I hope it works. Good morning. Welcome to CSIS. Thank you very much for coming out. We're deeply appreciative to both you and to our speakers. Many of you are friends in the room, and so we're glad you're here. We're looking forward to this event, which will be digital trade in the international mall economy. I'm not sure that our speakers need an introduction. Their bios are on our website. We're eager to hear what they have to say. The format will be, Meredith will begin with the presentation. Jeff will then make a few remarks, and Jamie will beat cleanup. We're really grateful that they're here. We'll then throw it open to questions to a more interactive discussion. This is a roundtable, so we are looking forward to your remarks. We all, of course, have set questions if you're quiet at the beginning, but we're hopeful that you'll get around that. With that, let me turn to Meredith and ask her to begin with her presentation. Hey, thanks, Jim. It's really great to be back here in the new building. It's so beautiful. So excited for CSIS. It's interesting. What I love about Washington is the old adage that a couple of weeks can be a lifetime or at least a 17-year locus cycle. We've done our report, which is raw material for these guys, and we try to come up with generally agreed, well-vetted numbers and analysis that can be used to plug into the political process here, or not be used depending on their choices. So I'm basically here to set the stage, but really time has moved on since we've gotten the bipartisan congressional trade priorities bill introduced. These guys have another, there is another bill on digital economy that's also gotten some attention 1789. So that's kind of where the action is, but I wanted to just kind of lay out a few things that we were seeing to set the stage. And as I see around the table, there's a lot of experts in the room that know this topic very well, so please feel free to jump in and make comments. The overview of our study. We did a quick study on the digital trade in the U.S. and global economies. We're halfway done. We just issued part one a couple of months ago. And did, as an overview, we looked at the U.S. industry and tried to profile it, figure out what the U.S. footprint was here. The U.S. industry deals with digitally delivered content, music, games, videos, books, social media, search engines, communication services, email and text messaging, software services and data services, processing and storage, and then cloud computing platform services. So that's kind of what we're talking about. This is a cool graph that's in our report. And Kate Linton from the ITC, I will not deferred you to explain it, but it's just a fascinating work of art to me, I think. It just talks about kind of the multi-dimensional nature of what the major U.S. companies are doing right now. And it seems to me that they're creating the technologies and the products, and then they're all trying to compete in each other's pace and where the other firm created something, they're trying to get in and compete right along with it. And I mean, if you understand the size of these companies, they're all U.S.-based firms. I mean, Apple, we were checking had $170 billion of revenue based on a really good first quarter in 2013. Microsoft, $78 billion. Google, $56 billion. Amazon, $61 billion. And then you've Facebook is trying to monetize their operation, $7 billion and really growing and very popular. So if you look at the U.S. economic footprint, folks that are trying to decide what the U.S. interest is in this area, this is a little bit of a snapshot of some of the stuff that we saw. It's really multi-dimensional. You've got a huge amount of creative destruction and, frankly, wealth creation in Silicon Valley as the smaller folks innovate and then try to get bought up by the bigger guys. The second section of our report looks at what's happening with Internet technologies, how they're impacting the broader economy. What are the reverberations to the machine tool manufacturer in Ohio? And we see huge effects on retail e-commerce, financial services, professional services, healthcare, telemedicine records management, diagnostics, and then also express delivery, online education. This is kind of the reverberations, the ripples of effect throughout the economy of how processes are changing. Just an interesting chart here. I thought the percent of revenue that's generated by Internet sales. Right now, snapshot 2010, you look at manufacturing shipments. 46% of manufacturing shipments are generated by Internet sales. That's not necessarily new. It might be old sales that were done over the telephone, but almost 50% of their sales are now Internet sales. This really goes down to all sorts of sectors of the economy, and I just thought that was an interesting percentage and snapshot of what was going on there in terms of converting over to business on the Internet. Oh, this is just another chart that survey of U.S. industry leaders, and this is what business leaders think is going to transform, which sectors are going to be transformed the most by the digital economy. So 72% of business leaders think that IT and technology will be changed the most, greatly transformed. I thought it was interesting here. The government were down at only 17% of business leaders think much is going to change in the government, so that's a little worrisome. Then we come up with these basic numbers, trying to quantify this huge amount of difficulty and just finding numbers. I think the OECD is looking for some generally agreed global numbers, but U.S. cross-border services trade, $356 billion in 2011. That's up from about $282 billion in 2007, and then imports, $221 billion in imports. For Heather, I thought the interesting thing is the huge footprint in Europe. I mean, we are both our exports and our investment in Europe is huge, and Europe really dominates the story if you had to pick one. So exports by 42% to Europe, and then only 18% to Latin America. We're importing a lot from the U.S. as well. Then you look at foreign direct investment, $84 billion in Europe, compared to only 31 in Asia. There's a 10-line. Everything's growing fast, but exports are growing faster than imports. That's always good. This is just where this is going geographically, exports and imports. If you look at exports, the focus there in the smaller circle to the right is the distribution in Europe. The U.K. is getting a lot. Huge amount there. U.K. and Netherlands, I think, are big. Another thing that struck me, here's the graph of the investment position, $80 billion to Europe again. As a snapshot, geographic breakdown of Facebook's 1.6 billion users. This is one of these companies global footprint. I think what's interesting is the distribution here of all the users on the left-hand side fairly evenly distributed, and then you look at where the revenue is coming mostly from the U.S. As Facebook struggles to monetize, that'll change. Really, the internet economy is dispersed globally. I mean, everyone's using it, and it's gone. It's moved quickly. I won't get into any detail here, but the report also looks at the barriers. Trying to describe them. Kate Linton here spent a great amount of time with some very well vetted description of what problems those companies are facing out there. Localization barriers, privacy, big issue with the EU. Of course, IPR protection, censorship, border measures, and then just the vulcanization of trying to put up national walls around internet economies. More barriers. That's kind of the same list. So what we're going to be doing going into July, July 14th, we'll release part two of our study, and it will be quantifying sort of econometric modeling and data analysis for both trade levels and barriers. We're going to look at some case studies. So anybody has contacts with companies that would like to be featured. It's usually pretty good to kind of get case studies of particular issues companies are facing. 10,000 people have received a questionnaire from the International Trade Commission asking them how they're surviving in the internet economy. So we're actually getting a fairly good response rate on those. And it's very hard, quantifiable data that I think is easier for the government to get than maybe a think tank or something. So hopefully there'll be some good numbers that are gleaned from that. And then finally, Congress is centered a wide and centered a thin and really looking at small and medium size enterprises. Is there a disproportionate effect of the digital economy on these guys? Or are they doing better than the bigger guys based on the digital economy? So those will be some of the things as a teaser for what will be coming out in July. But we would really appreciate your input, any perspective you have, questions that you might think we could answer that would be useful to the overall debate, which is really the exciting thing that's going on right now in the sense that the trade world has really moved miles with the issuance of the Congress congressional piece of legislation on trade promotion authority, which I'm interested to hear about. So thank you. Good morning. My name is Jeff Farah. I'm counsel to the Senate Commerce Committee where I advise ranking member Thune on telecommunications, technology and internet policy. I was fortunate enough to work with my friend and colleague, Jamie White from Senator Wyden's office on the Digital Trade Act of 2013, which our bosses introduced the end of last year. The goal of the Digital Trade Act is to set forward a series of negotiating principles for internet-enabled commerce. The big ticket items are trying to eliminate impediments to cross-border data flows and localization barriers. It's something that the goal of the Digital Trade Act is to try and influence a variety of agreements. So you have traditional international trade agreements of which we're all familiar, such as the T-TIP as well as the Trans-Pacific Partnership, but also to try and influence other agreements, such as internet governance agreements and things like the US-EU Safe Harbor Agreement, which is allowed for liberalization of cross-border data flows between the European Union and the United States, despite our differing privacy regimes. I'll let Jamie talk a little bit about the importance of the Digital Trade Act from more of a purely finance committee perspective, but I thought I would share some of our insights from why we view this as being important to the Commerce Committee's jurisdiction. The first is that I mentioned the EU-US Safe Harbor. There's been a lot of rumblings about how some of the NSA revelations will affect the transatlantic relationship and how that would affect the Safe Harbor. From where we sit, the Safe Harbor has been a fantastic tool for companies and individuals to be able to share data across the Atlantic, and we're doing what we can to interface with the Commerce Department and the FTC to try and preserve that ability. The Digital Trade Act, in addition to discussing cross-border data flows and localization measures, also speaks to the issue of intermediary liability. This is the legal regime that allows for platform internet sites in the United States to have certain liability protections so that third-party content is able to ride on that platform. This is something that