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TDF: the hardy perennial
Comment TDF: the hardy perennial Peter Robinson Transborder data flow (TDF) is an expression that causes eyes to glaze over, and minds to switch off and turn to other things. It is unfortunate that we cannot think of a better label - one that would indicate more clearly the range of issues covered, and one that would highlight their growing importance to all countries. In spite of the considerable attention paid to TDF, the issues are in general poorly understood. A wider understanding is necessary if viable solutions, particularly at the international level, are to be developed. The issues that have been raised under the label of TDF range firom The author is Special Adviser, Inter- those pertaining to national sovereign~ational Aspects of Informatics, ty, through important economic impliL3epartment of Communications, 300 cations for world trade and economic Slater Street, Ottawa, Ontario KIA development, to matters which impinge OC8, Canada. directly on the individual. A m o n g the countries which have devoted a great deal of attention to these issues is Brazil, where a cohesive set of policies for dealing with many of them has been endorsed. A report prepared under the direction of Colonel Brizida for the United Nations Commission on Transnational Corporations 1 sets out in logical sequence the evolution of policies: first in relation to telecommunications; then those related to computing; followed by those necessary as these This a r l i ~ is an ~lited wmion of a paper two technologies merged into what has p n s s ~ e 0 to um ~menU~ ~ r u ~ of Ir~rmat~, Rio de Jar~ro, become known as telematics; and, Brazil, October I ~ . T ~ vksws expressed finally, those related to the use of teleare tl~se of ~ au'd~ and am r ~ intsr~Iscl matics internationally, incorporated to re4~'t tl~ose of ~m D ~ m m ~ of under the label of TDF. Communications, nor of a ~ / o t l ~ oovemThere has been in Brazil a focus in r n ~ d e p a r m ~ or aoe~y. the work which is perhaps the envy of ;Transborder Data Flows and Brazil, many other countries, where the United Nations Centre on Transnatiocml responsibility for dealing with the issues Corporat~, lee2. are spread widely among a number,
By its very nature, ITansborder data flow is international in scope, since it involves the transfer of data and information across national boundaries. The problems and issues it raises are complex and often sensitive. Many are wilhout precedent and highly protean in character, as Ihe pace of techno/og/ca/ change cont/nues w//hout abatement and the technologies spread to ever-widening spheres of application. New concepts will need to be deveioped and new approaches to international c o o ~ may become necessary.
TELECOMMUNICATIONS POLICY December 1983
often a large number, of government departments. Some countries are, indeed, considering the need for a sharper focus. However, at the same time, there is a concern in some countries that the work here has perhaps been focused too narrowly, and that perhaps some of the complexities, some of the broader implications of T D F , particularly as they impinge on international activities and relationships with other countries, could lead to major difficulties. National and international policies are closely intertwined and interrelated as they influence, or are influenced by T D F . While T D F is inherently international in nature, it can at the same time impact on national policies, and it will touch many sensitivities. One of the reasons for this is that, as international computer/communications systems are established, the terminal or computer, and the services it provides in one country operate under the rules and policies established in that country, yet it is directly connected to a terminal or a computer in another country, where the laws and policies can be quite different. A case in point which touches on the sovereignty and national security of a state arose in Norway. A social research worker published information he had received on his terminal in Norway, directly connected to a databank in the US. Although the information was publicly available in the U S A it was regarded as secret in Norway. He was charged and convicted under their Official Secrets Act. The case was complicated by the fact that in addition, he published secret information obtained from Norwegian sources, but this was a relatively minor
271
Comment
part of the classified material he released. This is perhaps an extreme case, but as international networks grow, there is d a n g e r that the operators or the users of those networks could be in breach of the laws of one country or another, or run the risk of civil court action in one or other jurisdiction. T h e r e is a natural reluctance on the part of national governments to alter their own domestic laws and policies to comply with those of some other country, merely to avoid such situations. Histories are different, traditions vary, legal systems are based on different fundamental approaches, policy objectives may be widely divergent, and, as Alan Gotlieb, now the Canadian Ambassador to the USA, has said in a series of lectures 2 at the H a g u e A c a d a m y of International Law, there are close links between a number o f T D F issues and 'ideological issues relating to content control, censorship and the free flow of information'. It is therefore extremely important that governments begin to understand m o r e clearly the complexities of the issues raised by T D F as far as their own national interests are concerned. But it is equally important that they begin to understand the traditions, concerns, objectives and aspirations of other countries as they relate to TDF. Without this understanding there will be a 'Most of the issues have little tendency to react too quickly and too to do with the definition dogmatically and too negatively to the concerns and approaches of other of TDF' countries. A t this stage, it is perhaps appropriate to define what is meant by TDF. T h e working definition used by the Canadian Task Force is: 'Electronic or machine-readable data or instructions which are transmitted or move across national boundaries for purposes of processing, storage, or retrieval, in most cases utilizing computercommunication systems and interfaces'. While there is no generally accepted definition, I feel that this reflects a general consensus as to where the emphasis needs to be placed. Such a definition is useful in that it excludes 2The Impact of Technology on the telephone conversations between Development of Contemporary Inter- individuals, and ordinary letters sent in national Law, a series of io~utos bY GotJ~b given m the Hague Ac~rny at the mail. The definition, however, suffers from the same problem as the Interna~or~l Law, 1961.
