US hopes NSA surveillance won't derail data trade goals

A top U.S. trade official on Wednesday acknowledged that revelations of U.S. government surveillance of phone and Internet records could complicate trade negotiations aimed at reducing barriers to cross-border electronic data flows.

"There's no question that for a long time one of the most difficult issues that we're grappling with is the whole domain of issues encompassed in privacy," said Michael Punke, U.S. ambassador to the World Trade Organization.

"I don't think you need to be a genius, if you've read the newspapers over the last couple of days, to know that things that have been happening will result in an intensification of that discussion," Punke added at an event focused on recently launched talks on an International Services Agreement to reduce regulatory barriers in trade in services such as finance and telecommunications.

The negotiations include the United States, the European Union, Japan, Mexico, Turkey and more than a dozen other countries. One U.S. goal in those talks is to reduce barriers that prevent companies from moving data across borders.

Revelations about the U.S. National Security Agency surveillance programs have triggered a debate about the proper balance between privacy and security.

"I think what we're looking at in the international context is the same willingness to continue engaging in that debate and figuring out what the appropriate balances are," Punke said.

Free movement of data is a priority for many telecommunications and internet companies such as Verizon, Google and Facebook whose customer data has been used by NSA surveillance programs to identify potential threats to the United States.

It's also important for other service companies that want to easily move data around without being required to establish a local presence in every country.

"We are seeing requirements to locate facilities, to locate data exclusively in countries, to manage it in-country. And that completely eviscerates the whole notion of a cloud-type of service," Jackie Ruff, vice president for international public policy and regulatory affairs at Verizon Communications, said at the event with Punke.

"We also need to make sure that privacy rules do not undermine these seamless data flows. That's a tough issue but I think that can be done in a way that doesn't require uniformity, but rather compatibility or interoperability among national privacy rules," Ruff said.

The United States is seeking similar commitments on the free flow of data in the Trans-Pacific Partnership, a proposed free trade pact among 12 countries in the Asia-Pacific region, and in separate free trade talks with the European Union that are slated to begin in July.

At a U.S. government hearing last week, privacy rights groups raised concerns that the proposed U.S.-EU agreement could become a "back door" way for the United States to loosen EU privacy rules that have frustrated American companies like Google and Facebook.

"We've made it very clear that we're not willing to give up privacy for the sake of few digital dollars," said Jeff Chester, executive director of the Center for Digital Democracy, a privacy rights group.

© Thomson Reuters 2013