we think is integral to the success story of the U.S. internet economy. It's something that we think the United States has gotten the balance largely right, both through the Communications Decency Act, which is under the jurisdiction of the Commerce Committee, as well as some of the laws that affect intellectual property. As Meredith alluded to, the ability of small businesses to be able to utilize these platform sites to send their goods to market is really something that's unprecedented in international commerce. It's something that we believe the United States government should try and support it wherever it can, and while I think many of the people at this roundtable are representing larger enterprises, it's something that I think we should all keep in mind that it is small and medium-sized enterprises that really benefit from the ability to use the internet to send their products overseas. Tomorrow the Finance Committee will have its first hearing on trade promotion authority, and we'll be interested to see what the reaction is from some of the members to the inclusion of digital trade language in the Trade Promotion Authority bill. From Senator Thune's office perspective, we were very pleased to be able to work with Ranking Member Hatch and share our perspective on why digital trade language belonged in the Trade Promotion Authority, why Commerce Committee Republicans, especially, are interested in seeing this language in final trade agreements. It's an interesting thing because I will be closely trying to determine how members are thinking about these issues because from our committee's perspective, the Commerce Committee Republicans are very much accustomed to talking about internet policy issues in a way where we believe the government should try and have a hands-off approach in as much as possible. It's something that a lot of Finance Committee members, and I imagine Ways and Means Committee members, are not as used to talking about and thinking about. We'll be looking to educate members as need be and try and make the cases to why this language is important and that we need to have binding and enforceable commitments in our trade agreements to ensure that digital trade continues to flourish. And I would also note that as important as Trade Promotion Authority is, this is really just the beginning of what Senator Wyden and Senator Thune are really trying to do. Our goal is to be able to have a coalition of senators who believe in these issues, who understand these issues, and are going to want to push for strong language and final trade agreements and be able to make sure that our trading partners are living up to the commitments that they make. In addition, we'll be looking to other types of internet policy agreements that I mentioned previously, because fundamentally this is an issue of internet policy. It of course is a trade policy as well, but their multi-stakeholder fora that the United States government is sometimes standing alone or standing among a few participants and we believe that Congress should try and support the administration where it is standing for the correct things when it comes to a hands-off approach to internet policy. I think I'll leave my comments there and I'm happy to take any questions. That was really great. I think what I'll do is sort of describe how we got here and perhaps where we're going. I guess it sort of starts with Al Gore, maybe he created the internet, but the fact of the matter is the internet, it'd be an understatement to say the internet is reshaping commerce and society. It is having a profound effect on all of our lives and it is due in part because of good policy choices we made here in the U.S. It's no coincidence that the biggest internet companies originate and are based in the United States and it's because Congress said a couple of things. First, we're going to protect intermediaries from liability. Section 230 of the Communications Decency Act was really important. It ensured that companies like Twitter and Facebook are not responsible for the content that you and I post online. It ensures that ISPs are not liable for what you and I say online. We also made sure that the internet was not going to get taxed and in a bipartisan way we renewed the Internet Tax Freedom Act several times and it's up for expiration this year. As the internet is reshaping our domestic economy, a lot of these internet companies are growing and looking to do business overseas and they are continuing to come, continually coming to us saying, hey, we got some things right in the U.S., but we're having lots of problems overseas. How do we fix this? A few years ago in the finance committee we started holding hearings. Our first hearing was three years ago and we heard basically two messages. First, we don't know how big this economy is. We don't know quite how to measure it. The second thing we heard is, by the way, countries like China are blocking Google and Facebook while Chinese companies like Baidu and Renren are coming to the New York Stock Exchange raising money and doing well at that. What we did from that hearing is really work with Chairman Bacchus and convinced him to request what's called a 332 report by the ITC. The first 332 report is the one that Meredith described and the second one is coming out next year. That's the first step to trying to figure out first how big this economy is and what the barriers are. The first report is good. It's kind of an overview of literature that's out there and we're really looking forward to the second report which will kind of do a deeper dive and get some broader industry perspective. From there and the first hearings and the understanding that we needed to understand this economy better, the USTR did a really good job of socializing this issue first in the APEC discussions of 2011 and then ultimately in terms of tabling text within TPP on cross-border data flows and forced localization of things like server infrastructure and data. Then from that, Senator Wyden and Senator Thune recognized that there was going to be a discussion on trade promotion authority and have worked to really influence the discussion around what the negotiating objectives ought to be for TPA and broader issues. Here we are today, one day before a hearing on trade promotion authority in the finance committee. I think it's not only has the internet kind of transformed the economy but we're really rethinking our trade policy. It's remarkable to me that three years ago nobody was talking about digital trade in a meaningful way and here we are today. Chairman Bacchus, Raking Member Hatch, have components of digital trade in their TPA bill and the administration is really leaning in on these issues and it's going to be an interesting discussion and negotiation at TPP in the weeks ahead and certainly for TTIP. So it's exciting times and it's just critically important to the trade agenda to make sure that we're focusing on this segment of the economy because it's important to job creation and innovation but it's also a really good news story as you saw by the chart that Meredith put up. We're winning right now and we're going to win more in the future. We've got a trade surplus year over year and it's broadening and we've got to keep the momentum up so I'll stop there. Great, thank you. Let me start with the first question which is that when you look at the politics of the internet there's a whole set of pressures that come from companies who want to reshape things and maybe erode some of the American advantage and if you look particularly at some European countries, Brazil, perhaps China, there's a sense that the U.S. share is larger and needs to be brought down in some way. So you can hear this directly from at least the governments when you talk to them. So what do you think the right response and let me ask all three panelists, what's the right response here? We are the winners in the internet game and part because we were the first movers. One of the things I do when I talk to some officials is they'll complain about competitiveness, anti-competitiveness and I'll ask them to name the national competitor in their country. That usually stops the conversation. But I think the politics of the internet now are there'll be an effort to push back on what you see as the U.S. lead to change the rules in ways that will favor foreign competition. What do you think the right response is? That was a long question, sorry, but I suppose my first response would be that the things that Jamie cited as far as the popularity of U.S. internet sites, this is something that's consumer driven. These are not national champions of ours. This is not an industrial policy that has led to this. So my reaction would be that if the desire is for there to be better Chinese, better European, better Brazilian internet companies, then as a consumer I would support the companies trying to get their start there and try to offer something better to me as a consumer. But trying to tilt the field by balkanizing the internet in some ways and trying to change the structure of the internet is 100% the wrong approach. I would just say that I think in large part the reason these companies are doing so well is because we have an open internet that is not regulated and it's given an opportunity to upstarts and insurgents to compete with industry incumbents. We can all cite lots of internet companies that fail as many that succeed and it's because it really is a platform for competition and innovation and it's in part because of the laws that we have here and it's why I think if we can export some of these disciplines foreign countries will do much better than they are now. It's not a matter of the U.S. trying to stay ahead of everybody else by pushing people down. We want to see, and I think the administration wants to see this too, is how can we help countries grow economically by pursuing internet policies that contribute towards innovation, competition, and growth? I have loads of questions. Well I would just comment that both Jeffrey and Jamie's remarks, it strikes me that the cusp of this issue is there's a collision between this bottom up open source industry that developed and developed frankly faster than any industry in history to my knowledge. I mean if you look at the course of innovation in human history, look at the automobile, look at civil aviation, even electrification. Big game changing industries, none of them had the rate of consumer adoption of internet based commerce. It's really astonishing how fast it's come and my sense is that because it happened so fast and generated so many benefits for so many people, the industry got lucky. They got lucky with light regulation and that sort of a soft touch hands-off approach as Jeffrey described. That is unlikely to continue and in fact if you look at the early days this was all really easy. ITA in 1997 was really easy because nobody had a big business. No country was generating a lot of tariffs from electronics production. So going to zero tariffs on information technology equipment was no big deal. Same with the moratorium on taxation of the internet. It wasn't a revenue source in the first place. So it was easy to say yes. I think we particularly got lucky with fair use and the Digital Millennium Copyright Act. There were some provisions there