'It is extremely important that governments understand more clearly the complexities of the issues raised by TDF'
272
label 'transborder data flow' itself: it bears little relationship to the range of i m p o r t a n t issues. It concentrates, inevitably, on the movement of data or information from one country to another. The issues, however, arise not so much in that act of movement or transfer, but in the results or activities which follow from or are directly related to that act. The lack of this distinction has been the cause of much confusion in past debates, and continues to create difficulties in current discussions. It has been suggested, for example, that it is discriminatory to introduce measures that deal solely with the transfer of data or information by electronic means, and that there is really no difference in whether the data o r information are sent by the mail, carrier pigeon or by telecommunications. This argument does have some logic, if we concentrate solely on the act o f transfer as in the definition. T h e problems and issues that may arise, however, following from that act o f transfer or directly related to it can be quite different for different types of transfer - although obviously not in all cases, where, for example the content o f the message is the same, and where time and distance are not critical factors. But this is a trivial, hypothetical example that would hardly apply in most cases of TDF. Most of the issues, then, have little to do with the definition of TDF, for they are not associated directly with the actual act of transfer. In introducing the issues, I start from the premise that computers have b e c o m e an essential element in the operations of all major corporations, as well as in many smaller enterprises. Those companies that make effective use o f computers are better able to c o m p e t e , and therefore generate wealth and provide employment in those countries in which they operate. A s companies extend their operations there will be a need for effective communications between the various branches and operating entities of individual corporations. This applies at the international, as well as at the national level. It can therefore be argued that increasing and effective use of T D F will generate more wealth and provide
TELECOMMUNICATIONS POMCY December 1983
Comment
'Increasing attention is now being given to trade in data and information'
increased employment, and can provide a vehicle for transfer of technology and operational 'know-how'. Some governments, however, are concerned about the equitable and fair distribution of that wealth and employment. This type of concern is reflected in a textbook a used in a n u m b e r of North American universities entitled International Business and Multinational Enterprises. It was written before T D F became the focus of much international debate and deals in general terms with the potential for conflict between the goals of a multinational corporation and those of countries within which it operates. It states, 'There is, in fact, likely to be some conflict with every nation-state in which it operates, because the actions of the firm are not likely to maximize the goals of any one of those states'. A t the O E C D High Level Conference on 'Information, Computer and Communications Policies for the 80s', held in 1980, Pierre Juneau, then Canadian Deputy Minister of Communications, in his closing statement as Chairman of the C o n f e r e n c e : m a d e the following comments: there are concerns that must be faced. For example, some delegates felt the increasing flow of data and information across national borders may make a new international legal regime desirable, that would protect the rights of information users and providers. Others felt that these flows might lead to an unwanted concentration of data processing activities in a small number of member countries. Alternatively they could also provide new opportunities for international trade and specialization in this and other areas. •
.
.
T h e conflicting threats and opportunities presented by increasing T D F 3S.H. Robock, K. Simmonds, J. Zwick, continue to pose a major dilemma to International Business and Multinat~nal Enterprise, Richard D. Irwin,1977, p 173. many countries. A n unofficial transby Transnational Data •Conduding Statement by the Chaman, lation OECD High Level Conference on Infor- R e p o r t i n g Service s of the French rnae~, ~ and ~ r e p o r t on T D F prepared by Alain Policies for Ihe 80s, ~ 1980. STransborder Data Flow,: Towards an M a d e c makes the following point: International Informago~-Baaed Economy, In the face of these problems, the terms of unofndal ttanslalion of the report by the which are not yet well perceived, the purely Fmflch ~ on Transborder Data national solutions will be weak, inadequate, Rows, prepared by T ~ Data unadapted. It is a question, indeed, of the ReporlingService,July 1882, p 3. future of world integration. This is why it is ,Justice M.D. Kirby, 'Legal aspects of logical that any solution which ignores information technology', Imm~-dr,~orlto international concertation (legal barriers) first ~ of the OEGD Ccxrm'lin~Don would be suicide for the state adopting it.
IntomlaUon, Computer and C,mm'luni-
cations Policy, September 1962, p 26. •Op c/t, Ref4.
