Cloud Services and International Trade

Posted by Patrick Ryan, Policy Counsel, Open Internet

This year, Google is a private sector, Platinum Sponsor of the Asia-Pacific Economic Cooperation (APEC), the premier economic organization in the Asia-Pacific region which includes trade ministries from 21 member economies that account for 55 percent of global GDP. Like most trade-related organizations, APEC has traditionally focused on trade in goods -- things like manufactured products and agriculture that are shipped across borders. Free trade builds on the law of comparative advantage: that trading partners mutually gain from free, nontariff trade of goods and services. Increasingly, cloud computing is getting attention as a trade matter. At the most recent APEC meeting, on September 20, 2011, U.S. Ambassador Phillip Verveer talked about the economic advantages that cloud computing can bring to small and medium-sized enterprises, and encouraged governments to be careful about the effect of regulations that could slow adoption of the cloud:

“In these circumstances, we would expect every economy to welcome cloud services without regard to the national origin of their producers. But there are complications. One of the big ones is the limitations on trans-border data flows . . . [i]t is very important, however, that we not unnecessarily sacrifice the economic advantages inherent in cloud computing in our arrangements to protect personal privacy. Stated more directly, we should not let our quest for effective privacy mechanisms become a barrier to international trade in cloud services.”

We applaud Ambassador Verveer for his statements on cloud and we are encouraged that cloud computing is increasingly considered in the trade context. We agree with Ambassador Verveer that protections of personal privacy are important, and that’s why we offer our users clear information on our data security and privacy page. While privacy is critical to any environment -- it shouldn’t be used a trade barrier in favor of local industry and prevent small and medium-sized enterprises from taking advantage of the enormous cost savings that cloud services can provide. By analogy, under free trade principles, a country shouldn’t condition the sale of rice in their country on the purchase of a rice farm in that country. Similarly, it could be a trade barrier to condition the provisioning of cloud services in a country on the purchase of a server farm in that country. That’s not how the Internet was designed, and we hear at APEC and elsewhere an increased appreciation for broader transnational data flows--coupled with enhanced appreciation for privacy and security--and are encouraged by that movement.