Trans Pacific Partnership and Digital 2 Dozen: Implications for Data Protection and Digital Privacy

1. Introduction

2. Analysis of TPP and D2D

2.1. Trans Pacific Partnership (TPP)

2.2. Digital 2 Dozen (D2D)

3. Major Criticisms of the Digital Agenda of TPP

3.1. Data Protection

3.2. Digital Privacy

4. Implications of TPP for RCEP

5. Implications of TPP in the Context of EU Safe Harbour Judgement

6. Implications of TPP for India after US-India Cyber Relationship Agreement

7. Conclusion

8. Endnotes

9. Author Profile

1. Introduction

This essay explores the concerns related to data protection and digital privacy under the Trans Pacific Partnership (TPP) agreement signed recently between United States of America and eleven countries located around the pacific ocean region, across South America, Australia, and Asia [1]. TPP is a free trade agreement (FTA) that emphasises, among other things, the need for liberalising global digital economy. The essay also analyses the critical document titled ‘Digital 2 Dozen’ (D2D), which compiles the key action items within TPP addressing liberalisation of digital economy, and sets up the relevant goals for the member nations. TPP requires the member countries to facilitate unhindered digital data flow across nations, for commercial and governmental purposes, which evidently have major implications for national and regional data protection and privacy regimes. These implications must also be seen in the context the recent judgement by the EU Court of Justice against the validity of the EU-USA data transfer agreement of 2000. Further, the essay discusses the potential impacts that TPP/D2D might have on India, in the context of the ongoing USA-India Cyber Relationship dialogue. If the privacy concerns are not raised right now TPP might act as a model framework for future FTAs which will fail to encompass proper data protection and digital privacy regime within it.

2. Analysis of TPP and D2D

2.1. Trans Pacific Partnership (TPP)

Trans Pacific Partnership (TPP) is a large multi-partner free trade agreement amongst twelve Asia-Pacific countries, which is closely led by geo-political and economic strategies of the USA. Countries started the negotiation of TPP in 2008 when USA joined Pacific Four (P-4) negotiations and in 2015 negotiations of TPP was concluded and text was released. Ministers from the member countries signed the agreement on February 4, 2016 [2]. The main aim of TPP is to liberalise trade and investment beyond what is provided for within the WTO. It is also considered to be a strategic move by the US to counter the trade linkages that are being established in the Asian region. TPP largely covers topics of market access, and rules on various related issues such as intellectual property rights, labour laws, and environment standards [3].

Between 1992 -2012 there has been an upsurge in bilateral trade agreements being signed in Asia from 25 to 103 and the effect of these FTAs is called the ‘noodle bowl effect’. TPP is seen as framework which will replace these FTAs which are causing the ‘noodle bowl effect’.While these FTAs are being replaced but with TPP being signed there are various bilateral arrangements signed along with TPP. USA has also stated that TPP will not affect the already existing NAFTA [4]. While TPP is being concluded there is another free trade agreement being negotiated between USA and EU , which is Trans Trade and Investment Partnership (TTIP). Both TPP and TTIP and are considered to be serving similar objective which is to deal with new and modern trade issues. Also both the agreements are US led and since negotiation for TPP are now finalised it may have a significant impact on TTIP [5].

TPP is one of the first document which deals specifically with digital economy and applies across borders. The main aims of TPP are to promote free flow of data across borders without data localisation. It aims to remove national clouts and regional internets. It also includes provisions to combat theft of trade secrets. It allows you to create transparent regulatory process with inputs from various stakeholders. It also aims to provide access to tools and procedures for conduct of e-commerce [6].

