A New Trade Agreement for a New Era of Digital Services

Last week U.S. Trade Representative Ron Kirk announced the Administration's intention to start talks on an International Services Agreement (ISA) with Australia, Canada, the European Union, Japan, Korea, Mexico, and more than a dozen other trading partners. This is an ambitious undertaking, and it holds the potential to break wide open a services market of extraordinary potential for every industry involved, including technology and software services like cloud computing.

U.S. exports of services have not come close to reaching their full potential. According to the U.S. Trade Representative, the United States exported $600 billion of services in 2011 to go along with another $1 trillion in services sold through foreign affiliates of US companies.But USTR estimates the U.S. could increase trade in services by another $800 billion under the ISA.

With economic recovery still struggling to gain altitude, concluding a services agreement can only add fuel and create more jobs. "Every $1 billion in U.S. services exports supports an estimated 4,200 US jobs in America," Ambassador Kirk wrote in a letter to Congress.

To deliver on these promises, the ISA must lower critical barriers to trade in technology and software services so the economic benefits of these game-changing products can be realized.. There is no better example than cloud computing. The cloud derives its efficiency and cost savings through scale, which can only be achieved if companies providing cloud services are free to offer them across borders. The ISA offers a critical opportunity to establish trade rules to facilitate cross-border data flows, unlock the truly global potential of the cloud and prevent it from being chopped up into country-sized pieces.

While the ISA talks are starting up, a similar effort to craft 21st century trade rules is underway with the important group of countries involved in negotiations for the multilateral Trans-Pacific Partnership trade agreement. The TPP is working to ensure that data can flow easily across borders, to strengthen intellectual property protections, and to promote a competitive marketplace. We hope the discussions on digital trade issues in both forums lead to rules that bolster the ability to sell digital products and services internationally for the benefit of industry and consumers alike.

This post was also featured on BSA's blog, BSA TechPost.