that are astonishingly beneficial like internet service provider liability protection that nobody knew were that beneficial at the time. Fair use of course goes back to English common law. We just got lucky. So I think that luck has run out and you can see that in the sort of top-down approach and in many economies not just I think Jim's concern is right about national champions and disappointment about American market share in foreign economies but there's an instinct for top-down regulation to treat this as a strategic industry and to take the commanding heights. This has happened before. Energy production, oil and gas production, hydrocarbon production was at one time a bottom-up open-source deal. 1890 Standard Oil had 80% of the share of oil production and distribution in the world. And now ExxonMobil, the successor company, has 2%. And 90% of the shares with government entities. So this can happen. And my senses were on the cusp of something. And my question to the panelists, particularly Jeffrey and Jamie, because Congress needs to account for the fact that speed kills in this one and there's a likelihood of a lot of really bad regulation happening in foreign economies that will be very difficult for us to defend against without a more strategic look. So I just seek a reaction to that. I would just say I totally agree, which is why it is really important that we get TPP right first because that, as you can see from the chart, we've got a lot of trade in Asia, but it will set a template and a benchmark for how we do TTIP and every other trade agreement that follows. So getting this right in TPP is going to be incredibly important. And I credit the administration for taking on this issue early. They have good provisions that they put forward. I think that Jeffrey and I both agree that they can be doing some more, especially on liability issues. But that just, I think your remarks just speak to the importance of getting this right in TPP, TTIP, and TPA. Well, thank you so much. I mean, I wonder why would a director of a Europe program be sitting here at a digital trade discussion? And I was thinking, I think, because Jamie was talking, you know, as I look at the TTIP, the Transatlantic Trade Investment Program, in some partnership, in some ways there's two revolutions that this trade agreement is addressing. One is the unconventional oil and gas revolution and the competitive advantage that the United States may have in an enormous way for energy. And then I would say it's the online revolution, both from a data protection perspective. But I would also argue it's also trying to open up and expand new markets. And Jeff, I particularly appreciated your focus on the small and medium size, what I even call the micro, the individual who's selling something and wants to expand those markets. It's not even just the data protection issues, safe harbor, and I'll talk about that in a moment, and the difficult politics that are going to come into play on safe harbor because of the Snowden revelations. But we actually have physical barriers that still exist. And I think in some ways the administration is focused on the Trusted Trader Program. How do you allow the smallest exporters to participate in some of these programs? How do you open that up? And then a second thought would be, how do you create an environment? We have a slogan, CSIS adjunct fellow, Katya Salmanin calls it, aid for each trade. How do we help get those numbers, Asia, Latin America, a part of this online revolution? How do we stimulate that? How do we show resilient leaders and others that this revolution can happen, but it has to be transparent, open, free? And how does the United States and Europe potentially open that up? So those are two very important ideas. For TTIP to be successful, and maybe Jamie I'd have a slightly different theme, I think we have to get TTIP really right on this issue because of the figures that Meredith showed up there. There's an enormous amount of trade and the digital services, and I fear politically more barriers are going to be placed in its way of development because of privacy data protection concerns. We've always had them, but we found a way to bridge them. Now the politics may not be there to bridge them anymore. And how are we going to address that? But TTIP and TTIP, but TTIP particularly, this is about getting ahead in the future. This is not about dealing with the GMOs and the agriculture, the fights we've had for 15 years. It's about leapfrogging and getting, you know, focusing on the future of international trade. If we get that right, we've already set the standard. So high bar, huge issues, but the potential here is transformative, I think, for the transatlantic economy and setting the tone and tenor for the international economy. So extremely exciting. So thank you, Jim, for bringing us all together to talk about this. Thanks, Heather. Let me ask a question that I'm building off Heather's remarks. And then hopefully, we knew we'd have to do a few questions to warm you guys up. And hopefully after I do this, you'll be ready to talk. But I was in China at a big internet conference a couple months ago. It was really interesting because it was an all Chinese conference, right? There were only about 20 Americans there out of the 4,000 people. And you could have dropped the audience into Silicon Valley without they were all in t-shirts and running shoes and blue jeans and they had backpacks. They would have fit right in. And the thing that was interesting to me was that the Chinese internet companies are a sector apart in some ways. They're independent, they're innovative, they're aggressive. I got to talk to a couple CEOs of some of the big companies like Tencent and 360. They want to come into the Western market. Their question was how do I get into the U.S. market? So the question I have for the panelists is we're used to being the most active player in this space. But I think, you know, I wouldn't say this for other industries in China. We're going to see Chinese companies wanting to get into the global market and wanting to play and particularly wanting to play in the American market. How do we make sure that's a level playing field? And just to throw in a word that most of you probably know, will there be CFIAS concerns? I mean, if we could look at them buying a ham company, what will we do when they what will we do when they want to buy an internet company? So we have a powerful companies out there, a group of Chinese internet companies that will be real competitors. What do you think we ought to do about that? I don't have an answer. I think I have a question and maybe Jeffrey might have some ideas. But I think you're right. You know, when you have a business model, you have a business model in the internet economy that's about getting people's personal information, there has clearly been some level of comfort with that here domestically. And maybe it's because people are younger and they're used to it. I don't know fully. But what are people going to do when the data is being captured by Chinese companies or Brazilian companies or companies we may be less familiar with or less trustworthy of? And will that drive the US to look at data policies and privacy policies and ways as before? I don't have the answer. It's kind of a commerce committee thing. But I think that it's a question we have to start grappling with. I would say fundamentally, we shouldn't shy away from the competition. That would be the starting point for everything. But in terms of dealing with countries that have different political values than us, the Chinese people will have to be creative in thinking about how we address some of those concerns. But I think that going to what Jamie said, the reason it's so critical to get a lot of this right now is because we're all talking about companies moving things on eBay or a health company trying to move personal records across borders. But things are about to get a lot more complicated really, really fast. And I would say two things in particular are going to make this an even more complicated situation, which is why we need to make sure we have robust and forcible binding rules now. The first thing would be the internet of things. And this is something that was talked a lot about at the Consumer Electronics Show a couple of weeks ago. And this is sort of the idea that we're going to have sensors attached to myriad of devices that are going to be monitoring and informing behavior. And the second thing is big data. And so these two events are going to really change in a lot of ways how businesses make decisions, how consumers make decisions. And they're going to be quite complicated from a policy perspective in terms of how that data is treated, how that data is able to go across servers and whatnot. And but I think that really it makes sense to try and get this right now, because once those things come online fully, it's going to be a lot more of a political mess to really deal with. I would say I'm really I'm always optimistic, but I'm optimistic that we're going to get this right, continue to get this right at home, and get this right in trade agreements for two reasons. I think somebody mentioned politics. There were two events over the last couple of years that lead me to be optimistic. One is the PipaSopa experience. This is the internet censorship bill that it was an IP bill that reached too far. And you had the Chamber of Commerce and Organized Labor for it, you'd think that Congress would be for it. And 8 million Americans spoke up on one day and Congress changed its mind. So there's that there is the politics on internet freedom on the side of internet freedom. The second thing that happened, it was less reported on in the US anyway, is the US had led negotiations on the anti-counterfeit trade agreement. And Europe was about to consider it. And it seemed like it was a slam dunk. And kind of the same thing happened in Europe as to what happened on PipaSopa. There was public backlash, especially by young people. And the Europeans just flatly rejected it after a groundswell of opposition. I had European members of parliament in saying, my kids are going nuts about this active thing. What is it? We've never read it. This is a problem. And an active was dead, basically defeated by the Europeans. So I think the politics both at home and I suspect over in Europe are on the side of internet freedom. We're waiting for you to think of a question. I will tell you one story, which is I meet with the Chinese government every once in a while. And they said, why are you always complaining? We all use American credit cards. And so all of our personal data is stored in the US. And I said, oh, we don't store it in the US. We store it in India. And they went, so one of the issues that I think is just going to be really hard to wrestle with is this is trans. It's not a bilateral issue. It's a trans border issue. And you have data stored everywhere in the world. And there's real efficiencies from that. But it raises concerns some legitimate like privacy and some perhaps not so legitimate anti competitive that are going to make people push back. So go ahead. Yes, it's time for you. We're just screening along until somebody. Well, I figured I'd be the first. Thank you, Jim. I'm Jake Colvin from the National Foreign Trade Council. I want to first of all, I thank all of you for your leadership on digital trade issues. Meredith, you mentioned the number of questionnaires that you sent out for the study. And I don't think it's well understood how wide a net that the ITC cast on this.  