TAFTA | TTIP in the Light of the Modern Digital Age and its Significance for the Future of the ICT Industry

Abstract: The negotiations for the TAFTA I TTIP agreement encompass a broad spectrum of issues. Because of the far-reaching importance of ICT topics, the TAFTA I TTIP must include a Digital Agenda. BITKOM welcomes the High Level Working Group’s (HLWG) proposals and emphasizes the imperative to pay special attention to the needs of the information and communications technology (ICT) business. The world of the 21st century, its economies and societies are strongly influenced by ICT topics, increasingly dependent on working ICT-structures, and based on improvements of ICT technologies. The Digital Agenda – if TAFTA | TTIP is to become a succes – should discuss ICT-regulations such as technical test provisions, the proper defining of standards as well as issues like intellectual property and data protection.

In 2011, the leaders of the European Union (EU) and a United States (US) delegation met at a summit to talk about their future common goals and pending world challenges, especially in the economic area. With the continuing crisis of the world economy, both sides decided to open talks and negotiations on a mutually beneficial free trade agreement. For this purpose, the EU and US representatives authorized the Transatlantic Economic Council (TEC) with the establishment of a High Level Working Group on Jobs and Growth (HLWG). The Working Group has been tasked to formulate policies and measures to increase EU-US trade and investment, to support mutually beneficial job creation, and to aid economic growth and international competitiveness (European Commission 2013a).

BITKOM and its members welcome the HLWG’s proposals and emphasizes the imperative to pay special attention to the needs of the information and communications technology (ICT) business, because the world of the 21st century, its economies and societies are strongly influenced by ICT topics, increasingly dependent on working ICT-structures, and based on improvements of ICT technologies.

The first round of the TAFTA | TTIP-negotiations started in July 2013 and took place in the same secrecy as the negotiations for the Anti-Counterfeiting Trade Agreement (ACTA), which, in the end, was rejected by the European Parliament (No: 478, Yes: 39, Abstentions: 165) after comprehensive and international protests against the agreement occurred all over the continent (BBC 2012). Looking at the issues at stake, both sides of the negotiations would be well advised not to make the same mistakes again, but should henceforth try to guarantee more open, transparent and, thus, democratic procedures. This should start right away, especially with the running negotiations of the intended treaty.

TAFTA | TTIP and the ICT Industry

The realization of TAFTA | TTIP would be the biggest trade deal in the world. Today, there are close relations between the EU and the US which are and will continue to be an element of stability in Europe and a precondition for development in general. These relations, built on the foundation of shared values and goals, have been developed steadily and were an important, stabilizing factor for the creation of the EU as a whole.

Looking at current economic statistics, the EU and (North) America have the strongest economic ties of all trade areas across the globe. The US and the EU only represent 10% of the world population, but together generate around 40-50% of world GDP (Auswärtige Amt 2013) and 30% of world trade (European Commission 2013a). In 2011, approximately 17% of all European exports went to the American market and 19% of total American exports were destined to the European market (European Comission 2013b).

Economic Importance of the ICT Sector in the European and American Economy: Numbers, Growth, Jobs

The ICT sector is not only one of the several sectors generating growth; it is also a cross-sectional technology enabling processes of production growth and innovation in various sectors of the value chain. A prosperous ICT sector has the potential to assure continuing growth in national Gross Domestic Product (GDP) and to safeguard jobs, while reducing the unemployment rate and providing the necessary product and service infrastructure. In a nutshell: the flourishing of aforesaid sector can help to ensure a sustainable economic growth for big, medium, and small companies alike and could contribute greatly in the creation of reliable modern infrastructures: for example, in public administration institutions (E-Government), in the health business (E-Health) or in the optimization of public transfer structures (smart grids) (European Commission 2013c; Executive Office of the President 2011).

The American and European ICT markets are globally leading markets, inasmuch as they represent a share of 27% (US) and 23% (EU-25) respectively, which combines to represent half of the global ICT market. Furthermore, the US and the member states of the EU maintain good and growing trade relations in the field of the ICT industry as well as in ICT products. The German ICT industry is one of the most important European trading partner for the American ICT industry (Statistisches Bundesamt Wiesbaden 2012).

