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INTERNATIONAL DATA FLOWS: PROMOTING 

DIGITAL TRADE IN THE 21ST CENTURY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

NOVEMBER 3, 2015 

Serial No. 114–49 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

DARRELL E. ISSA, California, Chairman 

DOUG COLLINS, Georgia, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

J. RANDY FORBES, Virginia 

TRENT FRANKS, Arizona 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

BLAKE FARENTHOLD, Texas 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

JERROLD NADLER, New York 

JUDY CHU, California 

TED DEUTCH, Florida 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

ZOE LOFGREN, California 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

JOE KEELEY, Chief Counsel 

JASON EVERETT, Minority Counsel 
(III) 

C O N T E N T S 

NOVEMBER 3, 2015 

Page 

OPENING STATEMENTS 

The Honorable Darrell E. Issa, a Representative in Congress from the State 

of California, and Chairman, Subcommittee on Courts, Intellectual Property, and the Internet .......................................................................................... 1 

The Honorable Jerrold Nadler, a Representative in Congress from the State 

of New York, and Ranking Member, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 3 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 4 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 5 

WITNESSES 

Ambassador Peter Allgeier, President, Coalition of Service Industries (CSI) 

Oral Testimony ..................................................................................................... 12 

Prepared Statement ............................................................................................. 15 

Robert D. Atkinson, Ph.D., Founder and President, The Information Technology and Innovation Foundation 

Oral Testimony ..................................................................................................... 22 

Prepared Statement ............................................................................................. 24 

Victoria Espinel, President and CEO, BSA | The Software Alliance 

Oral Testimony ..................................................................................................... 46 

Prepared Statement ............................................................................................. 48 

Ed Black, President & CEO, The Computer & Communications Industry 

Association 

Oral Testimony ..................................................................................................... 54 

Prepared Statement ............................................................................................. 56 

Mark MacCarthy, Senior Vice President, Public Policy, Software & Information Industry Association 

Oral Testimony ..................................................................................................... 73 

Prepared Statement ............................................................................................. 75 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Ranking Member, Committee 

on the Judiciary ................................................................................................... 8 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Prepared Statement of Edward M. Dean, Deputy Assistant Secretary for 

Services, International Trade Administration, U.S. Department of Commerce ..................................................................................................................... 120 

Prepared Statement of Nuala O’Connor, President and CEO, Center for Democracy & Technology; and Gregory T. Jojeim, Director, Freedom, Security 

& Technology Project, Center for Democracy & Technology ............................ 124 

Letter from Michael Beckerman, President & CEO, The Internet Association . 130 
Page

IV 

Letter from Daphne Keller, Director of Intermediary Liability, Center for 

Internet and Society, Stanford Law School ....................................................... 133 

Response to Questions for the Record from Ambassador Peter Allgeier, President, Coalition of Service Industries (CSI) ........................................................ 137 

Response to Questions for the Record from Robert D. Atkinson, Ph.D., Founder and President, The Information Technology and Innovation Foundation .. 139 

Response to Questions for the Record from Victoria Espinel, President and 

CEO, BSA | The Software Alliance ..................................................................... 140 

Response to Questions for the Record from Ed Black, President & CEO, 

The Computer & Communications Industry Association ................................. 142 

Response to Questions for the Record from Mark MacCarthy, Senior Vice 

President, Public Policy, Software & Information Industry Association ......... 146 
(1) 

INTERNATIONAL DATA FLOWS: PROMOTING 

DIGITAL TRADE IN THE 21ST CENTURY 

TUESDAY, NOVEMBER 3, 2015 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 1 p.m., in room 2141, 

Rayburn House Office Building, the Honorable Darrell E. Issa 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Issa, Goodlatte, Collins, Smith, Chabot, 

Jordan, Poe, Marino, DeSantis, Nadler, Conyers, Chu, DelBene, 

Jeffries, Cicilline, Peters, Lofgren, and Johnson. 

Staff Present: (Majority) Vishal Amin, Senior Counsel; Eric 

Bagwell, Clerk; and (Minority) Jason Everett, Minority Counsel. 

Mr. ISSA. The Committee will come to order. 

Today’s hearing concerns digital trade, and specifically cross-border data flows. The modern economy requires data flow and to flow 

freely. 

Individuals and businesses rely on technology and the efficient 

and reliable movement of data across borders. The recent decision 

by the European Court of Justice, invalidating the 15-year-old Safe 

Harbor Agreement between the United States and the European 

Union, created uncertainty that’s bad for business everywhere. We 

hear that a new Safe Harbor Agreement is imminent. But if an 

agreement is not reached by the end of January 2016, then the consequences for transatlantic data flow and business operations could 

be dire. 

To help us reach a new agreement with the EU, the House 

passed a Judicial Redress Act last month. Though it still awaits 

Senate action, it is a strong move by the House to support—in support of reaching this vital agreement. 

But cross-border data flow are not simply a transatlantic issue. 

They also figure prominently in the Trans-Pacific Partner Agreement, or TPP. As we consider digital trade issues more globally, it 

is important to view the tactics being used to restrict it as much 

as any other point of it. The trade barriers being used to restrict 

cross-border data flows are simply nontariff trade barriers. By any 

other name, it is protectionism, and it hurts U.S. competitiveness; 

it hurts the very countries who are implementing these protec-
2 

tionist agreements, and ultimately, it will hurt global trading with 

all the partners who depend on data free flow in a 21st Century. 

These trade barriers include localization requirements for cloud 

computing. That means that instead of harnessing the economies 

of scale that come from a cloud, companies will be forced to house 

in facilities in individual countries, resulting in duplicative infrastructure and higher costs. Let us bear in mind that a location anywhere on the face of the earth is a location everywhere on the face 

of the earth. And many countries seem to ignore that in favor of 

basically an infrastructure construction project being mandated in 

their country. 

And it’s not just technology companies that can be harmed by 

these types of digital trade barriers. In the financial services industry, banks use a security practice known as charting, that splits a 

single customer’s information into discreet packets that are stored 

in multiple locations to prevent a hacker from compromising it. By 

its very definition, this practice would be impossible without the 

free flow of data. 

In July, we held a hearing on The Internet of Things, or IOT. 

This new era of technology relies on sensors transmitting data to 

a cloud for analysis. If the data cannot flow freely around the globe, 

then The Internet of Things technologies will not be as successful 

as they could be, and, in fact, could restrict many of the technologies already implemented in The Internet of Things. 

If countries are allowed to unduly restrict data flow, what is to 

stop them from creating new market access requirements that require companies to share source code, trade secrets, utilize—utilize 

or source solely from local companies, and more absurdly, force 

U.S. studios to alter their story line of a movie as a condition of 

market access. 

The last one isn’t that absurd. A report published just last week 

by the U.S.-China Economic and Security Review Commission, explains just how China regulator—China’s regulators do just that as 

a condition of market access. 

As this Committee works to promote digital trade, we are continuing a long battle against market access barriers that take surprisingly, and oftentimes, strange forms. 

Though the issues can oft-times seem complex, the goal here is 

to actually make this simple and understandable for the American 

people to ensure free and fair trade, improving U.S. competitiveness globally. 

Digital trade helps drive the modern economy, and I look forward 

to our witnesses today and a healthy debate on these issues. 

Last but not least, it goes without saying that no one owns data 

in a global environment exclusively. An economic transaction for an 

American who is traveling in a foreign country, requires a lookback to their country. If the United States refuses to provide that 

data, while another country refuses to provide the information as 

to what is being bought or what service is being procured, then, in 

fact, you have a standoff; I won’t let my data flow to you to tell 

you what customer X is buying, and you won’t tell me if customer 

X can pay for it. Can you imagine trying to travel with a 

MasterCard or a Visa or an American Express that simply couldn’t 
3 

cross international lines? Sounds absurd? Not if everyone says, my 

data is mine, and I won’t share. 

And with that, I recognize the Ranking Member for his opening 

statement. 

Mr. NADLER. Thank you, Mr. Chairman. 

Today’s global economy is largely a digital economy. Thanks to 

the Internet, massive amounts of data can be sent across the global 

in an instant, connecting businesses and consumers alike. The ability to easily transmit data at low cost throughout the world has 

spurred tremendous innovation and fostered significant economic 

growth. But various countries have erected barriers to the free flow 

of data across borders. Some of these restrictions are intended to 

stifle dissent and free speech. Some are purely protectionist in nature, or some are for other policy reasons, such as protecting the 

privacy of a country’s citizens. 

Today’s hearing presents a good opportunity to examine what 

rules should govern the international flow of data, and what role 

the United States can play in establishing and enforcing these policies. 

When we talk about cross-border data flow, it could be something 

as simple as someone in a New York office of a multi-national bank 

and emailing a colleague in the bank’s Hong Kong office. It could 

also be someone sitting in Paris accessing their Facebook account, 

or logging onto iTunes and downloading movies and songs contained on American servers. 

But it also has much more complex applications. Cloud computing allows businesses and consumers to store data and service 

that could be located anywhere in the world. And some global businesses gather data across their worldwide operations to a centralized location where it can be analyzed to better stream their supply 

chain or improve service to their customers. 

Companies of every shape and size, and across nearly every industry, rely on data that crosses international borders at some 

point along its journey. That is why it’s important that we carefully 

examine any restrictions that might impede the free flow of data. 

Some restrictions, like those that block access to social media or 

filter out political dissent, are clearly improper, and threaten the 

human rights of those countries and citizens. America should continue to lead the world in opposing oppressive regimes that stifle 

the freedom of their people. 

Other restrictions, like those requiring a company to process data 

domestically, or to locate certain infrastructure in-country, are 

often intended to bolster domestic companies. Many of these restrictions can be removed in the context of trade agreements. 

But I have been a persistent critic of some such agreements, in 

part, because of their devastating impact on American jobs, and we 

should tread carefully in the digital realm before we make some of 

the same mistakes we have made with physical goods. 

More complicated to address the limitations on data flow, the 

countries impose to advance other policy goals, like privacy protection. Finding the right balance between protecting the needs of 

American businesses, respecting the legitimate policies of other Nations, and to ensure that other countries respect ours is not an easy 

task. That was made clear by the recent decision by the Court of 
4 

Justice of the European Union to invalidate the U.S. EU Safe Harbor framework. This important agreement enabled more than 4,000 

American businesses to transfer the personal data of EU citizens 

to the United States if the company certify that they would comply 

with certain adequacy requirements to protect personal privacy. 

The court, however, determined, in part, that because the Safe 

Harbor scheme only applies to companies and not public authorities, there was not adequate protection for EU citizens from U.S. 

surveillance activities, and the entire agreement was, therefore, invalidated. 

The court also found that EU citizens do not have sufficient remedies under U.S. law if their privacy rights after a transfer are violated. 

The gentleman from Wisconsin, Mr. Sensenbrenner, and the distinguished Ranking Member of the full Committee, Mr. Conyers, 

deserve great credit for working to address the second issue by 

drafting the Judicial Redress Act, which will provide important privacy protections for EU citizens under U.S. law. 

The Judicial Redress Act has already passed the House, and I 

hope the Senate will take it up shortly. I also appreciate the U.S. 

Department of Commerce, which is hard at work negotiating a new 

Safe Harbor Agreement. I hope a new agreement is reached soon, 

but I also hope that Congress will view this incident as a wakeup call. 

The USA Freedom Act took an important step in curtailing surveillance activities, but we should go much further in strengthening our privacy protections. It should not take a European court 

to prod us into protecting our own citizens. 

To ensure that businesses have the flexibility they need, while 

consumers have the protections they deserve, the United States 

must work with its partners in the global community to set clear 

standards governing cross-border data flow. I look forward to discussing what these standards ought to be with our esteemed panel 

of witnesses today, and I yield back the balance of my time. 

Mr. ISSA. The gentleman yields back. 

I now recognize the Chairman of the full Committee, Mr. Goodlatte, for his opening statement. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Today’s hearing reflects a new twist on the same old song. U.S. 

companies are at the forefront of the digital economy, and as our 

companies look to operate globally, they face new and novel nontariff trade barriers that could make it costly, or near impossible, 

to operate overseas. As we work to promote digital trade, we must 

work to make sure that the international playing field is fair. 

When foreign countries attempt to raise trade barriers ore put in 

costly regulations as a cost of doing business, we need to call it out 

for what it is, a barrier to free and fair trade. 

We are now in a world where, on one side of the globe, the 

United States has negotiated the Trans-Pacific Partnership Trade 

Agreement, with rules promoting cross-border data flows and preventing undue restrictions, such as localization requirements. 

And on the other side of the globe, we look at Europe, which has 

invalidated a 15-year-old Safe Harbor Agreement. This decision 

translates into uncertainty for thousands of American companies 
5 

doing business in Europe, which could have a ripple effect on our 

economy. 

As the United States and Europe continue to negotiate the new 

Safe Harbor Agreement, we must understand that this is a complex 

issue for all sides. And we are cautiously optimistic that the Administration and our European allies will be able to come to an 

agreement that eliminates uncertainty and allows transatlantic 

commerce to continue. 

In the House, we recently passed the Judicial Redress Act. This 

bipartisan bill, awaiting Senate action, extends certain privacy protections to citizens of European countries, as well as other allied 

Nations if the Federal Government willfully discloses information 

in violation of the Privacy Act. Under this bill, citizens of designated countries will be extended the core benefits of the Privacy 

Act, which already applies to Americans, with regard to information shared with U.S. law enforcement authorities, including the 

ability to bring a lawsuit for the intentional or willful disclosure of 

personal information. 

This hearing is important because the rules of the road that are 

considered on digital trade and data flows will either promote or 

impede the growth of the Internet. A recent BSA report stated that 

90 percent of all of the world’s data was created in just the last 

2 years. While an incredible statistic, it also shows how important 

data and data flows are to innovation and economic growth. 

Localization requirements, such as forcing companies to locate 

data centers in a particular country, defeat the whole point of cloud 

computing. New technologies, like The Internet of Things and cloud 

computing, rely on cross-border data flows. Undue restrictions 

could prevent companies like Boeing and GE from using IOT sensors in jet engines to send back real-time data to their engineers 

in the United States. 

For global diversified technology and manufacturing companies, 

they would face the absurd situation of not being able to move 

their own R&D data from country to country. 

Restrictions on data flows fail to recognize the importance of 

interconnected global supply chains, and the need for the uninterrupted movement of data. 

As this Committee continues to study this issue, it is important 

for us to keep in mind the effects on public policy today and in the 

future. 

I am hopeful that the right policies will help fuel the engine of 

American innovation, prosperity, and creativity. I think we have a 

great panel assembled today, and I look forward to hearing from 

all of our witnesses. 

Thank you, Mr. Chairman. 

Mr. ISSA. The gentleman yields back. Thank you. 

We now will hear from the Ranking Member of the full Committee, the gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Chairman Issa. 

I think this is a more important hearing than a lot of people appreciate it. Certainly, that’s the case of myself. And to our distinguished list of panelists, we welcome you all, particularly Dr. Atkinson. But I just want to get something out about the digital 

trade, because the growth of our economy relies on the expansion 
6 

of the global digital economy, and efficient cross-border data flow 

as digital trade becomes a larger portion of the global economy. 

That’s the heart of my introductory comments. 

