 So welcome everyone, thank you for coming out to Berkman Center lunch series talk. Today our talk is going to focus on development in the digital age. We have some really exciting speakers here who I'll introduce in a minute. I did want to just mention a couple of things in advance of the talk. First is for those of you who may be watching it online or on the webcast streaming, if you do have questions, you should feel free to use the Berkman hashtag to direct your questions over. We'll have someone in the room monitoring and then relaying your questions over. The second thing that I just want to note is that traditionally at Berkman Center talks, which are always held on Tuesdays at lunch, but they're usually at the Everett Street location. Usually we would go around the room and we would have a quick round of introductions. But given the size of today's talk, I think we want to leave more of the time here for Q&A and for discussion. So we'll skip that here today as well. So my pleasure today to welcome Jake Colvin and Usman Amen. And then our third speaker, Althea Erickson, is running late. Amtrak is delayed on the way up, but we'll hope that she'll be able to make it before the end of the session. All three of them are leading thinkers, policy activists, influence shapers when it comes to development, trade, and cyberspace. Jake is the Executive Director of the Global Innovation Forum, www.globalinnovationforum.com. He is also the Vice President for Global Trade Issues at the National Foreign Trade Council. Usman Amen is the Policy Council for eBay. I don't think I need to relay the URL for eBay, but he heads up the government relations policy arm of eBay. eBay, as you'll hear about, has also been one of the leading players in terms of analyzing trends about the use of cyber platforms for entrepreneurs, particularly in the developing world. And Usman is also a Felfly member at Georgetown Law School, where he teaches courses on internet and trade, as well as policy practice in the internet economy. And let me just do a quick introduction for Althea Erickson, who hopefully will be joining us. She is the Director of Public Policy at Etsy, which I also think most of you do know. And she heads up Etsy's government relations and advocacy efforts. So with that, I will turn it over first to Jake and then to Usman. And let me kick off our conversation by directing a question for Jake, which is, what's different about global trade in a digital age, particularly what role is to be played by public policy, by governments, and the like? What's different about this type of trade as opposed to conventional trade? Thank you very much, Mark. I just really appreciate the invitation. I think the next time we do this, maybe we ought to agree to do this in like April or May, but otherwise happy to be here. Mark was actually supposed to be with us last week in Washington, D.C. for an event that the Global Innovation Forum held on how innovative online financing is empowering global entrepreneurship, but he was snowed in. And so, you know, let the record show that I managed to make it up here, Mark. Yeah. So, you know, I think to answer the first part of the question is what's changed is that the global marketplace is being democratized. And so when you think about how international trade happened about 50 years ago, it was large international, it was large multinational corporations, mainly based in the United States and a handful of other developed countries that can engage most effectively in global markets. They had the resources to do it. They had the lawyers and the legal teams and the export compliance specialists to go around the world and make sure that they knew how to operate and they were unlocking markets around the world. Today the internet permits almost anyone with an internet connection from engaging in the global marketplace. Your suppliers, your financial backers, your customers, your partners, your sellers are global. And so what we do with Global Innovation Forum is we connect entrepreneurs with larger corporations and public policymakers to explore the opportunities and challenges that are associated with engaging in the global marketplace and the digital age. You know, on the opportunity side, the thing that I think is most surprising is the entrepreneurs themselves as well as the policymakers around the world is that the opportunity is immediate. You have a cool concept. You have a slick website. You have a couple of press hits. And all of a sudden you're exporting to 14 countries around the world. And we hear the story in the United States. We hear this in Europe. We hear this in Latin America and everywhere that we go. Just to give you one small example that's I think a global example is the suit that I'm wearing today is from a company called Black Lapel. They're an online custom tailor based in New York City. You go on their website, blacklapel.com. Their suits are made in Shanghai, but they operate out of New York. They have about eight employees here full time and they export to around 70 markets around the world. This is a great global story that benefits not only us in the United States but it benefits the people that are making the clothes in Shanghai. And it's being replicated around the world. And it's not just an e-commerce story. It's not that you can just sell something to the international marketplace. At this event that I mentioned last week in D.C., we had Kiva.org with us and they provide microlones or they enable people to provide microlones to people all to entrepreneurs all over the world, including in places like Kenya. There are new services that are being enabled around the world. I was in Latin America a couple of months ago and got to speak with Yabame, which is a regional competitor that's developing to Uber. Usman and I were in New York last year maybe. We met the CEO of Wakanau.com, which is a regional competitor in Africa to Expedia. And so the opportunity is tremendous and it's