Data trade and the shadows of the times

InsightaaS: Ten days after publishing this post focused on the ripples resulting from the Snowden revelations, we were contacted about a recent Business Software Alliance (BSA) report, "Powering the Digital Economy: A Trade Agenda to Drive Growth."  The report’s focus on easing restrictions on cross-border data transmission, calling on governments to opt for "the least trade-restrictive" approaches to technology (including security) standards and standardizing intellectual property protection regulations have clearly been credibly researched, but the document itself suffers gravely from its juxtaposition against what the report refers to as "the wake of disclosures about surveillance activities by the US National Security Agency (NSA)."

The organization and the report

BSA (formerly known as the Business Software Alliance) is a Washington, D.C.-based organization lobbying for practices that positions itself as "the foremost organization dedicated to promoting a safe and legal digital world." The organization’s mission "is to promote a long-term legislative and legal environment in which the industry can prosper…[and] foster innovation, growth, and a competitive marketplace for commercial software and related technologies."

CompuEye_resizedThe "Powering the Digital Economy" report is intended to provide a rallying point for these aims. It begins by observing that a multi-trillion dollar global opportunity in spending on technologies and related services has "far-reaching significance, not just for the IT sector but for the world economy as a whole…boosting productivity, streamlining operations, and facilitating creativity and problem solving, which in turn spurs job creation and growth." The threat to this "limitless" potential, according to BSA, is "digital protectionism" — restrictions on the flow of data cross borders, policies favouring local suppliers that "distort international competition," and "widespread intellectual property infringement." This seems like a somewhat random list, made moreso by the further reference to "other novel forms of IT-focused protectionism [that] threaten to inhibit digital trade, stifle innovation and slow economic growth to the detriment of enterprises and customers around the world."

In some ways, this commingling of different types of intellectual property (IP)-related issues — again, against the backdrop of the Snowden revelations — make for an uneven read. At a high level, it is easy to find merit in the report’s focus areas. If an increasing proportion of global trade is digital, then we need to pay attention to trade rules in this area, as we must and do to trade regulations governing physical items. Government procurement policies governing software and services sourcing would most likely benefit from review, and from establishment and adoption of best practices. And most creators of IP (InsightaaS.com included) count on some measure of protection for the fruit of our invention in order to profit from our work.

Remedies and reservations

When the discussion moves from identifying problems to specifying potential remedies, though, the BSA positions become more difficult to digest. One example is in the area of data residency. The report notes that "current global trade rules provide few protections to limit countries from imposing restrictions on cross-border data flows." This is true — but in reality (unlike in the report), it does not necessarily follow that "it is vital that trade rules include clear and enforceable obligations to: (1) allow trading partners to transfer, access, process or store data across borders, and (2) prohibit countries from requiring the use of local servers or other IT infrastructure as a precondition for accessing their markets." Given the insights gleaned from Snowden’s disclosures, there may in fact be reasonable grounds for national government to insist that data traffic occur outside the U.S. — and although there are no high-profile examples of the Patriot Act being used to extract nationally-regulated information from U.S.-based servers, that threat is explicit in the positioning of the Act, and plays a role in international concerns with respect to U.S. data hosting. "Modernizing trade rules" may well be an important step in ensuring more cost-effective service delivery around the world, but it’s not necessarily the first step — there may be need for better transparency and regulatory reform in the U.S. before a Washington-based lobby group can argue credibly for this kind of action.

Similarly, the section calling for promoting technology innovation through the provision of "robust intellectual property protections" looks better on the surface than it would likely appear under closer scrutiny. Clearly, it is important to protect the rights of inventors of IP. But to be candid, it is well known that Canada and the U.S. have followed different paths with respect to intellectual property protection in the digital economy — and it isn’t remotely clear that the U.S. path is better, despite persistent efforts (notably, by the Harper government, in the now-discredited Bill C-30 and currently-controversial Bill C-13) to bring Canadian standards more closely into line with U.S. norms. In the abstract, it is difficult to take issue in with the report’s call for adoption of "best practices in intellectual property protection and enforcement" — but if the implication is that the entire world should embrace the U.S. approaches to "strong civil and criminal enforcement mechanisms for both physical and online copyright infringement and effective measures for patent protection," there will be reasonable specific grounds for dispute.

In the end, it is hard to fault BSA for its positions: it is a lobbying group dedicated to advancing the interests of its members, which include Microsoft, Oracle, Apple, Symantec, IBM, Intel, Adobe and many others that would benefit from freer and more secure access to high-growth emerging markets. However, as is the case with Bill C-13 — which begins with the stated objective of combating cyber-bullying, and drifts rapidly into the much murkier territory of cyber-surveillance — it can be difficult to adequately parse laudatory objectives from more objectionable tactics.

Readers interested in reading the BSA report can find it here: http://digitaltrade.bsa.org/pdfs/DTA_study_en.pdf

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