So most countries continue to play a waiting game to acquire that greater
T E L E C O M M U N I C A T I O N S P O L I C Y December 1983
understanding of developments and of issues, both from a national and an international perspective. The uncertainties arising from this are of concern to industry. In the face of these uncertainties they cannot make use of the full potential offered by the new technologies. Industry points to the growing use of these technologies in a widening area of economic activities, and suggests that this (together with the associated use of T D F ) offers an o p p o r t u n i t y to climb out of the current economic difficulties facing all countries. Increasing attention is now being given to trade in data and information, and the related services, as one of the areas that will promote i m p r o v e d economic growth. A growing concern about trade in some countries was mentioned in a recent address by Mr Justice Kirby, C h a i r m a n of the Australian Law R e f o r m Commission, to the new O E C D Committee on Information, Computer and Communications P o l i c y : H e pointed out that, 'It has been suggested that movement of g o o d s from country to country was h a m p e r e d at the time of the first industrial revolution, diminishing the potential for spreading the benefits of technology, by [and he quotes from a 1965 paper] "narrowly conceived national interests", which resulted in municipal laws which destroyed the simplicity and uniformity of maritime and commercial law and gave rise to " s h a r p conflicts of laws". Concern has been expressed that we should not m a k e the same mistake twice'. T h e matter of trade in relation to information and information services was also referred to in Mr Juneau's closing statement to the O E C D High Level Conference, 7 in which he said: 'I think it fair to say that all members of the O E C D would concur that the development and use of new information technologies should respect their traditional commitment to the open exchange of information, both domestically and internationally. T h e y would also agree that the exchange of information goods and services should be carried out in accordance with the principles of our o p e n multilateral trading system. At the same time, the Conference
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Comment counter to a growing tendency; or w h e t h e r it is limiting the argument strictly to natural resource commodities. This is a point that may well benefit from further discussion among different sectors of industry. Such discussions would indeed be refreshing for, unfortunately, to date, much of the d e b a t e has a p p e a r e d to put governments in general on one side of the fence, and industry on the other. Justice Kirby's O E C D address 11 also Flows: the Need for Flexibility, addresses this last point. The report dealt with the issue of information as a argues that, 'Unlike physical resources, c o m m o d i t y - from a somewhat differinformation does not disappear with ent perspective: consumption, a Indeed, in most cases, consuming and sharing information Traditionally, intellectual property law developed around protections which enhances rather than depletes it'. The attached to the medium rather than the conr e p o r t concludes 9 that 'Information tent. It was not possible to patent or copyshould not be treated . . . as a com- right an abstract idea. Patents attached to m o d i t y in the same way as natural 'inventions'. Copyright attached to the original 'work'. The law of confidence and resources'. the law of defamation attached its conseIn an article in Foreign Policy, 1° Joan quences typically to the act of unwarranted Spero, a vice-president of American communication or publication rather than Express, appears to argue the contrary. to the information itself. The problem T h e following are a few key sentences posed by informatics technology is that data (and therefore information) have now been from that article: 'liberated' from physical objects representW h i l e the free flow of information is a ing the data. Thus it has become possible, technologically, to read the text of a book compelling position in debates on without purchasing the book, or even copyprivacy and freedom of the press, this ing the text. Information technology has a p p r o a c h is less effective when con- made information a commodity. fronting national economic prerogatives Picking up on this point that inforand aspirations. m a t i o n has been 'liberated' from the m e d i u m on which it is represented, one T h e principle of free flow is even being i m m e d i a t e l y asks the question whether 'A new concept of data challenged in the United States for information can then be 'owned'. Lack ownership may create more economic reasons. o f information ownership, contrary to problems than it would solve' the case with physical goods, may lead A m e r i c a can no longer deny that to further difficulties if trade in inforinformation is becoming a commodity. m a t i o n is treated in the same way as t r a d e in tangible goods. However, to G A T I " s universal trade principles d e v e l o p a new concept of 'data ownerbased on non-discrimination can be ship' may create more problems then it applied to trade in information. Nonwould solve. It may be better to discrimination in information would d e v e l o p a legal system that would deal govern price structure, eliminate use with use and misuse of information. restrictions, and open access to A s the debate on trade in data and facilities. information intensifies, focus may be directed to another question that has In addition, GATI" provisions for a l r e a d y been raised. It has been argued Slntemafforag Informa~n Flows: the Need m a n a g e d departures from the rules, that, given that information is now a for Flexibility, a CBEMA ~ Paper, such as those for developing countries, Computer and ~ n e s s Equipment could also apply to an international valuable and tradeable commodity, it would seem equitable that any rules or Manufacturers Association, Washington, information regime. tariffs associated with its transfer from DC, July 1982, p 5. 91bid, p 13. It is not entirely clear from the C B M A o n e country to another should be ~oJoan E. Spero, 'Information: the po,cy i n d e p e n d e n t of the medium or method void', Fore/gn Po//cy, Fall Issue, 1982, r e p o r t whether it is arguing against by which it is transferred, and be treating information as a commodity, p 139-156. p e r i o d - in which case it would be established regardless of who makes 110pcit, Ref6, p24. recognized the fact that transborder d a t a flow issues transcend trade policies. This raises the question w h e t h e r data flows can be compared or t r e a t e d as if they were normal goods and services moving in international trade'. A report by the Computer and Business Equipment Manufacturers Association ( C B E M A ) in Washington, entitled International Information
