 Thank you for attending. Let me also welcome those who are watching live via webcast. Today's event is being recorded and will be available at csis.org after the presentation for as long as anybody pays attention to it. My name's Scott Miller. I'm the Shoal Chair in International Business or in the International Business Program here at CSIS. Today's event is part of a series of programs on the Trans-Pacific Partnership. The series has been developed by the Shoal Chair in International Business and the Sumitro Chair in Southeast Asia Studies. This is a joint project. We're in our second year of programs. Year one focused primarily on the broad economic and geostrategic matters associated with the Trans-Pacific Partnership. Year two is focusing on specific elements that are particularly interesting and dynamic in the commercial environment as it's developing. Today's subject is the digital economy and TPP. Commercial use of the internet, that is the digital economy, has experienced rapid growth since the mid-1990s. It's radically altered the array of business to business and business to consumer transactions being done. It changes daily. It is one of the most disruptive technologies that any of us have ever experienced in our lives. That disruption which we all benefit from and enjoy every day, whether it's from our mobile phone technology or the ability to access goods and services via the internet or from a business standpoint, the operation of the industrial internet and the massive efficiencies generated through supply chain improvements which are IT enabled, this rapid disruptive development has created a gap between the commercial reality of the digital economy and the international policy governing the digital economy. That's why today's program will examine that policy environment in the context of TPP. We hope to illustrate the gaps and have an open discussion on what can be done to address those gaps and fill them over the course of this negotiation into the future. Why TPP? Well, it's an important subject in the digital economy partly because it's next. If you look at the history of trade negotiation, as trade agreements have proceeded, at a pace that the digital economy has proceeded, each successive agreement includes more disciplines and more obligations. This is just next in line. At this point in time, the U.S.-Korea free trade agreement was probably the best we've done. That was a 2006 negotiation. Now, six years later, seven years later, it's time to improve it and the underlying environment has changed dramatically. Second, the transformative partnership has a high level of ambition and is one of the four in which U.S. firms are most interested in engaging with other like-minded economies in creating a template. That template is important in TPP in part because of the diversity of the economies. My own view is that if you can get an agreement on the key principles of the digital economy and the way it ought to be governed in international trade among parties as different as Brunei, Vietnam, Malaysia, Singapore, and the United States and Japan and Australia, you probably have a robust enough agreement to be able to socialize it further and get broader adoption in other multilateral and pro-lateral fora. It's timely. It's a high standard agreement, so it's an opportunity to reach and deal with this gap in a very productive way, and it's an opportunity to set a standard and be adopted by other parties in other fora. We'll start today with a keynote speaker and then move on to a panel discussion. I'm delighted to welcome Congressman Jared Polis to CSIS as our keynote speaker. Mr. Polis represents the second district of Colorado, that's north-central Colorado, basically the cities of Boulder and Fort Collins. He was first elected in 2008 and as a member of the Committee on Rules and the Committee on Workforce and Education. Now, the Congressman has, in my view, having been a lobbyist here for a long time in the city and dealing with a lot of members of Congress from a lot of backgrounds, Congressman Polis is quite distinctive. First, he's not a lawyer, which makes him different from the majority of his court, not that there's anything wrong with being a lawyer. It's just the most common background, okay? More importantly, Congressman Polis is an entrepreneur. He's a digital entrepreneur. He founded American Information Systems while he was still an undergraduate and has successfully launched bluedmountain.com and proflowers.com, which many of you may have used last Mother's Day. In any case, he has a unique perspective and brings an orientation to the space of the digital economy that is quite rare among his colleagues and we very much look forward to hearing from him. Please join me in welcoming Congressman Jared Polis. Thank you. And as you can tell, by the way, I dress here, I'm a digital economy guy and I don't get to speak to the foreign policy establishment very often, so hopefully it won't need much translation, but you're welcome to ask any questions about what I say, but my perspective comes from somebody who's been an entrepreneur in the internet economy. I have, in the private sector before serving, been involved with some light version of trade issues in my flower company. We certainly imported flowers from Columbia and South America and we also had a Canadian operation on the retail side, so I'm not a complete stranger to being a practitioner on those trade issues and it was a trade dependent business in that perspective, but it was a very expedited area. We didn't have to do any groundbreaking trade work, obviously, flowers entering through Miami and meet most of the need for flowers in our country, so it was a relatively simple thing. On the digital side, though, I've been deeply involved with a number of different internet and e-commerce companies since the early days of the internet. I co-founded an internet access provider in 1994, so we've seen a lot of this grow up around in me and as such, I've had the opportunity to be on nearly every side of every type of issue that early stage and high-tech companies face, so, for