(CC BY-NC-ND 2.0) Photo by Arts Electronic

Stronger Consideration for Regulation in ICT Related Areas

The trade in ICT products is regulated through a multilateral World Trade Organization (WTO) agreement, the Information Technology Agreement (ITA), signed in 1997 by 29 countries with the objective of eliminating tariffs on a broad list of information technology (IT) and telecommunications products (WTO 1996). Today the ITA regulations are accepted by 46 members (states or separate customs territories) and represent 97% of global trade in the specified products.

The HLWG identified areas for potential closer cooperation through: a) the elimination, reduction or prevention of tariffs, tariff-rate quotas and various kinds of non-tariff barriers to trade, b) enhanced compatibility of regulations and standards, and c) enhanced cooperation for the development of rules and principles on global issues of common concern (European Comission 2013a).

BITKOM welcomes these proposed measures, but would prefer stronger consideration in the following areas related to the ICT business: adjustment and specifying regulation of the customs, technical test provisions and standards, data protection and questions related to the protection of intellectual property rights.

Customs

The list of products under the rules of the ITA covers computer hardware, computer software and peripherals, telecommunications equipment, analytical instruments, semiconductor manufacturing equipment and other electronic components (WTO 1996).

During recent decades, there have been rapid advancements in the development of devices and in the range of functions of these, which have opened up new features and applications in communication methods (Facebook, Twitter, social media, etc.). One important result of these developments was the idea to combine different functionalities in one device – the most common features and advances nowadays are evident in the integration of the Internet into telephones (“smart phones”), television sets (“hybrid or smart TV”) or, currently under rapid development, glasses (“smart glasses”).

The new devices – usually called Consumer Electronics (CE) – are not part of the low or non-tariff regulations of the ITA (except smart phones, which are classified as mobile devices) so when procuring them, they are liable to duties which constitute a new barrier to trade. Just as important is the fact that is it nearly impossible to decide, in which category (IT product or CE device) hybrid devices should be classified into. To eliminate this obstacle and, thus, to ease trading activities and procedures in this product area, the EU member states and the US would have to decide what kind of product each new hybrid device is, so that each one could be adequately categorized and put under suitable customs regulations.

Technical Test Provisions and Defining of Standards

In the area of setting standards, norms, and a broader harmonization of technical test provisions for the market access of new IT hardware, a growing trade volume could easily be achieved by agreeing on the usage of the European approach – the so called “New Legislative Framework” (NLF), – which constitutes the basis for a free movement of IT goods within the European market. On the legislative level there is no need for a myriad of new laws dealing with questions of technical details for each new IT product: it is just necessary to define basic product requirements. The second step – the technical realization of the product – is guided by a collective setting of norms that would take existing statutory laws into account.

Having identified the European approach as not only a successful one with regards to trading activities and trading volumes, but also as a simple way of setting standards and norms in the IT hardware business, it should be preferable to insert this working approach – by taking working American standards and norm setting schemes into account of course – into the procedures that have to be formulated under a common free trade agreement.

Another area that should be more strongly integrated and harmonized under the TAFTA | TTIP agreement is the field of European and American mobile telecommunication networks, especially in the field of Global System for Mobile Communications (GSM) frequency bands, which are cellular frequencies for the operation of GSM cell phones. Currently, there are various GSM frequency ranges used in different parts of the world. This variety creates a mixture of usage that requires travelers not only to pay (sometimes quite expensive) roaming fees, but also obliges them to check if their mobile devices are compatible with the band of networks available at their destination. More harmonization, in order to achieve greater interoperability between mobile telecommunication networks, is a further key towards reaping the benefits provided by ICT structures, devices, and applications.

(CC BY 2.0) Photo by itupictures

Intellectual Property

In our digital age, an increasing number of non-physical products that can be sold, such as expensive cinema productions, can also be shared easily without any charge via a growing number of online platforms that are (usually) maintained by illegal providers (mostly located in unregulated countries). As a result, violations of intellectual property (IP) rights are on the rise.

A common free trade agreement between the EU and USA should try to reverse this trend by: a) fostering international cooperation to pursue those illegal providers even when they are located in non-regulated countries, b) conserving and (re-)strengthening existing IP-regulations like another WTO agreement, for example, the so-called Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, and c) establishing timely data sharing platforms where users can buy and legally stream content without violating any intellectual property rights. Furthermore, to increase the geographic coverage of a new agreement, its structure and norms should be agreeable to further potential participating states.

The economic, as well as the industrial, sector are important areas where IP-rights should find special protection under the rules of a common agreement. In the phase of an expansion to new markets, companies not only need the safety, but also the certainty that they do not have to disclose any intellectual property to gain access to a new market. Any spying – especially promoted by governments – should be banned under these new rules.

