Morning Consult

Data Localization Would Harm U.S. Economy, Tech Experts Warn

A growing global trend of data localization, also called data nationalization, is threatening firms’ ability to conduct business around the world. It could jeopardize the American economy more than other countries if it grows, tech experts warned the House Ways and Means Subcommittee on Trade.

Data localization laws include things like a Chinese policy that bars companies from processing or storing Chinese citizens’ financial and credit data offshore, one that several panelists at a House Ways and Means Subcommittee on Trade pointed to as particularly egregious. There are also laws in Malaysia and South Korea requiring all data about citizens to stay on local servers. A key step for international tech openness, according to the witnesses, will be passing the Trans-Pacific Partnership, the massive trade deal signed by the United States and 11 other countries on Feb. 4. Members of Congress from both parties, as well as both presidential candidates, have expressed doubt to outright opposition to TPP because they say it puts the United States at an unfair disadvantage in many areas. GOP leaders say there is almost no chance that Congress will vote on TPP in 2016. But some in the tech community, including the Internet Association, have come out in support of the deal for acknowledging digital trade and including requirements for nations create safe harbors regarding intellectual property law. Subcommittee Chairman Dave Reichert (R-WA) called the “arbitrary blocking of cross-border internet traffic” a long-term problem for the US, especially since digital trade can be such a boon for small businesses.