Some of the major criticism to TPP were regarding the issues related to [7]:

• environment, wherein it does not address the issue of climate change and the language used in the agreement is very weak;
• labour rights provision mandates parties to adhere to the ILO provision but it does not seem to provide for effective framework and might not bring the desired change;
• investment chapter is seen to be controversial because of the investor state dispute settlement clause which will allow foreign investor to sue government over policies that might cause harm to them;
• e-commerce and telecommunication chapter raises major privacy concerns;
• intellectual property chapter wherein it includes controversial rules regarding pharmaceutical companies and data exclusivity apart from the privacy concerns.

2.2 Digital 2 Dozen (D2D)

D2D is set of rules and aims which is specifically drafted to be followed for the trade agreements related to open internet and digital economy. More specific aims of TPP as provided within the ‘Digital 2 Dozen,’ aiming for more liberalised trade in digital goods and services, are [8]:

• promoting free and open internet,
• prohibiting digital custom duties,
• securing basic non-discrimination principles,
• enabling cross-border data flows,
• preventing localization barriers,
• barring forced technology transfers,
• advancing innovative authentication methods,
• delivering enforceable consumer protections,
• safeguarding network competition,
• fostering innovative encryption products, and
• building an adaptable framework.

Strategic goal of the US in introducing D2D as goals of TPP has been to set up a trend within Asian region for all the trade agreements. It is expected to ensure that if TPP is a success, similar goals and policy frameworks will be followed for other trade agreements as we. For example, the USA-India partnership also enshrines similar aims and so does the USA-Korea partnership. Hence while India is not part of TPP, USA is nonetheless trying to get India into a partnership which is similar to the TPP. The language proposed by the USA in TPP negotiations has always been supportive for cross border data flows as it claims that companies have mechanism to keep a privacy check and privacy would not be undermined, but countries like New Zealand and Australia which have strong privacy protection laws nationally have raised concerns which will be discussed in further sections [9]. Also not only in privacy rights but Digital Dozen initiative also affects other digital rights related to - excessive copyright terms TPP proposed to extend the term of copyright to hundred years which deprive access to knowledge; as in the U.S motive to give more power to private entities , the ISP obligations enumerated within TPP which puts freedom of expression and privacy at risk as ISPs are allowed to check for copyright infringement and TPP does not put any privacy restriction in this regard; introduction of new fair use rules; ban on circumvention of digital locks or DRMs; no compulsory limitation for persons with disabilities; lack of fair use for journalistic right; while net neutrality is major issue is many developing nations in Asia no effective provision for net neutrality is aimed at in the D2D initiative; prohibits open source mandates which puts barrier for countries which want to release any software as open source as a policy decision [10].

3. Major Issues Related to Data Protection and Privacy in the TPP

3.1. Data Protection

One of the major concern raised against TPP is regarding data protection provisions that have been integrated within the E- Commerce chapter of the agreement. Article 14.11 and Article 14 .13 are the ones that deal with data flow related to consumer information.Article 14.11 in the agreement puts a requirement on the member states to allow transfer of data across border and Article 14.13 does not allow the companies to host data on local servers. Concerns were raised in few member states for instance, Australian Privacy Foundation raised concerns over Article 14.11 which requires transfers to be allowed in context of business activities of service suppliers. It claimed that exception to this provision is very narrow and the repercussion for not following the exception is that investor state dispute settlement proceedings can be initiated, which is not sufficient to protect privacy. Also, it highlighted the issue that with the narrow exception provided under Article 14.13 which relates to prohibition on data localisation, it might have adverse effect on the implementation of national privacy laws within Australia [11].

Another provision which is of major concern is Article 14.13 which prohibit data localisation. It will raise problems for countries like Indonesia and China which will have to change their local laws to implement the provision [12]. Since there already has been a major concern with regard to USA- EU Safe Harbour Agreement which was later made subject to the ECJ’s ruling on data protection, which invalidated any arrangement which provides voluntary enterprises responsibility to enforce privacy. But both the USA and EU are in process of renegotiating the agreement.The major concern was that in EU data protection is a fundamental right while in USA data protection is more consumer centric. When similar concerns were raised in TPP negotiations, they were rebutted as USA claimed that FTA does not concern itself with data protection [13].

