January 27, 2017 at 5:00 am ET
Trade is controversial. To many, it feels in this moment that trade is a particularly divisive subject.
But it is incontrovertible that trade has been the basis of economic cooperation, political cooperation and political security for centuries. That will not change. Trade among nations will continue and it will increase. That is undeniable.
It’s also undeniable the global economy has changed. As our global economy modernizes, the rules of trade need to modernize as well. This is the issue on which to focus when the United Kingdom’s Prime Minister Theresa May visits the United States this week.
We need new rules for areas of the economy that did not exist in the early 1990s when the North American Free Trade Agreement was negotiated and the World Trade Organization was launched. The internet has blossomed and we are at the start of a new data economy. Software alone supports almost 10 million U.S. jobs and adds $1 trillion to the U.S. economy. Many countries would like to shift these jobs to their shores. We need rules to help determine when countries can and cannot create policies that impede the movement of data to serve their own interests.
Providing forward-looking trade leadership has served the United States well. Almost three decades ago, the United States took stock of the economy and realized that intellectual property would be a major driving force — not just for the U.S. economy but also for the world. The United States, working with other forward-thinking countries, negotiated global rules on intellectual property and used trade agreements to embed them into the trading system. No one can seriously question that it’s useful and appropriate to have baseline rules on intellectual property in the global trading system.
Data and digital trade stand at a similar moment. Businesses of all shapes and sizes use data to grow. Manufacturers rely on data to manage global supply chains effectively. Farmers use global weather forecasts, sensors, and market reports to minimize their costs and maximize yields. Hotels, banks and retailers depend on data flowing across borders. App developers can launch into a global market. Credit fraud detection, humanitarian relief operations, R&D collaboration: international data underlies all of them.
It is obvious that commercial data will not only be a major part of the U.S. economy, it will be a significant element of, and catalyst to, the world’s economy. Yet there is no international consensus on strong enforceable rules on data. Without proper rules, non-competitive policies can be used to manipulate where these jobs go.
We need rules: fair rules that protect American interests, but also the prosperity of the overall global economy, and that set a standard to follow. There are new opportunities to accomplish this, creating better agreements that will expand job creation in the United States. A new and modern trade agreement with the United Kingdom is one such opportunity. The agreement should include strong provisions on ensuring data can be transferred and that localization requirements are prohibited. We hope May’s visit is a moment that moves this forward. Modernizing NAFTA is another opportunity to include groundbreaking, enforceable rules on data.
Europe, Japan, China and others are moving forward with data strategies. Different regimes are emerging. The United States is a leader in harnessing data for jobs and growth, but this is not to be taken for granted. Similar to what we have seen with intellectual property, there’s a brewing struggle for the economic benefits that data can bring. Other countries are moving forward. The United States should lead. And because the economic benefits are clear, there is reason to have confidence that it will. The United Kingdom, Canada and Mexico can be valuable partners in this effort.
There’s a gap in our international trading system right now and it’s a gap that clearly needs to be filled. It’s too big and too important to the U.S. economy to be overlooked. We can be optimistic that any administration looking to negotiate a trade agenda that will create jobs in the United States will see data as a priority.
Within the debate about the future of trade, shaping the rules for a modern, data-driven economy is an area that offers unity and agreement. Let’s seize that opportunity together.
Victoria A. Espinel is president and CEO of BSA | The Software Alliance. Previously, she was an adviser to former President Barack Obama on intellectual property and a chief trade negotiator under former President George W. Bush.
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