But I think it's important what you're doing to make sure that you're emphasizing that there's a whole broad universe of companies out there. And so thank you. And thank you both, Jeff and Jamie, for your leadership on the Digital Trade Act. And my question is for you. I was wondering if you've had a chance to assess how the TPA draft compares to the provisions that you've had that you put forward in the Digital Trade Act. We've noticed that under the IP chapter, the provisions are largely similar to what they were the last time the TPA bill came out and it was passed. And you can correct me if I'm wrong, but I didn't see anything specifically in there on intermediate liability or the balance of rights limitations and exceptions for copyright. And so I was wondering if you could give sort of a brief initial assessment of how TPA sits with respect to the universe of digital trade issues and if there's anything that you envision doing to maybe change what's in there. Thank you to Jake. Jake has been somebody who's doing a lot of thinking on digital trade for quite a bit of time and certainly has been a resource to both of our offices, I think. I would start by just repeating what I said in the beginning, which is that we really appreciate the fact that there is digital trade language that's in the TPA bill. And certainly a lot of it is consistent or very similar to what's in our Digital Trade Act. And we appreciated the chairman and ranking member hearing our concerns in terms of what the differences are and what our posture is going to be going forward. I think it's pretty early days in terms of how things will proceed. I think the hearing tomorrow will be interesting in terms of what the member's reaction is. As far as what's in the IP chapter, what you said is my understanding as well. And again, in terms of what that means for how the bill might change going forward, I couldn't really comment right now. I would just kind of in the same position. I would say we're very pleased that they put some provisions in there and there's a real focus on it. I think the key question is, is what do their words mean or what does USTR think their words mean? Jeff and I have some experience trying to figure out what words mean and how to negotiate them. And we have views about them, but what ultimately we need to understand is what does USTR think they mean? And my sense is the words can be clear on liability and issues like fair use, but I think getting some feedback from the USTR is going to be the key. Because even the current language on IP, the USTR is doing some good things in terms of limitations and exceptions. Does the current language push them in that direction or solidify those points of view? We don't know. Hi, I'm Katherine Hauser. Meredith, congratulations on the report. I was very pleased to participate in one of the rounds of hearings that you had leading up to this first edition. I agree with Scott's view that there could be a collision between the top down and bottom up. But I do think there's another threat that I wonder if could be reflected in the second version. It's really nice to get lulled by the strength that the US has in this area. But just look at the consumer backlash now to the cyber threat of people's credit card information being swiped by Target and a whole bunch of other retailers the size of which has not yet been determined. The implications are huge. When you look at your chart showing the financial services industries interest in using the internet and IT to become more efficient and so forth, the implications of this cyber threat on the payment system is something I think we really need to think about. Not just catching the guys who stole the information, but what ripple effects are there going to be in the retail and commercial banking or in the broader financial services industry? And I just have a gut feeling that while it's easy to say young people are used to the internet and they're happy to give away their privacy on Facebook, when it comes to cyber theft, getting to the heart of people's pocketbooks, I think there can be a real backlash here. And I think we're making a mistake to go into TPA negotiating language thinking that this issue isn't going to come into the broader issue. And it kind of is a way to sideline into the Europeans view that see you Americans have never protected privacy enough. But privacy and cyber security have never really been talked about jointly. In my view they've been different silos. And now we have a huge, huge issue in the U.S. with this Target and all these other retailers who can't tell how 70 million files were stolen. I mean the numbers are staggering. But we don't really know that that's the end of the issue. So it seems to me we've got to find a way to talk about this issue, maybe not as a negotiating objective. But the issue is bigger than just the, I hate to sound pejority, but the happy talk about the U.S. dominates in this industry and how are we going to keep our competitive position. It is such a transnational activity with the payment system that I think it's a real threat to what we're trying to preserve here. So my two cents. I mean just as a reaction to that, and I'm speaking on my own opinion, of course we have six commissioners and I'm just one, but in my experience trade negotiators don't do well if you don't have a domestic consensus on something. And a trade agreement is not the best place to work out a domestic consensus. And I think when you look at kind of the success of our legal regime and how it has supported a very successful economy, the kind of innovation without permission I think is what the Internet Association talks about. Where we have a constitution, we have the Digital Millennium Copyright Act, we have other sorts of legislation in the Commerce Committee's jurisdiction that have protected intellectual property but balanced it with all the different concerns. We have a good regime here, but it's a domestic regime that is suddenly under threat from changes in the technology and the fast moving nature of the economy. And so I think it's incumbent on us to work on the domestic consensus just as soon as we can or we're going to miss the international opportunities that successful trade agreements give us. And I remember doing negotiating objectives in trade promotion authority in 2002 and I can tell you we took the Digital Millennium Copyright Language and put it into the TPA and it was easy because it was done and the people that knew about it figured it out and we had a bill that had passed and once you get a consensus in Congress it's a very powerful thing in an area like that but there's a question whether our trade policy mechanisms can keep up with the speed of what's going on in the economy and in the threats to these generally agreed policies. Just to follow up, I mean I think on cyber there isn't a domestic consensus, right? There was a house bill that got through and the Senate did not because of disagreements. But on the issue of Target and I think it was Neiman Marcus and others, it seems to me there's also an awfully large market incentive for these guys to do a better job of securing data. I don't think they need the government to tell them do a better job. I think their sales figures probably suggest that they're going to be very inclined to figure out what went wrong and ensure that it doesn't happen again. Probably some legal reasons too. The risk in this is international trade. I think you're right about the market incentives but the risk is most problems of the internet have a solution that reads something like forced localization. Okay that's what I worry about becoming the default solution and keep in mind we had a banking crisis in 2008 and the default solution was forced localization. The one agreement that G20 has ever reached is everybody fix their own banks. Okay and there's going to be a tendency when these kind of problems arise the default whatever the problem is the solution will be let's localize it. That's going to screw this industry up pretty badly and we probably should think about what what the real options are instead of the default. It's interesting though because the data doesn't yet show that people are reducing their use of the internet for commercial purposes in response to these activities and we at CSS have been tracking this for a few years it looks like it's about at most this is a rough estimate a third of a percent of global GDP for the total cost of cyber crime and that doesn't seem to have affected behavior right and even when you look now at increased use of mobile devices particularly in developing countries lots of economic opportunity a growth area for crime it doesn't seem to knock people off it may distort how they use these things but so far we haven't seen that effect I know that European Union did a survey the ITU did a survey and what it found is you know people said yeah I'm concerned but I'm still going to be using it so one thing to watch is to see if that ever changes but right now you know we looked for you have a big disaster like one of these retailers people it takes about three months for people to go back to what they were doing so far that hasn't changed so it's one of the things to watch. Interesting. Hi Scott Thompson from Samsung both Jamie and Jim mentioned we're winning in terms of the debate over internet trade internationally I'm wondering if your definition of we meaning the United States includes foreign based companies who do a large chunk of their manufacturing here in the US as well as their R&D or are foreign based companies somehow inherently different whether they're based in South Korea or China or anywhere else and related to that Commissioner Broadman when you put up statistics on international trade investment one you didn't put up was about foreign based firms doing FDI here in the United States in R&D manufacturing etc is that outside the scope of what the ITC is going to look at in the study or is that something that you would include as the study goes forward thanks. When I say we and what I was referring to there is American exports of digital goods and services whether they be by Samsung or Google or anybody else I'm trying to figure out is whether so you know this is like rumored but there's a Chinese company that offers a social network service that American college kids seem to prefer right so that's kind of different and if they're if they're a leading edge indicator that might mean that we will see foreign firms moving into this market and I think this is just the start we don't know if that will happen I know a few Chinese internet companies measure their customers in the single digit millions in the United States whether that will change as they offer different products or services and bearing in mind this is where you do see some effect people do have concerns about Chinese companies related to politics and privacy they probably have those same concerns about US companies but that's the place to watch is will foreign companies begin to get a bigger market