According to the United States International Trade Commission, 

a digital trade increased U.S. average wages and helped create 

about 2.4 million full-time positions in 2011, the same year digital 

trade also increased annual U.S. GDP by 4.8 percent. 

As we hear from today’s witnesses, which I welcome, I’d like to 

have considered the following points: To begin with, any discussion 

on digital trade and unrestricted cross-border data flows requires 

a serious discussion on surveillance reform. Earlier this year, a coalition of companies, trade associations, civil rights organizations, 

wrote to the leadership of both parties to outline the economic costs 

of the significant erosion of global public trust in both the United 

States Government, and the United States technology sector. Their 

fears appear to have been prescient. 

Last month, citing concerns about insufficient privacy safeguards 

in the U.S. Court of Justice of the European Union suspended the 

U.S. EU Safe Harbor framework that allows about 4,400 United 

States-based companies to move digital information across the Atlantic. The decision is a reminder that we need to have a thorough 

conversation about surveillance reform. Without one, we cannot 

fully address eliminating restrictions on cross-border data flow. 

A couple of weeks ago, the House took a step toward a fuller discussion by passing H.R. 1428, the Judicial Redress Act, which our 

colleague, Jim Sensenbrenner, introduced, and I was proud to be 

a cosponsor of. 

The bill extends to the citizens of certain foreign countries, privacy protection, and it will facilitate information-sharing partnerships with law enforcement agencies across the globe. This will 

save lives. 

Although there is far more work to be done, I hope that our allies 

will take our work on the Judicial Redress Act as a sign of good 

faith and a first step. 

We must continue to work to restore the public trust necessary 

for the continued success of the United States industry overseas, 

while protecting individual rights. Digital trade and cross-border 

data flows are transforming how American consumers and small 

businesses operate and interact. For example, Ford Motor Company and Boeing, analyze, in real time, digital data from their vehicles and aircrafts. This helps them diagnose problems and quickly find solutions. This saves consumers money and saves lives. 

Similarly, small businesses depend on having efficient cross-border data flow in digital trade. For example, digital trade affords 

them the ability to expand into foreign markets. Consumers rely on 

online payment processors, like PayPal, to process their payments 

globally from purchases on online platforms and small businesses. 

Finally, the flow of data across international borders presents a 

unique regulatory setting. Congress, the Administration, foreign 

governments, and nongovernmental actors, must provide solid consumer protections that safeguard the development of these ever-increasing data flows. The smart and thoughtful discussion I believe 

we ought have today will be to illuminate barriers to future growth 

that we need to consider and address. According to studies, restric-
7 

tions like data localization mandates hinder economic development 

in those companies that erect barriers to digital trade. We should 

examine how they affect consumers and the United States-based 

businesses. 

Still, some barriers are necessary to protect against the digital 

trade of illegal goods and services, such as digital piracy and the 

trafficking of child pornography. 

I look forward with interest to having the witnesses at today’s 

hearing, and I thank the Chairman. 

Mr. ISSA. Thank you. The gentleman yields back. 

Without objection, all—— 

Mr. CONYERS. Mr. Chairman. 

Mr. ISSA. For what purpose does the gentleman seek recognition? 

Mr. CONYERS. For the record, I would like to enter into the 

record an ACLU report concerning the Subcommittee on Courts, 

Intellectual Property, and the Internet hearing dated November 2, 

2015. 

Mr. ISSA. Without objection, placed in the record. 

Mr. CONYERS. Thank you. 

[The information referred to follows:] 
8 
9 
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Mr. ISSA. You’re most welcome. 

Without objection, other members’ opening statements will be 

made a part of the record. We now move to our distinguished panel 

for today. 

The witnesses’ written statements will be entered into the record 

in their entirety, and I’d ask you to please summarize, within 5 

minutes or less, your opening statement. 

To help us stay within the timing, as you may be used to, you 

will see a red, yellow, and green light in front of you. Please think 

of them like you do the lights that you never, never run in your 

daily driving habits. 

Before I introduce the witnesses, I would ask that all witnesses 

please rise to take the oath pursuant to the Committee rules. Raise 

your right hands. 

Do you solemnly swear or affirm that the testimony you’re about 

to give will be the truth, the whole truth, and nothing but the 

truth? 

Please be seated. 

Let the record reflect that all witnesses answered in the affirmative. 

Our witnesses today include Ambassador Peter Allgeier, president of the Coalition of Service Industries; Dr. Robert Atkinson, 

president of the Information Technology and Innovation Foundation; Ms. Victoria Espinel, president and CEO of BSA, the Business 

Software Alliance, or the Software Alliance now as we want to call 

it; and Mr. Ed Black, president and CEO of the Computer and 

Communications Industry Association; and certainly never least, 

Mr. Mark McCarthy, senior vice president of Public Policy for the 

Software & Information Industry Association. 

And with that, we’ll go down, starting with the Ambassador. Oh, 

and before you begin, I would note that we’re going to go about 5 

or 10 minutes into when the bells ring, and then we’ll be gone for 

roughly half an hour, but we’ll try to get through as many witnesses as possible. 

Ambassador. 

TESTIMONY OF AMBASSADOR PETER ALLGEIER, PRESIDENT, 

COALITION OF SERVICE INDUSTRIES (CSI) 

Mr. ALLGEIER. Thank you very much, Mr. Chairman, Mr. Ranking Member, and Members of the Subcommittee for allowing me to 

participate in today’s hearing. 

The global economy today is in the midst of two revolutions that 

are inextricably linked: The digital revolution and the services revolution. And the United States is in the best position to define the 

courses of these revolutions, and to benefit from them if we follow 

appropriate policies, especially in international trade. 

Now, the services revolution is evident from the fact that service 

is, by far, the largest source of jobs, of GDP, and of job growth. And 

more importantly, they are the enablers of all other sectors of the 

economy, including manufacturing, agriculture, and energy. 

At the center of the service’s revolution, however, is the second 

revolution, the digital revolution. And all services, indeed, all parts 

of the economy, depend upon digital communication within their 

own businesses, with their customers, and with their suppliers. 
13 

And the Internet, of course, is emblematic of the digital revolution. 

This revolution has enabled services to be delivered digitally across 

borders to a degree that was unimaginable two decades ago. But, 

the international rules and provisions governing trade and services 

and digital trade have not kept up with these developments. So 

they urgently need to be updated and brought into line with the 

realities of a digitally-connected world. 

Now, as a number of the members already have said, many countries do not share our entrepreneurial and technological aptitudes 

and seek to get advantage by imposing legal restrictions on the 

ability of a firm to manage and move its own data across borders, 

or they impose requirements to store data on local servers. A common measure by such countries is for the government to require 

that foreign firms establish facilities for storing and processing 

their data in the jurisdiction that they are serving. 

This tendency is particularly pronounced in regulated sectors 

such as banking, insurance, and telecommunications. 

These localization requirements essentially make cloud computing services impossible. Examples of local data storage and 

processing requirements abound, just, for example, in Greece, in 

China, in India, in Russia, in Indonesia, and in Malaysia. 

So it is essential that our government oppose attempts, in all sectors, to impose localization requirements on local businesses. The 

opportunity to do so lies in the various trade negotiations that are 

occurring now. The Trans-Pacific Partnership, the Transatlantic 

Trade and Investment Partnership, the Trade in Services Agreement in Geneva, and also work in the World Trade Organization. 

These negotiations should set the standards for digital trade by, 

one, ensuring parties can transfer, access, process and store data 

across borders; two, prohibiting parties from requiring the establishment or use of local servers; three, ensuring nondiscriminatory 

treatment of digital products and services from other parties; and 

four, allowing parties to regulate cross-border data flows for legitimate policy reasons, but only within the accepted standards that 

are included in the World Trade Organization in the GATS, the 

General Agreement on Trade in Services. 

So how are we doing with respect to using these trade agreements? The TPP has made important progress in advancing the objective of freedom for cross-border data flows and prohibitions on 

localization requirements. However, it includes one very disturbing 

exception to the prohibition on localization requirements, and that 

is that financial services, including banking and insurance, are excluded from the localization prohibition. Every other business has 

that prohibition in this agreement. But most disturbing is that this 

exception was at the insistence of the U.S. Government, and this 

misguided position gives our trading partners the perfect political 

argument to impose such requirements on our businesses. 

What we need to do, in addition to fixing that, is to ensure that 

we don’t repeat that mistake in the negotiations that are taking 

place elsewhere in the transatlantic negotiations, and in the Trade 

in Services Agreement. 

I’ll just make one point about Safe Harbor, because that also is 

something that is extremely important. Everybody knows that that 

decision was just handed down by the Court of Justice in Europe. 
14 

Our member companies are very eager to work with the Congress 

and the Administration to find a solution that preserves our companies’ ability to move data across the Atlantic, but with appropriate respect for individuals’ privacy. 

So thank you, Mr. Chairman and members. We very much appreciate the opportunity to be part of this today, and congratulate you 

on the attention that you are paying to this issue. It’s extremely 

important to the service industry, but also to the economy more 

broadly. Thank you. 

[The prepared statement of Mr. Allgeier follows:] 
15 
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19 
20 
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Mr. ISSA. Thank you, Ambassador. 

Dr. Atkinson. 

TESTIMONY OF ROBERT D. ATKINSON, Ph.D., FOUNDER AND 

PRESIDENT, THE INFORMATION TECHNOLOGY AND INNOVATION FOUNDATION 

Mr. ATKINSON. Good afternoon, Chairman Issa, Ranking Member 

Nadler, Members of the Subcommittee. It’s a pleasure to be here 

today to talk about this critical issue. And in my written testimony, 

I go into great length and detail on all the economic benefits to 

both the global and the U.S. economy from cross-border data flows, 

so I won’t go into that too much, but I want to make one point that 

a couple of others have made, which is, this is not, quote, ‘‘just a 

Silicon Valley thing.’’ Cross-border data flows are critical to a wide 

variety of industry, mining, agriculture, automobile production, finance, retailers. 

So this is really something that’s affecting all of our industries, 

all sizes of companies. And, unfortunately, we don’t have the ability 

to control our own fate here, because a growing number of Nations 

are engaging in digital protectionism. Some of the policy reasons 

for them are, perhaps, legitimate in the sense that they have this 

concern for privacy. In other cases, privacy is a guise for just naked 

protectionism; they don’t want data to flow outside their country in 

order to benefit their own domestic companies. And in, still, other 

cases, companies are requiring data to reside in their borders so 

they can have unfetterred government access to that data without 

the rule of law. 

But whatever the rationale, this data protectionism hurts the 

U.S. economy. It raises costs for our companies; it makes them 

have less global market share. That’s why in 2013, ITIF estimated 

that the cost to U.S. technology companies alone from all of the 

Snowden revelations and the backlash against us and the restrictions that companies—countries were putting in place under the 

guise of the Snowden revelations, we stood—our technology companies stood to lose anywhere between 21- and $35 billion by next 

year in revenues, in global revenues. That hurts not just our technology companies, but the U.S. economy and U.S. workers. 

So what do we need to do? I think one of the things we cannot 

do for a lot of, I think, reasons, but one is we cannot simply say 

that the way to solve this problem is to adopt the most stringent 

privacy regime in the world. We can’t have another region, another 

country, tell us what our laws and rules should be with regard to 

privacy. Our view is our privacy rules and policies are actually the 

reason we lead in the global digital economy, not the other way 

around. So we cannot have one solution. 

The good news is, we don’t have to have one solution. The way— 

we’ve argued very, very strongly that when a foreign—when a U.S. 

company operates on foreign soil, they’re subject to the laws of that 

country. They can’t just—just by moving data back to the U.S., 

they can’t get out of their legal obligation. They can’t then say, 

well, we’re going to use U.S. privacy policies, even though we have 

a branch in Brussels. 

So in a lot of ways, I think this is a lot of much ado about nothing. We can look just, for example, at the Canadian privacy com-
23 

missioner, who has filed a number of successful suits against U.S. 

companies who have branch plants or facilities in Canada, who 

have broken, or purportedly, broken Canadian privacy law by moving the data back to the U.S., processing it in a way that was 

against Canadian rules. The Canadian Government had the ability 

and the right to bring action against those U.S. companies. They 

did so, and they prevailed. There’s no reason why Europe couldn’t 

do the exact same thing. 

So what do we need do? I agree with the Ambassador, we really 

need to push forward on two steps: The first step being trade 

agreements. TPP purportedly has—reportedly has strong agreements, protections for digital trade there, TiSA as well. But I think 

the key challenge there is really making sure that any national security or privacy exceptions are very, very narrow. The risk is that 

the exceptions won’t be narrow, and countries will use this again 

as a guise to restrict—to restrict data flows. 

I also think the U.S. should not be overly defensive, at least on 

the commercial side of the ledger. We have a right to do what we’re 

doing. Our companies aren’t really breaking any laws, by and 

large. And I think it’s time for us to at least put on the table the 

possibility of a WTO suit against Europe. Europe has, as we all 

know, cut off our access to data flows to the U.S. because of the 

Safe Harbor. They have not cut off data flows to Israel; they have 

not cut off data flows to Argentina, neither—both of those countries 

still have agreements with Europe, and yet, there is no evidence 

that the national security protections for government access to that 

data in Israel or Argentina are any less stringent than ours. If Europe wants to go down this path, they should cut off data flows 

from every country in the world, not just the United States. 

And lastly, we need to—one area we do need to act on is with 

regard to government access of data. Our companies in America 

can comply with foreign laws quite well, and when they don’t, they 

can be prosecuted. What they can’t comply with is what government does with data. That’s why we’ve proposed that we work with 

Europe to craft what we call the Geneva convention on the acts on 

data, where we come up with a set of norms and rules that we 

would all agree with in terms of government access to data to restore that trust. 

Thank you for the opportunity to appear before you today. 

[The prepared statement of Mr. Atkinson follows:] 
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Mr. ISSA. And thank you. 

Ms. Espinel. Sorry. Ms. Espinel. I do that. I apologize. Thanks. 

Victoria. 

TESTIMONY OF VICTORIA ESPINEL, PRESIDENT AND CEO, 

BSA | THE SOFTWARE ALLIANCE 

Ms. ESPINEL. Thank you, Mr. Chairman, Ranking Member, and 

Members of the Subcommittee. 

Mr. ISSA. Try—Victoria, pull it a little closer to see if that works. 

Ms. ESPINEL. Maybe mine is off. Can I borrow yours? Thank you. 

Mr. ISSA. These are very effective. 

Ms. ESPINEL. Thank you. My name is Victoria Espinel, and 

thank you for the opportunity to testify today on behalf of BSA | 

The Software Alliance. Promoting international trade by eliminating barriers for cross-border data flows is a top priority for us 

and for our members. And today’s hearing presents a tremendous 

opportunity to explore three areas: First, the growing importance 

of data and digital trade; second, forward-looking efforts to expand 

such trades through agreements like the Trans-Pacific Partnership, 

and troubling recent developments in Europe and other markets 

that could derail these potential opportunities. 

International trade is critical to our members, and as is the case 

for many other sectors, international trade for our members increasingly involves data services and digital, rather than physical 

transactions. The economic implications of the software-enabled 

data revolution are enormous. Economists predict that making better use of data could lead to a data dividend of $1.6 trillion in the 

next 4 years. And that efficiency gains alone could add almost $15 

trillion to the global GDP by 2030. That’s an amount that’s equal 

to the current economy of the United States. 

