How the Trans-Pacific Partnership Benefits Digital Advertising

Trade pact under fire from both presidential candidates

If you've been following the presidential race in recent weeks, you have undoubtedly heard the Republican and Democratic nominees express their objections to the Trans-Pacific Partnership, or TPP, an international trade deal among the U.S., Canada, Mexico, Japan and eight other countries in the Pacific Rim.

Republicans have argued that the trade deal was poorly negotiated and fails to prevent countries from manipulating their currencies and harming U.S. exporters. Democrats have argued that the agreement would send U.S. jobs overseas and lacks strong, enforceable international labor and environmental protections.

Dave Grimaldi

While it is naive to think that international trade deals will please everyone, there are indisputable bright spots in the agreement that both political parties should weigh as part of their analysis of TPP. For example, let's look at Chapter 14 of the agreement addressing digital trade and electronic commerce.

For the first time in any international trade agreement, Chapter 14 requires that participating countries "allow the cross‐border transfer of information by electronic means, including personal information, when this activity is for the conduct of the business of a covered person."

Though this sentence might seem cursory at first glance, it has broad implications for the digital advertising industry and the internet broadly. Here is why: Before the first computer message was sent from UCLA to Stanford in 1969, researchers and futurists alike dreamed of a communications network that would enable information sharing around the world, irrespective of national borders. Whether used for research, communication or media consumption, technology pioneers recognized the potential of a common and open computer network to become a major driver of human progress.

Less than 50 years later, the internet has become pervasive in every facet of modern life. Today nearly half of the global population is online, up from just 15 percent 10 years ago. Billions of people are now global citizens with access to international communities and markets. No country has benefited from the rise of the internet more than the U.S. Today, six of the world's 10 largest internet-technology companies are based in the U.S. America leads the world in broadband adoption and speed, and continues to be the model for fostering technology innovation.

The digital advertising industry has been a key contributor to and beneficiary of the explosive growth of the internet. As the economic engine that powers the many online services we love and rely on, digital advertising has enabled publishers to profitably populate the web with a wealth of content that is freely accessible to a global audience. Last year, 40 percent of worldwide online advertising revenue went to U.S.-based publishers, and U.S. online advertising revenues continue to increase at double-digit rates. The growth of online advertising has revolutionized the media and marketing industries by democratizing the dissemination of information.

The success of U.S. companies in commercializing the internet has not gone unnoticed. Countries around the world have sought to replicate this success and encourage development of local markets by constructing hurdles for international businesses. Vietnam, South Korea, Indonesia and others have already passed laws that restrict where citizens' data can be stored and how it can be used. Turkey, France and other nations are following this trend by considering restrictive laws of their own.

Individually, these protectionist policies have a marginal impact on U.S. businesses. But should the U.S. fail to take a leadership role in combating this trend, the net effect of these policies could be a fragmented internet ecosystem in which businesses are unable to serve international customers; consumers have limited access to goods and services; and the fundamentally open and interoperable internet that we know today would be replaced by an inefficient patchwork of networks that restrict consumer choice, hinder international trade and lower the global standard of living.

For U.S. publishers, these protectionist policies could manifest themselves through firewalls that limit entire populations from accessing content; requirements that data to be stored domestically; and severe restrictions on the use of data for interest-based advertising.

And it's not only the digital advertising industry that would be affected. In this environment, businesses across all sectors would be unable to perform many everyday tasks we take for granted such as processing orders, developing an automated global supply chain or conducting research and development.

Fortunately, the leaders of the prospective countries participating in TPP have recognized the lose-lose nature of a regressive internet ecosystem and have supported a strong agreement that both creates accountability for those countries directly participating in TPP and also sets a precedent for future trade agreements globally.

As debates related to the Trans-Pacific Partnership continue through the remainder of the 2016 presidential election, let us keep in mind the positive impact of the digital trade provisions of the agreement on the U.S. economy, and ensure the U.S. remains the global leader in technology innovation.

Dave Grimaldi (@dfgrimaldi) is executive vp, public policy, Interactive Advertising Bureau (IAB)elec