instance, with regard to capital formation, raised capital from conventional VC, been an investor in venture capital, taken a company public, raised formal private rounds, sold companies, bought companies. So, on the capital formation side, I got to see a little all of that. And, of course, more applicable here on the intellectual property side, also got to be on most sides of intellectual property and patent issues, for instance, named in veteran. Several patents, you know, gotten frivolous notices of infringement, had to fight, etc. So, been on all sides of all those battles over the years. So, I take those experiences to my approach on TPP and trade. Part of my frustration with the TPP process that some of you might share has been the lack of transparency. So, Darrell Issa, who I work with on a number of tech-related issues, and I did a letter asking for more transparency. The truth of the matter is, if you wonder what type of congressional oversight we're able to have, I can meet with the negotiators and review all of our negotiating documents in a private room without my staff even being present. So, I'm not even allowed to bring my staff or take anything out of the room that I review current and prior drafts of TPP and discussions of our negotiating position. Now, I've done my best to make the most of that ability. I've had them in several times, and we meet, but it's challenging without being able to have the normal staff resources or being able to have the same kind of follow-up that we would with kind of a normal, more normal oversight process. And, of course, no one would argue that this should all be aired publicly, but it would be nice to have a way for a Congress to do its oversight work more effectively, but be the American public to be able to and to engage stakeholders in a more meaningful discussion of intellectual property in the digital economy and, of course, other issues that surround TPP. As a former internet entrepreneur, one of my objectives since I was elected was to bring the perspective of entrepreneurship and startups to Congress on tech issues and other issues relating to the digital economy. Our extensive digital outreach include a number of successful AMAs on Reddit and Chair of the Bipartisan House Caucus on Innovation and Entrepreneurship, and I've worked on a number of issues that are important to the technology community. We are, we also have, we launched recently a startup day across America initiative on August 29th where we're trying to get members of Congress from as many districts as possible to visit startups in their district. And one of the interesting things about startups in their districts in this day and age is many of them are trade dependent and international. I mean, it could be a one-person shop, a three-person shop, but if you're providing a fundamentally digital product or service, you're just as likely to have your early customers in England or India as you are a block away. Now, that depends on the particular nature of any business, but what you have is essentially the ability to launch into a global marketplace from your garage. And that was not the case in prior pre-digital error trade negotiations, and we need to contemplate the great benefits that this brings to small businesses and entrepreneurs, not just here, but also a person operating out of their garage in other countries as well. It has unprecedented access today to the American marketplace and even more so in a better design fashion through the Trans-Pacific Partnership. I have been focused on a number of free and open internet access issues, they're ranging from issues like net neutrality to trying to prevent measures like SOPA and PIPA from moving forward, which would have been damaging to the internet ecosystem. There's also been a lot of changes since the passage of the Digital Millennial Copyrights Act, and we've been very interested in engaging in copyright reform in the 113th Congress, looking at duration and strength and the process for seizing domain names through Department of Homeland Security and patent reform as well. And patent reform, of course, within the context domestically of reducing what we call patent trolls, but also kind of looking at in the long run as we sort of reinvent our intellectual property protection system for the digital economy, finding the right way to protect people's works and at the same time disseminate the benefits of innovation. What worked for and does work still for mechanical innovation is fundamentally different than the policy framework that one should want to have for digital innovation. The two are different things, and I would argue for biological innovation as well. And by the way, we were in session until midnight last night and just saw a little horse and it says related topics to Department of Defense appropriations, although we do have a prism amendment and NSA amendment that would take away the authority of our government to do what they did through prism coming up here in a few hours. It's been one of the more hotly debated ones. But I think one of the things we need to do within our trade agreement since a fine line is we need to of course define the baseline parameters for intellectual property protection at the same time we need to give our own government, our own congress the ability to adapt and reform our own intellectual property laws for a digital economy which is a process that is started and is underway and certainly Digital Millennial Copyrights Act was a step forward but is one that is certainly not work complete and I would argue that we have a long way to go with regard to creating a framework for intellectual property law for the 21st century and I want and making sure that we don't tie ourselves into the parts of intellectual property law that don't currently work through trade agreements which would give ineffective policies a longer tail by making it more difficult to have reasonable discussion about what they should look like now there's a number of trade issues before the 113th congress and I'm a strong believer in trade as a driver for growth in our country