But beyond the economic implications, data is central to the lives 

of billions of people around the world. Farmers use data to reduce 

pesticides in water use while increasing yields; families are cutting 

down on their commute times; cities are redesigning transportation 

routes that save time and reduce pollution; doctors are using data 

to save the lives of premature babies and do research on Alzheimer’s; people around the world are using data to improve their 

lives. 

Because the actual processing and analysis of data often takes 

place in various locations that are miles, or even continents apart, 

it is critically important to be able to move data freely across national borders. And as excited as BSA members are about the potential for software and data-driven innovation to spur growth, we 

are deeply concerned about steps that several U.S. trading partners 

have considered, or taken to erect barriers to digital trade and 

cross-border data flows, including Brazil, Nigeria, China, Russia, 

and many others. 

These barriers take many forms. Sometimes they expressly require the data stay in country, or they impose unreasonable conditions in order to send it abroad, and other cases, they require the 

use of domestic data centers or other equipment. 

In light of the troubling growth and barriers to data flows, BSA 

members welcome the recently concluded TPP. We understand, 

based on briefings and discussions with U.S. and TPP partners, 
47 

that the agreement include several commitments that are vital to 

digital trade. 

First, robust commitments on cross-border data flows, including 

explicit prohibitions on data and server localization mandates; second, a prohibition against imposing custom duties on digital products; and third, prohibitions against requiring companies to disclose software service code as a condition of competing in the market. 

This is the first time that strong enforceable rules on data have 

been included in the FTA agreement, and it is a historic opportunity. We look toward to studying carefully the final text, and to 

working with the Administration and Members of Congress as the 

agreement moves forward. 

While we are pleased by the important rules that the TPP will 

provide with many of our transpacific trading partners, we are concerned about potential new obstacles that have recently arisen with 

our biggest transatlantic trading partner, the European Union. 

As the Subcommittee is aware, the European Court of Justice recently handed down a decision that invalidates the Safe Harbor, a 

mechanism that nearly 5,000 U.S. companies of all sizes have relied on for more than a decade, to facilitate digital commerce with 

customers, suppliers, and partners in Europe. The invalidation of 

Safe Harbor has broad ramifications with transatlantic trade, not 

only for software, but for many other sectors of the economy as 

well. 

The current situation has led to uncertainty for Europeans and 

American individuals and the businesses that serve their needs 

and the millions of customers that are served by them. We encourage Congress and the U.S. Government to respond with urgency 

and focus. And we thank each and every member of this Committee 

for their vote or Judicial Redress Act, and we hope that the Senate 

follows your lead. 

Our members work hard to build privacy and security into their 

products and services, and are committed to protecting the data in 

their care, regardless of where that data originates. We are ready 

to work with Congress and the U.S. Government and with the EU 

and its member states, to ensure that data continues to move 

across our borders for the benefit of both Americans and Europeans. 

Thank you, again, for providing this opportunity to share our 

views on these important matters, and I look forward to your questions. 

[The prepared statement of Ms. Espinel follows:] 
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Mr. ISSA. Thank you. 

Mr. Black. 

TESTIMONY OF ED BLACK, PRESIDENT & CEO, THE 

COMPUTER & COMMUNICATIONS INDUSTRY ASSOCIATION 

Mr. BLACK. Mr. Chairman, Ranking Member, and Members of 

the Subcommittee, thank you for your focus on this important 

issue. 

Mr. ISSA. I’m afraid now you’re not quite loud enough. 

Mr. BLACK. Thank you for your focus on this important issue. 

CCIA members and our industry are directly impacted by barriers 

to international data flow, as are many other industry sectors that 

utilize our services. CCIA members alone generate revenues in excess of $540 billion, and employ over 750,000 workers. International data flows are critical to U.S. economic interests. While 

the top Internet brands are American-based, the majority of their 

users are abroad. And increasingly, our most important exports are 

access to platforms and provision of services. Internet platforms 

uniquely empower businesses to participate in the global economy. 

Small businesses in the U.S. would be the biggest winners if we 

can eliminate digital trade barriers. This is not a zero-sum game, 

but a win-win one. Global citizens and economies would also benefit if other governments eliminate digital trade barriers, which effectively lock their own citizens out of the 21st century economy. 

U.S. policies have not adequately adapted to the new reality. We 

excel at the export of bits, but under current trade rules, countries 

can far more easily block bits than bananas. While TPP begins to 

make progress on digital trade, the situation worsens faster than 

U.S. policy can respond. We must do more. We should bring trade 

cases against countries who block bits. 

Unless the trade system meaningfully responds to Internet trade 

barriers, our industries have little to gain from the trade agenda. 

Five issues must be prioritized: Internet blocking; forced localization; intermediary liability; balanced copyright; and data protection. TPP should make progress on blocking and forced localization, 

but the problem is worsening. A third of the world’s 3 billion-plus 

Internet users live where social media or messaging apps have 

been blocked, and adoption of forced localization policies abroad 

keeps accelerating. 

Sensible intermediary liability rules are essential. Internet businesses have thrived here because of carefully-crafted legal safe harbors, but foreign liability rules frequently favor domestic plaintiffs. 

Foreign courts often shoot the messenger when users express unfavorable views online about government, royalty, or national heroes. 

This has to change. 

Particularly troubling is so-called EU right to be forgotten. European data regulators are prohibiting online services from simply 

linking to published news accounts about individuals. Some have 

even prohibited linking to stories that reported on these cases, and 

have even demanded removal of such links worldwide. If foreign officials punish U.S. companies, for pointing U.S. citizens to lawfully 

published news articles, we must stand up for free trade and free 

speech. 
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Another barrier for digital exports is unbalanced copyright. We 

have failed to export strong copyright limitations along with strong 

protections. Thus, we are seeing demands for snippet taxes to be 

paid for the privilege of quoting news. Such taxes on U.S. services 

subsidize foreign news publishers and violate international law. 

Since U.S. policy hasn’t made them a priority, we’re seeing such 

laws metastasize in Spain, Germany, and elsewhere. 

Finally, data protection barriers are a problem. Recently, the EU 

Court of Justice, as my colleagues have mentioned, struck down 

the Safe Harbor framework. This has been used by thousands of 

U.S. companies to lawfully transfer data between Europe and the 

U.S. This decision forces thousands of businesses to find alternative tools to ensure they can lawfully transfer data from the EU. 

Current alternatives are costly, piecemeal, and difficult to implement for all companies, especially smaller ones. It is essential that 

a Safe Harbor framework be implemented promptly. 

For the Internet to flourish as a tool for innovation, expression, 

and commerce, we must commit to showing that users worldwide 

continue to have confidence in the services of U.S. Internet companies. Passage of the U.S. Freedom Act was a step in the right direction, as will be the hoped-for passage of the Judicial Redress Act. 

Our domestic policies must also reinforce our own commitment to 

the free flow of data. For example, since cross-border access to competitive telecommunications is essential to facilitating the free flow 

of data, eliminating bottlenecks in U.S. telecom networks via proceedings, such as FCC’s current special access reform review will 

enhance our global credibility. 

In conclusion, our economy’s future is intertwined with the Internet, but threats to Internet commerce proliferate. We must 

prioritize protecting this vital part of U.S. commerce. Thank you. 

[The prepared statement of Mr. Black follows:] 
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Mr. ISSA. Thank you. 

Mr. MacCarthy. 

TESTIMONY OF MARK MacCARTHY, SENIOR VICE PRESIDENT, 

PUBLIC POLICY, SOFTWARE & INFORMATION INDUSTRY ASSOCIATION 

Mr. MACCARTHY. Chairman Issa, Ranking Member Nadler—— 

Mr. ISSA. Once again, we’d like to hear you better. 

Mr. MACCARTHY. Is that better? 

Mr. ISSA. Pull it a little closer, and let’s see. 

Mr. MACCARTHY. Is that better? 

Mr. ISSA. Yes. Sequestration gets us all. 

Mr. MACCARTHY. On behalf of the technology trade association, 

thank you for your equipment. 

I want to make a few points in my testimony. First, cross-border 

data flows fuel 21st century trade and investment across all sectors 

of the economy, not just technology or Internet companies. 

Second, one goal of U.S. policy is to reduce barriers to trade— 

to traditional flows around the world. We should stay the course 

on this wise policy. 

And third, the recent European decision on the Safe Harbor is 

a step backwards for open data flows. A new, workable, Safe Harbor must be put in place as soon as possible. 

Mr. Chairman, digital trade involves tech products like software, 

where exports are growing at about 9 percent a year. But digital 

trade also involves business services generally, financial sector, 

royalties and licensing revenue, and communication services. It is 

60 percent of all trade and services, it’s growing three times faster 

than other service exports. Digital trade increases our economic output by up to $711 billion 

a year. As Mr. Conyers mentioned, that’s 4.8 percent of our gross 

domestic product, and it increases employment by 2.4 million workers. We have a global surplus in digital trade of $150 billion. A loss 

of open data flows would not be a minor sector-specific irritant. 

Data localization mandates have been studied for other economies. 

They would impose large welfare losses up to $63 billion for China, 

and $193 billion for the European Union. 

Mr. Chairman, one goal of the U.S. trade policy is to promote 

cross-border data flows. Congress has instructed U.S. trade negotiators to dismantle measures that impede digital trade in goods 

and services that restrict cross-border data flows, or require a local 

storage or processing of data. Any exceptions have to be narrow, 

the least restrictive on trade and nondiscriminatory. 

The United States has largely achieved these goals in the TPP 

agreement, although I concur with Ambassador Allgeier’s remarks 

on financial services. That’s an unfortunate exception, but we must 

seek similar outcomes in TTIP and TiSA. 

Mr. Chairman, the demise of the Safe Harbor is a setback for 

open data flows. It has been in place since 2000, and the invalidation just this month left 4,400 companies in legal limbo, and that’s 

not just technology companies. The list of Safe Harbor companies 

include many SIIA members, companies in online publishing and 

information services. In fact, the list of Safe Harbor companies 

reads like a Who’s Who of American brand name corporations, in-
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cluding Ford Motor Company, Starbucks, and the Walt Disney 

Company. 

We need a new Safe Harbor. We need a Safe Harbor 2.0. Congress can help your passage of the Judicial Redress Act with a step 

forward. It’s a modest step, but one that we need to follow in the 

Senate. We’re hopeful that the Senate will act quickly on this bill 

and move forward with it. 

Mr. Chairman, we urge this Committee to stay the course on promoting data flows and to help establish a new Safe Harbor for 

transatlantic data sharing. I stand ready to answer any questions 

you might have. 

[The prepared statement of Mr. MacCarthy follows:] 
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Mr. ISSA. Thank you. 

With that, Mr. Nadler has responsibility on the floor with his 

votes, so he will do the round of questioning, and then we will recess until after three quick votes. 

Mr. NADLER. Thank you, Mr. Chairman. 

Dr. Atkinson, in your testimony, you urge the U.S. to lead on reform of government access to data, so that other Nations do not 

have an excuse to restrict cross-border data flows. You also note 

that after the Edward Snowden revelations about the U.S. Government’s expansive intrusive surveillance programs, a number of 

countries pulled data out of the U.S., and imposed restrictions on 

the flow of data to this country. 

Can you describe the impact that the Snowden revelations had 

on American companies? And can you expand on what sorts of reforms we should put in place, if we lead on reform, as I agree we 

must? 

Mr. ATKINSON. Sure. Thank you. 

For a long time, countries were wanting to do these kinds of 

things, but never had the sort of public excuse or rationale. And 

a case in point is China. China, in the last year and a half, as I 

document in my testimony, has put in place a number of restrictive 

policies that negatively affect U.S. companies. And the goal there— 

and the reason they say they are doing it is because exactly because of the Snowden revelation. They talk about secure and controllable technology and other kinds. 

And these are, just frankly, just an outright guise on their part. 

This is a policy they’ve long wanted to do to punish, or to favor 

their own domestic companies at the expense of U.S. companies. 

We see that in Germany, for example, where you have some major 

German technology companies that are marketing themselves as 

NSA free, and pushing the European Commission to adopt policies 

like the, quote, ‘‘European cloud,’’ so that NSA or other law enforcement agencies in the U.S. couldn’t get access to the data. 

And there have been a number of cases that have been documented where U.S. technology companies have actually lost market 

share. We see that in Australia, where one of the leading cloud providers, domestic cloud providers in Australia, has been arguing the 

exact same thing; in fact, funding a report, trying to convince the 

Australian Government to ban storage of data outside the country 

with U.S. providers. 

So in our view, it has been a systemic effort to target the leadership of U.S. technology companies. And what do we do about it? As 

I said, I really—I think it’s a two-part process. It is that we do 

need—there are some reforms that we need to make domestically, 

a number of people talk about judicial redress, other steps that we 

could take. But at the same time, I would agree with a couple of 

other panelists who said I think we just have to get tougher on 

trade enforcement and negotiations with these countries, particularly China, which is getting away with murder on many, many 

fronts engaged in a systemic effort to take market share away from 

U.S. companies. 

Mr. NADLER. Thank you. And as you know, FBI Director Comey 

and other law enforcement officials have argued that the government must maintain a backdoor into technology, and have opposed 
88 

strong encryption measures. Do you think that would be a mistake? 

And if so, why? 

Mr. ATKINSON. I do think that’s a mistake. I think it’s a mistake 

for several reasons: Number one, if the technology is inextricably 

going in the direction of unbreakables, encryption where the key is 

not public, it’s just between two parties, the technology provider 

doesn’t have the key, the government doesn’t have the key, that’s 

where the technology is going. I think the FBI is fighting a losing 

battle there, as they fought a losing battle in the ’90’s with the clipper chip. 

The second problem with that is if they mandate—try to mandate that, they are setting, I think, a dangerous precedent, for example, by letting the Chinese Government do the exact same thing. 

The Chinese Government is trying to do the same thing right now 

to prevent encryption in China for U.S. companies. 

And, finally, weakening our encryption technology that U.S. companies would use, why give the FBI more access? We would also 

give the Chinese and the Russians and anybody else who wants to 

do harm to us, it would give them access as well. 

Mr. NADLER. Thank you. My last question to you, and I think for 

this series is, as you explained in your testimony, support for free 

trade and data does not mean we must allow the free flow of illegal 

content like child pornography or email stem or pirate creations 

and other banned products. But what if two countries have different standards of what is illegal or objectionable? You may have 

a country that thinks political dissent is objectionable, but pirated 

movies are perfectly acceptable. Even in a less extreme case, countries may treat certain content differently under the law. How 

should countries determine what data should be permitted to flow 

freely between them in cases of disagreement on these standards? 

Mr. ATKINSON. Because, as I said earlier, I think it’s an un—essentially, an untenable project that we would end up with global 

harmony on every single rule with regard to the Internet. We’re 

not going to be able to do that. And we’re certainly not going to 

be able to do that with free speech. There are certain countries, 

particularly more traditional, religious countries that find pornography objectionable. We dealt with our—at least we have free 

speech, we might found objectionable, but we allow it. We are not 

going to be able to agree on that. And for certain things like that, 

countries are going to do that, and I think we are just going to 

have to be okay with that. 

Another example was in Germany, you’re not allowed to 

download a copy of Mein Kampf. In the U.S., we can. Again, we’re 

not going to change the German view. I don’t know whether they 

are right or wrong, it doesn’t make any difference. Where we can 

and should, though, take action is there are certain things that are 

clearly illegal under the WT0 framework for intellectual property. 

