A role for trade rules in Internet governance
This is a problem of trust, and it’s up to advocates of the rules-based global trading system to remedy it.
Almost all participants I heard from supported the idea of a global internet that facilitated personal and commercial exchange for everyone. That’s not to say that no one complained about globalization or offered support for “data sovereignty” or some form of industrial policy for internet services. But the vast majority of policy discussions revolved around less nationalistic concerns like privacy, cybersecurity, or consumer regulation. Similarly, most participants who expressed concern about data localization bans in trade agreements (like in the TPP’s E-Commerce Chapter), did not defend data localization policies for their own sake.
Trade negotiations, according to many in international civil society groups, are inadequately transparent, overly susceptible to power politics and trade-offs, and driven by a purely state-to-state dynamic unlike the multi-stakeholder process common to other internet governance institutions. They simply do not believe that trade agreements can produce good rules for internet governance or preserve adequate policy space for governments.
These complaints are not entirely unfounded. It’s true that modern trade agreements have overstepped their bounds by regulating some issues better left to national discretion or other international fora. This is particularly true in the areas of intellectual property rights, labor laws, and environmental protections. This phenomenon can be seen in the TPP’s E-Commerce Chapter, which includes a number of global governance provisions (mandating anti-spam laws, for instance) that don’t belong in a trade agreement. And one reason these issues don’t belong is because trade negotiations are not a good mechanism for achieving well-balanced solutions to complex policy problems.
But it’s important to put the failings of trade governance into perspective by recognizing what it is that trade agreements do really well. Global trade rules have proven uniquely capable of preventing destructive state behavior. They promote peaceful relations and ensure that people all over the world can enjoy a quality of life and security made possible only by cross-border economic cooperation. They accomplish this by reducing the otherwise-out-sized influence of import-competing businesses in domestic politics. By tying domestic market liberalization to foreign market liberalization in a reciprocal arrangement, trade agreements conscript the political power of exporting businesses to dismantle the protections and privileges enjoyed by rent-seeking domestic companies.
Even if open fora and multi-stakeholder processes may do a better job of developing and disseminating good ideas, they don’t alter the interests at play that shape political decisions about policy. Reciprocal trade negotiations, on the other hand, actually eliminate economically unsound, beggar-thy-neighbor protectionist policies.
And that’s what most data localization rules are. The global nature of the internet means that companies can provide services in real time to consumers or businesses in any part of the connected world. The value that has been and will be created because of this technology is immense, and governments have sought to redirect those gains for political purposes to the detriment of not only their own economies but everyone else. Trade rules that prohibit data localization polices are an embodiment of the idea that humanity benefits from an open, global internet applied to the problem of parochial incentives shaping government action.
I’m not trying to say that organizations and researchers working to shape internet policy should just ignore trade agreements or trust trade negotiators to get the rules right every time. Trade negotiators need input from internet policy groups on how best to shape specific exceptions necessary to keep broad rules from impeding other policy agendas. There’s also plenty of work to be done engaging government officials to influence and educate them about the best way to pursue legitimate policy goals like privacy protection and cybersecurity without data localization mandates that impose nationalistic cultural barriers and economically arbitrary borders onto the internet.
Trade rules may not be perfect, but they are an incredibly valuable bulwark against internet fragmentation that policy experts should engage with rather than condemn.