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September 19, 2013

NSA Mass Surveillance Harming the Free Flow of Data

The American people have been outraged to find that their ordinary, uneventful communications and ecommerce transactions have been collected, analyzed and stored for future access in a mass surveillance program by the National Security Agency (NSA). But beyond its domestic political impact, the mass surveillance scandal may have far reaching economic consequences that affect the ability of American companies to compete internationally.

The free movement of goods and people across borders has long been an element of a free society that contributes to economic growth. Barriers to trade in goods and lawful migration of citizens are rightly seen as creating unnecessary friction and harming economic freedom.

But in our new global, digital economy, the free flow of data across borders is equally important. The Internet we have today and the Internet we want in the future depends on the free, unhindered flow of data across national borders.

Various countries have long wanted to control digital traffic. Some despotic regimes want to have total control over Internet traffic for obvious reasons, but many other countries see data flows as resources to harness for domestic development purposes. India and Brazil, among others, have advocated “forced localization” policies that would compel data companies to:
  • Build in-country data storage facilities so they are subject to country-specific regulation and taxation;
  • Share software code and other sensitive design elements with in-country government and industrial players; and
  • Be subject to involuntary technology transfer requirements.
This is why cross-border data flow protection has been a key element in recent trade agreements like the Trans Pacific Partnership (TPP) and the emerging Transatlantic Trade and Investment Partnership (TTIP) agreement with the EU.

Tragically, the NSA mass surveillance scandal has provided these countries with the excuse they needed to move toward more control, regulation and forced localization of data. This week Dilma Rousseff, the president of Brazil, announced a series of measures aimed at insulating Brazil’s data flows from the United States.

The tragedy is—she has something. The NSA spied on Rousseff, on Brazil’s state-owned Petrobras oil company, and on Brazilians who use Internet services like Facebook. And now she knows that all the Internet hardware and software in Brazil’s infrastructure has an NSA backdoor. Rousseff’s reaction is unwise in the long term for Brazil’s participation in the digital economy, but understandable.

The hard work of U.S. companies (and, ironically, of other U.S. government agencies) to build international goodwill and to negotiate data protection agreements has been dramatically undermined by the rogue behavior of the NSA. Congress must rein in this unconstitutional mass surveillance program not only to protect the privacy and freedom of American citizens, but to maintain America’s moral and economic leadership in the global digital economy.


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