share not in the production where they have a robust representation in the services where so far they they largely don't. Steve Mitchell Entertainment Software Association question for Jamie and Jeff premised on Jamie's observations that it's really important to get this right digital trade provisions right in TPP from a personal perspective I couldn't agree more because of the fact that the language will be out there as a potential template for the t-tip perhaps even for TESA and I'm wondering if the objective to get it right at some point creates a rub with the administration's efforts to achieve quick closure of the TPP particularly given some of the pushback that we're seeing from some countries to introduce their own unique flavors of internet policy into into the equation including for example Australia. Yeah it's a good question and it's kind of a Congress is in an awkward position in the administration is in an awkward position where they are trying to conclude negotiations well at the same time they are asking the Congress for what the negotiating objectives are so so then what happens if there's a TPA bill that's passed it's different than what they're seeking in TPP and that's the question I don't have clear I don't have an answer I think the the administration is thinking about that in concern but also having discussions with us it's also unclear as to you know it's great that the that the administration's put forward some important provisions how important are they to the administration there's a lot of pressures in these in these negotiations from lots of different economic sectors and you know our hope is that by demonstrating the important you know having the ITC demonstrating how important this is to the US economy that there will be a corresponding priority in what what they're willing to accept and when they're willing to close the negotiations. Yeah I also think it's an interesting point I don't really have a strong sense of to what degree a lot of these issues will will slow things down I mean I I'm not trying to be partisan but from Senator Thune's perspective you know he would have preferred the administration would have requested TPA a long time ago maybe that would have helped solve some of these issues I think the interesting thing to note is that perhaps the administration is learning a lot what what I learned during the process of the digital trade act which is that this isn't an issue that that is just something for technology and internet companies that it does affect many many industries and so perhaps as USTR has learned these same lessons it's it's you know elevated these issues somewhat in in terms of the things that they're negotiating on and that that may well have the result of slowing things down. I have a measurement question so this will be mainly aimed at Meredith but one of the things that's come up in the last couple years is the the difficulty of one measuring services and two measuring what you could call the global supply chain component of these things so that the some arguments you've heard in the WT and other places is that the the old notion we have of sort of national based metrics doesn't adequately capture what's going on and so do you think we have the right metrics how would you change them where do you want to go what do you think the future will be for that yeah I mean I think that the global supply chain concept is out there and we you know we work with it as other organizations do and I'm not sure that it's it's more our job to kind of understand it not that I completely do because it's not my area specialty but more to more understand it and present it in an objective analytical analytical way to Congress and they can use it or not use it and as they choose their priorities but I think understanding you know the value of you know developing countries in particular being able to to get into a niche market of some sort of brake component of an automobile you know look at Thailand or something what they're what they're able to do and the key contribution it makes to economic development and the developing world and kind of cooperation and partnerships throughout a number of countries as these products go back and forth across borders many many times so I think you'll see us doing a little more on the supply chain issue but we you know don't have anything to announce yet and we'll be sort of consulting with the our committees of jurisdiction to see if they want us to do more more in that area. Yesterday obviously the court decision came out and it was quite quite eventful and certainly you know interesting from our perspective I think maybe I don't know if Senator Wyden made comments on it or not but perhaps Senator Wyden and Senator Thune would have different perspective on on how different elements of the case turned out Senator Thune has commented that they were both good and bad parts of the court decision I think there's some elements we preferred the dissenting view I think that's fair and so whether or not that affects digital trade policy I haven't thought that through exactly I think that you know this is where Jamie and I made diverge a little bit you know from our perspective prior to the open internet rules we had a thriving internet in which a lot of these companies that were all clamoring to say good things about we're thriving beforehand and I think that that says to a large degree why the open internet rules the FCC put forward weren't weren't necessary in the first place. We have a different view on net neutrality but I will say that if foreign countries are carving up the internet into fast lanes and slow lanes in very obvious ways the U.S. will want to take that on and what kind of position are we in if we don't have rules to prevent that might on this might be politically incorrect what happens if we don't get TPA that might be for Scott and Heather more than anyone else but well practically it makes it astonishingly difficult to close and implement trade agreements I mean we've only ever closed one free trade agreement without trade promotion authority in hand it was the U.S. Jordan free trade agreement in 2000 okay and it it was closed by the Clinton administration in the in the after after the the 90s grant of trade promotion authority it lapsed and before the 2001 authority was implemented and that bill was a dead letter until the terrorist events of September 11 2001 literally it was submitted to the Senate to the Senate and House for implementation at that time Senator Phil Graham of Texas took umbrage with a couple of provisions in the bill and put a hold on it and that's the last anybody would ever have heard of the U.S. Jordan free trade agreement so that's our one it's a one data point okay look trade promotion authority has existed for a long time my friend at Gresser says that there was actually a provision in the 1934 reciprocal trade agreements act the Franklin Roosevelt signed into law the 34 act had a had a provision for expressive implementation by Congress and so ever since then but certainly since the 74 trade act the way we've done trade has has said Congress will partner in a specific way will set objectives will agree to a set of consultation procedures and then if the if the agreement meets the the objectives it qualifies for expatriate expatriate treatment particularly no amendments in when when the implementing bill is is is sent to the Congress so that's how that's what we've done since 74 that's really been a foundation of trade policy i can't imagine treating treating treating a negotiation as complicated as a 12-party talks like tpp without that sort of protection it's just i don't know how in the world you get it done i probably just retire but so it's now it's difficult to speculate so all along my my personal point of view is the the administration have three negotiations they have tpp they have ttip and they have tba that's negotiation with the congress it's probably the one that takes priority and the one if if i were in the administration i'd be putting a great deal of attention to right now but so it's it's but it's hard to speculate beyond that i i don't see practically how you close a trade agreement without authority from congress given the way our system works so i will just say two things um there's tremendous value in tpa not just for the expedited procedures and congress which i think that value is overblown it's overblown because if you just look at the columbia experience where it was protected by fast track and the house just by a majority vote changed their rule to say we're not ready for this yet so congress will always do what it needs to do when it doesn't want to consider agreement and do what it needs to do to consider an agreement um but the the value of tpa in my view is that you know congress is clear about what it what it wants to obtain from a trade agreement and congress makes it clear what the framework for consultations with congress are um you know i think with respect to the the the necessity of tpa um you know it's been around since 74 and we had lots of gat round gat round rounds of gat that were concluded and passed by the congress so i think the record is not as as clear as as you suggested that's a fair point and importantly very controversial issues like uh china pntr uh where the senate took up and passed the house bill without amendment without any protection so it certainly can be done and we closed a uh a volley round recently too which was complicated yeah not the biggest of deals important but right complicated but i think we can safely say that ttip will not be done on one tank of gas if tpa um is not sort of provided as a those clarity from congress because what i what i'm concerned about in the european uh perspective is that ttip really is the agenda item for us eu relations and the message rightly or wrongly that if tpa doesn't come out that the political message it sends to all the european parliamentarian members who are running for the e p elections at the end of may for all the french leaders that don't like this to start with they they aren't going to go down a very difficult political road and tackle some of the most difficult trade issues because they don't see the domestic clarity from us so i think it also it just sends a message to our partners that okay we're going to take a step back too so why am i putting my neck out to tackle gmo's to tackle geographic and you know whatever the tough stuff is because clearly the political message from here maybe we're not ready to tackle some of those tough issues so it's sort of that the reality versus the perception and i fear the political perception for our european partners if tpa gets clogged up and then that sort of pushes back tpp potentially and then certainly way pushes back ttip now it's the political message that you have to worry about i hope i'm wrong but i i feel you're right i mean when congress and the administration do this wonderful dance where congress goes in and asks for a lot's or you know does a lot of saber rattling and i think that the tpa can it can be very valuable and sending the political message that us tr is negotiating what us tr is asking for has broad political support in in the country i just wanted to i mean i think heather raises an interesting point as relates to the european