it's very exciting I was able to be part of United States congress when we passed three trade agreements that I of course voted for South Korea Panama and Columbia I think those will be important job creation mechanisms in our country and in our allied countries as well but again the internet and digital economies are a unique opportunity a unique opportunity not only for entrepreneurs we talked about but also for U.S. multinationals and other countries as well by ensuring that we have a good set of tools to operate under and a good framework that includes things like cross-border data flows not holding intermediaries liable no localization barriers we can foster economic trade and growth on the digital side among all the signatories to the TPP just as in the physical world there has always been a short-sighted tendency of countries to engage in protectionist activities so too is there in the digital world now they look different they don't take the same form and frankly efforts in the digital world are less effective when nation states try to engage in protectionism but nevertheless to have a formal policy framework that can prevent that where possible will be an enormous step forward and provide surety to technological providers on both sides so this is an exciting opportunity through Trans-Pacific Partnership I also wrote a letter encouraging the addition of Japan to TPP the administration is aggressively negotiating TPP which is a very important agreement that promises to be set a new benchmark for trade agreements in the digital era that frankly we can use to include in other agreements as well you know as an example we were just talking in a small group before this and I've of course been a strong supporter of NAFTA over the years as well when NAFTA was written the real economy was in a very early stage and it wasn't really written in contemplation of what has become in one of our biggest economic drivers through TPP process we have the opportunity to take NAFTA as well to the next level with Mexico as a signatory really looking at and I've been part of the US-Mexico parliamentary exchange since I joined congress every year we meet with members of the deputados of the Mexican and we alternate between US and Mexico and we have pretty much the same discussion every year where we say what is the next evolution of NAFTA that's the economic part then we have the security part where we talk about drugs and cartels and so I mean we have but anyway ever since I've been part of that we have a section on taking that it's the same thing you have the majority on both sides that are interested in doing this and then you have a few people on both sides that want to roll back while we've already done but the point is we haven't made any substantial progress on this and TPP is the first opportunity to further develop the relationship with our allies and our trading block the North American trading block so it's better to compete with other trading blocks in the global economy and we've seen since NAFTA an increased interdependence between the Mexican United States and Canadian economy and that's a good thing when you look at the closer security arrangement that America has with our allied nations in North America as compared with alternative trading partners that are geopolitically more challenging in terms of the mutual reliance so it's a very good thing that through TPP we can further develop the North American trading block and NAFTA concept encapsulates the digital economy which we all expect to be one of the major growth areas in the coming decades not that by in any way shape or form the physical economy and the product-based economy is obsolete, it's not in fact a tour intertwined when you're talking about, for instance, manufacturing you're also talking about a flow of digital information regarding specifications that originate in real-time with real-time feedback digitally over something that also has a physical manifestation so the two are linked in many ways I don't want to in any way insinuate that they're mutually exclusive Our international treaties in general have not kept pace with the growth of the digital economy WTO rules were largely set between 1993 and 1997 well before the digital economy came to the prominence it has today and before, frankly, we even had domestic policy frameworks which while still lacking are further along than they were in the 90s neither the WTO nor even our most recent free trade agreements offer the right framework for the free flow of digital goods services and data in many ways in an area where we should be the strongest with regard to trade promotion and free trade considerations we have weaker rules than we have for any other sector and this is not merely a hypothetical discussion foreign governments are considering and have and are looking to enact policies that block cross-border data flow or favor their domestic interests over American interests we have seen repressive governments like China that are manipulating or blocking flows of data for political reasons or for unknown reasons and this is something that we continue to face in the digital economy as a 2010 white paper from Google talked about in a pure what looked like to be a pure tit for tat to retaliate for congressional honor for the Dalai Lama officials manipulated their so-called great firewall so that users who typed in a web address for the three major US space internet search engines Google, Microsoft and Yahoo were not taken to their site of choice but rather they were taken to the Chinese owned search engine instead so again what might have been used as a political tit for tat had real trade ramifications effectively they were converting traffic to a domestically owned search engine at the expense of traffic where the customers were desiring to use American US space search engines and this restriction that foreign governments have placed on connectivity and access and data flow has significant implications to our economy and to their economies everything from tomorrow's innovators to today's online retailers to search engines to cloud providers