Comments to the U.S. Commerce Department on the Indo-Pacific Economic Framework

Nigel Cory March 21, 2022
March 21, 2022

Responding to a Commerce Department inquiry into the Indo-Pacific Economic Framework (IPEF), ITIF provided recommendations on global data flows, privacy, and governance; innovation and advanced manufacturing; standards-setting for data, cybersecurity, AI, cloud services, and other new and emerging technologies; the potential for an IPEF climate-change agenda; and using IPEF to launch a joint commercial intelligence forum.

Summary of Recommendations

Global Data Flows, Privacy, and Governance

  • The United States should build data, digital, and technology processes and outcomes at IPEF that define the type of open, rules-based, and interoperable governance it wants to see in the global digital economy. In doing so, it would reject the perspective (mainly European) that harmonization—that there is a one-size fits all approach to data and technology governance—is the best approach to address global data and technology issues.
  • The United States should explicitly reference and articulate the principle of accountability in regards to data governance—that privacy and other legal responsibilities move with the data.
  • The United States should explicitly reference and articulate the principle of interoperability, such that data is still able to flow between different privacy regimes, and countries’ data protection rules flow with it. An interoperable system would focus on “global protections through local accountability.”
    • For example, IPEF partners should ensure outcomes explicitly allow for multiple different legal mechanisms to transfer personal data (similar to what Chile-New Zealand-Singapore did in their Digital Economy Partnership Agreement).
  • The United States should include carefully designed “conditional linkages” in IPEF between various commitments, provisions, and programs within each (and potentially between) the four buckets, such that it does not scare Indonesia and Vietnam away, but incentivizes them to join and engage in good faith cooperation (absent the America’s ability to make market access concessions).
    • To add value to existing agreements, it is key that IPEF move Indonesia, India, and Vietnam closer to the U.S. approach to data and digital trade (and that of Australia, Japan, New Zealand, and Singapore). Even just getting Indonesia and Vietnam engaged would be a win.
    • In parallel, the United States should build out the club of ambitious countries on digital issues such as to create a clearer incentive for these potentially problematic partners to join.
    • The United States should use a flexible approach, with connected conditionality, perhaps over an extended period of time, to encourage those members with problematic policies to move toward signing up to and joining ambitious provisions and programs.
    • The United States should make access to any preferential financing and technical capacity building, training, and other digital economy and advanced technology programs by the U.S. National Institute of Standards and Technology (NIST), the American National Standards Institute (ANSI), or USAID, contingent on genuine, good faith engagement on the full range of digital issues and rules.
    • To do this, the United States needs to better align U.S. development assistance with the commercial, trade, and strategic goals central to IPEF’s digital and technology objectives and make access to ongoing and new programs contingent upon IPEF engagement.
    • The United States should use core IPEF partners (like Australia, Japan, and Singapore) as trusted intermediaries to engage with these countries given they may get a different reception. Indonesia and Vietnam are familiar with USTR’s perspective. Along with the carrot, the United States could ask these trusted intermediaries to suggest to Vietnam that they may consider launching a CPTPP-based dispute case (given its use of data localization) if it fails to join IPEF and engage in genuine, good faith cooperation.
  • New digital trade rules are definitely needed to prohibit and roll back the growing range of digital barriers to trade, but these are insufficient on their own to future-proof trade frameworks so that firms can engage in seamless cross-border digital trade and innovation. U.S. policymakers must build-in regulatory cooperation with like-minded trading partners to ensure the early and ongoing alignment in how they govern data and new digital technologies.
    • Australia, Chile, New Zealand, and Singapore-style digital economy agreements show how truly modern trade agreements are as much about pursuing a model for digital governance that is international and interoperable as it is about agreeing on new, binding trade law provisions. It’s as much about the regulatory engagement and cooperation as it is about new digital trade rules.
    • The United States should get respective agencies to review and revise existing regulatory cooperation with IPEF partners and determine whether new MOUs and other agreements are needed. The Department of Commerce would need to work with other agencies to get them to buy into new regulatory cooperation under IPEF.
  • The United States should use IPEF to launch a partnership on government access to data—which is a foundational concern that underpins a wide array of restrictions on data flows, digital trade, and data governance in IPEF countries.
    • Progress on this issue is central to differentiating the United States and its like-minded democratic, rule-of-law countries from digital authoritarian countries like China and Russia who see physical access to data centers as a critical enabler of surveillance and political control.
    • The Department of Justice already has the mandate and expertise to work with the Department of Commerce on this issue.
    • The United States should also use IPEF to pursue updated MLATs, which would address a legitimate concern that governments have about data governance.
    • This will be difficult with India and Vietnam (and potentially Indonesia), but it’s still worth including the issue, taking a fresh look at what is possible, and pushing those countries as far as possible.
  • The United States should use IPEF to develop joint data-sharing frameworks, which could include private firms, researchers, and organizations in specific sectors, such as health.
    • The United States could even make participation in joint data-sharing frameworks contingent on signing onto ambitious digital rules or at least demonstrating a genuine, good faith commitment to exploring alternative approaches to data localization, etc.

