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For many, many years we've hit pretty hard at the USTR (United States Trade Rep) for appearing to basically view trade and trade agreements solely through the lens of 20th century industry, without any recognition of the importance of startups and innovation -- especially on the internet. As such, many of the policies that the USTR has promoted through trade agreements seemed almost entirely focused on baking in and protecting potentially obsolete business models, and stifling innovation and competition. Many people have pointed this out over the years, but the USTR tends to spend most of its time with lobbyists and representatives from the big, old industries, rather than startups and innovators that are actually building the businesses of tomorrow. I mean, how else can you explain that the focus on internet related issues doesn't seem to change in trade agreements, despite massive changes in the actual tech ecosystem?
So it was at least marginally encouraging to see that the USTR actually recognizes internet and internet related issues as trade barriers in its new National Trade Estimate report (which clocks in at nearly 500 pages). The big (and important) headline, that was picked up by the press, was that the USTR (FINALLY!) is willing to recognize the Great Firewall of China and other internet censorship regimes as a "barrier to trade."
Over the past decade, China’s filtering of cross-border Internet traffic has posed a significant burden to
foreign suppliers, hurting both Internet sites themselves, and users who often depend on them for their
businesses. Outright blocking of websites appears to have worsened over the past year, with 8 of the top
25 most trafficked global sites now blocked in China. Much of the blocking appears arbitrary; for example,
a major home improvement site in the United States, which would appear wholly innocuous, is typical of
sites likely swept up by the Great Firewall.
China has hit back against this claim
, arguing that the Great Firewall is not about trade barriers, but "about national security," which is a somewhat laughable claim.
Still, as an article by Matt Schruers at the Disruptive Competition Project notes, the document actually goes much further in calling out other bad internet practices
in other countries. For example, it calls out new rules in India that undermine intermediary liability protections and lead to censorship by ISPs:
India’s 2011 Information Technology Rules govern the liability of internet intermediaries (internet service
providers (ISPs), hosting services, search engines, social networks, online forums, and other web platforms)
for content on their networks. U.S. stakeholders have raised concerns that these rules are vague and
inconsistently applied, and do not provide safeguards against abuse of the process. Any citizen can
complain that certain content is “disparaging” or “harmful,” and intermediaries must respond by removing
that content within 36 hours. Failure to act, even in the absence of a court order, can lead to liability for
the intermediary. Such strict rules encourage over-compliance with takedown notices, causing
intermediaries to remove content that may not be illegal. Foreign companies providing internet services in
India are forced to choose between needlessly censoring their customers and subjecting themselves to the
possibility of legal action.
It calls out countries like Pakistan for establishing site-blocking regimes that have resulted in YouTube and WordPress being completely blocked in the country:
Pakistan has blocked access to websites deemed to be blasphemous or immoral, including YouTube, which
has been blocked since September 2012, and WordPress, which was temporarily blocked for several days
in 2015 with little explanation from the authorities. YouTube reopened in January 2016 after Google
created a country specific site which allows the government of Pakistan to request the removal or blockage
of content. Pakistan has also intermittently blocked both Facebook and Twitter, while Facebook is routinely
asked by the government to censor material deemed to be blasphemous.
It's also really good -- if fairly surprising -- to see the USTR note that the EU's "Digital Single Market" plans with things like increased intermediary liability could result in serious problems for free expression. Even better, the USTR recognizes that these moves to increase intermediary liability are almost entirely about legacy companies trying to shackle innovators, competitors and upstarts:
The Commission is simultaneously exploring whether to increase online intermediaries’ network and
system management responsibilities as they pertain to illegal content and to require some platforms to more
proactively monitor and filter such content (i.e., a “duty of care”), despite logistical difficulties and
implications for free expression. Consequently, the Commission may eventually introduce a new regulatory
regime to more tightly control platforms’ behaviors. The e-Commerce Directive 2000/31/EC currently
grants limitations of liability to intermediary service providers.
Both these initiatives appear motivated, at least in part, by legacy businesses struggling to compete against
the efficiencies provided by Internet-based commerce. This underscores the risk that even well-intentioned
goals can, if implemented through heavy-handed regulation, or even just threat thereof, seriously undermine
innovative business development and hurt the EU’s own efforts to inject more dynamism into its markets.
The USTR also
calls out the ridiculous "Google tax" concept, also known as "link taxes" or "ancillary copyright" that have been seen in a variety of European countries, that would require sites that aggregate and link to news sites to pay those news sites for the privilege of sending them traffic. As the USTR rightly notes, this is clearly a trade barrier in the free flow of information:
Over the past several years, publishers in Europe have been advocating for the right to impose fees for the
right to link to content published online. This effort appears to target in particular news aggregators that
index stories and allow users to more conveniently find and access such content by the inclusion in search
results of headlines or other extracts of the stories that the underlying publisher typically offers, without
charge (e.g., supported by advertising) on its own website. Aggregators, including but not limited to U.S.
service suppliers, have pushed back against such requirements, arguing that that they help drive traffic to
publishing sites, and therefore help increase viewership and revenue, and should not be required to pay for
a valuable service they provide. After Belgium and Germany attempted to impose such requirements, some
aggregators simply dropped links to sites seeking additional compensation, causing publishers in those
countries to opt out of requiring such payments after they evaluated the economic impact. In late 2014,
however, Spain passed a similar measure called “Canon AEDE,” which, unlike in Germany and Belgium,
made such payments mandatory (i.e., publishers could not opt out of requiring payments for links). As a
result of this new law, many aggregators, including from the United States, simply pulled out of the Spanish
market. A 2015 study by the Spanish Association of Publishers of Periodical Publications (AEEP) revealed
that publishers’ revenue decreased and that many smaller publishers, which had depended on aggregators,
were disproportionately affected. Since parts of the EU publishing industry are advocating adopting similar
measures EU-wide, which will likely have a negative effect on many U.S. stakeholders, this issue bears
careful monitoring, as well as stepped-up engagement with the EU to ensure that innovative business
models are beneficial to EU content suppliers themselves.
Of course, there's lots of other stuff in the report that is quite concerning (I mean, this is the USTR we're talking about). Ridiculously, some of it even contradicts the points we've raised above. For example, the report repeatedly talks about stronger copyright enforcement and encourages more actions against those who link to infringing content. There's obviously a big disconnect here within the USTR -- in that it doesn't seem to realize that whining about intellectual property in these situations just gives various countries exactly the cover they need to leave in place the ideas discussed above. Don't want your Great Firewall to look like it's about censoring dissent? Just claim it's necessary to stop piracy online! Still want to tax links? Just explain how it's an anti-piracy measure to make sure links are tracked and evaluated to make sure their content is not infringing!
So, yes, this is still the same old USTR on the one hand. But, in the past, the USTR just focused on issues like that, not realizing how it was playing into the hands of others who looked to control and censor the internet, and to stifle innovation. At least now, for the first time, at least someone at the USTR is recognizing how important issues like censorship, site blocking, intermediary liability and the free flow of information online may be. Given how long it's taken, it may feel a bit late, but it's at least an encouraging step in the right direction.
Hopefully, it means the attitudes within the USTR are shifting and it may actually start to focus on the issues that are important in keeping the internet open globally.
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