and it should be front and center with regard to our TPP negotiations as well. I think the administration recognizes the expanding role of digital trade as a driver of economic growth however we need to do a better job with regard to both transparency as well as with the advisory groups that surround the TPP process. I as one member of Congress are doing what I can we're encouraging my colleagues to do the same but with everything going on and frankly with the difficulties that we have namely being in a room by ourselves and having to set it up ahead of time to even review this it is difficult to get the kind of meaningful input from my colleagues that I think the process would benefit from and ultimately if the process wants to and needs to have the buy in of policymakers who will ratify and support the treaty they should do a better job in a more open manner engaging the elected officials as stakeholders today and frankly the individuals that are here in this room have a critical role to play in educating your own respective governments if you represent governments other than our own our government and businesses as well as the administration and members of Congress on many of the issues surrounding trade in the digital era that you are familiar with as well. So there are great opportunities there are also great challenges with regard to trade policy in the digital era I'm continuing to work to increase transparency expand the representation on ITAC 15 ITAC 8 to a larger group of economic interests want to make it sure that the treaty doesn't tie Congress's hands and make it difficult for us to update our own intellectual property laws for the digital era but at the same time provides a baseline to ensure that disparate treatment is not given to data that originates in different countries among the signatories to DPP in addition to this agenda I touch upon I wanted to mention how the 113th Congress and also the TPP negotiations have been impacted by recent revelations like the prism regulation and the NSA regulations which we'll be addressing here on the floor of the house this has caused psychological but very real reactions among many members of the electorate and politicians of course following that lead in Europe and in Brazil and other countries and frankly as somebody speaks myself and who I'm critical of what I consider to be an overreach violation of privacy this is an externality that should be accounted for of course you're going to offend your friends and there are those who would use that popular opinion and would demagogue that popular opinion who might have had anti-trade agendas all along in other countries but we'll use that to implement protectionist measures because of the tide of groundswell of public opinion against what they perceive to be an American security apparatus overreach into the privacy of their nationals so that should be part of the equation when we're thinking about how we balance security and privacy we should think about public perception in allied countries and we should think about how public perception impacts trade and this is not hypothetical this is playing out now in a number of countries that quite possibly will impact the TPP negotiations as well so those are some of my initial thoughts I look forward to addressing your questions and discussing how we can better leverage our trade agreements and TPP in particular for the digital economy thank you the congressman has a few minutes to take some questions I'd like to ask follow three simple rules for the questions first, if you have a question once the congressman recognizes you please wait for the microphone as a courtesy to our digital audience second, when you start please introduce yourself and identify your organization and third, what I call the Alex Turek rule please make sure your question is actually in the form of a question leave your statements for another forum my constituents need to hear your rules too because they never follow that third one yes, who has the microphone I'll be right over to you thank you thank you congressman for your if you can introduce yourself my name is Jeff Okan Koslowicki I'm a visiting fellow with third way and I have a brief question for you regarding your remarks about transparency in the negotiating process the US trade representative has created unprecedented levels of engagement with stakeholders compared to previous free trade agreements in the TPP process and I was wondering how you would say that the administration can increase public engagement and oversight over the TPP negotiations without publishing draft text or otherwise compromising the US negotiating position excellent question and so first of all I am no historical authority on past negotiations obviously I mean I was I think in college when NAFTA was being negotiated right about in the paper but we did have a small group that convened earlier and there seemed to be a couple ideas and a couple things that I don't know if this premise of somehow this being the most transparent conforms to reality here in prior trade negotiations it's my understanding that there have been daily briefings for ITAC members for longer daily detail briefings on negotiations in addition when we talk about the public side the general public side of the engagement process it should be a lot much more of a discussion rather than just a listening session so again obviously without compromising our negotiating positions there should be more of an effort even both within ITAC of course in terms of the more frequent updates and by the way broader diversity of representation on those ITAC councils which the administration has expressed willingness to do but we haven't yet seen and we continue to work with them on recommending candidates that would provide a better representation of the digital economy specifically but frankly American job creation and growth engines should be better represented on ITAC better representation on ITAC more and better use of ITAC and then more engagement with the general public in terms of a give and take so those would be the three again as a non