THINKPolicy #9: A Conversation with Deputy United States Trade Representative Ambassador Robert Holleyman

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(Editor’s Note: Ambassador Robert Holleyman (ARH), Deputy United States Trade Representative, yesterday spoke to more than 100 IBMers participating in the company’s annual Congressional Fly-in. His remarks focused on the economic importance of the Trans Pacific Partnership, including its landmark digital and e-commerce provisions. Holleyman then sat down with Christopher A. Padilla, IBM’s Vice President of Government and Regulatory Affairs. The following Q&A is based on that discussion.)

CP: Thank you Ambassador for taking part in our annual Congressional Fly-In and for explaining how the Trans Pacific Partnership, or TPP, will support IBM’s global growth in this decade and beyond.  For our employees who were not able to attend the Fly-In, can you give us some basic facts about the agreement?

ARH: Absolutely. Let me start first by thanking you, Chris, for providing me with this opportunity to speak directly to IBM’s employees about why passing TPP is critical to the global growth and competitiveness of IBM, as well as to our entire tech sector.

TPP is a free trade agreement that the United States concluded last fall with 11 countries in the Asia Pacific region: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Viet Nam. Together, the TPP countries comprise 40 percent of the world economy.

If passed, TPP will make the goods and services of our manufacturers, producers, farmers, and ranchers much more competitive in these countries.  How will it do that?  For starters, it will eliminate over 18,000 tariff lines on American products. These tariff lines function like taxes making Made-in-America goods and products more expensive than other goods and products in the region.

TPP will also eliminate a whole host of non-tariff barriers to trade. For example, it will cut red tape at the border; it will strengthen intellectual property rights protection for our companies; it will push back against digital protectionism; and it will ensure that our partners raise labor and environmental standards across the board.

Making American goods and products more competitive abroad is essential to our country’s economic well-being for the simple reason that 95% of the world’s population lives outside our borders. If companies like IBM want to grow, they have to be able to reach these global markets.
CP: Why is the Administration focused on expanding opportunities in the Asia Pacific region?

ARH: The Administration is focused on creating opportunities for our exporters in the Asia Pacific region because it contains some of the fastest growing economies in the world. Consider this: in 2009, there were approximately 500 million middle class consumers in Asia. By 2030, Brookings projects that the number will skyrocket to 3.2 billion.

Many of our top trading partners are in the Asia-Pacific region, and we already sell most of our exports there. Given these facts, deepening our trade and investment ties with the region just makes sense.

TPP establishes a set of rules for trade and investment in the region that reflect high standards and help ensure new opportunities for innovation.
CP:  Why is TPP particularly important for promoting growth in the tech sector?

ARH: TPP is of particular importance to technology companies like IBM because it contains the most comprehensive set of rules to promote the digital economy in any free trade agreement negotiated to date.

Trade policy has a critical role to play in giving American innovators a fair shot at competing in the global economy. The Internet has ushered in a new era in global trade. Along with broadband networks, it has established an open platform for delivering any information-intensive product or service instantly and cheaply.

The Internet, cloud computing, and big innovations such as Watson, also have made massive computing power more affordable, more scalable, and more impactful than ever before. We believe that if the Internet remains free and open, its combined effect on interconnectedness, scale, and entrepreneurship will continue to facilitate the greatest wave of innovation the world has ever known.

But digital protectionism is on the rise. You can see it when websites are widely blocked and governments control content on the Internet. Companies like IBM experience it when countries impose barriers to obstruct cross-border data flows and protect their domestic ICT producers.

TPP’s rules to promote the digital economy—which we refer to as TPP’s Digital 2 Dozen—are designed to combat these trends.

They fall in essentially three categories.

  • The first category includes rules to ensure that the Internet remains an open, safe, and effective channel for trade in digital goods and services. For example, TPP affirms the bedrock principle that consumers should be able to access on-line content and applications of choice for all legitimate commercial purposes.
  • The second category includes rules designed to combat protectionist restrictions and localization policies to ensure technology choice. For example, TPP includes broad provisions enabling cross-border data flows and preventing our partners from forcing companies to localize their computing facilities.
  • Finally, the third category includes rules to protect the intellectual property rights of our digital innovators and ensure that they can compete on a level playing field when they trade and do business abroad. For example, TPP requires participants to establish criminal procedures and penalties for trade secret theft, including by means of cyber theft, while preserving domestic laws that protect whistleblowing.

Collectively, these rules form a comprehensive architecture that will allow digital entrepreneurship to thrive. And that is why TPP is an agreement the tech sector urgently needs.
CP: Why is it important to pass TPP this year?

ARH: TPP is a real opportunity, and its one that’s well within our reach. The economic and strategic cost of delaying a vote on the Agreement beyond this year cannot be overstated.

According to the Peterson Institute, a one-year delay in passing TPP would cost an estimated $94 billion in national income. That’s about $700 per American family.

From day one, TPP will make it easier for U.S. businesses and their workers to export Made-in-America products. And as our exports rise, so will economic opportunity here at home. We know that companies that export more tend to grow faster, hire more employees, and pay up to 18 percent more on average than non-export related firms. By increasing exports, TPP will become an important tool to deal with wage stagnation and income inequality in our country. Failing to act now could slow our export-driven economic recovery.

In addition to these economic costs, there’s an incalculable cost of ceding our leadership role on trade. The rest of the world is not waiting. Other countries are going ahead with agreements of their own, with rules that don’t necessarily reflect our interests and our values.

IBM’s support for TPP and the lessons you have to share about innovation in the global environment are important.  You also know you can compete and innovate when the rules are fair.  TPP captures that spirit and includes the trade rules needed for the 21st Century.

TPP’s cutting edge disciplines combat localization barriers, bar forced technology transfers, and ensure technology choice.  These rules and other elements of the Digital 2 Dozen are key to ensuring that the tech innovators like IBM can compete for new opportunities while pushing back against digital protectionism.  Standing on the sidelines is not a viable option, and TPP represents a once-in-a-generation leadership opportunity.

We simply cannot afford to wait.

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