Several years ago in this column, I remarked on the amazing transition from e-commerce to the “Internet economy.” Nowadays, it is clear that the digital economy, for all intents and purposes, is the economy. Very little commerce, both in-country and across borders, could take place without the interconnected networks enabled by the global Internet. Think about how your business would function for even a day without reliable access to modern information and communication technologies (ICTs).
The OECD, which has served as an invaluable forum for discussion of sensible policy approaches to the challenges and opportunities presented by the digital economy, is gearing up for a ministerial meeting this June in Cancun, Mexico. The meeting will explore work undertaken by the OECD Committee for Digital Economy Policy to address the continued evolution of the digital economy in the eight years since a previous 2008 ministerial in Seoul, South Korea. USCIB and our members played an active role at the Seoul ministerial, where I had the privilege of serving as chair of the “business day” events.
The Seoul ministerial acknowledged the essential nature of the Internet as a platform for economic growth, and emphasized the need for all stakeholders to guide its development. Recognizing the vast changes in this area since 2008, the Cancun ministerial will highlight the extent to which the entire economy has become digitized, and explore how this transformation has affected social interactions, business and government operations, laws and regulations, and jobs and skills. Numerous USCIB and other global companies are set to participate.
Privacy and localization concerns
The Cancun ministerial comes against the backdrop of growing unease in some markets over privacy protections for cross-border data transmissions. The European Court of Justice got everyone’s attention recently when it invalidated the European Commission’s 2000 decision concerning the adequacy of the existing transatlantic “safe harbor” framework. In the past 15 years, thousands of U.S. companies have used this framework to ensure that their data practices are in line with European Union privacy rules.
Addressing the 2016 Consumer Electronics Show in January, Federal Trade Commission Chairwoman Edith Ramirez said she was confident that U.S. and EU officials would reach agreement on a new data transfer deal – a so-called Safe Harbor 2.0, which is essential for the global operations of both tech and non-tech companies. As we went to press, however, there was still no agreement, and the clock was ticking loudly toward a January 31 deadline imposed by EU Data Protection Authorities (DPAs). The DPAs indicated that if U.S. and EU negotiators do not conclude Safe Harbor 2.0 by that date, they may launch probes of U.S. tech companies to ensure compliance with European law. Such actions could have a severe chilling effect on transatlantic data flows, with potentially devastating consequences for both the U.S. and EU economies.
A related development is rising support for the forced localization of data centers within a country’s border. As USCIB members have made clear in numerous forums, such requirements diminish the investment appeal of these markets by creating undue burdens for global companies. Localization requirements also threaten ground-breaking ICT advances – with promise of significant economic and societal benefits for these countries – in such areas as cloud computing, use of Big Data and the Internet of Things. Also important (and ironic), data localization measures effectively undermine privacy and security by distracting from efforts to create better protections for individuals and generally making these markets more vulnerable to hackers.
More generally, we are seeing a proliferation of other types of localization barriers, such as local content requirements, discriminatory government procurement practices, technology transfer requirements and other policies and regulations aimed at promoting domestic industry and shielding it from foreign competition.
Wise policy choices needed
A vibrant digital economy holds great promise for individual businesses and the global economy more generally. Many countries realize this, but in their efforts to harness the innovative and developmental potential of an Internet-fueled economy, they are resorting to policies that risk quashing that vibrancy.
During last year’s review of the decade-old World Summit on the Information Society (WSIS), an initiative launched under UN auspices, we also heard calls from some countries for a stronger government role in governance of the Internet. Such an approach would undermine the bottom-up, multi-stakeholder approach to Internet governance. When governments work together with other stakeholders, we can realize significant progress in raising capacity, knowledge, and understanding of digital economy issues. Policymaking invariably is improved when representatives of business, the technical community, and civil society inform such discussions; such inclusion also helps to lower the risk of unintended consequences.
The upcoming OECD ministerial provides the perfect opportunity for the business community to tell lawmakers which policies best realize the promise of Internet-enabled development and innovation. USCIB seeks a ministerial outcome that recognizes the importance of private-sector investment and “light touch” regulation that preserves the Internet’s interoperability. We would also like to see the OECD highlight how emerging technologies facilitate economic development and address societal needs. And collaboration between all stakeholders is a must in order to expand inclusion in the digital economy.
USCIB addresses these issues at a global level through our unique role as U.S. affiliate of the International Chamber of Commerce (ICC) and of BIAC, the Business and Industry Advisory Committee to the OECD. We are lucky to have strong member support and leadership from individuals such as Eric Loeb (AT&T) and Joseph Alhadeff (Oracle), chair and vice chair, respectively, of our ICT Policy Committee. (Alhadeff also chairs the corresponding committees at ICC and BIAC.)
I am confident that USCIB and our members will have robust representation in Cancun. And I am equally confident that policymakers will recognize the Internet’s role as a platform for innovation, social inclusion and economic development. With your continued strong support, USCIB and our members can continue to drive industry leadership in this critical area; ICTs are essential for doing business in the 21st century.