Technology Global IT Policy Report

Promoting Economic Growth through Smart Global Information Technology Policy

The Growing Threat of Local Data Server Requirements

I. Introduction

As CEOs of leading companies, Business Roundtable (BRT) members agree that for American companies of all sizes to prosper in the global economy — and continue to grow and create jobs for American workers — the United States must have in place a competitive policy framework that fosters innovation and facilitates the productive use of information and technology.

BRT’s policy paper Taking Action for America: A CEO Plan for Jobs and Economic Growth provides a comprehensive plan to put the United States back on the path of strong economic growth through actions that include opening foreign markets, protecting America’s cyber interests, and ensuring that U.S. companies and workers are not disadvantaged by discriminatory foreign policies such as local preference requirements. This paper builds on the BRT plan by closely examining one critical and actionable aspect of global information technology (IT) policy: the growing international risk of government-imposed limits on cross-border data services through local data server requirements. This trend is bad for U.S. technology and commerce and, in turn, bad for economic growth and job creation. This paper recommends concrete actions that the U.S. government and BRT companies can take to oppose these requirements wherever they arise.

II. Issue Overview: Preventing Local Data Server Requirements

For decades, the United States has led the world in advocating policies that open markets and reduce regulatory barriers to commerce. Such policies are all the more important today given the integration of networked technologies into global business models and the positive impact these business models have on the creation of U.S. jobs and economic growth. Globally networked technologies, such as the Internet, cloud computing, virtual private networks and mobile commerce, are critical to modern business. These cross-border network technologies have created the most profound platform for worldwide commerce in history. 

BRT and our members are concerned about a dangerous trend we are experiencing as we conduct business around the world. Governments are beginning to erect new counterproductive, overreaching regulatory barriers to services that rely on cross-border, information-driven business models. We want to raise awareness of the potential damage these policies could cause, and we encourage business and government to work together to implement policies to mitigate such risks.

BRT is focusing first on the emerging trend of local data server requirements, i.e., requirements to mandate server infrastructure within the borders of a country, rather than allowing businesses to use servers located in other countries. Such policies are disruptive and an unnecessary drain on resources. They can fragment the unified, economically efficient and technologically flexible nature of global networks such as the Internet. We want to work with the U.S. government to identify these threats and to advance practices that minimize the barriers to open markets here at home and work with other governments to adopt the best practices embodied in the E.U.- U.S. Trade Principles for Information and Communication Technology Services.

The United States has already recognized the harm that can be done to global business and consumer experiences by blanket local data server requirements. For example, the E.U.-U.S. Trade Principles for Information and Communication Technology Services and the Organisation for Economic Co-operation and Development (OECD) Principles for Internet Policy-Making both discourage requirements for needlessly replicating infrastructure locally. We agree with these principles. We encourage the United States to more specifically confirm its implementation of these principles and to advocate their adoption by other countries around the world.

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