274
TELECOMMUNICATIONS
P O L I C Y December 1983
Comment
'One of the problems has been the too-frequent use of misleading labels or attention-grabbing slogans'
'To what extent are practical measures feasible and enforceable'
t2Peter Robinson, ~ help from J.C. Wall, 'Leg= q u ~ o m and Vansbor~ data now', ~ to the Swed~ and Nor~gkm Sodelm for Computm and Law, January, lSa2. TELECOMMUNICATIONS
that transfer. The argument continues that when goods are transferred within a multinational corporation they are treated for customs and other purposes, much as if they had been transferred between independent corporations. The argument concludes that information and information services should be treated similarly. This argument, while having some logical basis, does, however, open a veritable Pandora's box of problems. These include, for example, a review of domestic laws and measures which deal with different types of media, and whether it is really practically feasible to develop some harmonized approach for dealing with the content. There is then the problem of attempting to reconcile at the international level the different approaches that might be taken by different countries. Perhaps the most difficult problem of all is, even if certain rules did appear to be desirable, to what extent are practical measures feasible and enforceable? In addition, it would be necessary to take costs into account - not only direct costs associated with the selected measures, but also indirect costs associated, for example, with possible loss of economic growth - and decide whether or not the benefits outweighed these costs. A further factor in the trade debate will be the extent to which information can continue to be regarded as a 'public good', and the extent to which it is becoming a tradeable commodity. The general view in many countries has tended in the past to lean heavily towards treating information as a public good, with governments establishing public education systems, widespread public libraries, and government information services. The extent to which governments stay in this business and the extent to which industry takes over will likely influence trade relations. Turning now to an equally, if not more sensitive issue - national sovereignty - in a previous paper 12 I have expressed some difficulty in understanding clearly the notion of 'informational sovereignty', a concept that appears to be gaining some popularity. This does not mean that I have difficulty in understanding why
P O L I C Y December 1983
some governments might be concerned if certain types of data and information are transferred out of the country. However, 'sovereignty' is a loaded word, and immediately triggers deepseated feelings. One of the problems in coming to grips with the issues raised by T D F , as indicated above, has been the too-frequent use of misleading labels or attention-grabbing slogans. In international law, the sovereignty of a state refers to the legal powers it has to control national policies and to exercise jurisdiction over a specific tract of territory. At the same time, there is a growing interdependence a m o n g all nations, a factor that will be strongly influenced by increasing TDF. The practicalities of this interdependence do impose some constraints on state behaviour, but these do not necessarily involve a derogation of sovereignty nor alter the basic principles of international law. With that basic starting point, it becomes clear that some issues that may be thought to touch on national sovereignty merely reflect a need to ensure that legislation or other policy measures take fully into account changing circumstances. For example, early concern in Europe about the protection of privacy led to a number of laws being passed. But it became clear that the effect of those laws was nullified if the personal data were exported, for they were no longer under the enforcement jurisdiction of domestic law, yet threats to the individual remained. The issue was dealt with through cooperative approaches both in the O E C D and in the Council of Europe. A n o t h e r example is provided by the Canadian Bank Act. The InspectorGeneral has statutory responsibilities under the Act which necessitate access to certain relevant information. To ensure that access, the Act requires that all banks operating in Canada maintain in Canada certain minimum records on all its customer transactions in Canada. The Act does allow banks to export data for further processing and storage once the minimum 'in C a n a d a ' requirements have been met. Unfortunately, and probably because of the sensitivities associated with m a n y T D F issues, this Act has been misunderstood and misrepresented.
275
Comment
'The concept of free flow is not absolute'
The latest example of this is a letter dated 9 March 1982, from a consulting firm which states that, 'Canada is now requiring all banking data processing to take place in Canada and not abroad'. The letter was soliciting sponsorship of a multiclient study on Transborder
Data Flow: Issues, Barriers and Corporate Responses. It is this type of
~3Op c/t, Ref8, p 12. ]q~A. Nimetz, 'Informatics in the lgS0s; some
suggestkx~ for a ~
dialogue', wesentation to the I
~ Information Industry Conference, Quebec Cibj, Canada, June 1982.