different than what it was 20, 30, 40 years ago. I just wanted to maybe get at a little bit of the public policy implications here and just sort of lay a placeholder and the public policy plays a huge role in that governments can enable or restrict this access to the global marketplace through their digital policies. So there are all sorts of different ways that governments can do this through traditional trade policy, through internet and telecom policy, privacy policies, their export promotion strategies. And I think, I know Usman in particular has views on these and maybe we'll get into this later, but maybe I would just describe in general terms two countries that I have familiarity with to kind of compare and contrast how government can play a role in regulating access to the global marketplace. And so I'm going to just talk very briefly if I have a couple of moments about Chile and Cuba. Chile, in Chile there's this sort of happy intersection of priorities for the Chilean government where they want to engage in the global marketplace and also empower their entrepreneurs. And so if you look at the number of trade agreements they've pursued, the way in which they've tried to build out their trade-related infrastructure, their export promotion strategies is, I think, really aggressive through ProChile. They've got this thing called startup Chile where they try to incubate global entrepreneurs in Santiago to create a startup ecosystem there. Their internet and telecom policies are generally open and facilitate, you can correct me if I'm wrong, but can facilitate internet access. And so my impression at least is that Chile is becoming a platform for regional and global entrepreneurship in the region. And then maybe you consider Cuba, which I know there's a lot of interest in right now because of the president's announcement of the change in policy. And for historical reasons, we do a lot of work on it. It's a planned economy, state-owned telecom. They don't have very robust trade relationships outside of the Alba countries. And there's just the general lack of financial, physical, and IT infrastructure in the country. There's also the US embargo, which I think the Cubans would point to as being limiting as well. But there are lots of creative and intelligence and entrepreneurial people in Cuba. But they're much less connected to the global marketplace. And I think in Cuba you have maybe a less happy confluence of priorities there. And one of which are political considerations that slow progress towards greater internet connectivity combined with the history of ambivalence towards engaging in the global marketplace and in global investment. And so I think that is maybe a long way of saying that policies matter and look forward to following up on that and also hearing what my friend Usman has to say. So thank you. Thank you, Jake. Usman, let me direct the conversation to you in a little bit more pointed manner because I think Jake has given us a good overview both about how trade is being democratized as a result of this new technology, but also about how government policies shape the opportunities made available to entrepreneurs. eBay is one of the leading platforms for global commerce. You all have done a lot of the innovative work looking at trends in terms of how the platform is actually being used. Can you discuss with us some of your findings about what type of opportunity specifically exists for entrepreneurs in developing countries and what you notice in terms of those trends? Sure, sure. Thanks, Mark, and thanks everyone for coming out today. Is this working? It's working? Okay, cool. So yeah, I sit on a pretty interesting team I think at eBay Inc. We're basically like almost like a think tank where we do economic research on trends that we're noticing, as Mark said, that are going on over our platforms and then we work on the policy issues that are potentially beneficial to the types of businesses that are using our platforms and those that might be detrimental. And the interesting thing, the threshold finding that we have from the economic research that we've done on businesses that are using PayPal and eBay is that the vast mass majority of them are actually really small businesses. So, you know, five, 10, 15 person kind of shops that used to be operating exclusively on a main street in a city or a country are now kind of using the internet as a new platform to find new customers and to achieve growth. And it's a pretty exciting story and what we've done is we've kind of tried to put a lot of data to that. So we spent the last year and a half or so really studying that trend in the developing world. And so I'll start in Brazil, which is our most recent report. And I think one of the most interesting top level findings from our report in Brazil is that there's about six million businesses in Brazil overall. But only about 20,000 of those businesses, which is less than 1%, actually engage in exporting. So the vast, vast majority of businesses are these tiny little SMEs, 99.7% of the businesses in Brazil are SMEs. They don't export. They don't have the capital like Jake said. Traditionally, you know, 50 years ago you would need such a huge capital infrastructure, contacts in the other country, you know, big time relationships if you actually wanted to engage in trade. And that simply isn't possible for a smaller business. But what was interesting was when we looked on eBay and PayPal, so every single small business that uses eBay exports. That makes sense. I mean, it's a global marketplace. The second you put your item up, you can export to anywhere. But interestingly in the fun part of sitting at eBay Inc. is that we have a view at the broader internet also, things that are happening outside of the eBay marketplace because of PayPal. 