COLUMN-Don't let data protection turn into protectionism

Thu Jan 9, 2014 6:58pm EST

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(Jim Hagemann Snabe was appointed co-CEO of SAP alongside Bill McDermott in February 2010. The opinions expressed are his own.)

By Jim Hagemann Snabe

Jan 9 (Reuters) - We live in a global, digitally networked world. Cloud, mobile and in-memory technologies are its engines. Our new world has no boundaries; there is a huge potential for growth, employment and new business models. But it also comes with challenges for policy and industry.

In response to leaks about the U.S. National Security Agency's widespread surveillance, there have been lots of understandable concerns globally. Unfortunately, some parties have suggested building fortresses around national data.

I believe that the new technologies and the free flow of data are essential to spurring innovation and expanding international trade. This is only possible if consumers and citizens trust the digital economy and use it extensively. We in industry must work with policymakers in all markets to create clear and transparent rules that both protect the legitimate rights of citizens, consumers and companies and promote cross-border data flows.

We urgently need an internal harmonization of security and privacy regulations in Europe, but these cannot lead to building data barriers around the continent.

On the contrary, Europe should work toward a global solution with other partners, starting with the United States. As both continue their transformation into digital economies, policymakers and industry representatives from both continents should come together and take an ambitious approach to creating joint standards and procedures that enable cross-border data flows under the Transatlantic Trade and Investment Partnership.

In so doing, we should also strengthen the Safe Harbor agreement between the European Union and the United States, which facilitates data transfers between businesses in both areas.

Of course, such agreements should include provisions that reaffirm each party's right to protect its citizens' private data as well as sensitive government or business data. With this we also need to jointly address challenges in privacy, cyber-security, and protection of intellectual property. Important work needs to be done to establish due-process norms and enforceable rules regarding government access to private and industry data. But all this should also be done with an eye to boosting global commerce and facilitating data flows.

We have already seen this work successfully in the past when an innovation like containerized shipping boosted global trade. The invention of the standardized metal shipping container decreased the time and costs for loading and unloading a ship. As a result, ships finally spent more time at sea than docked. Containerized shipping boosted bilateral trade by almost 800 percent over two decades, according to a recent study of 22 industrialized countries.

This explosion in global commerce was also supported by trade agreements such as the General Agreements on Trade and Tariff (GATT), which preceded the World Trade Organization. While there have always been safety and security concerns associated with containerized shipping, these have been well-managed through strong cooperation among governments.

The McKinsey Global Institute estimates that electronic commerce accounts for $8 trillion annually worldwide and Gartner analysts forecast that companies will spend about $154 billion on cloud services in 2014, 60 percent more than in 2011.

The flow of information clearly is the new currency of global trade today and there's a huge opportunity in creating a new "GATT" for the data economy.

Exciting innovation is taking place around new technologies today. In the future, companies could improve economic efficiencies, deliver breakthroughs in public health and create new models for social welfare - all through the aggregation and analysis of data.

This innovation will mainly come from smaller companies and startups that are building their solutions on the latest technology. But these companies will not be able to handle the necessary investment and cannot take advantage of the opportunities that come with new technologies as long as rules vary by country and we have not established reliable global standards.

Instead of building fortresses around information, we should work on laying the necessary groundwork around security and trust - so that we can embrace the global economic opportunities unleashed when data travels unhindered across borders. (Jim Hagemann Snabe)

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