276
misrepresentation or misunderstanding (which is not limited to the Canadian Bank Act) that is a cause of considerable concern to those who seek a genuine understanding of the issues, and look to establish meaningful cooperation at the international level. However, current articles and speeches such as those by Joan Spero and Justice Kirby, are indicative of a growing understanding and of the greater sophistication in the questions that are being asked. A further indication of this increasing understanding is provided in the CBEMA report I mentioned earlier. 13 In a section entitled 'Exceptions to free flow' the Association states: 'There are fundamentally valid reasons why some degree of control must exist in processing and handling information. Social responsibility for protecting the rights and integrity of individuals through rules governing privacy are a good
example. Another involves questions of national security. A third concerns the issue of the proprietary rights of individuals and business enterprises. The question of what constitutes proper exceptions to the free flow of information is not easily resolved'. This is perhaps an understatement of the difficulties that will be encountered in achieving international cooperation. Many governments remain committed to a concept of 'free flow' of information among, as well as within, countries but there is some concern regarding the implications of different practical interpretations of that concept. As the recent CBEMA report points out, the concept is not 'absolute', and certain modifications may be necessary in order to achieve competing public policy objectives. In this connection, Matthew Nimetz, a former US Under Secretary of State, stated in a presentation 14 to the International Information Industry Conference in Quebec City in June 1982, 'I cannot accept the view that the principle of "flee flow" is the beginning and end of discussion. As an advocate of "free flow" I take it to be a guiding principle, an important and basic presumption, but not a magic incantation that by itself establishes policies'.
TELECOMMUNICATIONS
P O U C Y December 1983
By its very nature, ITansborder data flow is international in scope, since it involves the transfer of data and information across national boundaries. The problems and issues it raises are complex and often sensitive. Many are wilhout precedent and highly protean in character, as Ihe pace of techno/og/ca/ change cont/nues w//hout abatement and the technologies spread to ever-widening spheres of application. New concepts will need to be deveioped and new approaches to international c o o ~ may become necessary.
TELECOMMUNICATIONS POLICY December 1983
often a large number, of government departments. Some countries are, indeed, considering the need for a sharper focus. However, at the same time, there is a concern in some countries that the work here has perhaps been focused too narrowly, and that perhaps some of the complexities, some of the broader implications of T D F , particularly as they impinge on international activities and relationships with other countries, could lead to major difficulties. National and international policies are closely intertwined and interrelated as they influence, or are influenced by T D F . While T D F is inherently international in nature, it can at the same time impact on national policies, and it will touch many sensitivities. One of the reasons for this is that, as international computer/communications systems are established, the terminal or computer, and the services it provides in one country operate under the rules and policies established in that country, yet it is directly connected to a terminal or a computer in another country, where the laws and policies can be quite different. A case in point which touches on the sovereignty and national security of a state arose in Norway. A social research worker published information he had received on his terminal in Norway, directly connected to a databank in the US. Although the information was publicly available in the U S A it was regarded as secret in Norway. He was charged and convicted under their Official Secrets Act. The case was complicated by the fact that in addition, he published secret information obtained from Norwegian sources, but this was a relatively minor
271
Comment
part of the classified material he released. This is perhaps an extreme case, but as international networks grow, there is d a n g e r that the operators or the users of those networks could be in breach of the laws of one country or another, or run the risk of civil court action in one or other jurisdiction. T h e r e is a natural reluctance on the part of national governments to alter their own domestic laws and policies to comply with those of some other country, merely to avoid such situations. Histories are different, traditions vary, legal systems are based on different fundamental approaches, policy objectives may be widely divergent, and, as Alan Gotlieb, now the Canadian Ambassador to the USA, has said in a series of lectures 2 at the H a g u e A c a d a m y of International Law, there are close links between a number o f T D F issues and 'ideological issues relating to content control, censorship and the free flow of information'. It is therefore extremely important that governments begin to understand m o r e clearly the complexities of the issues raised by T D F as far as their own national interests are concerned. But it is equally important that they begin to understand the traditions, concerns, objectives and aspirations of other countries as they relate to TDF. Without this understanding there will be a 'Most of the issues have little tendency to react too quickly and too to do with the definition dogmatically and too negatively to the concerns and approaches of other of TDF' countries. A t this stage, it is perhaps appropriate to define what is meant by TDF. T h e working definition used by the Canadian Task Force is: 'Electronic or machine-readable data or instructions which are transmitted or move across national boundaries for purposes of processing, storage, or retrieval, in most cases utilizing computercommunication systems and interfaces'. While there is no generally accepted definition, I feel that this reflects a general consensus as to where the emphasis needs to be placed. Such a definition is useful in that it excludes 2The Impact of Technology on the telephone conversations between Development of Contemporary Inter- individuals, and ordinary letters sent in national Law, a series of io~utos bY GotJ~b given m the Hague Ac~rny at the mail. The definition, however, suffers from the same problem as the Interna~or~l Law, 1961.