In 2012 Australia proposed an alternative language to TPP which allowed countries to place restriction on data flow as long as it was not a barrier to trade. U.S responded to concerns raised by the Australia through a side letter which ensured Australia that U.S and Australia have a mutual understanding in relation to privacy and U.S will ensure the privacy of data with regards to Australia. While Australia’s concern was given acknowledgement other countries which raised similar issues were not given any assurances [14]. US instead proposed ad- hoc strategy that gave private companies power to form privacy policy with implementation through state machinery [15].

3.2. Digital Privacy

Article 14.8 in the E- Commerce chapter of the agreement states that countries can form legal framework for the protection of rights but the kind of ‘legal framework’ is not defined. Also, nowhere it states that the privacy protection or data protection laws are expressly exempted, rather it states that any such policy implemented by member states will be put under review of TPP standards. The standards which TPP proposes to follow are based on the underlying idea that any such policy should not hinder free trade in any way. This test will be applied by tribunals which are experts in trade and investment and not on data protection or human rights [16]. While Article 14.8 provides for protection of private information of consumers but the footnote to the provision renders it ineffective. The footnote states that member countries can adopt legal framework for the protection of data which can be done by self-regulation by industry and does not provide for any comprehensive data protection obligation upon the member states [17]. Similar to this Article 13.4 of the telecommunications chapter under TPP also states that the countries can apply regulation regarding confidentiality of the messages as long as it is not “a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade in services" [18].

Another chapter which raises major concerns about the privacy rights is intellectual property. It affects privacy through the provisions related to technological protective measures and the provision that regulate ISP’s liability. Regarding the TPM provision, the TPP follows the DMCA model whereby the exception to anti- circumvention provision is very narrow and does not apply to anti- trafficking provision. The exception allows user to circumvent TPM if it affect the user's privacy in any way, although this provision does not apply to ant- trafficking of TPM. The provision regarding ISP’s liability states that there should be cooperation between ISPs and rights holders and it does not prohibit ISPs to monitor its users. Also TPP proposes the notice for takedown and identification of the infringer by the ISP but this provision is not in consonance with laws of member states, like that of Peru which does not have any copyright law on ISP . Also many countries have tried to introduce proper privacy laws along with implementation of ISP liability but that is not done within the TPP [19]. TPP as whole aims to give greater power to private regulators without providing for minimum standard for protection of privacy.

Although TPP is not a data protection agreement but it consequently deals with various aspects of data protection, hence it is prospective model for privacy and data protection practices in future trade agreements. If positive obligations are included within the free trade agreements it will have an advancing impact on the data protection regime.

4.Implications of TPP for RCEP

While TPP has such lacunas similar provision are proposed in RCEP to which India is a party and which will have serious implication as many of the countries have inadequate data protection laws nationally and with the introduction of such an FTA the exploitation of privacy rights will be rampant [20]. To avoid this EU directive on data protection should be taken into consideration in the negotiations of such FTAs. But for the RCEP negotiations are still going on and in India many companies like Flipkart, Snapdeal etc. have started preparing for the changing norms. The government claims that it is going to accept best practices in the region which indicates that it is going to have same policies as that of TPP. Although people from industry have raised concerns that while there are national laws but it is difficult to check third party involvement within the business and it is becoming increasingly difficult to keep the consumer data confidential [21].