For example, piracy and intellectual property, thus, can be prosecuted. So when countries engaged in steps, for example, to block 

certain Web sites that are clear piracy sites, like, for example, a 

domain called the Pirate Bay, that should be quite—you know, we 

should be encouraging that. That’s quite different than blocking, 

say, you know, Facebook or something like that, or blocking some 

site just because you don’t want competition. 
89 

I think the key step, though, is we have to understand, just in 

free trade—in good free trade, there’s certain things that we don’t 

allow trade in. Like elephant ivory, we signed a global agreement, 

we shouldn’t trade in that. It doesn’t mean we don’t support free 

trade. I would argue we should apply the same standards, things 

like malware or a pirated content and the like. 

Mr. NADLER. Thank you very much. 

Mr. ISSA. I thank all of you. We’re going to—we’ll stand in recess 

until 5 minutes after the last of 3 votes begin, because I will vote, 

and I will walk. So 5 minutes after that, I will be here, and we will 

pick up with those who are present. 

We stand in recess. 

[Recess]. 

Mr. ISSA. The Committee will come to order. I’ll now recognize 

myself for my 5 minutes or longer, if people doddle getting back. 

Ambassador, when you talked about—I believe you talked about 

the carveout for banks. Can you go through one thing with me? 

What could possibly prompt the United States Government to want 

to carve out banks? 

Mr. ALLGEIER. Well, our understanding, from having met with 

various agencies in the U.S. Government, is that the Treasury Department wants to maintain the flexibility that sometime in the future, it might want to impose a localization requirement. We do not 

understand that because the issue is, will data be made available 

for prudential reasons, security, for law enforcement. And in this 

world, it doesn’t matter where the data is. You can get it instantaneously, as you know. 

Mr. ISSA. Well, let me ask you a rhetorical question: Localization 

versus duplication. If the United States Government had said that 

on all American persons and/or all accounts, whether owned by 

non-U.S. persons or U.S. persons, there must be maintained a copy 

in the United States, thus not requiring localization but simply the 

ability to get a copy related to U.S. bank accounts, wouldn’t that 

have met all of their requirements? 

Mr. ALLGEIER. Well, that certainly does add an element of additional cost to the operation, and so in that sense, they’re not 

happy—wouldn’t be happy about that. 

Mr. ISSA. Well, I hear you, but I want to have a dialogue for a 

moment, because I think part of the data question for all of us is 

cost. I hear you say cost, but in the—with the possible exception 

of the IRS, it doesn’t seem they’ll maintain 6 weeks of backups. In 

the ordinary course, backups are a relatively cheap mass storage. 

So, again, the question I have for you is, regardless of where live 

data is hosted, realistically, the only American interest, the only 

U.S. interest was, for purposes of the IRS, 7 years worth of data, 

right? So let me ask again, wouldn’t any country, for purposes of 

sufficient information to allow them to make the appropriate tracking for tax purposes, either demand that it be maintained, a copy 

be maintained where they could reach it by a U.S. law enforcement 

agency, or an agreement that would allow a long-arm relationship? 

So, for example, if you’re going to host in Britain, Germany, 

somewhere, there has to be an ability for the IRS to be able to ask 

for and receive that. Would that be an example—as a former trade 

ambassador, would that be an example of these carveouts that you 
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think are limited but appropriate as long as you can demonstrate 

the need, the specific need that is being preserved? 

Mr. ALLGEIER. Well, certainly, it is an improvement in the sense 

that it’s limited. But I guess the question again I say is, first of 

all, these businesses, insurance and banking, are highly regulated. 

If they don’t provide the data, they can lose their license, and 

so—— 

Mr. ISSA. Okay. You’ve made my case in a sense. Isn’t it true 

that without the U.S. having imposed this, they already had other 

requirements, the FDIC, and so on, that would have required 

banks and other financial institutions for various reasons to have 

a copy available for their observation and review, right? 

Mr. ALLGEIER. Well, they have to make it available. The question 

is if the server is in Singapore and the IRS or the Fed or anybody 

else comes and says I want this data, how long does it take them 

to get it from Singapore? It doesn’t take them any faster—— 

Mr. ISSA. It depends on the bandwidth of the pipe. 

Mr. MacCarthy. 

Mr. MACCARTHY. Mr. Chairman, I used to work at Visa, the payment card company, and so I’m familiar with how—— 

Mr. ISSA. Visa? Payment card? 

Mr. MACCARTHY. Yeah. 

Mr. ISSA. Small company. Okay. 

Mr. MACCARTHY. Small company. 

Mr. ISSA. I’ve heard of it. 

Mr. MACCARTHY. I left there in 2008, but before that, we were 

familiar with the rules that the Federal regulators had in place, 

and they actually provided for outsourcing of bank records, and 

they had rules and guidance for how it should be done, making 

sure that U.S. law followed the records. And under existing case 

law, they have a full authority to reach out wherever the bank 

records are stored, and have the bank produce them for—— 

Mr. ISSA. So your position is that the United States asking for 

this in the trade agreement was unnecessary and counterproductive? 

Mr. MACCARTHY. Unnecessary, counterproductive, and—— 

Mr. ISSA. Is there anyone that disagrees with it being unnecessary and counterproductive? Okay. Then we’ll consider that it was 

unnecessary, counterproductive. 

I’ll close—because I want to get to the other folks that are now 

coming back—with a very simple question: To the best of your 

knowledge—and, you know, Mr. Snowden helped us have some of 

this knowledge, but—and WikiLeaks did, too, for that matter—isn’t 

it true, that, for example, Nigeria, a country that loses half a billion dollars a month of oil, which is tangible and hard to steal, is, 

in fact, a place where if the United States wanted to get any and 

all records hosted there, they would be able to do so easier in Nigeria, and be able to do so without the court’s supervision at all? Because ultimately, once something leaves the United States, the 

United States is under no obligation not to—the NSA, which has 

been mentioned here previously, can simply take what they want, 

assuming they have the technology. 

Isn’t that true that the countries who demand that the data be 

kept in their country and out of the U.S. actually lose protection 
91 

that is granted in the United States for under the Fourth and other 

amendments? 

Okay. We’ll assume that I knew the answer to that one. Ms. 

Espinel? 

Ms. ESPINEL. I was just going to point out that there is a certain 

irony in a country like Nigeria, which is one of the countries that’s 

putting in place things like data localization laws. 

Mr. ISSA. I used them because they can’t even keep track of their 

own oil. 

Ms. ESPINEL. When I think the processes that we have in the 

United States to protect due processes and civil liberties. I think 

our system would stand up well against their system. So Nigerial 

is one of the countries of the concern, and there is a certain irony 

there. 

Mr. ISSA. But let me do a final, and it’s a rhetorical question, but 

isn’t it true, really, that Nigeria hosting their Nigerian information 

really simply means that, like China and other countries, they 

have the ability to take, without due process potentially, the information of their citizens where if it’s hosted in the U.S., there would 

be due process? 

Yes, Dr. Atkinson. 

Mr. ATKINSON. I completely agree with that. There are a lot of 

countries that have nowhere near the due process, the rule of law 

that we have, and in that sense, data stored in those countries can 

be quite problematic. That’s why I raised my earlier point about 

the European Commission cutting us off in the Safe Harbor, but 

leaving in some other countries that have at least the same, if not 

more dubious protections for government access to data. 

Mr. ISSA. Thank you. And I look forward to additional questions. 

And with that, I’d like to go to the Ranking Member of the full 

Committee, the gentleman from Michigan, Mr. Conyers. 

Mr. CONYERS. Thank you, Mr. Chairman. 

I am struck by the unanimity among the five witnesses today, 

and I commend them all. 

Let me start with Dr. Atkinson. And keeping in mind the privacy 

concerns of Americans and our allies, how can the United States 

and its trade partners move forward to advance free data trade? 

And I understand you have some regrets about strong encryption. 

Mr. ATKINSON. Is the question—I’m sorry—about encryption? Is 

that—— 

Mr. CONYERS. No. It’s how they advance free data trade. That’s 

the main idea here in this question. 

Mr. ATKINSON. Well, I think the challenge is that countries will 

use the guise of privacy as an excuse for protectionism. And as I— 

I think the Chairman’s comment—question alluded to this, I think, 

central point, which is, as long as countries—as long as companies 

have nexus in a country, if they’re doing business in a country, 

they cannot get out from under that country’s privacy and commercial security rules and laws by moving data to a third country. 

They still have to comply with those laws no matter where the 

data are located. And I think that’s really the fundamental principle that we have to go by with this. So you can protect—you could 

have—you can protect the privacy of your citizens, and you don’t 
92 

have to require the data be located there, as long as you have jurisdiction over the company doing business there. 

Mr. CONYERS. Thank you. 

Mr. Allgeier, with regards to privacy, what’s been done, and what 

do you think still needs to be done in order to ensure the viability 

of cross-border data flows? 

Mr. ALLGEIER. Well, there is a structure in place already in the 

WTO, the World Trade Organization, and the agreement there on 

trade and services. And what it says explicitly is that governments 

may put in various restrictions on data to achieve certain ends. 

And one of them, specifically, is to protect the privacy of individuals in the processing and dissemination of personal data. And so, 

all of the countries are obliged to recognize that. And so, if a country does put in place certain privacy rules, that’s legitimate. 

Mr. CONYERS. Absolutely. 

Now, we passed the Judicial Redress Act. We are hoping that the 

other body will act with appropriate swiftness. But I think we may 

have something else to think about. 

Mr. MacCarthy, can you elaborate on how the Judicial Redress 

Act affects the companies that you represent? 

Mr. MACCARTHY. Thank you for that question. The Act doesn’t 

directly affect our companies. What it does do is to create a reason 

for the European negotiators in Safe Harbor to move ahead with 

finalizing the agreement. And when the agreement is finalized, 

then it would create enormous benefits for our companies and for 

Europe as well. 

The second reason is that there’s a separate agreement called the 

umbrella agreement, which is a law enforcement agreement, where 

the Judicial Redress Act is actually an intrinsic part of that agreement and has to be finalized before the agreement is itself going 

into effect. 

If I might, Mr. Chairman, if I could ask unanimous consent, 

there’s an op-ed that I published in today’s Hill on this very issue, 

if I could ask unanimous consent that it be included in the record 

of the Committee hearing. 

Mr. CONYERS. As soon as I see it. 

Mr. MACCARTHY. Okay. 

Mr. CONYERS. Ms. Espinel, how does the recent invalidation of 

the U.S.-European Safe Harbor agreement impact the software industry? 

Ms. ESPINEL. Thank you. So we are very concerned about the 

revocation of the Safe Harbor, and it has implications not just for 

software, but across our economic sectors. The cross-border data is 

used by nearly 5,000 companies, some of them large, many of them 

quite small, that use it to do all sorts of things, including process 

payrolls so that their employees get paid at home. 

So we have significant concerns about the European Court of 

Justice decision that undermine the process put in place by the 

Safe Harbor. That said, we do think there is a path forward, and 

we think there are three things that need to happen: The first is 

that we need as, quickly as possible, to have the U.S. and the European negotiators come to agreement on a new Safe Harbor; the second thing is we need to have some reasonable, appropriate period 

of time for companies to be able to come into compliance with the 
93 

new rules under that Safe Harbor; but third, because we know this 

will continue to evolve and change, we need to work together, the 

United States and Europe, industry and Congress, on coming up 

with a global, sustainable long-term solution. It’s clear that we 

need a new global framework for data and how it moves. And that 

needs to be an important part of the process as well. 

I’ll just say lastly, going to the point that Mr. MacCarthy made, 

passage of the Judicial Redress Act by the House is tremendously 

helpful, and so we thank all of you for your vote on that, and we 

hope the Senate follows your lead. That is, you know, important, 

both for our own domestic system, but is also helpful in terms of 

concluding negotiations on the Safe Harbor with Europe. 

Mr. CONYERS. Thank you. 

Thanks, Chairman Issa. I yield back. 

Mr. ISSA. Thank you. 

We now go to the gentleman from Ohio, Mr. Chabot. 

Mr. CHABOT. I thank the Chairman for yielding, and also for 

holding this very, I think, important and very interesting hearing 

this afternoon. 

It has been mentioned that barriers to free trade in the digital 

arena have a particularly adverse impact on small businesses, and 

I happen to be the Chairman of the House Small Business Committee, so I’d just like to ask—give each of the witnesses an opportunity to address what steps should be taken, specifically, to address this adverse impact on small businesses. 

And I’ll start with you, Mr. Allgeier, Ambassador Allgeier. If 

that’s okay, and I’ll just go down the line. If you don’t have anything to say, that’s okay, too, but—— 

Mr. ALLGEIER. No. Thank you very much. 

What we find, of course, is that the digital technology has opened 

the world to small businesses. I mean, in the past, let’s say a small 

business wanted to go overseas, well you’d have to find an agent, 

and you’d have to have a presence overseas. Now you put your 

product up on the Internet, whether it’s a good or a service, and 

it’s called random exporting. You don’t know whether your next 

customer is coming from Boise, Idaho, or Bangladesh. 

And then with the combination of express delivery and electronic 

payments, you’re in the international market. And so it’s extremely 

important that the movement of data remain open, and that people 

be able to have access to the Internet, and particularly small businesses or people in poor areas. 

Mr. CHABOT. Thank you. 

Dr. Atkinson. 

Mr. ATKINSON. With the way the European Commission is negotiating the Safe Harbor, it’s possible and hopeful that that will happen. But if it doesn’t, people are talking about other possible ways 

that companies can get access to finding corporate rules and other 

types of model agreements. Those are clumsy, they’re expensive, 

they’re time-consuming, but large corporations can do that. Small 

companies really can’t, and that would be the real harm here, or 

the biggest harm. 

And so that’s why I think we have to really insist that we put 

these very strict rules in trade agreements so that companies don’t 

have to do these very expensive workarounds with—particularly in 
94 

Europe where they’d have to go to 28, or if you include the German 

lander or the states there, perhaps almost 40 different jurisdictions 

to be able to move data. And if you’re a small company that’s doing 

business in all of those jurisdictions in Europe, it’s going to be almost impossible for you to be able to do that. 

Mr. CHABOT. Thank you. 

Ms. Espinel. 

Ms. ESPINEL. So I think the risks and some of the options for 

small companies can be even more serious than for the large companies. So I would say a couple of things: One is specifically with 

respect to the Safe Harbor, as I said, the United States and Europe 

need to come together on a new agreement as quickly as possible. 

There needs to be some appropriate period of time for companies 

to come into compliance. 

And then we need a long-term sustainable solution. But picking 

up on what Dr. Atkinson said, part of that is making sure that we 

have a good global framework for how data moves around and 

pushing back on restrictions of data. 

You know, when I think about kind of the moment that we’re in 

with data, and, you know, we live in a world where data is increasingly important, not just to big companies, but to small companies, 

not just to software, but to all of our sectors, it is an interesting 

fact that there is no comprehensive enforceable trade rules on data. 

So it’s kind of—you know, we’re sort of at the moment that intellectual property was back in the Uruguay round, when the WTO 

was being established. There were no global rules on intellectual 

property in the trading system. That was a very difficult negotiation, but it was also very farsighted, on behalf of the United States 

and the other trading partners, to come together at the end of the 

Uruguay round, and agree to a global framework for intellectual 

property rules. 