60% of the businesses in Brazil, and again, these are mostly small businesses, that are using PayPal export. So it's not just like an eBay trend. It's really an internet trend where any business of any size that wants to, the second they put up their website, anybody around the world can access it. So great, so you've got all these small businesses that are exporting. Well, that's not the whole story. Like Jake said, it's a democratization story. And what that means is, it's not just that they're exporting to one or two markets, which again, was the traditional kind of model. So another country we looked at was South Africa. And in South Africa we found that the World Bank actually, not we, the World Bank exporter database says that the average South African business that does export reaches less than five markets. And again, that makes sense. It's usually African countries where people have connections and they might export and engage in trade with those countries. But again, looking at the online marketplace as a kind of juxtaposition, you see on eBay that the average business that exports reaches 30 markets. So a huge, huge difference in the amount of markets that you can reach. And what that means is that there's more growth opportunities for these businesses. And so coming back to Brazil for a quick second, between 2011 and 2013, the Brazil economy kind of hit a wall. For about 20 years, it was growing pretty steadily. Actually at a very good clip relative to the global marketplace. But in 2011 hit a wall and actually saw exports drop 6% over that time period. But online again as a juxtaposition, we saw that businesses in Brazil that were exporting saw their exports increased by 50% over that same time period. So that's the idea that all of a sudden you can reach all these markets even if your particular market is not doing that well, you have access to the entire world. So they were selling into the US which was on an upswing or into China or into India or other countries that were seeing growth. You were seeing Brazilian businesses export to these countries. And the last point I'll make because I'm sure I'm boring everybody with all this data. You guys are a law student. Many of you I'm sure are law students and we'll talk about law because I'm a lawyer and, but the data is particularly exciting. It's particularly this last point which is a report we did on India. And so I said that kind of, the data showing that these businesses are growing and that they're exporting more. But the most exciting point is that like I said, these are small businesses and that this is an inclusive kind of vision for global trade. So as Jake mentioned, used to have to be a really big player to engage. Now that's different. And this one data point in our India report when we released it, this was the one that every single newspaper that reported that had an item on this report, this was the headline of every newspaper in India that reported on this. And they said that the finding was that 50% of the overall trade going on in eBay marketplaces from Indian businesses were coming from tier two and tier three cities. So those are strange terms that I had never heard of before I started looking at this report, but tier two and tier three cities are the smaller cities in India. So they're not Mumbai, not Delhi, not Chennai, you know, not the big export hubs that have for another reason become very powerful as a result of the internet on a services side. But now you've got businesses outside of those traditional export hubs and cities that really have a chance to all of a sudden get the benefits of globalization and trade. And so every single newspaper in India was saying this is great, this is what we need, this is what we want because there's a concern within the country that too many people are moving into the city that the opportunities only exist in the city. And so this was a nice story to kind of broaden that out. And I'll throw one case study on there too since Althea's not here so I'll get a little extra time to talk. So I've talked a lot about eBay marketplaces which tends to be a platform for physical goods providers. But this is not just a physical goods provider story, I mean this is a services story as well. So one of the businesses that has a really exciting story is a business called Cultural Immersion and they exist in Peru. Started by a young guy, Eduardo Bacara in Cusco. And started the business in 2005 and was offering travel services to people. And so services have traditionally been something that have not been very exportable. But now all of a sudden Eduardo has grown his business from 2005 just himself with an idea of offering travel services to over 30 employees and the vast, vast majority of his sales coming from people who are overseas who are buying travel services to come into Peru and explore and use his service. So he has culturalimmersion.com and anybody anywhere can access that, buy a tour, come, feel like they have trust and he's expanded it beyond Peru also. He's offering tours in Bolivia, in Ecuador. So it's just the idea that even a services business could take their business and kind of go global is a very exciting trend I think that also gets overlooked sometimes in the data. So I want to stop talking because I've been talking too much but I have spent a lot of time thinking about the policy and I think there are issues on the jurisdictional side like threshold questions about what it means to be a business in the digital age and be potentially subject to jurisdiction all around the world. So this fascinating case, can I just keep talking? Is that okay? I'm gonna keep talking. I think it's interesting. This fascinating case has just come out of Europe and this is where I'll get all the law people, kind of you all glossed over if they were anybody from the business school or anybody else, they liked the last part but now the law students will pay attention. So the fascinating case just came out of Europe. Austrian photographer, okay? Takes pictures, sells those pictures to companies that might want to use these cool photographs. So sells these particular photographs that he took to