5. Implications of TPP in the Context of EU Safe-Harbour Judgement

Mr. Maximillian Schrems, an Austrian National residing in Austria, has been a user of the Facebook social network since 2008. Any person residing in EU who wishes to use Facebook is required to conclude, at the time of his registration, a contract with Facebook Ireland (a subsidiary of Facebook Inc. which itself is established in Unites States). Some or all of the personal data of the Facebook Ireland’s users who residing in EU is transferred to servers belonging to Facebook Inc. that are located in United States, where it undergoes processing. On 25 June 2013 Mr Schrems made a complaint to the commissioner by which he in essence asked the latter to exercise his statutory powers by prohibiting Facebook Ireland from transferring his personal data to Unites States, and this led to the Maximillian Schrems v Data Protection Commissioner case [22]. He contended that in his complaint that the law and practice in force in that country did not ensure adequate protection of the personal data held in its territory against the surveillance activities that were engaged in thereby by the public authorities. Mr Schrems referred in this regard to the revelations made by Edward Snowden concerning the activities of the United States intelligence services, in particular those of the NSA.(para 26, 27, 28). The case came in the court ruled that “that a third country which ensures an adequate level of protection, does not prevent a supervisory authority of a Member State, within the meaning of Article 28 of the EU 94/46 directive as amended, from examining the claim of a person concerning the protection of his rights and freedoms in regard to the processing of personal data relating to him which has been transferred from a Member State to that third country when that person contends that the law and practices in force in the third country do not ensure an adequate level of protection. The ruling implies that personal data cannot be transferred to third country which does not provide adequate level of protection.

EU safe harbour judgment and EU directive on privacy provide contrasting rules related to privacy. While TPP gives power to private entities to formulate rules regarding privacy while the recent ECJ judgment invalidated giving such power to private entities under EU-US Safe Harbour Agreement. Also in context of the same judgment Hamburg’s Commissioner for Data Privacy And Freedom of Information announced an investigation into the data transfer taking place through Facebook and Google to U.S. Hence in the light of the recent judgment member states within EU are not allowed to permit cross border data flow, in contrast to this one of the main goals of TPP is to maintain free flow of data across border [23]. EU is this regard has also set forth the proposal to introduce General Data Protection Regulation. (GDPR). Although U.S and EU are trying to renegotiate the agreement but the privacy concerns raised cannot be ignored. Hence following the same model as was invalidate under the ECJ judgment lets US exploit privacy of member states under TPP. Similar concerns as raised within the judgment are also raised in India as it also following the same model within U.S-India Cyber Relationship Agreement and in RCEP negotiations.

6. Implications of TPP in the context of USA-India Cyber Relationship

While India is not part of TPP but it might have an effect on the U.S India Cyber Relationship Agreement. In August 2015 there was re- initiation of the India-U.S cyber dialogue to address common concerns related to cybersecurity and to develop better partnerships between public and private sector for betterment of digital economy [24]. One of the key aim of this agreement is free flow of information between two nations, which suffers from similar problem that it will put privacy of the citizens at risk. Also India does not have any bilateral treaty which ensures cyber data protection in such a scenario the only solution is data localisation, but this agreement will put data at risk [25]. Hence while the TPP negotiations were going on and also RCEP is being discussed the concerns about privacy and data protection need to be raised as mention in earlier section regarding implications of TPP on RCEP, the USA-India Cyber Relationship also faces the same implications..Although the aim of USA-India Cyber Relationship is to ensure cybersecurity. After the cases of Muzaffarnagar riots, upheaval in North -Eastern states and Gujarat riots, India has realised it is important to ensure compliance from the social media companies. India sees the USA-India Cyber Relationship as an opportunity to achieve this goal. The Google Transparency Report states that that India made around three thousand requests to Google for user data [26], which indicate at the country's interest in having a common data understanding with the major social media companies (almost all of which are located in USA) about requesting and sharing of user activity data. While this concern is being addressed through the agreement, it is difficult to ignore the clause related to free flow of information, and if the meaning of the term is extended and adopted from TPP itself will put digital privacy of Indian citizens at risk [27].