Innovation, Industrial, Economic, and Advanced Manufacturing Ideas for IPEF

  • The United States could launch an IPEF innovation policy experts’ group.
    • Each IPEF member country could nominate 3-4 people to work on a broad and/or specific set of innovation issues set by IPEF leaders. The expert group could meet periodically in working toward producing a report for IPEF leaders.
  • The United States could work with IPEF partners to develop common industrial classification standards so that partners can conduct cooperative economic statistics gathering and more accurately assess supply chains.
  • The United States could explore cooperation on Open Radio Access Network, or ORAN, equipment.
  • United States should use IPEF to align collaborative international development aid/assistance, development finance support, and export credit initiatives to encourage nations in the Indo-Pacific region to select digital technologies, solutions, and platforms from vendors from like-minded nations.
  • The United States should make joint supply chain mapping the foundation of efforts to improve supply chain resilience as it helps identify and address gaps.
  • The United States should use IPEF to connect centers of excellence and advanced manufacturing firms with their international counterparts to share best practices and to build trade connections.
  • IPEF could provide a platform for small to medium-sized enterprise (SME) manufacturers in participant countries with online access to digital manufacturing toolsets.

Use IPEF to Launch an Indo-Pacific Standards Strategy

  • The United States should use IPEF to launch an “Indo-Pacific Standards Strategy” that would better connect standards-making bodies and related government agencies (and relevant industry stakeholders) on the development and use of standards (and certifications) for data, cybersecurity, AI, cloud services, and other new and emerging technologies.
    • If the United States doesn’t mobilize the Department of Commerce, NIST, ANSI, and other agencies involved in technology standards, it essentially leaves a vacuum for China and the European Union, who are ramping up advocacy for a state-directed, restrictive, and discriminatory approach to standards-setting that will inevitably disadvantage and discriminate against U.S. firms and products.
    • NIST and ANSI have not prioritized international standards cooperation and advocacy to the level it should—and it shows.
    • IPEF provides a chance for the United States to reset, catch up, and get ahead.
    • The United States should set up a high-level policy forum among the IPEF governments’ standards experts (with an appropriate balanced scope of work given the government’s interests and role in standards) on their respective approaches to new and emerging technologies and how best to address associated public policy issues, especially as it relates to the development and application of measurement standards.
    • Industry should be involved given their central role in developing and adopting technical standards as part of the open, transparent, and voluntary standard setting forums that the U.S. government supports.
    • A challenge to more forcefully advocating for the U.S.’s preferred approach to addressing certain tech and digital issues (e.g. NIST’s Cybersecurity Framework and AI Risk Management Framework) is that these frameworks are voluntary, while the government plays a far more central, and prescriptive, role in many potential IPEF partner countries.
  • IPEF should pursue pre-standardization cooperation on new and emerging technologies with IPEF partners.
    • This represents a creative, forward-looking way for the United States to work with like-minded partners on the early alignment of key terminology and concepts, technical details, and policy discussions, such as on AI, the Internet of Things, and facial recognition.
  • The United States should use IPEF to advocate for the use of certifications (for services like cloud services) given they address legitimate public policy concerns (like cybersecurity) without unnecessarily impacting digital trade.
    • This is an important and indirect way to address concerns that some countries have about the security of U.S. cloud service providers (which they use to justify data localization).
  • The Department of Commerce needs to work with its partner agencies (especially USAID and State) to better align and expand the resources and staffing dedicated to international standards policy engagement and to prioritize those countries that join IPEF.

Ideas for an IPEF Climate Change Agenda

  • The United States should pursue an Indo-Pacific extension of its idea for a “climate club.” The United States could extend what it is already doing with the EU in terms of a “green” steel deal or it could initiate a similar initiative but in another sector.
  • The United States should use IPEF to coordinate clean energy supply chains.
    • The United States could build on recent steps in this direction, including those by the U.S. International Development Finance Corporation and the Department of Energy.
  • The United States should use IPEF to create a regional climate change metrology center (run by NIST) to better measure, and therefore better understand and respond to, climate change.
    • NIST already has good relationships with counterparts in Australia, Korea, and Japan. With the proper funding, direction, and support, it could expand this network to other IPEF countries.
    • The United States could get NIST to work with counterparts to share information and best (methodological) practices and develop joint pilot projects to better measure climate change and associated activities and events.

Use IPEF to Launch a Joint Commercial Intelligence Forum

  • The United States should launch a joint commercial intelligence forum at IPEF.
    • This would bring together respective agencies to share information, cases, and best practices when identifying and responding to foreign adversaries that seek to steal technology and trade secrets. The forum would focus specifically on combatting state-sponsored economic espionage in advanced-technology industries.
    • This would include enhanced information-sharing to combat foreign economic espionage and IP/technology/trade secret theft, including the use (and reform of) export control, foreign investment review, and other defensive mechanisms.
    • It would also include sharing information and best practices about how to ensure universities screen applications so that they do not educate people with direct connections to foreign (adversarial) governments (like China) in advanced technologies areas that have national security implications.

Read the full comments. (PDF)