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Forced Localization: The New Protectionism

Tue, 22 May 2012 15:46

What do the following examples have in common?

These cases are examples of required localization: governments attempt to restrict the sale of goods and services within their territory to those which have been produced locally. The localization can be in terms of embodied intellectual property rights, manufacturing facilities, or facilities providing cloud computing services.

Governments cite national security concerns, or consumer protection issues or privacy and government access worries when imposing these restrictions. From a trade and economic point of view, however, they increase economic nationalism at the expense international trade.

What seemed like a series of isolated incidents now seems to be a trend, which if left unchecked, could seriously undermine the goal of increasing the flow of goods and services across borders. The 2012 Special 301 Report (p. 18) and the 2012 Section 1377 telecom trade report document the extent to which these localization initiatives could hinder bi-lateral, regional and global economic integration.

SIIA and other worldwide businesses and trade associations are seeking an effective response to the growing threat of a new protectionism based on localization initiatives.

Two principals that are gaining wide currency among industry and NGOs stand in stark opposition to this new protectionism. These principles are embodied in the agreement between the Office of the United States Trade Representative and the European Commission on a set of trade-related principles for information and communication technology (ICT) services:

Since this agreement was made in April 2011, several intergovernmental, industry and non-governmental civil society groups have endorsed these principles, including SIIA, the Aspen Institute, the Organization for Economic Cooperation and Development (OECD), and a group of trade associations and companies lead by the National Foreign Trade Council.

There is momentum in both the private sector and the U.S. government to take on this issue in the strongest possible way. The US government is ramping up its efforts to move these principles forward. For instance, they are embodied in the electronic commerce chapter of the U.S. proposal in the Trans-Pacific Partnership (TPP) trade negotiations.

SIIA urges that this issue be moved to the highest levels of U.S. government decision making and raised in all significant international venues including economic gatherings of heads of state such as the recent G-8 meeting, meetings of the ministers of the Asia Pacific Economic Cooperation group, committees of the World Trade Organization, OECD working groups and trade discussions such as TPP. Only a sustained, high-level commitment from the U. S. government will turn the tide against this new form of economic nationalism.


Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology.


This week in the Federal Cloud: May 13-18

Fri, 18 May 2012 20:29

There was big news in cloud this week with the announcement by GSA on May 14th of the first certified 3rd Party Assessment Organizations (3PAOs). The initial 3PAOs include a federal agency (DOT Enterprise Service Center), SRA International, and a number of small to mid-size companies specializing in FISMA certification. The 3PAOs are an integral part of the FedRAMP process so this action represents a major step forward for the FedRAMP program and vendors wishing to go through the FedRAMP process can now hire one of these approved 3PAOs to assess the security of their system. The link below will take you to GSA’s list of accredited 3PAOs.

Also this week, we began to get some clarity around the role of industry in the shared services initiative, with public comments from OMB Officials about how the strategy will be implemented and what role industry and government shared service providers will play in the initiative. According to OMB, they are not distinguishing public and private sector service providers. Read more from Federal News Radio.


Michael Hettinger is VP for the Public Sector Innovation Group (PSIG) at SIIA. Follow his PSIG tweets at @SIIAPSIG.


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