U.S. Pacific Trade Deal Exit Highlights Privacy Uncertainty

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By Daniel R. Stoller

U.S. withdrawal from the 12-nation Trans-Pacific Partnership trade pact may have important overseas and domestic privacy and security implications, privacy and trade attorneys told Bloomberg BNA Jan. 24.

The most important privacy, cybersecurity and data security provisions of the now defunct TPP fell under electronic commerce provisions. If the deal had gone through, it would have provided protections for personal information, electronic data and intellectual property source code, Joshua R. Rich, intellectual property partner at McDonnell Boehnen Hulbert & Berghoff LLP, told Bloomberg BNA Jan. 24. Also now off the table are provisions that would have promoted cybersecurity cooperation and may have limited law enforcement access to encrypted data, he said.

U.S. companies, especially consumer-facing businesses with a large presence in Asia and the Pacific Rim, such as Alphabet Inc.'s Google and Amazon.com Inc., may feel the biggest impact from President Donald Trump’s recusal from the TPP negotiating table, Rich said. Companies such as Apple Inc. were seeking the clarity that came with the widespread adoption of privacy, cybersecurity and data security protections in places where the companies operate. Now, they will have to wait for multiple bilateral deals for, at the least, similar protections, he said.

Trump has called for bilateral trade deals with the nations under the TPP in an effort to reach a “fair deal.” Trump’s announcement came at the end of a Jan. 23 meeting with executives from U.S. companies, including U.S. Steel Corp., Lockheed Martin Corp. and Dow Chemical Co. The move also comes before Trump’s U.S. trade representative nominee, Robert Lighthizer, has been confirmed.

Susan C. Schwab, former U.S. Trade Representative in the George W. Bush administration and current strategic adviser at Mayer Brown LLP in Washington, told Blooomberg BNA Jan. 24 that Trump’s decision to leave the TPP “was a bad move.” Although the TPP “was a good but not great agreement,” it did set good policy precedents and allowed the U.S. to assert its control in the Pacific.

Additionally, bilateral trade deals may not be a perfect solution for overseas policy implementation, Schwab said. “There are some areas of rulemaking that aren’t doable in bilateral agreements,” and there hasn’t been any substitutes or specific plans offered by the Trump Administration, she said.

Pulling out of the TPP is a lost opportunity for the U.S. to influence international international privacy and security policy, Rich said. Because the TPP’s language and goals were overarching, guiding principles that would have been enacted in the future, the U.S. won’t be able to directly influence policy for a large swath of countries that directly do business with U.S. companies, especially consumer-facing tech companies, he said.

Broad Language, Missed Opportunity

Many TPP provisions were written broadly, with the aim of espousing certain values to member states who would then adopt legal frameworks.

Consumer-facing tech companies may be upset over the U.S.'s move away from the TPP in favor of bilateral deals, because of the privacy assurances the TPP offered, Rich said. On the other hand, manufacturing companies without extensive IP, and small businesses without a consumer-facing front, have the most to gain from less regulation, he said.

Apple, for instance, would have benefited from the TPP's privacy and other principles overseas, given that part of its business is protecting large amounts of consumer data and providing private consumer communications. “Apple would have had much to gain from the TPP” because it would have been able to assure consumers that their data is protected no matter where they are in the world, Rich said.

However, Burcu Kilic, legal and policy director at advocacy group Public Citizen, told Bloomberg BNA that even if the TPP is dead, “it doesn’t mean those provisions are dead.” They may well resurface in other trade pacts, she said. The Trump administration probably didn’t put great significance on the TPP’s privacy sections, Kilic said.

To contact the reporter on this story: Daniel R. Stoller in Washington at dStoller@bna.com

To contact the editor responsible for this story: Donald Aplin at daplin@bna.com

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