09/11/2012 11:45 am ET Updated Nov 10, 2012

TPP: The First Regional Trade Agreement of the Cloud Era

Trade officials from the United States and eight other Pacific Rim countries are meeting this week in Leesburg, Va., for the 14th negotiating round of the Trans-Pacific Partnership (TPP), an agreement noteworthy for many reasons, not least of which is the fact that it constitutes the first one of its kind in the cloud computing era.

The ability to deliver IT services over the Internet is easily the most exciting evolution in information technology in the last decade. In the past, only big corporations could afford high-end data-processing tools and facilities. Now, everyone has cost-effective access to infinitely scalable services. That offers huge economic benefits -- especially for small and medium-sized enterprises, which can start up and grow faster than ever before.

But for the countries participating in the TPP to capture the full benefit of cloud computing, negotiators will need to do three big things right:

  1. Ensure that data can flow easily across borders.
  2. Strengthen intellectual property protections.
  3. Promote a competitive marketplace by eliminating preferences for particular technologies or providers.

We talk a lot these days about cross-border data transfers, but what we're really talking about is cross-border business opportunities. The TPP represents a chance for entrepreneurs in each of the participating countries to expand their reach, grow their businesses, and drive economic growth by taking advantage of the global cloud.

Unfortunately, in many of the world's fastest-growing markets, we are seeing a new wave of IT-focused protectionism that threatens to slow or stop the ability of these entrepreneurs to access cloud services across international borders. Some countries are putting in place regulatory barriers that inhibit Web- or cloud-based content services. Some are pursuing policies that restrict the ability of cloud providers to move data across borders. Some would even undermine the very benefits of global cloud computing by requiring data centers to be located in specific geographic locations. 

These kinds of restrictions are often done in the name of data security and privacy, but they don't always make sense. We need to distinguish between disguised protectionism and legitimate data-management concerns -- and we have to find ways to address those concerns without restricting trade. In short, we need to stop the new wave of IT-focused protectionism before it spreads.

Getting this right in the TPP will set an important precedent for the rest of the world to follow at a critical time for the growth of the global cloud market. So how do we do it?

First, to ensure that data can flow seamlessly across borders, we need our privacy and security rules to work together. We don't need everyone's laws to be identical. But every country has to balance good data stewardship with the growth of the digital economy.

For example, the digital economy has powered growth in the United States for several years -- and that growth has been balanced with strong privacy protections. Even as the US considers new online privacy protections, our current framework is built on a foundation of fundamental values enshrined in the Constitution. US privacy law encompasses flexible and adaptable common-law rules, plus numerous consumer-protection laws. All of this, of course, is backed by strong enforcement: The FTC holds companies accountable when they promise consumers to protect personal information.

Second, we need to promote innovation in the cloud the same way we promote it everywhere else. That means protecting your rights when you bring new products to market, and it means stopping new forms of cybercrime and theft. Contrary to popular belief, IP theft doesn't disappear in the cloud; it just takes on different forms. It is critical to have strong protections against infringement and to prevent circumvention of technologies that protect content.

Finally, governments buy a lot of technology. They can shape a competitive marketplace if they reject preferences and let the best technologies win.

A variety of factors contribute to the optimal policy environment for promoting the cloud, as BSA has documented in our Global Cloud Computing Scorecard. The TPP offers its participants a chance to get some of the biggest ones right -- and the world will be watching.