parliament which is that things have changed in the e u in terms of the parliament now has a lot more say in how a lot of this goes down and i think that jamie had mentioned earlier about acta that was kind of you know round one in seeing how this goes and it went as it went and now this is round two at least from from our perspective and so i i hadn't thought about this until heather made the comment but but it will be an interesting indicator too i think a lot of those those eps i was just going to add a comment that you know this really isn't your father's tpa i mean just look at the increase of trade in its importance in our economy since the 86 act or the 74 act the issues we're talking about even in this agenda today on digital trade is much more pervasive in our economy which leads me to the conclusion having been a us tr negotiator and having worked on the senate finance committee we need much broader and deeper consultation with more members of congress than we used to just consult with finance and ways and means it was a pretty much a slam dunk can't do that anymore it has to be much broader and deeper and take much more time and so it i think we are we have to be careful that we don't make such a rush to get tpa that it comes back to bite us if we don't have the broad consensus among members of congress that we need could i just make one quick comment about that it's just that it would be if we were not going to get tpa it would be an unfortunate outcome if for no other reason than a lot of the criticism of tpa right now has been the lack of congressional consultation and then by not having tpa you're losing your ability to consult so it it's sort of a chicken egg thing but it's an awkward outcome it would be an unfortunate outcome katharine um thank you for all of y'all's comments have been really enlightening to me um and i wanted to follow on the conversation on tpa um and i think your last comment was was a very interesting possible hook um to help make the argument for a bipartisan bicameral approval of tpa um my comment is that this is the most toxic period um certainly since 1974 maybe maybe since 1934 when it comes to um the the congress and its relationship with the white house um scott and i were just at a i think a very interesting discussion by uh norm ornstein which of course goes into the tribalism and toxicity which is permeating everything and one of the main takeaways was how little is getting done in congress and is scheduled to get done um by the leadership uh in this congress tpa and every trade agreement that has been hard lifting has it seems to me i don't know if it's a hundred percent of the time it's been done in the lame duck sessions um it's always been the hardest thing to get um from a to get a buy-in on a trade agreement and it ultimately many of the times it had that that there has been agreement on a trade agreement we've had to resort to national security arguments um i'm thinking about uh the senior president bush and textile agreements um we had to make a national security argument to get that done so given the toxicity i i i guess my comment is it's highly ironic to be thinking um that we can get tpa uh this year and uh maybe the argument is well the president won't consult anymore unless we get we have this consultative process i think that's a very interesting argument that i hadn't heard before no the only brief the only brief comment i would make is that while things are toxic on a lot of places i you know our working relationship with senator widens office from senator thune's perspective has been remarkable there's a whole whole host of other things in addition to the digital trade act that our two offices have worked on and so you know i think it it may not say much but it says something about the degree to which members of the senate can can get together at least on on discrete topics and and try and forge ahead and chairman camp and chairman camp and chairman balkas introduced the same bill so there's bicameral what about that's right it's it's just ironic i would just say that the challenges that you have described are there um but there is bipartisan interest in doing something i think the the question is how much and what the timing is it is complicated by tpp because of the politics people are gonna conflate the vote on tpa with the vote on tpp that's the concern that i hear about and and it's what i'm hearing from a lot of staff is that it's hard to distinguish the two votes especially if there isn't a tpp agreement to describe that's the challenge that i hear about uh steve mitchell again another question for jamie and jeff and sorry to be piling on i'm wondering if you see a congressional role for helping to face down the threatened server location mandates that are starting to take shape in brazil and indonesia and other countries i mean i think it starts with the trade agenda and we're not negotiating with brazil and other countries but if you know i think if we can get a good tpp agreement that addresses that issue and we're getting consensus from our trading partners on that issue that gives ourselves and our trading partners some leverage in geneva ultimately i think i had mentioned at the outset that while while our legislation while we're trying to influence pieces of legislation a lot of it also is about creating a coalition of of members who are interested in these subjects and to be able to have a group of senators who can weigh in as events unfold and so i prior to introducing the digital trade act our bosses wrote a joint op-ed in the wall street journal on the subject that was our that was our first piece of work between our two offices and we did make mention of specific instances where localization requirements were were problematic and certainly i think that that got the attention of of some countries and we're looking to try and do what we can to to influence those events as well you know i think in the particular example of of brazil as jamie mentioned we're not negotiating with them but the threat of contagion you know in south america or as other countries do it in their regions that's something that really i think concerns concerns our office because there's definitely a me too attitude when when a country the size of brazil takes certain measures it really only increases the incentives for other countries in the area to do the same brazilians of course have a meeting coming up in april with a group of countries on internet governance where i think localization will come up where they've been going around seeking support from other south american countries from other leading g 77 or nam countries like indonesia so this topic will come up the part that i think is the ray of sunshine here and it may not be enough of a ray is that the the economics of localization don't make any sense and certainly the bigger companies and even in countries like brazil realize that they will be hurt by this and the growth will be hurt um whether that's enough to deter uh this i don't know but at least it gives you an option what i've been doing is emailing people to post out an article on petro bros last week and i've been emailing them that and saying is this the model you want for the internet oddly enough no one has said yes but um you know there is a real push here but i think it's political and you've you've seen some pushback from the companies in in countries that have companies that are looking at a global stage or looking at a global market so we'll see how that plays out but it will be hard um oh go ahead you kind of addressed my the question carolina lessa with reed el severe but i was picking back um on on the question on brazil because it's very hard to discuss forced localization with a country like brazil which believes that local content requirements is a way of encouraging and incentivizing the the industry the local industry so what are the right talking points like how can we address and how can we talk about these negative um consequences of forced localization in a way that countries like brazil would understand i understand that it's politically um driven the debate obviously president ruseff is expecting an apology from obama on the whole privacy but how can the private sector engage even more actively with with countries like brazil and indonesia and others that might come so but you kind of addressed it but if anyone has any additional comments that would be great my only comment would be that that from industry that is is in brazil to the degree to which you can point out that these requirements may degrade the level of service that the average brazilian receives to me that's the the way that you speak most clearly on this topic i mean the average internet user is not particularly interested in in you know which servers you're using or whether or not it adds to your marginal cost or whatnot but when you start talking to them about whether or not their personal internet experience is going to change or whether or not their personal experience using a different product that is somehow or another using the internet i think that's where you you may actually uh get some traction and in the internet economy knowledge is dispersed it's very widely dispersed and it's one of the the powerful elements and the reason for the pace of innovation what you're what you're doing by employing sort of infant industry arguments which is how local local content and local uh forced localization get justified based on the infant industry arguments that have been made for hundreds of years that somehow we're going to build up our own industry it ignores the benefits that accrue from this wide dispersal of knowledge and what brazil is really doing is cutting itself off from that i would note that it was chinese scientists who saved google in china was chinese chinese scientists who went to the government and said we're going to get cut off from our colleagues in the world if google doesn't operate here and it made a major political difference so uh in terms of mobilizing resources i would i would look to the centers of knowledge in brazil which there are some there's r&d done there and things like that and the degree to which it is it is not contained in brazil it is there may be people in brazil but they are corresponding with and connecting with and building knowledge with uh with people outside the way i saw it and that's where i'd look just went i i liked your question on advocacy because it's important but i think you know we all need to realize that a lot of these problems aren't going to be solved in a really fundamental way unless we have an ongoing trade agenda i mean if we're negotiating with other countries that will put pressure on brazil there's a lot of things that the brazilians need in this market and we're going to have to figure out you know we just gave them some ethanol tariffs recently and we got no no additional access because no one asked for it so there's a little bit of coordination has to go on here we all have market objectives in each of our markets and the process of kind of building a unified set of negotiating objectives that are generally agreed between republicans democrats and the president uh it makes the us very very powerful but you know that's sort of job one i think at this point just a last point i think as as uh