a German business. I think it's like an employee training type of business and they just wanted to use the pictures on their website. So they wrote a contract and sold the pictures and then the Austrian guy noticed that the German business wasn't using the photos in the way that the Austrian photographer had authorized. So an intellectual property violation because these were unauthorized uses of the copyrighted photographs. So not that interesting of a case, what's so interesting about this? Why the heck am I talking about this? Because the Austrian photographer brought a case in an Austrian court against the German business. And the German business said we don't have any, all of you first year law students, minimum contacts. We don't have purposeful availment. In Europe it's called targeting under their kind of precedent of jurisdiction. We don't have that with Austria. So we're not coming before that court. But interestingly the court of justice that ruled on this particular case said actually the fact that the website was accessible, key term being accessible, in the jurisdiction of Austria means that that business is subject to jurisdiction in Austria. So the implications of that are potentially mind blowing for Eduardo Becara in Peru offering services to 80 countries or whatever he is or Black Lapel in New York offering services to 80 countries. Now all of a sudden you're subject to 80 different jurisdictions. So that's a big problem and that's a potentially, we are right at the cusp of these kinds of legal issues becoming widely prevalent because these businesses are still small, this is still a new trend relatively and you're gonna see courts more and more and more starting to kind of use their power to kind of regulate in these spaces potentially. I have much more to talk about, I've been talking too much. So I'm gonna stop and we can jump around other legal and policy issues too. I'll open up to questions in a minute but let me toss out one question here for you first before I do that. The question I wanna ask is you've given us pretty much a feel good version of this story, right? But for many governments there's a concern that the internet increases competition, you could crowd out opportunities for their own SMEs. There's privacy concerns, there are concerns that all of these payment systems are dominated right by a certain number of small players, certain platforms, so on and so forth that you can manipulate page views and so on and so forth. What do you say in response to that? Just very short thoughts there. How much should governments be worried and what would you advise governments in developing countries to think about on that front? I mean I guess just a couple of thoughts. One is that I don't think governments are necessarily understand the extent of the opportunity. I mean policy and government perceptions tend to lag behind reality. I think that's certainly the case when it comes to the global opportunity for even the smallest of businesses around the world. It's something that I said like I said before that small businesses themselves don't always fully understand when they're going to market and just speaking with government officials both in the United States and around the world even when they think about small businesses and how they wanna help small businesses. What they're generally thinking about is a 40 or 50 person business that's been around for 10 years and is interested in exporting to their first or second markets. It's not the same kind of opportunity that USMOT has described. And so I think first advice to governments is to really understand the opportunity, understand better through analysis, through monitoring, through data, through talking with people at different kinds of forums about the kinds of activities they're engaging in the global marketplace. What's up with that right now? Sure. So I think Jake's exactly right. From a political perspective the world outside of the United States thinks that the internet is just a US thing and it's just benefiting US companies and all they hear about is Google and Facebook and Amazon and Apple. And kind of one of the reasons we're trying to do a lot of this work is to describe how there is tremendous benefit for every country that wants to engage in this to take advantage of it. So that's the first piece I think from a political perspective, Jake's exactly right. From the legal policy, legal perspective let's say, I think there are very legitimate things that governments can and should be concerned about as a result of this. This is a brand new class of actors that are engaging in trade. You've got consumers that are buying stuff from overseas that potentially there could be problems with those items and how do you actually regulate and control that. So I'll just give two quick examples. So like from a customs perspective, right? So traditionally what was coming through customs was just these giant boxes of products that Staples was sending to Staples or Walmart was sending to Walmart or 3M was sending to a supplier. So it was like just big businesses that were really engaged in it. Now you've got the tiny little, you've got Black Lapel in New York sending suits in 80 different countries all around the world and these little packages that are coming all around the world and they come to customs and customs is like, who the heck is Black Lapel? And why are they sending this thing into our country? And so they stop it, they don't know how to treat it, that the rules aren't written for those types of items. So there's a serious problem where there's a legitimate concern but the legal and regulatory regimes are not in place. And the other one I give is something that you hinted at Professor Wu which is this financial services issue. So again, very legitimate concerns that governments can and should have about the stability of the financial system about anti-money laundering across borders. But my advice at a top level to what governments