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Recognition of Internet Freedom as a Trade Issue Growing

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On Wednesday I moderated a World Trade Organization panel in Geneva that examined the impact of Internet restrictions on international commerce and how Internet censoring and filtering may violate WTO agreements.

The UN has viewed restrictions on access to information as a human rights issue, but the enforcement of human rights commitments against wayward states has typically lacked the ability to alter their behavior. More recently, the Internet's evolution as a platform to enable commerce has also put the issue of Internet restrictions on the radar of the international trade system. The issue of trade and free expression is gaining media attention including this World Radio Switzerland interview of Google's William Echikson from Tuesday.

Trade officials may be more effective at altering Internet restrictions like filtering and censorship because of the potential for economic retaliation. But as a precursor we need a broader understanding among policymakers that just like boats, planes and the postal service, the Internet is a vehicle for trade.

Data is becoming increasingly economically relevant, and even critical, either as a fundamental part of a service, such as financial, health care, telecommunications, and computing services, or as the delivery mechanism for electronic goods such as digital media and software applications.

In fact, McKinsey just released a study that valued the contribution of search engines to the global economy at $780 billion annually. Facebook, whose core value lies in making data useful to its users and advertisers, is currently valued higher than Goldman Sachs. And these points do not even address how much the Internet is transforming more traditional export sectors and supply chains around the world.

The Internet has been likened to a digital Silk Road, ferrying electrons around the world and enabling trade in service sectors that were not too long ago considered by economists to be non-tradeable. Now a Chinese engineer, a German lawyer, a British banker or an Indian accountant can ply their trade anywhere in the world that has an Internet connection -- and all without ever having to get on a plane and pass through a customs checkpoint.

The global value of music distributed online was $4.6 billion in 2010. Amazon just recently announced that it is selling more digital books than physical ones, and supply chains are no longer subservient to manufacturing, but masters of it.

Where it was once mainly limited to the developing world, the Internet is now truly affecting every corner of the globe. Spurred on by the rapid adoption of mobile devices, China has more Internet users than the entire population of the U.S., and India expects to have 160 million Internet users in two years time.

The global online marketplace is growing, but the laws created before the Internet are not always clear and often not enforced. Conflicts over digital trade issues are now a leading cause of WTO disputes. Presently, we find ourselves in a strange world where physical trade is increasingly liberalized, yet digital trade remains restricted.

The administration has taken a stance on Internet freedom issues. Secretary Clinton has made it clear in policy speeches that Internet censorship is both a human rights and a trade issue. In 2009 when China mandated that all computers sold in its country contain Internet filtering software, our USTR and other trade officials objected and the order was ultimately not enforced.

Just this year, the U.S. and EU agreed upon joint trade principles that affirmed the importance of the free flow of information and an open Internet.

The WTO forum this week will hopefully help build understanding and momentum for recognizing the importance of the Internet as a trade delivery route and make sure the free flow of information is a top diplomatic and trade priority. We need to enforce existing trade agreements and build clearer protections into new ones.

I hope efforts to highlight these issues will be increasingly put in the context of global economic negotiations. Given President Obama's oft publicized commitment to double U.S. exports, it is appropriate for the U.S. to fight protectionist limits on the provision of Internet services around the world as U.S. companies are disproportionately affected by these measures. Other countries around the world need to recognize the vital and growing importance of the Internet to world trade and their own domestic economies.

Although there is much to debate, economic diplomats worldwide need to intensify their focus on Internet-related trade. Taking steps to develop international norms and a framework based on principles should address current deficiencies, and lay the foundation for new technology or technology-related issues that are around the corner.

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