internet companies grow in places like brazil and as these countries kind of catch up to the us and the e you our interests kind of naturally align right so part of this is we're out ahead and trying to to create some standards and some disciplines and we're getting pushback but ultimately i'm confident that they'll kind of get to where we are because their companies are going to grow and thrive too hi lori dando us state department just in response to that um i i guess the pushback we're getting from countries who are trying to uh address that localization barriers which is at the top of your list is that because the us is so far ahead they need to get somehow a leg up on us by by uh preferential market access or these localization how do you respond to that agreement i mean yes their their interests would align with us when they get to where we are but they're not there yet and they one of the arguments we're getting is that they they need these additional restrictions barriers in order to get where we are i think that in the united states we have creative destruction we have companies that have come and gone and we have new companies that are that are emerging out of the internet ecosystem every day and these companies didn't come to be they didn't become gigantic companies because they were given some type of leg up by by the u.s. government they use the existing internet ecosystem they use open source materials they hired engineers from other companies they started with ideas in a lab or in a dorm room and then grew into huge enterprises and so they exist today because of an open internet not in spite of it and i think that's the point that i would make to our trading partners which is that we we haven't tried to give a leg up to to any company as far as as i'm concerned and that's not a model we should try and encourage in other countries you know the data would support that i mean it just shows that i'm of meredith one's dad you know in india is a good example brazil's petroleum industry is a good example go ahead close yourself off and see how soon it will take you to make a competitive product and the answer is stand by and that lasts for about 10 15 years maybe longer so i think the argument is this will hurt your own economic growth this is a strategy that has not worked in the past we can give you lots of examples that may be politically desirable there'll be some company countries that will move in this direction because it's it's the reflection of their political attitudes but the general argument would be this is economically harmful it is it is a free trade argument and the the evidence in particular might be that you could align and i think this gets to the point you were making if you can align with the businesses in those countries that will be hurt right they will be the victims as much or more than american companies if you can align with the consumers in those countries who will be hurt as much and definitely probably more than american companies um that's where you can see some pushback that's where these things have not worked in the past the one exception to that rule might be china but the part that gets left out of this is china includes massive subsidies for developing national champions and for developing countries and if brazil or india aren't going to do those massive subsidies we know the answer to that this is a strategy that fails so a little bit of a sermon there but i don't know if marion wants to add anything go ahead well i think i'd like to add on to the advocacy i think because you mentioned earlier the supply chain and the existence of the global supply chain which is critically important to industries not only in the united states but in brazil and the depth of foreign direct investment in brazil is also very much related to the openness and so not only will it you know not only will those types of policies cripple the brazilian infant if you will but it will also um frankly drive away future foreign direct investment and i'm speaking here not just from my kind of policy perspective here in washington at the itc and on the hill but as sitting on corporate boards um i just know how much investment is made in in in it information technology and supply chain and um if a market like brazil decides to cramp that it it can have an amazing cascading effect maybe not immediately um the those individual companies will take a big hit but they'll start to shift in terms of future investment decisions okay i'll pile on here you know brazil did not sign on to the information technology agreement and there's been a lot of research done looking at the productivity gains in the economies of those countries who did sign on to the ita so a point of advocacy that we may not have pressed as much as we might is to talk with the finance ministries in the countries who have not signed on to the ita as a way to demonstrate quantitatively how their economy is less productive compared to those who have eliminated tariffs on the equipment side that supports the whole it revolution it's basically an economics argument or a business argument against a political argument and in in i think in the two countries we've been talking about india and brazil i'd probably vote on the bet on the political one but in the rest of the world uh the economics argument can be compelling and particularly when you look at some of the other people who might be voting on these issues to the you know kenya uh turkey um maybe some others but we're almost at the end is there a final question from anyone this is your last chance no uh go ahead oh i'm not gonna answer that question because it's a more complicated discussion um there is


Hello everyone. It's nice to be here. I don't often get out. I run the rabbit and queue team for Erlang solutions. We're a consultancy that supports mainly products within the Erlang and Elixir community. I'm going to talk about how to grow and maintain open source community and ecosystem for the long term. I have a bit of a confession to make. The chap who was actually going to do this talk, a chap called Francesco Cisarini, has about 30 years of experience of working within the open source community. Unfortunately he couldn't be here today. But he's a real expert. He's written books on the subject. He's got up on stage and he's part of that O'Reilly community. He has a great reputation within that open source community. What's interesting to see is his passion and commitment to the community. That comes through in those projects where you've got a real ambassador for the community. If I'm honest, I feel a little bit of a fraud standing up here because I don't necessarily have that experience. One of the things that I thought I'd bring to this particular talk was how practically working within an open source community really is for a company who's still quite a small company in the size of things and how we work with companies accordingly. There's only two things I've done in the long term. One of those things gave me a bit of hope and optimism and the other was a little bit of fear. One was getting married and the other one was signing the mortgage papers just before the subprime crash, which was an application for 25 years at the time. When we talk about long term, what do we actually mean by that? I think one of those things is about the commitment that you're prepared to make within those communities. The most that you can get from an open source community is showing that element of passion and commitment to try and sustain you through that journey. We use words like community to wrap our heads around these ephemeral groups of people, but they are built on shared experiences and learning solutions. Our involvement with RabbitMQ and this open source community came about in a roundabout way. Relationships evolve. Our association with RabbitMQ was with the very early days of this open source project. We contributed our knowledge and insights from a particular perspective, and that's the use of Erlang within the RabbitMQ project. Prior to the launch of RabbitMQ, we provided some specialist consulting around Erlang, and that was for the company then known as RabbitMQ Technologies. For those of you who don't know anything about Erlang, Erlang is a programming language that was open sourced by Erickson in the 1990s. It solved a particular problem around the reliability of telecom networks at a scalable size. We gained reputation for being experts in this particular area, and this is a very niche area for us. Our first contact really was with doing this consultancy with RabbitMQ Technologies. It was back in 2007. Fast-forward seven years, and we had a brand new opportunity to work with RabbitMQ again, but this time with VMware. At this point, RabbitMQ was a very popular worldwide success as a messaging broker. But VMware needed additional support around that particular open source product, and where we contributed at that particular point in time was the skills around Erlang. This allowed us to build knowledge around RabbitMQ, but only for VMware at that time was to supplement their own contributions to that project, to keep the momentum going in that particular industry. But again, our relationship changed as we became much more involved with RabbitMQ. While this was a sideline project for us, we began to build up a deeper knowledge about RabbitMQ and around the usage of that particular product, and we needed to answer certain questions from the community. This was quite difficult for us to do because we're still a small company, but those questions were still coming around. I think what's important about working with an open source product is you don't really quite know what your relationship with that open source community is going to be like. We didn't necessarily have an agenda when working with RabbitMQ. So when you're working with an open source product, it can be a bit of a winding path. At different times, your contributions to that community are different and evolve around how the community is using that particular product. So that's, I think, a quite important thing for companies to understand when they get involved with an open source product. So commercially, it's been good for us. We provide consultancy. It's both exciting and interesting for the engineers who are invested in RabbitMQ. Less so for the corporate business who are looking to figure out what the business model is about what we're doing. So by that point, we'd been working with RabbitMQ for 15 years over the course of that development and evolution of that particular product. However, we're a small business and what we noticed in the community was there wasn't actually an open source, there wasn't actually a conference around RabbitMQ and there wasn't an opportunity for companies to rally around the use of their own particular usage of RabbitMQ. So we thought, OK, what can we do about that? We can perhaps take what we've learnt within the Erlang community and actually jump-start the community within Rabbit. So about five years ago, we set up the RabbitMQ summit, which was an opportunity for companies and individuals to learn and support and share. And that's really what, when you're working alongside an open source project, creating opportunities for those who want to teach, those who want to learn, those who want to share and those