There are a number of reasons the Transatlantic Trade and Investment Partnership (TTIP) holds the potential to be a significant agreement. Not least of these is the fact that the United States and European Union together account for half the world’s output and a third of all trade. But when all is said and done, the most significant aspect of a US-EU trade pact could turn out to be its impact on global commerce and trade in the kinds of products and services that rely on exchanging information digitally.
As digital products and services like cloud computing roll out in markets around the world, data flows increasingly have become the lifeblood of companies large and small. Whether they are selling digital technologies or using them, companies operating in the global economy need to transmit data across borders. The TTIP can establish trade rules that stimulate this digital trade across the Atlantic — and set a precedent for the rest of the world.
The Administration has set an ambitious timetable for TTIP negotiations. This means a great deal must be decided in a relatively short time. As a first step, the US Trade Representative requested comments from industry and other public stakeholders on what the agreement should include. BSA recommended the following eight priorities:
- Ensure data can flow across borders unimpeded. This is critical for companies offering and using digital products and services and for global enterprises managing their international operations.
- Cover current and future innovative services. With technology moving so quickly, the ink on a treaty can barely dry before innovative new services make it obsolete. The TTIP can avoid this by including broad coverage of services using a flexible “negative list” approach that only spells out what is not covered. This will ensure the agreement automatically includes many new services as they are developed in the future.
- Forswear forced localization requirements. The TTIP can take a stand against a troubling trend in which countries are implementing policies that benefit indigenous firms or force foreign firms to invest or build local facilities as the price of market access. Europe and the United States should use the TTIP to establish trade rules against these discriminatory measures in their own markets and work together to persuade other markets to follow suit.
- Uphold robust intellectual property protections. Europe and the United States both understand the importance of protecting and nurturing the creative engines that drives our economies. The TTIP should reinforce our common high standards of intellectual property protection and enforcement, and it should establish effective ways we can work together more closely to address problems in other markets where software piracy is rampant.
- Open up government procurement. Governments purchase huge amounts of software and other IT products and services. It is critical they do so in an open and transparent way that allows them to purchase the best solutions the world has to offer for their needs. The TTIP can do this and set a standard for other countries to emulate.
- Keep state-owned enterprises on a level playing field. In many countries, state-owned enterprises (SOEs) are outsized economic players that enjoy protections from the rules of the marketplace, including preferential financing, fewer regulatory burdens, and preferred vendor status with the government. By requiring transparency and implementing non-discrimination commitments, the TTIP can establish rules that put SOEs operating in the commercial sphere on the same level as other competitors.
- Follow industry’s lead on technology standards. Standards help foster innovation and trade when they are developed through a market-led process and then implemented globally. But when governments mandate technology standards or develop unique ones for each market, they stifle innovation. The TTIP should call for deference to internationally agreed standards rather than imposing regulations from on high.
- Promote mobility for skilled labor. The global marketplace is remarkably integrated, and that is especially true between the two largest and closest economies in the world. But it is harder than it should be for skilled workers to move back and forth between the United States and Europe. The TTIP could go farther to streamline and reform visa, certification and labor-market tests so people can move wherever their skills are in demand.
Fortunately, the United States and Europe have a great deal of common ground to work from on many of these issues. Not long ago, the two jointly issued “Trade Principles for Information and Communication Technology Services.” The TTIP can build on this and set new rules that serve as a global blueprint for digital trade.