need to think about is that not everything is a nail. Not everything is a nail, you don't have to hit everything with a hammer. Some things are different than other things. So in the financial services space, the only kind of entity that existed 50 years ago when most of the financial services regs were written were banks. But now you've got all types of new players that are engaging in the financial services system. Obviously PayPal is one of them but you think about some of the crowdfunding platforms that are starting to get propped up. You think about the intuits of the world, right? New ways to access finance and to engage with taxation. The rules and the regs weren't written for the types of businesses that are getting created around financial services. And again, there are very legitimate concerns around those but if you write the rules in a very kind of concrete way and don't enable the flexibility for some of these new business models to come, you limit the ability especially, it's very interesting in the developing world where a lot of these tools aren't available to businesses yet because of the regulatory structures. So you're limiting the opportunity for them to kind of engage and benefit from it. Okay, so I'll open up to questions. If you have a question, please raise your hand and identify yourself in your affiliation. Hello. My name is Marguerita Afonso. I'm a fellow here with the Weatherhead Center for International Affairs but I work in Brussels with the European Commission. My question is actually just curiosity because you were saying that all these little businesses, let's say in Brazil or Peru, they are accessible on internet. Is it, isn't there something that is not exactly true or you're being a bit optimistic? I give an anecdote. Once in Brussels we saw often a car with the logo for a kind of pet service company which was called like Paws and Friends or something like that.com. We tried to find it on the internet to find out what the company was. We could not find it. There were like hundreds of other similar businesses coming on the Google listing. So, I mean, after pages and pages, we could not find that company. I mean, how do these small, really small companies actually manage to be found by clients who are just doing a search? I don't know, let's say for Brazilian flip-flops and there's a Brazilian company who has invented the new type of flip-flop. How can you find it on the internet? And how is there any thinking about kind of regulation that will give a fair chance for these new businesses to actually be found by someone who's looking for them? Well, I think a friend of mine, Anne Habibi, who founded the All World Network, which was founded with help from Harvard Business School, what she likes to say is that what you need in the internet age is, the internet age means that place is less of an issue. What you really need is a visibility strategy, a way to rise above the crowd and get found. I mean, she tends to talk about that as mostly in terms of branding and outreach and making the right partnerships. And so, when I think about that, when I think about a visibility strategy, I think about that mostly from a business perspective and a marketing perspective. I will say that I think from a policy perspective, there are, it's easier to be visible when you're fortunate enough to be based in a certain place. I mean, if you're in the United States and you have the benefit of always on internet access of probably being digitally literate and having accessible the kinds of partnerships that are very easily found in the United States to grow your business and get advice and be part of these innovation or entrepreneurial ecosystems around the country, it's much easier for you as an entrepreneur to succeed and to be visible and to make the right connections than it is for let's pit, I don't know, Rwanda where while there are these tech hubs that are forming, there's not the same kind of internet connectivity of literacy about how to use the internet, even if you are fortunate enough to have it or the kinds of connections and financing and people that will help you make the right connections in the same place there. And so, some of that is sort of place specific, but I do think that there are public policies that can help improve certainly literacy and connectivity. Thank you both for the very interesting comments. I have a bit of a follow-up on, oh, sorry, I'm Liz Loftus, I'm a 2L here. I have a bit of a follow-up to that first question and it's also about how small businesses can access information less to promote themselves than to navigate what is still very complex trading system even if they're small businesses exporting and they're able to do that, there's still a host of regulatory issues they have to comply with. And I'm wondering what sort of framework exists to help them with that and what sort of resources are out there. Yoast Pro-Ellen was here last year talking about Trade Lab and- Who was? Yoast Pro-Ellen, he's a trade lawyer. Oh yeah, he was, yeah. Sorry, I can never pronounce his name correctly, so. At any rate, he was talking about the globalization of legal services and I'm wondering if you could talk about some of that. There are clear issues, liability and licensing there too but have you seen a growth in that area as business has developed internationally too? Well, so the answer is definitely yes, just like every other sector you're seeing a growth of kind of offering of services cross-border but to your exact point, there's issues of licensing so you're not supposed to be practicing law if you're not a licensed US attorney. And actually, I think Professor Anupam Chander at UC Davis has written probably the best stuff on this and now this is a big problem and a big limiting factor to the continued kind of globalization opportunities that exist with the internet. To the first part of your question, which is what are the tools that exist to help these small businesses? So I'll