And I think that is exactly the moment that we are in right now 

with data. It is clear that it is a complicated new issue. It is also 

clear that it is going to be a driver of the U.S. economy and the 

global economy, and we need U.S. and other countries to lead on 

this issue and establish a global framework. 

I think TPP, we understand, it could be—based on what we know 

about it, it could be the beginning of that. I think it’s a real historic 

opportunity. But we are going to need to have those rules applied 

broadly across the world. 

Mr. CHABOT. Thank you. 

Mr. Black and Mr. MacCarthy, I’ve only got about 30 seconds 

left. 

Mr. BLACK. My colleagues have been very articulate. Let me just 

stress that we are in a new era, and digital trade, if we want to 

make a metaphor back to original trade, blocking a Web site, doing 

various kinds of barriers or like blocking a port, and the openness 

of the trading system and going forward is so much tied to data 

and digital activity. 

And Ms. Espinel is absolutely right. We need—our laws are 

based on historical outdated concepts of what trade is about. And 

we really need to see—and that’s why we call for some precedentsetting efforts in the WTO to bring some cases to start relaying 
95 

some criteria and ground rules for how the problem should be dealt 

with. 

Mr. CHABOT. Thank you. Mr. Chairman, is it okay if Mr. 

MacCarthy answers real quickly? 

Mr. ISSA. Without objection. 

Mr. CHABOT. Thank you. 

Mr. MACCARTHY. The one point I’d add to everything else my colleagues have mentioned is that in this global framework for data, 

which I think is a great idea, we have to make sure that whatever 

rules affect the flow of data, whether they are privacy rules or consumer protection rules, or whatever, they’re narrowly crafted, that 

they’re least restrictive of trade. We can’t take away the option for 

countries to enforce their privacy of consumer protection laws, but 

they can’t unnecessarily trample on cross-border trade. 

Mr. CHABOT. Thank you. 

I yield back, Mr. Chairman. 

Mr. ISSA. I thank the gentleman. 

We now go to my colleague, the gentlelady from California, Ms. 

Chu. 

Ms. CHU. Thank you, Mr. Chair. 

Dr. Atkinson, you state that several countries around the world 

are limiting free trade in data, and you argue they are motivated 

by privacy and security concerns, national security and law enforcement concerns, and the desire for economic growth. The European Court of Justice recognized that the U.S. lacks an adequate 

level of protection for EU data amongst other privacy concerns. 

Within this context, can you tell me how the EU views individual 

privacy and data security, and to what laws or principles do they 

have in place and what do we have in place here in the U.S.? 

Mr. ATKINSON. Thank you. The Europeans culturally look at privacy differently than Americans do. As a general rule, they look at 

privacy as a fundamental human right. We look at it as a consumer right that has to be balanced against a number of other 

issues. 

There’s a lot of good scholarly evidence that shows that the European privacy directive and the rules that they have there actually 

significantly limit the Internet economy in Europe. There’s a reason why the Europeans don’t have global leaders in the Internet 

space, by and large. The effectiveness of their companies is significantly limited because of their privacy rules, and there’s a very 

good study by Catherine Tucker at MIT who has demonstrated 

that. 

Having said that, there’s also another broad generalization that, 

I think, has some merit to it, which is, that we have less stringent 

rules, but we do a better job through the FTC and the State AGs 

of enforcing them than the Europeans do. They have stronger 

paper rules, but less real enforcement. 

Having said that, I’ll just close by saying, I don’t think that we’re 

miles apart. We generally share the goal of privacy. We share the 

goal of the rule of law, and I do think that we can work this out 

in a cooperative manner as long as the Europeans are willing to 

be reasonable, as we need to be reasonable. 

Ms. CHU. So what, then, do you think should be done by Congress or by the Administration in these ongoing negotiations with 
96 

the EU to ensure that we’re providing adequate privacy protections 

for our citizens, and for those whose data travels to our country 

from across the Atlantic? 

Mr. ATKINSON. So I think there’s two key points there: One is, 

I believe that we shouldn’t sign a trade—a TTIP agreement with 

the Europeans unless it includes strict and enforceable rules 

around the free trade-in of data. I don’t see why we should have 

that trade agreement if we don’t have that component in there. 

At the same time, there are steps that we need to take with regard to government access of data in the U.S. that have made the 

Europeans rightly uncomfortable, and I do think we need to do a 

better job there. And the Judicial Redress Act was one step in that, 

but I think there are other steps we can and should take. 

Ms. CHU. Can you describe which countries have the most stringent regulations when it comes to setting limitations on data flowing in and out of their country? And what effect does that have an 

American companies’ ability to compete? 

Mr. ATKINSON. Sure. So we listed a number of countries in the 

written testimony, and what’s troubling about that is if you look at 

that list, say in 2010, it would be significantly smaller: Nigeria, 

Turkey, Greece, Malaysia, Australia, Indonesia, Russia, China. 

China, just within the last year, for example, has put in place a 

set of—a numerous set of policies that would—that will significantly limit the ability for American companies to process data 

there. 

So it really is something that’s growing. There’s a couple of Canadian provinces that do this as well. And I think one of the challenges really is their—they falsely believe that by doing this, that 

they will enhance security and privacy, commercial privacy. And I 

just simply reject that notion. I don’t believe that’s the case. 

Ms. CHU. Ms. Espinel, you argue that as a result of that invalidation of the EU-U.S. Safe Harbor, many routine commercial dealings between the U.S. and European countries have now been disrupted. Can you give us an example of this? 

Ms. ESPINEL. An example of the impact that it’s having? 

Ms. CHU. The disruptions that are occurring today? 

Ms. ESPINEL. So, you know, an example of an impact that could 

happen if data stops moving back and forth is the ability to process 

payroll, as an example. Warranty information that U.S. consumers 

rely on would be at risk. So there are a number of real-life development—real-life impacts. 

In cybersecurity, one of the maxims is that information is to follow the sun. So if you have information about a threat, you want 

to have that in the hands of cybersecurity experts, wherever they 

are in the world while they are awake, and restricting the data 

moving back and forth in the United States and Europe could put 

that at risk. 

So I think there are a number of real world impacts. But, you 

know, even at a more macro level, the promise and the efficiencies 

that are brought about by cloud computing and by data analytics 

simply do not work if information cannot move around as efficiently as possible. 

And I think one of the things that the trade barriers in the various countries that we see around the world, and the situation in 
97 

Europe is putting at risk, is putting a shadow on an industry that 

has enormous potential, but is still at a relatively early stage. And 

I think putting a shadow on the development of where remote computing can go and where data analytics can go at this early stage 

of its development is extremely troubling. 

Ms. CHU. Thank you. I yield back. 

Mr. ISSA. I thank the gentlelady. 

We now go to the Vice-Chairman of the Subcommittee, the gentleman from Georgia, Mr. Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. I appreciate it. 

Ms. Espinel, I want to go back to something, and then I’ve got 

others, too. Back in October last year, 2014, many of my colleagues, 

including myself, wrote a letter to the U.S. trade representative 

about the TPP. And just to review, first—we had several things: 

First, we wanted to include provisions that specifically keep borders open to free flow of data; second, it must prohibit countries 

from acquiring the use of local data servers and computing infrastructure as a condition for providing digital service; third, it must 

ensure nondiscriminatory treatment of digital products and services. 

Based just on the reports that have come out so far from the Administration and others, where do you think we are in that right 

now? 

Ms. ESPINEL. So, again, with the caveat that we have not seen 

the final text, our understanding is that the TPP has strong commitments on all of those provisions. First, on cross-border data 

trade and on pushing back on data localization; obviously, we 

would like that to be as comprehensive as possible. But our understanding is that, overall, the commitments there are strong. Our 

understanding is that there are prohibitions on imposing Custom 

duties on digital services, which is also important. 

And our understanding is that, I believe for the first time ever, 

there are prohibitions on forcing companies to disclose source code 

in order to compete in a market. Those are all very important to 

us. And, again, based on the reports that we have heard, TPP contains strong and enforceable rules in those areas. 

Mr. COLLINS. And granted, I think we will see those, and that’s 

part of our whole process. But if that was not there, and probably 

a short answer is, if these protections were not there, given the 

new marketplace of the future that we’re looking at, that being 

much more in this round, than it is for rounds and others, would 

that be a serious hindrance to enactment of this agreement? 

Ms. ESPINEL. Well, I hope and expect that they are there. If they 

were not there, I think it would be an enormous missed opportunity. We were talking earlier about the fact that this is really the 

future, not just of the U.S. economy, but of the global economy as 

a whole. There are also enormous societal benefits that come from 

data analytics in cloud computing. 

Mr. COLLINS. I agree. 

Ms. ESPINEL. And in order for us to see the potential of those, 

it’s enormously important that we have a global system of trading 

rules that gives clarity and predictability to the system. 

Mr. COLLINS. Thanks. 
98 

Mr. Atkinson, real quickly, could you please describe for the 

Committee the problem of forced localization, and how this impacts 

member companies and your ability to create American jobs? Mr. 

Atkinson. 

Mr. ATKINSON. So one of the real advantages the U.S. has is in 

cloud computing, for example, where we have north—it’s in my testimony—north of 70 or 80 percent of—maybe even more—of the 

global market, partly because we have scale in our own domestic 

market that’s given our companies the ability to scale up and get 

capabilities. 

Other countries look at the cloud computing industry as a core 

strategic industry for their countries. And one of the ways that 

they’re trying to gain market share is by simply saying that you 

have to store data out, not just in country, but, in some cases, in 

country with a domestic company. And that—— 

Mr. COLLINS. It could present a load of problems on many different levels? 

Mr. ATKINSON. Pardon me? 

Mr. COLLINS. It could present a load of problems on many different levels? 

Mr. ATKINSON. Yeah. Even if it is just simply localization to tell 

an American cloud provider you have to put a server in a country, 

that essentially raises cost. If it was cost effective, they would have 

already done it, by definition. 

Mr. COLLINS. Right. Okay. 

Mr. ATKINSON. Not only does it raise cost, but something people 

haven’t talked about, it has environmental impacts. Cloud computing, by putting it all in one place, you can save a lot of energy 

by requiring servers all over the world. So either way, whether it’s 

forced server localization or domestic company preferences, it’s 

going to hurt U.S. companies and the U.S. economy. 

Mr. COLLINS. Mr. Atkinson, I appreciate that. 

Mr. Black, very forceful in this Committee discussing some 

issues, but I’ve noticed something. We do read through all of your 

printed text before you appear. And on page 8 of your written testimony, you seem to want to have it both ways, and I think it’s a 

concern. 

The first way is you basically say that U.S. Internet intermediary 

liability and copyright rules discourage investment in growth and 

domestic startups. Yet, two sentences later in the same paragraph, 

you say U.S. businesses have thrived domestically under carefully 

crafted legal framework of U.S. law. 

Now, you’re basically contradicting yourself there. I don’t know 

why you would do that, but I think one of the things that goes back 

for me is, is something I have said in this Committee from the day 

I came on, strong copyright, strong protective laws are not a barrier, but they’re a creative incentive. I believe that what we—the 

framework that we have here has allowed U.S. Internet businesses 

to thrive, and they become a growth for your association and for 

many others that grow this industry. 

So my question is, why are we presenting what seems to be a 

false narrative here, on one hand, saying that it discourages, and 

on the other hand, two sentences later, saying it encourages? 
99 

Mr. BLACK. Thank you very much for the question. Barriers to 

international trade data flows are a problem that we all talked 

about how important the economy of the future is. 

Mr. COLLINS. Whoa, whoa, whoa. Your word says ‘‘domestic.’’ 

Mr. BLACK. We look at what made our society, what in the U.S. 

law has worked to help build our industry. Part of it is the balanced copyright. We have a very important, well-developed, well-refined system that provides both strong copyright protection and significant limitations and exceptions. That is a key to the health and 

vitality of what has allowed the Internet to flourish here. 

And we believe it is, likewise, and it is appropriate, for the U.S. 

Government as we try to persuade others in the world to have 

strong copyrights, that they also reflect the boundaries and limitations that have proved so important to the ability of Internet and 

Internet companies to flourish. 

Mr. COLLINS. It’s an interesting question because -it’s an interesting answer, because it frankly doesn’t answer my question. Why 

would you contradict yourself? I understand that you want to say 

that—but when you said domestically U.S., it’s either hindering or 

it’s helping. You can’t have it both ways in the same four sentences. 

Mr. BLACK. Maybe I’m not—— 

Mr. COLLINS. You cannot say the U.S. Internet liability and copyright rules discourage investment and growth in domestic startups, 

and then two sentences later say, ‘‘U.S. Internet businesses have 

thrived domestically under carefully-crafted legal framework in the 

U.S.’’ Either the legal framework we have here is bad, or the legal 

framework we have here is good. I believe it to be good. I’m not 

sure why it would be contradictory there. 

Mr. ISSA. Would the gentleman yield? 

Mr. COLLINS. Yes. 

Mr. ISSA. If I heard that, Mr. Black, were you saying that the 

international conundrums are causing problems, while the domestic well-crafted has allowed us to thrive. Is that what your intent 

was in that paragraph? 

Mr. BLACK. Yes, that’s correct. 

Mr. COLLINS. Well, the problem is—and that would be fine if understood, except that the footnote is to a footnote to a domestic— 

you know, saying which gives you the realization that it was for 

that. And this isn’t something that our—you know, we’ve had many 

meetings on this from different various interests. 

So I think the biggest thing is—the safe way to put this is, I believe that as we look at this, this is crafted in a well way. We continue to craft our copyright laws. It’s going to help us all in this 

bigger picture, and not settling for what is a weaker system in 

other parts of the world, and I think we can—— 

Mr. BLACK. I would just suggest, weaker is the wrong terminology. A strong system is a balanced one. Just the same way as 

a three-legged stool versus a two-legged stool. The fact that you 

have balance and limitations in your system makes it stronger, not 

weaker. 

Mr. COLLINS. Mr. Chairman, I yield back. 

Mr. ISSA. I thank the gentleman. 
100 

And without objection, Mr. Black, if you want to revise and extend that portion to clarify it, I’m sure the Committee would be 

happy to have that record be full and complete. 

And with that, we go to the gentlelady from Washington State, 

Ms. DelBene. 

Ms. DELBENE. Thank you, Mr. Chair. And thanks for calling this 

important and timely hearing. 

And thanks to all of you for being here with us today. 

First, I want to start with Ms. Espinel. As you state in your testimony, quote, ‘‘In striking down the Safe Harbor, the Court of Justice focused on issues around national security and law enforcement access to data. Troubled by the Snowden leaks, the court concluded that countries that permit indiscriminate surveillance and 

interception, and mass and undifferentiated accessing of personal 

data could not be deemed adequate under EU law,’’ end quote. 

While the national security piece is certainly something familiar 

to members of this Committee, could you elaborate a bit on why 

the EU might be concerned about current U.S. law on law enforcement access to data? 

Ms. ESPINEL. Yes. And I think it’s, in part, because the rules in 

that area, as in other areas, are unclear. So, you know, one of the 

things that I think is clear is that we need a new global framework. And part of that needs to be addressing the fact that the 

rules right now on how U.S. law enforcement and foreign law enforcement can access data in the trading partners are unclear. 