Data Protection 

The emergence of spying allegations has spurred a general opposition against a free trade agreement with the United States. But not only against the background of the various spying activities in Europe, the issue of data protection is of crucial importance. The global and increasingly digital economy needs robust data protection rules that provide a trustworthy basis on which companies can act and citizens’ rights can be protected effectively. Therefore a trade agreement that is not accompanied by data protection considerations would not be adequate.

 At this stage European companies are allowed to exchange personal data with American companies that are self-certified under the Safe Harbor agreement, which was accepted by the European Commission to provide an adequate level of data protection. The two other legal justifications for such data transfers are the use of standard data protection clauses – also allowed by the commission – and the existence of binding corporate rules that provide an adequate level of protection within internationally operating groups of companies. Especially the Safe Harbour Agreement is being significantly discussed at the moment, as there is a feeling that it might not live up to the expectations in guaranteeing an adequate level of protection. It is discussed whether there is a need for a better implementation and control of it or for a whole new approach on such transfers in order to strengthen European citizens‘ rights.

 BITKOM supports an evaluation and a renegotiation of the Safe Harbor agreement with the aim of a stronger emphasis and adherence of European data protection standards and more reliable mechanisms of self-regulation 

The issue of data protection must be treated carefully, but must not become an imposition for the TAFTA I TTIP negotiations in general. The exchange of data must be possible, for example, between companies located in Europe and their American daughters (e.g., to afford unobstructed business connections within one company). Nonetheless, the issue of data protection and a high standard for the protection of personal data is required and should be dealt with in the course of the TAFTA I TTIP negotiations.

 Conclusion

 The negotiations for the TAFTA I TTIP agreement encompass a broad spectrum of issues. Because of the far-reaching importance of ICT topics, structures, and technologies nowadays by means of the broadening of business activities and the restructuring of social activities and personal communications, the negotiations for the TAFTA I TTIP agreement should not end like the negotiations for the ACTA agreement. A free trade agreement between Europe and the United States should follow modern, equilateral and transparent procedures to safeguard the needs of the ICT business. Through the successful realization of the TAFTA I TTIP negotiations the desired outcomes of the agreement – more investment, more growth and more jobs on both sides of the Atlantic – can be achieved.

 A multi-stakeholder approach with the inclusion of economic and civil society actors, which ensures the required transparency, seems to be a constructive negotiating framework to rebuilding lost trust. Moreover, a broad and open negotiating approach could not only foster a closer cooperation between Europe and the United States, but should enable the participation and cooperation of further regions and states like for example the Asia-Pacific Region. Although the TAFTA I TTIP agreement would primarily be an agreement to reach economic goals, it also could become an important starting point to tackle questions of development policies. ICT technologies and structures are playing a growing, important role in this context; the most recent example is the role of the internet in the “Arab Spring”, which has been the core for coordinating protest activities and communications.

References

Auswärtiges Amt (2013): Beziehungen EU und USA. Available online: http://www.auswaertiges-amt.de/DE/Aussenpolitik/RegionaleSchwerpunkte/USA/EU-USA_node.html

British Broadcasting Corporation (BBC) (2012): Acta Protests: Thousands Take to Streets Across Europe. Available online: http://www.bbc.co.uk/news/technology-16999497

European Commission (2013a): Final Report – High Level Working Group on Jobs and Growth. Available online: http://trade.ec.europa.eu/doclib/docs/2013/february/tradoc_150519.pdf

European Commission (2013b): Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment. Available online: http://trade.ec.europa.eu/doclib/docs/2013/march/tradoc_150737.pdf

European Commission (2013c): Enterprise and Industry: ICT Competitiveness. Available online: http://ec.europa.eu/enterprise/sectors/ict/competitiveness/index_en.htm

Executive Office of the President (2011): United States-European Union Trade Principles For Information and Communication Technology Services. Available online: http://www.ustr.gov/about-us/press-office/press-releases/2011/april/united-states-european-union-trade-principles-inform

Statistisches Bundesamt Wiesbaden (2012): Außenhandel: Rangfolge der Handelspartner im Außenhandel der Bundesrepublik Deutschland. Available online.

World Trade Organization (WTO) (1996): Office of Technology and Electronic Commerce: Ministerial Declaration on Trade in Information Technology Products. Available online: http://www.wto.org/english/news_e/pres97_e/inftech.htm