Editor’s Note: Regulation of critical infrastructure cybersecurity has the potential to become a significant technical barrier to trade (TBT), harming American and European efforts to achieve a Transatlantic Trade and Investment Partnership agreement, unless officials on both sides of the Atlantic ensure that cybersecurity regulation is addressed in the negotiations.
From: Wall Street Journal
The incoming U.S. trade negotiator will need to forge greater cooperation in Asia while protecting innovation.
By CHARLENE BARSHEFSKY
U.S. President Barack Obama last week nominated Michael Froman to be the next U.S. trade representative, and the announcement comes at a particularly important time: America’s innovation edge is under threat, and smart trade policy can play a unique role in bolstering it.
As has been widely observed, the United States needs to adopt certain domestic policies to promote continued technological innovation and international competitiveness. Among other things, it needs to increase federal funding for research and development, improve its infrastructure, reform immigration policies to attract and retain high-skilled labor, and strengthen teaching in science, technology, engineering and math.
America also needs to use other tools—notably trade policy. Every day, foreign competitors are pursuing aggressive strategies to move up the innovation ladder. Some of these strategies are identical to what the U.S. should be doing (China’s funding of biotechnology and nanotechnology research, for example), and Washington has no basis to object. Yet foreign governments also pursue more odious actions, seeking to expropriate others’ ideas and technologies for their own benefit.
This is “innovation mercantilism,” as Rob Atkinson of the Information Technology Industry Foundation puts it. It is also known as “free-riding”—governments acting to appropriate intellectual property and technology without the investment or compensation that reflects its genuine value.
Outright theft of intellectual property and technology via industrial or cyber espionage is criminal activity and should be penalized as such. But less-obvious activities are also concerning. In China and India, for example, state policies have forced foreign businesses to transfer technology or reveal source code as a condition of entering the market. India is starting to use “compulsory licenses” to force biopharma companies to license their patents to local competitors. Others meanwhile fail to protect trade secrets or insufficiently protect the test data that businesses generate to demonstrate the safety and efficacy of their products.
These government policies threaten America’s interests and ability to compete, and they should be at the top of the next U.S. trade representative’s agenda. Fortunately, President Obama and Mr. Froman (assuming he is confirmed for the position) have several unique opportunities ahead.
The U.S. is in the later stages of negotiating the Trans-Pacific Partnership, a free-trade agreement including 12 major or emerging markets ranging from Japan to Vietnam. If completed, this deal would set the terms of trade in a region that accounts for nearly 40% of global gross domestic product.
The U.S. is also poised to begin negotiations on a free-trade and investment agreement with the European Union. This trans-Atlantic agreement would establish new terms of trade between the world’s two largest economic areas. If it succeeds, it would increase regulatory compatibility in areas such as product standards, potentially saving businesses millions now lost to increased costs and legal uncertainty. It could also set a high standard for the rest of the world, especially for emerging-market countries flirting with innovation mercantilism.
These negotiations—plus others on international trade in services and information technology—represent the most ambitious U.S. trade agenda since the 1990s. The Obama administration should seize the opportunity to prioritize innovation in these negotiations, so that the resulting agreements will better enable America and others to fight foreign free-riding.
To ensure that trade policy supports innovation, new agreements should include strong protections for trade secrets and heightened remedies for theft. They should also prohibit technology-transfer mandates, protect patents and other intellectual property (including test data), ensure that state-owned enterprises compete on a level playing field with private firms, and allow businesses to move data freely across borders.
With trade policy, the Obama administration has a critical lever with which to advance U.S. economic growth and international competitiveness. Now is the time to use it.
Ms. Barshefsky served as U.S. Trade Representative from 1997-2001.
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