You are one of the cosponsors and introducers of the LEADS Act. 

We think that that would be—that approach would be a helpful 

part of the solution. We think it would be helpful, both, because it 

would give our businesses, but also their customers, whose data 

they keep, and law enforcement, a clear and predictable framework 

for how to access information. 

We additionally think it would be helpful because without that, 

we fear our current system in the United States will open the door 

for foreign governments to be able to reach back into the United 

States for the data of our citizens, and that is a situation is that 

we would like to avoid. 

Ms. DELBENE. And are there examples right now that you’ve 

seen in terms of how the lack of certainty has impacted businesses 

today? 

Ms. ESPINEL. Yes. So there are a number of examples. There’s a 

case that is actually being litigated right now in the U.S. courts between Microsoft and the Department of Justice involving data that 

is held in an Irish data center. The Department of Justice, making 

a request to get that data, and Microsoft’s view that the request 

is inappropriate under U.S. law. 

That is a real-life example that is being litigated in the courts 

right now. We will see what the outcome from the courts are, but 

we are concerned that if the outcome of that case is inconsistent 

with the position that Microsoft has taken in which the software 

industry is supportive of, as a whole, that this will open the door 

to other governments being able to reach back into the United 

States. 

And so there is a domestic issue that we need to resolve absolutely, but part of the reason that we are so concerned about that 
101 

is because of the international implications of that and what that 

would mean for our system and the privacy of our citizens back at 

home. 

Ms. DELBENE. Thank you. 

You know, I had a meeting with a group visiting from the EU 

a few weeks ago, and someone—part of that group from the EU 

said that he felt like Americans don’t care about privacy. And so 

are we contributing to that negative narrative about how privacy 

is viewed in the U.S. by failing to address some of these questions 

and policy ourselves? 

Ms. ESPINEL. I think there are differences in approaches between 

the United States and Europe. But I reject the notion actually that 

United States and Europe are that different on privacy. Yes, Europeans care deeply about privacy. Americans care deeply about privacy, too. It is enshrined in our Constitution. We have a long history of protecting privacy. 

I think there are improvements to our laws that have been made, 

or are in the process of being made. So I think the USA Freedom 

Act was a significant step forward, and I thank all of you for that. 

I think Judicial Redress Act is also a step forward, and hopefully, 

again, the Senate will pass it. 

I think one of the things that will be really helpful in the environment that we live in today is for there to be a constructive dialogue between the United States and Europe to truly understand 

our different systems. Because as I said, I don’t think the differences are as far apart as people sometimes portray them. 

And if I could respectfully make a request of the members of this 

Subcommittee, I think when you’re in discussions with your European counterparts, I think one of the things that would be very 

helpful is to explain to European counterparts how our privacy system works in the United States, some of the recent improvements 

that have been made in the privacy system, and try to lessen the 

amount of misunderstanding that I think exists today. 

Ms. DELBENE. Thank you. 

I wanted to get one more quick question in for Dr. Atkinson. You 

spoke earlier about things that you thought we could do to bolster 

our credibility and standing to fight data protection, and you talked 

about kind of some of the other steps we could do beyond judicial 

redress, which we just did. And I wonder if you could be more specific and tell us about some of those other steps we could take with 

our own privacy laws. 

Mr. ATKINSON. Sure. I would second what Ms. Espinel just said, 

and go to the case in the court right now with the Microsoft Ireland 

case. And I think it’s a very important case, because if the principle 

in the U.S. is that we can access data on a foreign person without 

going through that country’s law, just because it’s hosted by an 

American company, there will only be one result and that will be 

American companies will not host foreign person data in other 

countries. That will be the result. 

The Europeans, the Irish, they will just simply say, you cannot 

put your data on an American cloud provider, regardless of where 

it’s located. That can’t be the result we want, and that’s why the 

LEADS Act is important. That’s why as part of the LEADS Act, 

one of the components in that is strengthening the MLAT process. 
102 

If the Justice Department wants access to that data, they should 

go through the MLAT process. The MLAT process could and should 

be better and faster and more streamlined, but that really has to 

be the direction we go, otherwise it just means that countries will 

just say you can’t put data with an American company anymore. 

Ms. DELBENE. Thank you. 

Thank you, Mr. Chair. I yield back. 

Mr. ISSA. Thank you. 

We now go to the gentleman from Pennsylvania, Mr. Marino. 

Mr. MARINO. Thank you, Mr. Chairman. 

I know my colleague and coauthor, Ms. DelBene, asked direct 

and pointed questions concerning the LEADS Act, so I don’t want 

to get into rehashing that. But is there anyone on the panel that 

wants to respond even further because of—given the fact that Ms. 

DelBene ran out of time? Please. 

Mr. MACCARTHY. Thank you for that. The LEADS Act is an important piece of legislation. If the court case that—— 

Mr. ISSA. I’m afraid you’re going to have to use Mr. Black’s 

microphone. 

Mr. MACCARTHY. Is that better? 

Mr. ISSA. Yeah. 

Mr. MARINO. Much. 

Mr. MACCARTHY. So the LEADS Act is a very important piece of 

legislation. And if the court case that Microsoft is involved in goes 

the wrong way, there would, indeed, be disastrous consequences for 

U.S. companies. 

But I wonder if a small amendment to the LEADS Act to make 

sure that it doesn’t inadvertently encourage data localization 

wouldn’t be in order. To the extent that it says to companies store 

the information in this country, and it’s safe from the U.S., that, 

I think, would encourage people to store data in one location rather 

than the other. 

Instead, the real stand, or issue, would be the nexus between the 

government and the data subject. If they’re citizens or residents, 

then local laws should apply; if they’re not, then local law should 

not necessarily apply. 

Mr. MARINO. Okay. I’ll ask that our staffs review your statement 

and others to see how we can make this more effective. 

Anyone else? Ms. Espinel. 

Ms. ESPINEL. I would just say briefly that I think these are clearly new issues, and they are complicated issues. I think the introduction of the LEADS Act and the work that’s done—and I thank 

both you and Ms. DelBene for your work on that—demonstrates 

that while they are new issues and they are complicated issues, we 

as the United States, can still show leadership on these issues and 

try to move forward with various ways to approach them. 

And I think that’s extremely important. I do think that we need 

to bring other governments into that. I think having international 

consensus around these issues is going to be very important. But 

the United States, I think, will inevitably need to show the way. 

And I thank members for their leadership that has already been 

shown on this issue. 

Mr. BLACK. If I could just jump in briefly. I think we are all on 

agreement an MLAT and LEADS. To understand the complexity 
103 

and why we have to be careful, whether it’s EU or us, trying to 

come up with the solution, the answer of is data owned or located, 

a conversation among the five of us, if we were sitting in different 

countries and it was a video capture of that, it would, in fact, be 

stored around the globe on different servers, be in the cloud. So do 

each of us own it? To what rights do the others have to stop it, 

block it, disseminate it? We get into very complex issues. 

We believe we can find answers, but quick, easy, simple answers 

in this area is very difficult. Ownership of data is a very tricky concept, and trying to precisely identify—the Microsoft case is very interesting because they’ve identified that the data has a location. A 

lot of people view the data they have on their servers disseminated 

through multiple servers, partly for security purposes. 

So the answers—the questions here are very tricky. The answers 

need collaborative between governments, multiple governments 

and private sector players to come up with solutions, which is why 

we’re nervous about imposed solutions, kind of rigidly applied in a 

regionally-limited area. 

Mr. MARINO. I’m not sure if my colleague went into this area. If 

she did, perhaps you could expand on it; if not, take a shot at it. 

Give me your impression or what you’ve heard or what you see or 

think about the LEADS Act potentially having an adverse effect on 

U.S. law enforcement, compared to the abilities that they have now 

to obtain information from other countries? Dr. Atkinson. 

Mr. ATKINSON. Well, I think it’s a question of do they look at 

their access in a short-term or long-term perspective. In the short 

run, at the margin, it makes it slightly harder for them to get access to that data. In the long run, it will make it impossible to get 

it, or much more difficult to get access to that data. 

Because as I said before, the dynamic will be, if the rule is that 

the U.S. can compel a U.S. company to turn over data with the 

lower standard on a foreign person that’s stored in their country, 

countries will just mandate that that data cannot be stored with 

the U.S. company, and that will make it harder, not easier, for a 

law enforcement to get that data. 

Mr. MARINO. Ms. Espinel, you have 9 seconds. 

Ms. ESPINEL. Sorry? 

Mr. MARINO. You have 9 seconds. 

Ms. ESPINEL. I would just say, the Department of Justice right 

now is in a situation where they don’t know exactly what the rule 

is. And that lack of clarity, predictability is not helpful for law enforcement either. I think the LEADS Act would be helpful in making it clear and predictable for everyone involved, including law enforcement. 

Mr. MARINO. Thank you. I yield back. 

Mr. ISSA. Thank you. 

Gentleman from New York is next, I think, or from Rhode Island. 

Which one of you is ready to go first? The gentleman will yield to 

the gentleman from New York. 

Mr. JEFFRIES. Thank you, Mr. Chair. 

And I want to thank the witnesses for their presence here today 

and for very thought-provoking testimony. 

Let me start with Ms. Espinel. There have been some concerns 

that have been raised by some of the people that I represent, and, 
104 

indeed, many aspects of the American public about sort of the 

downside of development of big data, the privacy concerns with respect to this data being misappropriated, abused, and misused. 

But I was wondering if you could speak to some of the potential 

upsides, the transformative nature of big data as it develops to improve, you know, the quality of life, or address social conditions or 

improve the functioning of the economy as we move forward. 

Ms. ESPINEL. I would be happy to. I will start by saying that our 

company take the privacy issues very seriously, so those do need 

to be addressed. 

But, you know, I think we are living in exciting times. So here 

is a kind of incredible fact: If you look at all the data that exists 

in the world today, 98 percent of it was created in the last 2 years 

alone. That is extraordinary. That is obviously without precedent, 

and that is a rate of change that is going to continue to increase. 

That has enormous implications for businesses, but it also has 

enormous implications for human beings who can use that data. 

And already today, even though this is an early stage, I think, for 

data, we’re seeing enormous societal impact. So we’re seeing them, 

you know, in cities that are using them to reduce pollution. Doctors 

are using data to make diagnoses more quickly. 

There’s an example that relates to saving lives of premature babies that are in NICUs that is, sort of, personally very meaningful 

to me. There is research being done on Alzheimer’s. Farmers are 

using them to increase their yields while reducing the use of pesticides. So I think the societal benefits from data, data used properly, are enormous. 

And beyond that, there are enormous economic benefits. So a 

conservative estimate of the gains from efficiency—so one of the 

things that businesses in the United States and Europe and around 

the world say is that using data helps them to be more efficient. 

And generally speaking, they report sort of a 5- to 6 percent increase in efficiency. 

If you take a very conservative estimate and assume that there 

will be a 1 percent gain in efficiency, we are talking about creating 

$15 trillion to the world economy by 2030. That is equivalent to another U.S. economy. So both from the economic point of view, from 

the ability of small businesses, as panelists talked about before, to 

have access to international markets in a way that was never possible before, and in terms of some of the societal benefits we’ve 

seen, there is enormous promise. 

And I will just conclude by saying, while there is enormous 

promise, it is early days. And so one of the reasons that we are concerned about some of the trade barriers that we see around the 

world is because we fear it will cast a shadow on innovation to 

come. 

Mr. JEFFRIES. Now, the international concerns that many on the 

panel have spoken to in the context of trade, and some of the court 

decisions that we’ve seen come out of Europe, I want to turn inward for a moment and ask you, Ms. Espinel, do you think that 

the United States, in the face of this exponential growth of data in 

such a short period of time, as it relates to that 98 percent figure, 

do we have an adequate legal and regulatory framework in place 

right now, or are there things that this Committee, that this Con-
105 

gress should be thinking about in this new data era that we exist 

in? 

Ms. ESPINEL. I think it’s inevitably the case that legal systems 

around the world are going to need to adjust to the world that we 

live in. You know, there’s country’s individual laws, and then 

there’s sort of the global trading system that also needs to address. 

And we’ve talked about some of the pieces of legislation that we 

think could be helpful, like the Judicial Redress Act, in trying to 

repair—be part of the solution to getting us to a new Safe Harbor. 

We’ve talked about the LEADS Act. You know, I think this is a 

rapidly-evolving landscape, so I think it’s entirely possible that we 

will need further legislative change in the United States, and I am 

very confident that we will need legislative change in other countries of the world. 

And I will close by saying, I think it is imperative that we have 

a global trading system that sets up strong and enforceable rules 

or data. Without that predictability around the world, I think it 

will be very difficult, not just for U.S. companies, but for all companies. 

Mr. JEFFRIES. And in the limited time that I have, you mentioned the importance of American leadership, but you also said 

that it was important to develop international consensus. Could 

you speak to what some of the international challenges may be as 

it relates to how other international actors look at big data, which 

perhaps may differ than our view here in the United States? 

Ms. ESPINEL. So I could talk about this almost indefinitely. I will 

try to be very brief. So I’ll just highlight a couple of things: One 

is, I think, you know, other countries, sometimes the motivations 

are about trying to grow their domestic industry or trying to keep 

U.S. industry out of their markets. And so that is a reason, or can 

be a motivation for why countries put in place restrictions to keep 

barriers out. 

But I think, you know, as I alluded to before, I think part of the 

issue is that these are new cutting-edge issues. And so I think not 

just the United States, but countries around the world are struggling with how do you balance security and privacy appropriately? 

And so that is why I think, while I believe the U.S. will and 

needs to show leadership on this, I also think it’s incredibly important that it’s not the U.S. going out and saying this is our solution, 

and we think this should be imposed on the rest of the world. I 

think there does need to be international consensus. 

I am fully aware of the fact that not every country in the world 

is going to want to be, or be able to be at that table right away, 

but I do think there are a number of countries where the United 

States could start having discussions about what norms of those 

areas should look like, and that would be very productive. 

Mr. JEFFRIES. Thank you, Mr. Chairman. I yield back. 

Mr. ISSA. We now go to the gentleman from Texas, who has been 

patiently at the end of the dais. 

Mr. POE. Thank you, Mr. Chairman. 

Thank you all for being here. 

I want to talk about a specific issue of privacy: Surveillance by 

government. That’s what I’m talking about. Not cybersecurity or 

any of those issues. Let’s focus on that one issue. 
106 

To me, the United States has always been the world leader in 

privacy. We have a Fourth Amendment that you’re all familiar 

with. Many countries, maybe most don’t have such a concept as the 

Fourth Amendment, protection against unreasonable searches and 

seizures by government. 

Mr. Atkinson, you talked about the Europeans use privacy as an 

excuse for really protectionism. I want to delve in this a little further and, talk about and ask you your opinion. There are three 

issues that we have regarding government surveillance on Americans. And if the perception of the Europeans is that America 

doesn’t protect the right of privacy, perception, whether it’s reality 

or not, is part of the reason we have this issue with the Europeans. 

And one of those is the concept of the FISA courts; the second 

is surveillance under 702 warrants; the third is backdoor searches, 

and encryption that government may encourage our businesses to 

have into their systems; and the fourth is EPCA, whether it should 

be reformed or hasn’t been reformed. 