7. Conclusion

Even though TPP negotiation are completed but the ratification of the agreement is still underway. TPP is being seen as one of a kind trade agreement because it is the first time that countries across the globe have come together as a whole to address concerns of modern trade. Although it fails to address some of the key concerns related to privacy and data protection which are becoming increasingly important. Data protection and privacy issues cannot be seen in isolation and needs to merged within the modern day trade agreements. The D2D component by the USA is strategic move to have trade dominance in Asia and to compete with China’s growth . TPP has privacy and data protection lacunae within the e- commerce , telecommunications and intellectual property discussion.Although it might have serious implications on RCEP negotiation and USA- India Cyber Relationship Dialogue. Similar concern regarding data protection has already been addressed by ECJ judgment invalidating USA-EU Safe Harbour Agreement but the similar ad - hoc strategy has been incorporated within TPP. Since TPP might be considered as best practice model for future FTAs in the Asian region it is important to raise and address these privacy concerns now.

8. Endnotes

[1] The signatory countries include Australia, Canada, Japan, Malaysia, Mexico, Peru, United States of America, Vietnam, Chile, Brunei, Singapore, New Zealand. "The Trans-Pacific Partnership," http://www.ustr.gov/tpp (last visited Jul 7, 2016).

[2] "The Origins and Evolution of the Trans-Pacific Partnership (TPP)," Global Research, http://www.globalresearch.ca/the-origins-and-evolution-of-the-trans-pacific-partnership-tpp/5357495 (last visited Jul 7, 2016).

[3] Fergusson, Ian F., Mark A. McMinimy & Brock R. Williams, "The Trans-Pacific Partnership (TPP): In Brief," (2015), http://digitalcommons.ilr.cornell.edu/key_workplace/1477/ (last visited Jul 1, 2016).

[4] Gajdos, Lukas, The Trans-Pacific Partnership and its impact on EU trade, Policy Department, Directorate-General for External Policies, Policy Briefing (2013), http://www.europarl.europa.eu/RegData/etudes/briefing_note/join/2013/491479/EXPO-INTA_SP(2013)491479_EN.pdf.

[5] Twining, Daniel, Hans Kundnani & Peter Sparding, Trans-Pacific Partnership: geopolitical implications for EU-US relations, Policy Department, Directorate-General for External Policies, June 24 (2016), http://www.europarl.europa.eu/RegData/etudes/STUD/2016/535008/EXPO_STU(2016)535008_EN.pdf.

[6] USTR, "Remarks by Deputy U.S. Trade Representative Robert Holleyman to the New Democrat Network," https://ustr.gov/about-us/policy-offices/press-office/speechestranscripts/2015/may/remarks-deputy-us-trade (last visited Jul 4, 2016).

[7] Murphy, Katharine, "Trans-Pacific Partnership: four key issues to watch out for," The Guardian, November 6, 2015, https://www.theguardian.com/business/2015/nov/06/trans-pacific-partnership-four-key-issues-to-watch-out-for (last visited Jul 7, 2016).

[8] USTR, "The Digital 2 Dozen" (2016), https://ustr.gov/sites/default/files/Digital-2-Dozen-Final.pdf (last visited Jul 1, 2016).

[9] Fergusson, Ian F.m Mark A. McMinimy & Brock R. Williams, "The Trans-Pacific Partnership (TPP) negotiations and issues for congress," (2015), http://digitalcommons.ilr.cornell.edu/key_workplace/1412/ (last visited Jul 8, 2016).

[10] "How the TPP Will Affect You and Your Digital Rights," Electronic Frontier Foundation (2015), https://www.eff.org/deeplinks/2015/12/how-tpp-will-affect-you-and-your-digital-rights (last visited Jul 7, 2016).

[11] Australian Privacy Foundation (APF), Trans Pacific Partnership Agreement (2016), https://www.privacy.org.au/Papers/Parlt-TPP-160310.pdf.

[12] Greenleaf, Graham, "The TPP & Other Free Trade Agreements: Faustian Bargains for Privacy?," SSRN (2016), http://papers.ssrn.com/sol3/Papers.cfm?abstract_id=2732386 (last visited Jul 1, 2016).

