveness of America’s industries.  The tech industry’s full-throated defence would be a powerful addition to the debate and an important counter-balance to the agreement’s opponents.

Negotiators of TPP deserve praise for grappling with critical new issues which are shaping the global economy.  Their efforts have set up a collision of competing tech constituencies, however, which we will see fought over in the coming months.  Given that TPP will not be voted on in the US Congress until later in 2016, we can expect to see much more from these groups in the coming months.  The outcome will say much about the relative power of each.

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