Those four issues to me, and I’m a former judge, are issues 

where it seems that government intrusion in those four areas and 

the failure for us, Congress, to redefine or define the Fourth 

Amendment to make sure it applies in those four areas or not may 

be part of the problem we have with dealing with foreign countries 

on the issues that you’ve all talked about. 

So my question is—and I want all five of you to weigh in on this, 

I just want your opinion—does Congress, in your opinion, need to 

look at each of those four issues, those four areas where government surveillance on citizens is allowed, and fix that problem, or 

look at those four issues? What do you think about that issue as 

regarding government surveillance on citizens and the effect it has 

on businesses being able to have the free flow of data around the 

world? 

So that’s really the only question I have, and I’d like to just start 

and go down the row and see what you all think about that. 

Mr. ATKINSON. I would agree with that. I’m less familiar, not an 

expert on the FISA court issue, but on all the other issues you 

brought up, I fully agree with you that we do need FISA reform 

on 702. 

EPCA, we’ve been a long supporter of it. It really is illogical that 

there is a lower standard of government access to data that’s stored 

in the cloud than data that’s stored on my home computer. It just 

doesn’t reflect technological reality that we would treat those differently. If we—so I fully agree with you on that. 

And I do think all of that, and including the backdoor issue and 

the intentional weakening of U.S. systems, that all of those things 

have hurt our ability to be a global technology leader, and they’re 

going to continue to hurt us until we take steps on it. 

I will just say, though, and I think we need to be a little bit more 

vocal about saying that is, there are other countries that are doing 

things like that. If I were the Irish data protection authority, I 

wouldn’t let Irish data go to France. In other words, there are other 

countries that do these as well, and I think it’s important that we 

make that, that we’re not the only country that has challenges 

there. 
107 

Mr. POE. I know other countries don’t observe the concept of the 

Fourth Amendment, but we do in this country. 

Mr. ATKINSON. Exactly. 

Mr. POE. And I just want to know if that is a factor in this entire 

discussion. 

Any others? We’ve got just about a minute left or less than that 

to weigh in on that. 

Ms. ESPINEL. Just briefly. Yes, I think those are all areas that 

Congress should consider. I would speak to two of them. We are 

concerned about movements undermining encryption and we’ve 

made that clear. And we also very much support EPCA and would 

urge its quick passage by Congress. Thank you. 

Mr. POE. Anybody else? 

Well, I’m going to yield back my 9 seconds. 

Mr. ISSA. And I’m going to take the 3 seconds back and treasure 

them always. 

Oh, I’m sorry. I think—the gentleman is recognized for a short 

addition to his now expired time. 

Mr. BLACK. Thank you. Very good points. Frankly, the world 

looks at what we do, not just what we say. If we’re going to be a 

moral leader for an open, free Internet, we need to walk the walk 

as well as talk the talk. And those are all areas where we need to 

do more. 

Without a doubt, I should point out there was a story that appeared today about the United Kingdom that just basically—apparently it was either finally passed, or very close to passing, a requirement that companies turn over—or have encryption that can 

be broken. That would be a terrible precedent, and the U.K. does 

it. Other countries are doing—— 

Mr. ISSA. Ms. Espinel, are you familiar with that? 

Mr. BLACK. We’re the only ones that do some things. Governments want to have access to information that’s global. 

Ms. ESPINEL. Yes. I should just say—and I will check on this— 

but we have been concerned about the U.K.’s moves toward requiring backdoors to encryption and have raised that with the U.K. 

Government. My understanding is that most recently, the U.K. 

Government has stepped back from that and has said that they are 

not going to be requiring backdoors to encryption in the legislation 

that is moving through the U.K. system. 

So I will check to confirm that and come back to you. But we 

view that as a very positive step, because, not to take too much 

time, but part of the reason that we are concerned about 

encryption here in the United States is not just because of here in 

the United States, but because of the precedent overseas. 

And so if my understanding is correct, and the U.K. Government 

yesterday said they would move forward with their legislation 

without those requirements to backdoors, we view that as, at least, 

one positive step in this discussion. 

Mr. ISSA. Mr. MacCarthy, if the gentleman would—okay. Please. 

Mr. MACCARTHY. Very briefly. I agree with—— 

Mr. ISSA. Again, you’ve got to use Mr. Black’s microphone. We’ve 

denied you full access, I’m afraid. 

Mr. MACCARTHY. Equal access to microphones. 
108 

Mr. Poe, I agree that those are issues that need to be addressed. 

I agree that back doors are a problem. We would oppose further 

movements in that area for the reasons that have been articulated. 

We’re strong supporters of EPCA. But my point is that none of 

those things need to be preconditions for a successful resolution of 

the negotiation for a new workable Safe Harbor. 

Mr. POE. Thank you, Mr. Chair. 

Mr. ISSA. And with that, I’ll take those 3 seconds and pass them 

on to the gentleman from Rhode Island for an additional 3 seconds. 

Mr. CICILLINE. Thank you, Mr. Chairman. 

Thank you to the witnesses for this very useful testimony, as we 

sort of struggle with this question of how do we preserve cross-border data flows, and if we’re really making the point of how important this is to our economy, and how unsustainable a system that 

interrupts those flows would be in the long term. 

And you’ve all spoken about the need for a narrowly-crafted, but 

least-restrictive-of-trade kind of standard. And I want to sort of 

press you a little bit on that, and beginning with you, Mr. Ambassador. You make the same argument, of course, in your written testimony that we need a workable, and commercially-viable and legally-valid alternative to the Safe Harbor provision. 

I wonder if you could just expand on this a little bit, and describe 

what you think should be included in such an alternative. And 

also, how do your member companies plan to take privacy concerns 

into account until such a new standard is developed? 

Mr. ALLGEIER. Well, thank you very much. 

Yes, it is very important for all of our companies, because they’re 

all dealing with cross-border data flows, that there be a successor 

to the now invalidated Safe Harbor. And I think it goes a lot back 

to what Rob Atkinson was saying, is that there’s going to have to 

be a workable way of recognizing some of the differences in privacy 

laws, but also make it viable for companies to actually comply with 

it without making it completely chaotic. 

I’m not a lawyer, so I don’t have specific suggestions on how do 

we work that, but I think that—as Victoria said, that once there 

is a successor, there needs to be sufficient time for companies to 

come into compliance. 

So I think there should be a recognition that, all right, if we’ve 

reached agreement, we leave the existing system in place for a reasonable period of time. And then these 4,000 companies—and some 

of them are small companies, a lot of them are—need time to then 

show that they can meet the new requirements of Safe Harbor 2.0, 

or whatever it’s called. 

Mr. CICILLINE. Does anyone else have a suggestion? Yes. Dr. Atkinson. 

Mr. ATKINSON. I would agree with that, although I think ultimately, we’re going to have to move beyond the Safe Harbor to a 

formal trade agreement. I know people have alluded, for example, 

to the WTO protections—or exemptions around—in the services 

agreement around moving from privacy and security. Unfortunately, what we’re seeing are countries that are using that as a 

guise for protectionism, China being a case in point. 

I have talked to Chinese Government officials who tell me that 

they’re justified in doing what they’re doing because of national se-
109 

curity concerns, which is just simply false. Under the way the WTO 

rules are set up, it’s hard to bring that case. And I don’t see any 

evidence that we’re going to change the WTO rules anytime soon. 

That’s why it’s important to put this in trade and services agreement, and a TTIP agreement with a very, very, very narrow exception so that countries can’t use that to drive the truck of 

mercantilers through—— 

Mr. CICILLINE. May I just follow up, Dr. Atkinson. One thing you 

said in your written testimony is that the European Court of Justice overturned the Safe Harbor agreement, not because of privacy 

concerns, but because of concerns about governmental access. Does 

it then sort of follow that either as part of the Safe Harbor, the 

new agreement, or in conjunction with it that we put into place additional surveillance reforms to respond to that concern raised by 

the court? Sort of building on Judge—— 

Mr. ATKINSON. I would argue that it does follow from that. I 

would say two quick things, though: One is, they made that decision without any real judicial review. They must have just watched 

some videos from—you know, that was shown, you know, what 

NSA did or something. There was no real collection of evidence 

when they made that decision, and I think that should be very 

troubling. 

Secondly, as I said earlier, they haven’t cut off other countries 

who have more problematic access, government access rules than 

we do. But having said that, I do think it’s incumbent upon us to 

make some reforms that would go in that direction, as you said. 

Mr. CICILLINE. And just one final question for the panel. Does 

Congress have a role to play, and if so, what is it, in establishing 

this sort of modernized Safe Harbor framework? Is there a useful 

role that Congress can play in the development of that? 

Ms. ESPINEL. Sure. So I would say, there’s a short term and a 

long term. I think short term, we need to encourage the United 

States and Europe to come to an agreement on new Safe Harbor. 

We don’t believe—we do not believe we need new U.S. legislation 

to do that, although we do hope the Judicial Redress Act passes as 

soon as possible. And I think Congress has a role to play in working with your European counterparts to encourage Europe to come 

to the table and to reach an agreement as quickly as possible on 

a Safe Harbor 2.0. 

But then looking at the long term, I think it is also clear that 

is not our long-term solution. We’re going to need a global solution. 

We’re going to need something that is flexible and principled-base, 

and I think Congress absolutely should play a role in working with 

the Administration and working with industries and working with 

your counterparts around the world and helping to determine what 

that long-term solution is going to look like. 

Mr. CICILLINE. Thank you. I yield back, Mr. Chairman. 

Mr. ISSA. Thank you. 

We now go to the gentlelady from San Jose. 

Ms. LOFGREN. Well, thank you. This has been very interesting, 

and I appreciate the insight shared by all the witnesses to the 

Committee. 

You know, I think that we are in for a very tough time, actually 

long term, in trying to reconcile very different approaches to free-
110 

dom, essentially. If you take a look at what the European Court of 

Justice did, they basically said that the 2000 Commission had 

erred by failing to take into account the interaction of U.S. domestic law and U.S. international policy and the framework; in other 

words, it didn’t take in the whole picture, and it’s going to allow 

the data protection agencies in each country to investigate violations. Well, where does that lead us? 

I mean, you’ve got a situation in Europe, and I—as Ms. DelBene 

mentioned, many of us meet with the parliamentarians from Europe, who feel that their decision on right to be forgotten is extremely important to them and very valuable. And when you get 

into it with them, you say—I mean, recently, an agency in France 

ruled that links in content removed under their right to be forgotten has to be removed worldwide. And when you talk to them 

about, Hey, we have a First Amendment. Even if we agreed with 

you, we can’t agree with you. I mean, we can’t allow elimination 

of First Amendment rights. 

So when you talk about data, I think it’s—it depends on which 

kind of data you’re talking about. I mean, if you have a database 

that is the product of the health study, and it’s completely owned 

by, you know, a university, it’s possible to control the sharing of 

that data in a very different way than a posting on Facebook. You 

know, I think we’re looking—we’re looking down the road at some 

very severe—and I’m not sure how we get to a situation that’s 

going to be suitable. But getting to that, I’m wondering—you know, 

Mr. Black, you mentioned the right to be forgotten and others have 

talked about it, is a major barrier to data flow. How do you see this 

ending up when you’ve got the First Amendment that protects 

Americans’ right to free speech, and a Europe that has no equivalent respect for speech, but has an equivalent right to—to sensor? 

How are we going to resolve this? 

Mr. BLACK. Well, as I tried to indicate, it’s a very troubling concept. And when you think about it, if it becomes an established 

precedent, and we are seeing other countries in other parts of the 

world are considering similar versions, it is an amazing shield for 

basically hiding data, distorting history, limiting the ability to prevent, frankly, honest information transfer. We talked about ‘‘data,’’ 

and we all use ‘‘data,’’ and it’s important we do, but we’re talking 

about information and knowledge, and the ability to block information and knowledge, to block people’s ability to communicate part 

of communication is getting information. It’s a very serious precedent. 

And unless it is whittled down, and we find some way to back 

off of its broad reach—I mentioned the editorial aspect that’s exceptionally troubling, but frankly, even if you don’t go to that step, the 

breadth of the concept of the right to be forgotten, the ability—and 

we all want database to be cleaned up of erroneous fact, but, again, 

it is, once again, imposing a liability on players, intermediaries, 

that is fundamentally a flaw, and you can do it on—for so many 

purposes. You can—— 

Ms. LOFGREN. Right. 

Mr. BLACK. And we had this discussion earlier, but if you have 

intermediaries liable for what users do, or for what information or 
111 

data that flows over the networks, you will have a crippling of the 

open Internet as we know it today. 

Ms. LOFGREN. Well, what I see, I mean, going—I’m sorry Mr. 

Marino had to leave, but we have Safe Harbors in the DMCA, and 

we have section 230 of the Communications Decency Act. We have 

some provisions that is would allow the Internet to flourish. They 

don’t have that in Europe. And so I think that’s part of the reason 

why they don’t have an Internet economy. They have crippled their 

tech sector in that way and maybe a few others. 

And to think that you can control the flow of data and have an 

Internet, that’s not how the Internet works. So I—I think that we 

have a fundamental misunderstanding with some of our colleagues 

in parliaments across the world. That’s not to say there aren’t 

countries that are just using this as an excuse. I mean, you take 

a look at countries that want to have localized data; Russia, China, 

Turkey, these are not companies that—countries that are, you 

know, wallowing in free speech. They have a different agenda. 

I just want to make one final comment on—or maybe even a 

question, on copyright. Because, you know, we’ve also got a problem there, and it’s a crossover with free speech. We recently had 

a situation where European book publishers are saying that you 

can’t actually index their books, and that if you index their books, 

there would be an index tax. Which is—I remember when people 

wanted to do an email tax. That’s not going to happen. And so I’ve 

been telling the parliamentarians, if they look ahead in Europe, 

they’re going to be like China, because we’re going to have to cut 

them off, because we’re not going to lose our freedom because they 

don’t value theirs. 

Do you see it going in that direction? 

Mr. BLACK. This is an excellent area for action to actually be 

taken by the U.S. Government. Under the Berne Convention, okay, 

it is very clear there is a right in order to basically have access to 

news. We think if the U.S. Government wishes to, some of these 

snippet tax approaches are, in fact, challengeable under existing 

law. We all want—we’ve all said we want to improve the rules governing data flow around the world, but there are some rules that 

are in effect now that are not being utilized. And in this area, we 

think there’s room for action immediately to go after some of these 

more egregious attempts to, frankly, alter the rules of access to information. 

Ms. LOFGREN. Mr. Chairman, could I just have 1 second more to 

make a comment? 

When Spain said you can’t link to news articles, and Google just 

withdrew, and then none of the newspapers could find readers. So 

I think to some extent, there’s a role for the government to play, 

but I think, also, companies are going to have to take actions themselves, because they can’t live with some of these rules. And I think 

when the European public can’t actually access information, there’s 

going to be reaction among the public themselves. 

Thank you, Mr. Chairman. I yield back. 

Mr. ISSA. Thank you. And I thank you for that salient point. I 

think it is one of those where be careful what you wish for. May 

Spain always have the dark ages back, if that’s what it wishes for. 
112 

Dr. Atkinson, I’m going to ask you sort of a question that I know 

the answer to, but—but it may be a will question as much as it 

can. 

Would be it helpful and/or appropriate and/or possible to sue the 

EU under the WTO in light of their decision? 