who want to serve. And you get loads of different types of organisations and people's different needs around a particular project. We didn't do this alone. We worked with other companies who use RabbitMQ as part of their technology strategy. It's not an individual project as such. It's a contribution of several different companies who have an interest in RabbitMQ. So in this slide, we want to talk about running with the open source ethos. It's an actual acknowledgement that no single organisation can truly cater for all future needs. So the ability to hand over the baton to other companies to take responsibility for their own contributions to the community is really quite a different mindset. So when we're talking with other companies around the community, our purpose really is to try and engage those companies who are making use of RabbitMQ so that there is a greater base to support from. It's a willingness to share and a willingness to trust. Frankly, it costs a lot of money to run these types of events. You need a marketing team, a conference team, commercial sponsors, and if you're lucky, you might even break even. But a community, if it's to thrive, needs its focal point. Working with those different companies allows us to share that burden as a small company ourselves. Why do we encourage companies to run with open source projects? Many companies are not suited to the open source philosophy because the commercial culture isn't predicated on learning, sharing, and trusting outside of the organisation. Often we work with companies who seek our consultancy but don't necessarily want to share the improvements within the community. Sometimes that's unintentional. We are often in the situation where corporate lawyers have got involved and lack the open source culture themselves and use IP wording to squirrel away code in the hope that they are protecting the jewels of the business. But tools don't make the business. Let me repeat that. The tools of the business don't make the business. If you don't share, you don't trust, there is a fundamental misunderstanding of open source. You are laboring the organisation to maintain that code and that hardly ever happens. Not sharing improvements with the community creates a fork in the community. Effectively, if the organisation isn't sharing those contributions, it's facing against the community. It's important to acknowledge sharing code with the community, getting accepted into the core, catalyzes and preserves the investment for the company but within the community. The network effect of supported code from within the community is an accelerant for the commercial success if they are willing to contribute. Growing and maintaining together is how we realise the benefit of open source. The value of open source is not in the code itself but in the sharing of codified ideas. One of the things that all organisations are facing is volatility. Communities can respond in many ways to a perceived threat. We've seen the effects of a pandemic on whole industries, funding models that collapse and too many copycat entrants within a crowded marketplace. Incremental improvements at a community level have a compound effect. Communities can adapt quicker because the threat are shared threats. Motivations are at a group level and not at an organisational level, commercial level. The diversity of survival compounds the returns back to the community. Individual companies that are facing issues within the software that they need, they will innovate those pieces of software and that goes back to the community. In the case of RabbitMQ, there are three sources of innovation that occur within this particular project. The first is with the project itself and that's largely supported by VMware. The second source is the wider community who extend the functionality of RabbitMQ by developing custom plug-ins. This effectively extends the ecosystem for different companies and you can pick and choose the features that you need from this particular open source project. The third is the technology that RabbitMQ is built on. Earlier on I mentioned that Rabbit is built on Erlang which is another open source project which is largely supported by Ericsson who are very big in the telecommunications sector and their contributions to that particular project meant that RabbitMQ got a 130% performance improvement just last year just by them updating that particular project. It reduces the cost of innovation. When you carefully look at open source projects, those companies that are actually contributing it have a compound effect of innovation. We encourage companies and mainly these are non-software companies that are using RabbitMQ to understand really this is where the commercial benefits of working with open source software are even if you are contributing to that success. It enhances the resilience of a particular project through the contributions of different companies. There is a network effect of the usage that accelerates the refinement in the technologies needed to support it. What I mean by that is companies like Ericsson, like VMware when they collaborate together on separate projects but are combined within products like RabbitMQ there is that compound effect that organisations benefit from. There are companies that understand how that network effect of open source work. We have had the pleasure of working with some of these companies that are using RabbitMQ and they realise culturally at the deepest level why open source matters. I have talked about the community. We are running an open source summit in September for RabbitMQ and it is an opportunity for companies who are using open source products to collaborate, see what other commercial companies are doing with the product and share ideas and work together. It is really through those sorts of opportunities that open source projects survive. Thank you very much. Does anyone have any questions? Interact with the business side to sell them the opportunity to participate in the products. What are the challenges that you have faced? There are companies that are really engaged in contributing to open source projects. That is a given. One of the challenges that we face when we do the implementation on behalf of those companies is not always accepted by the maintainer of the project. However, you can get around this. By choosing the right type of open source project you can contribute not necessarily to the core part of the product but you can contribute to the extended plug-in features of the community. That is how we get around sometimes the difficulties that when companies want to get a core contribution into an open source project, whether that happens or not, you can get around that. The other difficulty I think within open source projects and where we support companies is maintaining that on behalf of those companies. Even if you have a potential fork within the open source community and it is not incorporated within the core, you can still maintain those. We still help companies to maintain those as parallel features along there. It is open source within other companies who choose to want to take that on. That is how we do that. Open source encourages collaboration amongst the group from just the same entity or business or corporation. Can you give me how you guys get plugged in to, let's say, a modern ability found amongst the group or an idea that is practiced within the wide group and then bring it in? How do you get that information? It is usually through inquiries, separate inquiries. Companies who use open source projects probably go through some of the key members of an open source project. Sometimes they are companies and they may not get joy because actually it is not the main strategic focus. We also have issues where companies are using a legacy version of an open source project. It is not there for. They have used a particular product, they have rolled it out to their communities and it is very difficult for their communities to take on those particular upgrades. They are looking for ways in which that can be supported. Open source is not perfect but unless you have companies that are contributing to the whole nature of open source, not one particular vision, it is very difficult for organisations to invest. That is why it is really important when we talk about engaging companies who are not necessarily software companies. They are probably in the non-technical space. Not to squirrel away the code because that is where code goes to die effectively. We give them these examples. We invite them to the community. They speak to other companies who are contributing so that they understand that this is a cultural change that occurs. One of the important things about that cultural change is the sustainability of software. Once you are in a community, that becomes much more sustainable because you have a wider usage of the product going forward. Does it matter? For me it does not matter. The reason why it does not matter is this is just tooling. Real businesses are not really dependent on individual tools themselves. They are innovating at a wider level. Contributing back, even if your business model is to take an open source product and host it, for example, as many cloud companies do, that does not matter because they are only innovating at the lowest commodity level. They are not innovating at the level that some of the bigger corporates are pushing that technology. Within a community you have different players who are pushing the technology at an extreme level that they need those contributions to go into the community. Not all of the community is going to benefit from that because their market share in their particular area of business is not pushing that technology that way. The community benefits through the biggest companies who are pushing that technology. Even the cloud companies come back and say, this open source technology is not scaling to what we need. What can you do to fix that? That is the benefit to the community. When that goes back to the open source community, even if as an individual business you are not pushing that technology to its limits, you have that opportunity to trust that technology when you do get to that level. Sorry, what does it look like? Good looks like the ability to meet new channels of opportunity. Whatever the direction of a particular open source product, whatever the threat that I was talking about is the way that the community adapts accordingly. With Rabi MQ, its benefit is its adaptability and the ability to connect Java clients or PHP clients or Ruby clients or the next flavour of language that becomes the new fashion. That plug-in architecture allows those organisations who have made a significant investment in the technology to adapt accordingly. In that road you evolve and your relationship with the software changes. But it is always in the response to how the market is changing. Ten years ago, cloud technology wasn't such a big thing. Today is a fundamental strategy for many companies. Choosing the plug-ins infrastructure that gives you that adaptability is key. This is something that perhaps with Rabi MQ we explain that more in more depth with companies who are making that particular choice. Contributing now actually sets the direction of where the product is going invariably. Thank you very much.