Cyber-spying fight spills into trade debate

Cybersecurity is bleeding into international trade, with countries setting up barriers to U.S. exports in the guise of protecting their products from snooping.

The trend has rankled U.S. officials, who see it as digital protectionism masked as national security.

{mosads}“There is a growing wave around the world in the name of security regimes, which is really an attempt to use trade barriers and cyber-related measures to try and frankly keep U.S. businesses out of the market, which is a real problem,” Deputy Secretary of Commerce Bruce Andrews told The Hill in an interview.

The issue has spilled into the congressional debate on President Obama’s trade agenda, with supporters arguing trade is a way to counter digital protectionism.

Others maintain a freer flow of data between countries simply opens people up to foreign government surveillance and cyber crooks.

The Senate is expected to vote Friday on approving fast-track legislation, which would allow the president to send trade deals to Congress for up-or-down votes. The bill calls for trade pacts to guarantee uninhibited cross-border data flows.

“One of the principal factors I felt so strongly about were the digital ones,” Sen. Ron Wyden (D-Ore.), who helped draft the bill, told reporters last month.

If fast-track passes, it will make it easier for the White House to complete negotiations on the sweeping Trans-Pacific Partnership (TPP), which Andrews called “critically important” for cybersecurity.

“What TPP is doing is writing the new international norms” on cybersecurity, which he said “will allow [companies] to do what they need to do to protect their data.”

“That’s something that’s really important — giving companies the flexibility to build the security solution for their business.”

In the wake of Edward Snowden’s disclosures of U.S. worldwide snooping, countries like China, Russia, Brazil and Germany have all debated laws encouraging companies to store data locally.

Companies claim they could be locked out of critical markets as a result.

“You sort of begin to see how achieving national security goals can impact trade,” said Joshua Meltzer, a Brookings fellow focusing on the global economy.

The administration also believes these laws “work against globalization and to a certain degree cybersecurity,” said Jay Healey, a former director of cyber infrastructure protection for the White House.

Without access to the best cybersecurity products, free market advocates argue, companies risk exposing their data to hackers and spies. And denying companies the ability to shuffle data around the world leaves corporate networks more susceptible to cyberattacks, say proponents.

“When the data can’t move, it works against resilience,” said Healey, who also helped lead Goldman Sachs’ crisis response team in Asia.

Some even allege the practice might violate Worth Trade Organization (WTO) rules, which prohibit countries from favoring domestic products over foreign competitors.

The U.S. hasn’t gone that far, but in March it did express concern with the WTO over China’s ongoing attempts to include cybersecurity regulations as part of proposed counterterrorism and national security laws.

The administration would rather push norms through trade agreements than fight it out at the WTO.

While China isn’t part of the TPP talks, many of its important neighbors are, including Japan, Singapore and Vietnam. A completed deal could pressure China to agree to the cyber rules.

“If other countries, including China, want to enter TPP, we want them to play by a fair set of rules,” Andrews said.

Others argue the National Security Agency has shown few qualms about overseas cyber-spying.

Why shouldn’t countries be allowed to keep their sensitive information within their borders?

“We don’t want our data protection softened,” German Chancellor Angela Merkel said last year during her weekly podcast.

TPP won’t be the last word on the issue. Data flows and cybersecurity aren’t even central tenets of the talks. But the discussions will set the tone for future negotiations on the topic.

If TPP falls apart, “it gives us an excuse to turn our backs on one another,” Healey said. “And I think it’s going to make progress difficult. If we succeed on this we say, ‘Good, where can we succeed next?’”