Mr. ATKINSON. So, I’m not a trade lawyer, and I know when Ira 

Magaziner made those veiled threats back in the late ’90’s to get 

the Europeans to come to the table on Safe Harbor, he did suggest 

that we file a suit with the WTO. I think the case is stronger now, 

as I said earlier, because they haven’t just said they’re cutting— 

they’ve only cut us off. They haven’t cut off other countries who 

have even less governmental protection. So I think there is possibility. And I think we shouldn’t back down from holding up the— 

as Teddy Roosevelt in—speak softly but carry the big WTO stick. 

Mr. ISSA. I’m sure WTO was in that. 

Let me ask a broader question. I had the opportunity to be in 

Antarctica last year. Fifty-three Nations—I had to look that up to 

remember—53 Nations are all part of an international treaty that 

says you can go there; you can have things there; you can’t—you 

can’t mine and take the resources, and nothing could be done there 

that essentially isn’t agreed to by the party as a whole. It’s a noncountry by international agreement. 

As this Committee goes forward with the number of pieces of legislation, and we’re looking at privacy, domestically, and then we’re 

looking at a global world, do—I’d like each of your comments briefly, just as we have around our Custom systems, if you will, sort 

of free trade zones, they have places where you can bring your 

goods to the United States, but they’re not in the United States for 

any practical purpose. And there’s no tariff, and quite frankly, they 

are still considered to be not in the country. So they can only be 

seized or looked at as a ship might be bordered in international waters. 

Should we use, if you will, a combination of these two models, 

the pretrade zone in the U.S. and the idea just like Antarctica, 

there have been to be places, in this case, the cloud, in which all 

countries have to view it as outside their reach, and as such, not 

so easily taken whether it’s in the U.S., and Europeans are concerned that their privacy will be breached, or vice versa, inside another country where somehow the standard would be artificially 

higher or lower to enforce whatever is subject to what I would envision as an international trade agreement that mirrors, if you will, 

the best of the protections of, let’s say, the Europeans and ourselves and other partners. 

Can I have your comments on that? 

Mr. ATKINSON. Sure. One of the reasons we’re having this debate 

right now over privacy, it’s emblematic of a broader set of questions 

a number of the panelist members have brought up. And, really, 

what we lack is we lack a consistent, readily understandable and 

shared global framework for thinking about governing the Internet. 

And by that, I don’t mean ICANN governance. I mean, all of the 

policy questions that countries face with regard to the Internet. We 

don’t have a shared view of what’s appropriate, what’s not appropriate. And I think we have to—we’ve proposed in that a recent re-
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port called the ‘‘Framework For Resolving Cross-border Internet 

Policy Conflicts.’’ And I think we—I think it’s incumbent upon—— 

Mr. ISSA. And I appreciate that, and I’d love you to answer further, and I’ll read any material you send me. My question was 

more narrow, is should we take away in some hosting environments, if you will, a cloud and say it does not reside inside the 

U.S., even though it’s in Toledo, but, in fact, it doesn’t reside in any 

Nation, and all Nations have to observe at the same level of respect 

as though one might do an extradition, rather than a simple subpoena, no greater, no less than—than that? And that’s one of my 

questions is, if we’re going to make the cloud a free trade zone, do 

we have to begin looking at it as not ours, even if it’s in the U.S. 

and not theirs, even if it’s hosted there. And I’ll just go down the 

list. But please stay narrowly focused, because I want to get to Mr. 

Johnson. 

Mr. ATKINSON. I disagree. I’m not sure that is exactly the right 

way to go, because there are legitimate things government has access to and concerns that are legal. And if it’s in the cloud, it 

shouldn’t be extraterritorial, in my view, should be covered by a 

trade agreement. 

Mr. ISSA. Just so you know, the Chairman of the full Committee 

made it very clear in the last round of legislation that this Committee was tired of our country knowing more about us than us 

knowing less about them. So you may—you may find the definition 

of legitimate interest to the government is on the wane from this 

Committee rather than the ebb it had after 9/11. 

Ambassador. 

Mr. ALLGEIER. I thought your metaphor was very interesting, because the free trade zone, as you say, the products are in there and 

you can do all sorts of things with them. But once they leave that 

zone, they are subject to whatever the duties are and the regulations are of the markets they are going into. So I don’t know if it’s 

perfect, but in a sense, the cloud is where it resides, and then only 

when it leaves the cloud for a particular reason does it become subject to, well, whatever the jurisdiction is of whatever is being used. 

It’s an interesting thought. 

Ms. ESPINEL. So I would just say, I’ll take that to be a serious 

proposal, and I would like to give it serious consideration. But I 

could just make two observations, free trade zones work, in part, 

because they fit inside of a global trading system that has rules. 

And so, I think part of—a prerequisite to this would be to have 

that global trading system of rules for data. 

Mr. ISSA. By the way, I think it was about 1959 that we started 

trying to get Antarctica. We are only at 53 countries. So I have no 

illusions that this would necessarily be quick and easy, but it is— 

it begins to appear to me that if we do not begin to think of the 

cloud as not America’s, then the rest of the world will say, if it’s 

going to be yours when it’s in America, then it’s going to be mine 

if I have the ability to mandate it. And that’s—that’s exactly what 

this hearing today was about, is how do we get that free flow to 

be not a bias toward a country of residence to the detriment of others concerned? 

Mr. Black. 
114 

Mr. BLACK. I think it’s an intriguing idea. I agree it should get 

some serious considerations, look at the ramifications. I hate to use 

metaphors I haven’t thought out ahead of time. But, you know, 

when we talk about the oceans, we have territorial waters, and 

then we have the open sea. And it may well be there’s a certain 

appropriateness here to think of things that are not—should not be 

geographically, and therefore, governmentally tied to one Nation. I 

would like to explore that more. 

Mr. ISSA. Mr. MacCarthy, as you answer it, I want to tell you— 

yeah, grab the right one—I did not use the high seas, because 

there’s too much seizing of things on the high seas, but rather, 

places in which the world has agreed to a common set of protection, 

a common set of respect for other countries. Nobody can go into 

Antarctica and do something where other countries are not essentially consulted in the process. So it is a little more like extradition 

and a little less like the high seas. 

Mr. MacCarthy. 

Mr. MACCARTHY. So I think the idea is worth exploring in great 

detail. I’m worried that even our own regulators who have a responsibility to protect the privacy and the anti-fraud interests of 

our own consumers would want to gain access to information in 

order to enforce local law. And so the idea that there could be a 

place of the cloud, the Internet, that is literally a place without 

law, that probably is the right way to go. 

But the next step of trying to harmonize the rules probably is 

difficult. We’ve heard the difficulties in the First Amendment. 

We’ve—privacy is also a very, very difficult issue to get harmonized 

laws. We have got a sectorial approach. The Europeans have a different approach. But you can make those rules interoperate. That’s 

what the Safe Harbor was supposed to be all about, and that’s why 

we have to get it back into place as soon as possible. 

Mr. ISSA. Okay. I’m going to go to Mr. Johnson. But I will leave 

you with this, because we can certainly, many of you we regularly 

have a dialogue with. If the United States is to lead, we certainly 

have exclusively, within our jurisdiction, the ability to create these 

zones. We have the ability to lessen our own authority over a site 

hosted under this concept that it is not America without specific 

protections. In other words, a foreign hosting site, to use a term 

that may not exist yet. 

But, you know, the United States could, tomorrow, decide that 

we’re going to have foreign hosting sites, and that a foreign hosting 

site is, by definition, one of which the Department of Justice and 

others must treat it as a non-U.S. and use an open and transparent 

process in order to go after it, and not treat it quite the same as 

we would a U.S. In other words, give it all the protections of being 

in the U.S. from a standpoint of the NSA not being able to hack 

it, and yet, give it additional protections. 

This is not a new concept to think about, can we do better? The 

question is, will America lead? And that’s what I’d like to have in 

the days and months to come. 

Your comments on can America lead by creating something 

which the rest of the world could have a higher belief on, and if 

we do this, the same as we created the Internet, and we set the 

standards and then we gave it as a gift to the world, at least as 
115 

to entities which are hosted within our borders, but are hosted 

under some enhanced protection and assurances for the rest of the 

world, we could lead a standard that I doubt that Russia and 

China would follow, but I certainly would like to reach a standard 

that the EU would admire and emulate. 

Mr. Johnson, I apologize for going a little long, but the gentleman is recognized. 

Mr. JOHNSON. Well, no. In fact, I’m—I’m prompted to yield whatever time that the gentleman would extend to me, the 5 minutes. 

I tend to think that I might be better off by just simply yielding 

to you and listening to your questions. There’s a lot that I missed 

having been absent at an Armed Services Committee meeting, and 

I don’t want to go over plowed ground. I’m just kind of here to 

learn. And so with that, I will yield back to the Chair. 

Mr. ISSA. I thank the gentleman. 

Is there anyone who wants to make any closing remarks that, 

from the whole host of questions that you would like to have briefly 

in the record, and then we can—you can extend, and I’ll say in that 

my closing remarks. 

Mr. MacCarthy. 

Mr. MACCARTHY. So very briefly. It’s very good news that the European Commission has suggested that there’s an agreement in 

principle on the Safe Harbor. We have every reason to expect it 

will see a rapid conclusion of that. Commissioner Jourova is coming 

over here in a couple of weeks, maybe he will do something there. 

They have every incentive to get this right. Digital trade between 

the United States and Europe is huge. We have a global trade surplus of $150 billion in digital trade. They have a global surplus of 

163. They know that their fundamental interests are at stake here, 

and I think they are going to try to act to try to put in place a Safe 

Harbor to make transatlantic data flows work again. 

Mr. ISSA. Mr. Black. 

Mr. BLACK. Very short. 

Mr. ISSA. Reclaiming your mike. 

Mr. BLACK. Very short. A lot of consensus I think you heard 

today. The reality is that we’re going to have a lot of these problems linger for a while. There are no easy solutions. The Internet 

is a tremendous part of our future. I would—I guess I would urge, 

as a U.S. citizen, that we had a huge role in creating the Internet. 

We have a tremendous history and essential one to the First 

Amendment, freedom of speech, as we go forth and set rules domestically or internationally, that we keep it to a forefront of our 

principles, that commitment to openness, the freedom to access information, and that has, frankly, created a climate that has allowed the Internet to flourish. 

If we do that, we’re gonna still have a lot of problems to wade 

through, but keeping our eyes on that fundamental set of principles 

will lead the way. Thank you. 

Mr. ISSA. Ms. Espinel. 

Ms. ESPINEL. Thank you. Well, I would start off by thanking you 

for holding this hearing and focusing on attention on this issue. 

Having been given the extra time, I would just reiterate two things 

I said before. 
116 

Mr. ISSA. You can just tell us, what was it like being at E&C 

versus here? Which Committee did you think better of? You can be 

impartial here. 

Ms. ESPINEL. Clearly, this one. 

Mr. ISSA. Of course. 

Ms. ESPINEL. I think in terms of the trade barriers that we have 

talked about, we have been playing policy Whac-a-Mole for over 5 

years. There are countries around the world that have been considering trade barriers, putting trade barriers forward, and our hope 

and expectation is that TPP will be, at least, a start of a mechanism to push back on those. And so if it does what we believe that 

it does, it is a truly historic opportunity. 

The second thing is just, if I could go back to the U.S. EU’s Safe 

Harbor, because it is sort of an issue of immediate concern. I agree 

with Mr. MacCarthy. All indications are that that we will—the 

United States and Europe will be able to come to a quick conclusion on the Safe Harbor 2.0, but anything that Congress can do to 

encourage U.S. and Europe to come together on that would be— 

would be great, but we need to bear in mind that if the Safe Harbor is concluded, and if there’s an appropriate period of time for 

U.S. companies to come into compliance, that—that will only get us 

so far, and then we are going to immediately need to turn to working out what our long-term solution will be. Because I do not believe that the next Safe Harbor will be that long-term solution. 

Mr. ISSA. Anyone else? Doctor. 

Mr. ATKINSON. I think one of the things that’s been happening 

in the last few years is that the policy realities have finally caught 

up to the nature of the global Internet and not in a good way. And 

I think the challenge that we face, both here and around the globe, 

is we have to figure out a way to balance the differences that we 

have between countries, legitimate differences in values and cultures. We’re not all going to agree. We can never do that. And so 

we have to figure out a way to allow the Internet to thrive and 

flourish in a system where people are going to have different rules 

and different policies. 

At the same time, we have to be able to have a way that global 

free trade and data goes on, and goes on in a robust way. And I 

think we can square that circle, but it’s really gonna require not 

just all the specific actions that we’ve talked about, which are important; it’s going to require a larger conversation along the lines 

of what you’ve proposed. A much bigger way to think about this 

and the way to bring in countries, like the Antarctica problems 

that we tried to solve. We need something like that at the global 

level now. 

Mr. ISSA. Ambassador, you get to close. 

Mr. ALLGEIER. Thank you very much. Well, these issues that 

we’ve been talking about, cross-border data flows, localization, open 

Internet, and so forth, should be subject to rules that are multi-lateral, and the place normally to do that would be the World Trade 

Organization. 

The World Trade Organization is not operating at this point in 

a way that we can do that. And so our second best alternative is 

to get these issues right in each of the negotiations that we’re undertaking, whether it’s the TPP, the one with Europe, the one on 
117 

services, bilateral investment treaties with China. At least try to 

get a cohesive and right approach in all of those to create de facto 

the template. The advantage of the WTO, if we can get it there, 

is that there is dispute settlement. It’s legally binding, and so, for 

example, if there’s a dispute about whether somebody is using a— 

a health reason or a prudential reason for protectionism, you can 

at least battle it out within a legal framework there. 

So I think that’s what we should ultimately be looking for, but 

in the meantime, we need to get it right in the other negotiations. 

Mr. ISSA. Well, I want to thank you all of you for a delightful 

conversation back and forth. I think to all of us who attended, this 

was very useful. 

As promised, I will leave 5 legislative days to submit additional 

written materials on any subject, but particularly the ones that I 

brought up. And if you have any additional extraneous material, 

we also would accept that. 

And with that, we stand adjourned. 

[Whereupon, at 3:54p.m., the Subcommittee was adjourned.] 

(119) 

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD
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Prepared Statement of Edward M. Dean, Deputy Assistant Secretary for 

Services, International Trade Administration, U.S. Department of Commerce 
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Prepared Statement of Nuala O’Connor, President and CEO, Center for Democracy & Technology; and Gregory T. Jojeim, Director, Freedom, Security & Technology Project, Center for Democracy & Technology 
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Letter from Michael Beckerman, President & CEO, 

The Internet Association 
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Letter from Daphne Keller, Director of Intermediary Liability, 

Center for Internet and Society, Stanford Law School 
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Response to Questions for the Record from Ambassador Peter Allgeier, 

President, Coalition of Service Industries (CSI) 
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Response to Questions for the Record from Robert D. Atkinson, Ph.D., 

Founder and President, The Information Technology and Innovation 

Foundation 

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Response to Questions for the Record from Victoria Espinel, 

President and CEO, BSA | The Software Alliance 
141 

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Response to Questions for the Record from Ed Black, President & CEO, 

The Computer & Communications Industry Association 
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Response to Questions for the Record from Mark MacCarthy, Senior Vice 

President, Public Policy, Software & Information Industry Association 
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