'It is extremely important that governments understand more clearly the complexities of the issues raised by TDF'
272
label 'transborder data flow' itself: it bears little relationship to the range of i m p o r t a n t issues. It concentrates, inevitably, on the movement of data or information from one country to another. The issues, however, arise not so much in that act of movement or transfer, but in the results or activities which follow from or are directly related to that act. The lack of this distinction has been the cause of much confusion in past debates, and continues to create difficulties in current discussions. It has been suggested, for example, that it is discriminatory to introduce measures that deal solely with the transfer of data or information by electronic means, and that there is really no difference in whether the data o r information are sent by the mail, carrier pigeon or by telecommunications. This argument does have some logic, if we concentrate solely on the act o f transfer as in the definition. T h e problems and issues that may arise, however, following from that act o f transfer or directly related to it can be quite different for different types of transfer - although obviously not in all cases, where, for example the content o f the message is the same, and where time and distance are not critical factors. But this is a trivial, hypothetical example that would hardly apply in most cases of TDF. Most of the issues, then, have little to do with the definition of TDF, for they are not associated directly with the actual act of transfer. In introducing the issues, I start from the premise that computers have b e c o m e an essential element in the operations of all major corporations, as well as in many smaller enterprises. Those companies that make effective use o f computers are better able to c o m p e t e , and therefore generate wealth and provide employment in those countries in which they operate. A s companies extend their operations there will be a need for effective communications between the various branches and operating entities of individual corporations. This applies at the international, as well as at the national level. It can therefore be argued that increasing and effective use of T D F will generate more wealth and provide
TELECOMMUNICATIONS POMCY December 1983
Comment
'Increasing attention is now being given to trade in data and information'
increased employment, and can provide a vehicle for transfer of technology and operational 'know-how'. Some governments, however, are concerned about the equitable and fair distribution of that wealth and employment. This type of concern is reflected in a textbook a used in a n u m b e r of North American universities entitled International Business and Multinational Enterprises. It was written before T D F became the focus of much international debate and deals in general terms with the potential for conflict between the goals of a multinational corporation and those of countries within which it operates. It states, 'There is, in fact, likely to be some conflict with every nation-state in which it operates, because the actions of the firm are not likely to maximize the goals of any one of those states'. A t the O E C D High Level Conference on 'Information, Computer and Communications Policies for the 80s', held in 1980, Pierre Juneau, then Canadian Deputy Minister of Communications, in his closing statement as Chairman of the C o n f e r e n c e : m a d e the following comments: there are concerns that must be faced. For example, some delegates felt the increasing flow of data and information across national borders may make a new international legal regime desirable, that would protect the rights of information users and providers. Others felt that these flows might lead to an unwanted concentration of data processing activities in a small number of member countries. Alternatively they could also provide new opportunities for international trade and specialization in this and other areas. •
.
.
T h e conflicting threats and opportunities presented by increasing T D F 3S.H. Robock, K. Simmonds, J. Zwick, continue to pose a major dilemma to International Business and Multinat~nal Enterprise, Richard D. Irwin,1977, p 173. many countries. A n unofficial transby Transnational Data •Conduding Statement by the Chaman, lation OECD High Level Conference on Infor- R e p o r t i n g Service s of the French rnae~, ~ and ~ r e p o r t on T D F prepared by Alain Policies for Ihe 80s, ~ 1980. STransborder Data Flow,: Towards an M a d e c makes the following point: International Informago~-Baaed Economy, In the face of these problems, the terms of unofndal ttanslalion of the report by the which are not yet well perceived, the purely Fmflch ~ on Transborder Data national solutions will be weak, inadequate, Rows, prepared by T ~ Data unadapted. It is a question, indeed, of the ReporlingService,July 1882, p 3. future of world integration. This is why it is ,Justice M.D. Kirby, 'Legal aspects of logical that any solution which ignores information technology', Imm~-dr,~orlto international concertation (legal barriers) first ~ of the OEGD Ccxrm'lin~Don would be suicide for the state adopting it.
IntomlaUon, Computer and C,mm'luni-
cations Policy, September 1962, p 26. •Op c/t, Ref4.