[13] "GED-Project: Transatlantic Data Flows and Data Protection," GED Blog (2015), https://ged-project.de/topics/competitiveness/transatlantic-data-flows-and-data-protection-the-state-of-the-debate/ (last visited Jul 1, 2016).

[14] Geist, Michael, "The Trouble with the TPP, Day 14: No U.S. Assurances for Canada on Privacy," (2016), http://www.michaelgeist.ca/2016/01/the-trouble-with-the-tpp-day-14-no-u-s-assurances-for-canada-on-privacy/ (last visited Jul 4, 2016).

[15] Aaronson, Susan Ariel, "What does TPP mean for the Open Internet?" From Policy Brief on Trade Agreements and Internet Governance Prepared for the Global Commission on Internet Governance (2015), https://www.gwu.edu/~iiep/events/DigitalTrade2016/TPPPolicyBrief.pdf (last visited Jul 5, 2016).

[16] Lomas, Natasha, "TPP Trade Agreement Slammed For Eroding Online Rights," TechCrunch, http://social.techcrunch.com/2015/11/05/tpp-vs-privacy/ (last visited Jun 30, 2016).

[17] "Q&A: The Trans-Pacific Partnership," Human Rights Watch (2016), https://www.hrw.org/news/2016/01/12/qa-trans-pacific-partnership (last visited Jul 1, 2016).

[18] "TPP Full Text Released," People Over Politics (2015), http://peopleoverpolitics.org/2015/11/07/tpp-just-as-bad-as-you-thought/ (last visited Jul 7, 2016).

[19] "Right to Privacy in Trans-Pacific Partnership (TPP ) Negotiations," Knowledge Ecology International, http://keionline.org/node/1164 (last visited Jul 1, 2016).

[20] Asian Trade Centre, "E-Commerce and Digital Trade Proposals for RCEP (2016)," http://static1.squarespace.com/static/5393d501e4b0643446abd228/t/575a654c86db438e86009fa1/1465541967821/RCEP+E-commerce+June+2016.pdf (last visited Jul 1, 2016).

[21] "E-commerce companies like Flipkart, Snapdeal to beef up data security to meet RCEP norms," The Economic Times, http://economictimes.indiatimes.com//articleshow/49068419.cms (last visited Jul 1, 2016).

[22] ECLI:EU:C:2015:650 (C -362/14)

[23] King et al., "Privacy law, cross-border data flows, and the Trans Pacific Partnership Agreement: what counsel need to know," Lexology, http://www.lexology.com/library/detail.aspx?g=b5c0b400-8161-4439-a4b7-131552ad5209 (last visited Jul 4, 2016).

[24] "U.S.-India Business Council Applauds Resumption of Cybersecurity Dialogue," U.S.-India Business Council (2015), http://www.usibc.com/press-release/us-india-business-council-applauds-resumption-cybersecurity-dialogue (last visited Jul 5, 2016).

[25] Sukumar, Arun Mohan, "India Is Coming up Against the Limits of Its Strategic Partnership With the United States," The Wire (2016), http://thewire.in/40403/india-is-coming-up-against-the-limits-of-its-strategic-partnership-with-the-united-states/ (last visited Jul 4, 2016).

[26] Countries – Google Transparency Report, https://www.google.com/transparencyreport/userdatarequests/countries/ (last visited Jul 8, 2016).

[27] Sukumar, Arun Mohan, "A case for the Net’s Ctrl+Alt+Del," The Hindu, September 5, 2015, http://www.thehindu.com/opinion/op-ed/a-case-for-the-nets-ctrlaltdel/article7616355.ece (last visited Jul 5, 2016).

9. Author Profile

Shubhangi Heda is a Student of Jindal Global Law School, O.P Jindal Global University. She has completed her fourth year. She gives due importance to popular culture in her life and loves to read fiction and like to watch TV-shows, her favorite being 'White Collar'.