expert those would be three that I think are inadequate and then the fourth I would add is a better way to do congressional oversight because this is not very effective for me to have to go to some room and schedule it and not be able to take it but I think there's got to be some way that we can have more meaningful congressional involvement with that process too so those would be my suggestions I think we saw one over there yeah Hi my name is Bernie Lee I'm an intern with the Department of Commerce my question about TPP with the digital regulations or negotiations they have a number of negotiations have stalled because of the problems with agriculture like New Zealand dairy or and also with textiles and fabrics for Vietnam so in the negotiations is do you think that the US Congress would be willing to ratify a trade agreement that would make compromises on agricultural textiles in the industries for these digital services and protections in IPR because you also have a competing agreement with the regional comprehensive economic partnership that's been started by the ASEAN group with the other Asian nations that's lower standards which doesn't benefit the United States but could be much more appealing to some of the weaker economies in that region that might want to ratify that to get some more open their lower level industries well I mean you know I have not nor has anybody really formally taken the temperature of Congress or done vote counts on who supports what obviously ag interests are influential however we saw that major ag will nevertheless failed so perhaps they're not as influential as they were I think that there's always a sort of give and take in these trade agreements and I think that and I hope that our focus is on the great opportunities for the digital economy that can emerge from TPP and that we can also move forward on agricultural and manufacturer goods and everything else in terms of tearing down trade barriers and removing protectionism so again I think in general the majority of Congress is certainly pro trade we saw strong votes on ratification of the last three trade agreements so I would anticipate the same type of reception for tearing down barriers and textiles and ag and with the right framework for the digital economy I would also add that this is not top of mind for most members of Congress I mean it's not to the point where I could even go or anybody could say what do you think it's not on their rate people have other things that are focused on their committees are worked on I mean I think that most members of Congress are at best only slightly aware that these negotiations are taking place other than perhaps some people in ways and means and the committee of jurisdiction that are aware of it are working on it yes we got the microphone coming thank you I'm Bruce Van Voorst former financial and economic correspondent for Time Magazine nobody would disagree that digital age is going to be a major factor in economic growth in the future however you did point out that there will be challenges how will digital development impact employment there's a big difference of opinion if it will undercut employment or it will enhance employment enhance I mean it's a longer discussion I mean you need to have that's kind of a economists and futures I mean it's the old discussion of is doing something in a new and more benefit the economy and create jobs or not and I think that artificial efforts to preserve less efficient legacy methods is always damaging to the economy and facilitating transitions to new and efficient ways to produce products is good for the economy economists would generally agree with me that doesn't mean of course that there's not a human impact that ever get as positive and helps more people that it hurts it doesn't mean that people aren't hurt of course we know that globalization has winners and losers it's great for people in general more people benefit than lose their jobs but it's not great if it's hard to find the right example but let's say it's where is our friend from what has been displaced in Mexico has maybe American corn producers are exporting to Mexico now and displaced some local farmers if that happened it was bad if you were a corn farmer in Mexico but again there's winners and losers it's great if you were one of the many Mexican growth companies that is exporting more and doing more business with America so policymakers of course are concerned with those who are on the short end of that part of the issue with the digital economy of course will be access particularly making sure that people have access to the many benefits of the new economy but yes job creation economic growth new and official ways of doing things that's what the digital economy has provided and will provide one more question Hi my name is Ashley Hess I'm an intern at the British Embassy and I was just wondering if you had any opinion on to what extent negotiations in the TPP on the digital economy could affect negotiations on TTIP for digital economy issues there we go oh it's okay I got cut off um so you know I think we have not yet had a trade agreement that encapsulates the pressing issues facing the digital economy so I think what we have we're not there by any means but what we have through TPP is the opportunity to develop a template that would be employable for as a basis for other negotiations and it's an opportunity we don't want to pass up so I'm hoping again that focusing on things like cross-border data flows and intermediate liability and preventing localization barriers these kinds of things dealing with the whole realm of fair use and DMCA if we can get the template right now there's a lot of danger in getting the template wrong because if you lock in a template that is wrong from a policy perspective there's a longer tail on it and it's not right now yet but if we can get it right this can serve as a model for other trade agreements as well and I think that's even more of a reason to put the effort into it in the context of TPP thank you Congressman and let me invite the panelists up we'll continue on dead ahead