So most countries continue to play a waiting game to acquire that greater
T E L E C O M M U N I C A T I O N S P O L I C Y December 1983
understanding of developments and of issues, both from a national and an international perspective. The uncertainties arising from this are of concern to industry. In the face of these uncertainties they cannot make use of the full potential offered by the new technologies. Industry points to the growing use of these technologies in a widening area of economic activities, and suggests that this (together with the associated use of T D F ) offers an o p p o r t u n i t y to climb out of the current economic difficulties facing all countries. Increasing attention is now being given to trade in data and information, and the related services, as one of the areas that will promote i m p r o v e d economic growth. A growing concern about trade in some countries was mentioned in a recent address by Mr Justice Kirby, C h a i r m a n of the Australian Law R e f o r m Commission, to the new O E C D Committee on Information, Computer and Communications P o l i c y : H e pointed out that, 'It has been suggested that movement of g o o d s from country to country was h a m p e r e d at the time of the first industrial revolution, diminishing the potential for spreading the benefits of technology, by [and he quotes from a 1965 paper] "narrowly conceived national interests", which resulted in municipal laws which destroyed the simplicity and uniformity of maritime and commercial law and gave rise to " s h a r p conflicts of laws". Concern has been expressed that we should not m a k e the same mistake twice'. T h e matter of trade in relation to information and information services was also referred to in Mr Juneau's closing statement to the O E C D High Level Conference, 7 in which he said: 'I think it fair to say that all members of the O E C D would concur that the development and use of new information technologies should respect their traditional commitment to the open exchange of information, both domestically and internationally. T h e y would also agree that the exchange of information goods and services should be carried out in accordance with the principles of our o p e n multilateral trading system. At the same time, the Conference
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Comment counter to a growing tendency; or w h e t h e r it is limiting the argument strictly to natural resource commodities. This is a point that may well benefit from further discussion among different sectors of industry. Such discussions would indeed be refreshing for, unfortunately, to date, much of the d e b a t e has a p p e a r e d to put governments in general on one side of the fence, and industry on the other. Justice Kirby's O E C D address 11 also Flows: the Need for Flexibility, addresses this last point. The report dealt with the issue of information as a argues that, 'Unlike physical resources, c o m m o d i t y - from a somewhat differinformation does not disappear with ent perspective: consumption, a Indeed, in most cases, consuming and sharing information Traditionally, intellectual property law developed around protections which enhances rather than depletes it'. The attached to the medium rather than the conr e p o r t concludes 9 that 'Information tent. It was not possible to patent or copyshould not be treated . . . as a com- right an abstract idea. Patents attached to m o d i t y in the same way as natural 'inventions'. Copyright attached to the original 'work'. The law of confidence and resources'. the law of defamation attached its conseIn an article in Foreign Policy, 1° Joan quences typically to the act of unwarranted Spero, a vice-president of American communication or publication rather than Express, appears to argue the contrary. to the information itself. The problem T h e following are a few key sentences posed by informatics technology is that data (and therefore information) have now been from that article: 'liberated' from physical objects representW h i l e the free flow of information is a ing the data. Thus it has become possible, technologically, to read the text of a book compelling position in debates on without purchasing the book, or even copyprivacy and freedom of the press, this ing the text. Information technology has a p p r o a c h is less effective when con- made information a commodity. fronting national economic prerogatives Picking up on this point that inforand aspirations. m a t i o n has been 'liberated' from the m e d i u m on which it is represented, one T h e principle of free flow is even being i m m e d i a t e l y asks the question whether 'A new concept of data challenged in the United States for information can then be 'owned'. Lack ownership may create more economic reasons. o f information ownership, contrary to problems than it would solve' the case with physical goods, may lead A m e r i c a can no longer deny that to further difficulties if trade in inforinformation is becoming a commodity. m a t i o n is treated in the same way as t r a d e in tangible goods. However, to G A T I " s universal trade principles d e v e l o p a new concept of 'data ownerbased on non-discrimination can be ship' may create more problems then it applied to trade in information. Nonwould solve. It may be better to discrimination in information would d e v e l o p a legal system that would deal govern price structure, eliminate use with use and misuse of information. restrictions, and open access to A s the debate on trade in data and facilities. information intensifies, focus may be directed to another question that has In addition, GATI" provisions for a l r e a d y been raised. It has been argued Slntemafforag Informa~n Flows: the Need m a n a g e d departures from the rules, that, given that information is now a for Flexibility, a CBEMA ~ Paper, such as those for developing countries, Computer and ~ n e s s Equipment could also apply to an international valuable and tradeable commodity, it would seem equitable that any rules or Manufacturers Association, Washington, information regime. tariffs associated with its transfer from DC, July 1982, p 5. 91bid, p 13. It is not entirely clear from the C B M A o n e country to another should be ~oJoan E. Spero, 'Information: the po,cy i n d e p e n d e n t of the medium or method void', Fore/gn Po//cy, Fall Issue, 1982, r e p o r t whether it is arguing against by which it is transferred, and be treating information as a commodity, p 139-156. p e r i o d - in which case it would be established regardless of who makes 110pcit, Ref6, p24. recognized the fact that transborder d a t a flow issues transcend trade policies. This raises the question w h e t h e r data flows can be compared or t r e a t e d as if they were normal goods and services moving in international trade'. A report by the Computer and Business Equipment Manufacturers Association ( C B E M A ) in Washington, entitled International Information
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Comment
'One of the problems has been the too-frequent use of misleading labels or attention-grabbing slogans'
'To what extent are practical measures feasible and enforceable'
