How the Trans-Pacific Partnership Will Affect Cloud Service Providers

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While certain chapters had been previously leaked, the text of the controversial Trans-Pacific Partnership trade agreement has been officially released, outlining measures that could eliminate local data storage requirements, and enforcing common standards for the protection and enforcement of intellectual property rights.

Described as “NAFTA on steroids”, the TPP is a trade and foreign investment agreement between 12 nations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.

Internet activists have warned politicians that TPP could force sites to remove content that allegedly infringes on copyright without a court order, introduce harsh criminal penalties for journalists and whistleblowers, punish Internet users who share copyrighted material, and put restrictive limits on “Fair Use”. More than 250 tech companies and digital rights organizations have stated their opposition to the TPP Fast Track plan.

In June, the Senate voted 60-38 to give the president fast-track authority to pass the TPP and other trade deals, and barring lawmakers from making amendments to such agreements.

Fast Track authority helps the President pass other secretive trade deals such as the Trans-Atlantic Trade and Investment Partnership (TTIP) between the US and the EU, and the 51-nation Trade in Services Agreement (TiSA).

Removing Barriers to Cloud Services and Data Transfers, But at What Cost?

International trade policy is still catching up to the exchange of digital goods and services.

When the TPP first became known, software industry association BSA noted that an international agreement could potentially work against a “new wave of IT-focused protectionism” fueled by data security and privacy fear that have been prohibiting online entrepreneurs from entering international markets.

It would do this by ensuring data can flow easily across borders, that participating countries would honor a common set of intellectual property protections, and that incumbent service providers would be forced to compete with international competitors so that consumers have access to the most innovative options.

Some big tech companies like aspects of the TPP that restrict data localization laws that could require hosting data within a country’s borders. TPP members countries would not require companies to build data centers to store data as a condition for operating in a TPP market, and, in addition, that source code of their software is not required to be transferred or accessed.

But, as the EFF points out, “a trade agreement is the wrong place for a sweeping prohibition of such practices.” They explain that it does too little to ensure that sensitive user data is safely transferred and stored overseas.

In fact, the TPP chapters dealing with electronic commerce and telecommunications essentially prioritize trade interests over privacy rights. The security and confidentiality of messages and privacy of end-user personal data is clearly secondary to unfettered trade in telecommunications services, according to the EFF’s interpretation.

Changes to Copyright for TPP Member Countries

Service providers obviously handle a lot of user data, and copyright law is a huge area of concern for them.

As described in Chapter 18, TPP member countries would have to comply with a notice-and-takedown regime similar to the US Digital Millennium Copyright Act (DMCA), as opposed to other schemes of enforcement such as Canada’s notice-and-notice system.

This means that Internet Service Providers must “promptly remove or disable access to the identified materials upon receipt of a verified notice [of infringement]; and be exempted from liability for having done so in good faith in accordance with those guidelines.” This could lead to ISPs simply removing any materials they host where someone claims a copyright infringement simply because challenging copyright claims could potentially lead to legal liability.

Of course, there are fines for “misrepresentation in a notice or counter-notice that causes injury to any interested party,” but it’s unclear how effective these fines would be.

ISPs are also required to forward notices of alleged infringement to their customers or else be fined.

Also, under TPP, half of the 12 TPP-negotiating countries would see their copyright terms extended by 20 years, essentially making these countries comply with the life-plus-50-years specified in the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

TPP member countries could also be sued by a company under an “Investor-to-State Dispute Settlement” if a country passes a law that undermines a company’s ability to exploit their intellectual property. This could mean that democratically-decided user protections could be attacked by an ISDS challenge.

In essence, the TPP would open up new markets to large tech companies, but it would do little to make cross-border data sharing safer. It would also change how many service providers police their services, requiring them to handling domestic and foreign copyright infringement requests differently – which could be more costly and make their users subject to new takedown notices. This all factors into the costs of this trade agreement.

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