t2Peter Robinson, ~ help from J.C. Wall, 'Leg= q u ~ o m and Vansbor~ data now', ~ to the Swed~ and Nor~gkm Sodelm for Computm and Law, January, lSa2. TELECOMMUNICATIONS
that transfer. The argument continues that when goods are transferred within a multinational corporation they are treated for customs and other purposes, much as if they had been transferred between independent corporations. The argument concludes that information and information services should be treated similarly. This argument, while having some logical basis, does, however, open a veritable Pandora's box of problems. These include, for example, a review of domestic laws and measures which deal with different types of media, and whether it is really practically feasible to develop some harmonized approach for dealing with the content. There is then the problem of attempting to reconcile at the international level the different approaches that might be taken by different countries. Perhaps the most difficult problem of all is, even if certain rules did appear to be desirable, to what extent are practical measures feasible and enforceable? In addition, it would be necessary to take costs into account - not only direct costs associated with the selected measures, but also indirect costs associated, for example, with possible loss of economic growth - and decide whether or not the benefits outweighed these costs. A further factor in the trade debate will be the extent to which information can continue to be regarded as a 'public good', and the extent to which it is becoming a tradeable commodity. The general view in many countries has tended in the past to lean heavily towards treating information as a public good, with governments establishing public education systems, widespread public libraries, and government information services. The extent to which governments stay in this business and the extent to which industry takes over will likely influence trade relations. Turning now to an equally, if not more sensitive issue - national sovereignty - in a previous paper 12 I have expressed some difficulty in understanding clearly the notion of 'informational sovereignty', a concept that appears to be gaining some popularity. This does not mean that I have difficulty in understanding why
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some governments might be concerned if certain types of data and information are transferred out of the country. However, 'sovereignty' is a loaded word, and immediately triggers deepseated feelings. One of the problems in coming to grips with the issues raised by T D F , as indicated above, has been the too-frequent use of misleading labels or attention-grabbing slogans. In international law, the sovereignty of a state refers to the legal powers it has to control national policies and to exercise jurisdiction over a specific tract of territory. At the same time, there is a growing interdependence a m o n g all nations, a factor that will be strongly influenced by increasing TDF. The practicalities of this interdependence do impose some constraints on state behaviour, but these do not necessarily involve a derogation of sovereignty nor alter the basic principles of international law. With that basic starting point, it becomes clear that some issues that may be thought to touch on national sovereignty merely reflect a need to ensure that legislation or other policy measures take fully into account changing circumstances. For example, early concern in Europe about the protection of privacy led to a number of laws being passed. But it became clear that the effect of those laws was nullified if the personal data were exported, for they were no longer under the enforcement jurisdiction of domestic law, yet threats to the individual remained. The issue was dealt with through cooperative approaches both in the O E C D and in the Council of Europe. A n o t h e r example is provided by the Canadian Bank Act. The InspectorGeneral has statutory responsibilities under the Act which necessitate access to certain relevant information. To ensure that access, the Act requires that all banks operating in Canada maintain in Canada certain minimum records on all its customer transactions in Canada. The Act does allow banks to export data for further processing and storage once the minimum 'in C a n a d a ' requirements have been met. Unfortunately, and probably because of the sensitivities associated with m a n y T D F issues, this Act has been misunderstood and misrepresented.
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Comment
'The concept of free flow is not absolute'
The latest example of this is a letter dated 9 March 1982, from a consulting firm which states that, 'Canada is now requiring all banking data processing to take place in Canada and not abroad'. The letter was soliciting sponsorship of a multiclient study on Transborder
Data Flow: Issues, Barriers and Corporate Responses. It is this type of
~3Op c/t, Ref8, p 12. ]q~A. Nimetz, 'Informatics in the lgS0s; some
suggestkx~ for a ~
dialogue', wesentation to the I
~ Information Industry Conference, Quebec Cibj, Canada, June 1982.
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misrepresentation or misunderstanding (which is not limited to the Canadian Bank Act) that is a cause of considerable concern to those who seek a genuine understanding of the issues, and look to establish meaningful cooperation at the international level. However, current articles and speeches such as those by Joan Spero and Justice Kirby, are indicative of a growing understanding and of the greater sophistication in the questions that are being asked. A further indication of this increasing understanding is provided in the CBEMA report I mentioned earlier. 13 In a section entitled 'Exceptions to free flow' the Association states: 'There are fundamentally valid reasons why some degree of control must exist in processing and handling information. Social responsibility for protecting the rights and integrity of individuals through rules governing privacy are a good
example. Another involves questions of national security. A third concerns the issue of the proprietary rights of individuals and business enterprises. The question of what constitutes proper exceptions to the free flow of information is not easily resolved'. This is perhaps an understatement of the difficulties that will be encountered in achieving international cooperation. Many governments remain committed to a concept of 'free flow' of information among, as well as within, countries but there is some concern regarding the implications of different practical interpretations of that concept. As the recent CBEMA report points out, the concept is not 'absolute', and certain modifications may be necessary in order to achieve competing public policy objectives. In this connection, Matthew Nimetz, a former US Under Secretary of State, stated in a presentation 14 to the International Information Industry Conference in Quebec City in June 1982, 'I cannot accept the view that the principle of "flee flow" is the beginning and end of discussion. As an advocate of "free flow" I take it to be a guiding principle, an important and basic presumption, but not a magic incantation that by itself establishes policies'.
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