first give government's credit what credit's due through the world trade organizations, through the world trade organization, there was just an agreement reached on something called the trade facilitation agreement which is designed to make these kinds of things easier for businesses of all sizes and one super simplistic thing that when you see it in the text that all of these countries around the world have agreed to you think to yourself seriously is that all customs regulations be posted online, right? And so like, yeah, why? Obviously, but again, take the example of Rwanda like that wasn't something that they were thinking about and now they've acceded to do it. So there are, I think there is a recognition that a lot of this stuff needs to get easier for the vast new types of businesses that are engaging in this trade but it's still got a long way to go and platforms and services are doing an interesting job of it. Jake talked about into it. I think they do a great job of making some of these regs easier. We think on the PayPal side we make financial services regs a lot easier for these types of businesses. We do stuff on the custom side through the eBay marketplace platform. So service providers are stepping in as well but I think if the internet is supposed to be truly democratized it should be just as easy for the small business as for the large one. And to your point, I mean, no, it's not. Like there's still advantages of scale but what our data just shows that there's, compared to what existed before this is completely new and different and exciting. I would just maybe highlight two quick things to build on the private sector component. Logistics companies like UPS and DHL also provide tariff information and they're doing a better job. When you sell through eBay, eBay can then hand it off to UPS and there's just less to do from a customs compliance standpoint. And then also on the government side there are these specific export promotion services or market research services that the Department of Commerce provides in the United States, Chile, Colombia, across the world and they're increasingly targeting them to even the smallest of businesses now. The Department of Commerce has this initiative underway on global startups to try to make sure that they're addressing the needs when startups come to them and say we want to export. Not an attorney. So I wanted to ask you the question about the German Austrian case. The major question is, even if they find to be liable, what's the collection mechanisms for them to be to, and the second question I have is, was there any way for the German company to appeal the decision of the Austrian court that there is actual liability? My name is Marina. Thanks, interesting question. So on the first, on the first order, so I'm not a European Union lawyer, so I probably shouldn't speak in too much detail. I'm just going to say, I think that probably you could go to a German court and if it's a valid judgment they could as they have jurisdiction over that actor actually enforce an order if they wanted to, they have the choice to do that as a national government. And or if that anybody in that German business ever does step foot into Austria, then they would have a judgment against them where if they got arrested for a traffic ticket that would show up and then they'd be subject to some pretty serious penalties I would imagine. And then to your second question, which was, what was your second question? The German company, I feel. Oh yeah, I don't know enough about European Union law to speculate on that probably, but I don't know. Do you know, Mark? I think we have an idea. Well, as you say, we're from the commission here, right? Yes. Actually there is also on these questions of jurisdiction, there is also a number of regulations which deal with that. And I would imagine, I don't know about that case, but they could also ask what is called preliminary question to the request for preliminary ruling to the European Court of Justice to say whether this jurisdiction established on the basis just of the presence of the accessibility of the website in Austria would be enough to establish jurisdiction. But this is a field which is widely regulated. There were a number of international conventions before but they have become regulations since a couple of years. But I, in fact, I don't know about the specific case where the jurisdiction can be established only on the basis of accessibility of the website, which seems to be the point. There was a whole thing in the case, but yeah, I don't know. But that could be, and then you were right indeed if a judgment, assuming that the court of justice confirms that Austrian court has jurisdiction, once that judgment is rendered by an Austrian court that is confirmed no further appeals within the Austrian system, it can be enforced by the German executor system in Germany. I'm Peter Herzl, I'm a Berkman Fellow. You both mentioned the importance of having regulators understand about the innovative environment of the internet in defining trade policies. And of course, right now we have the US involved in two major trade negotiations. The reports that are coming, they're secret, so we don't know what's going on, but the reports coming out of it are that it's primarily being structured to work to the benefit of the large traditional industries rather than the global innovators. So I've got two questions for you. First of all, I hope that you're both involved in part of these negotiations, and if you are, what's going on, what's being decided? And if not, why not aren't you involved? But a broader question, how are we going to be able to, in the United States, shape the nature of our trade negotiations so that it doesn't preclude the benefits that you've talked about for global trade in deference to the buggy whip industries that are still supporting the way we've done things? You want to say something? Sure. And then I'll say something. So I think the answer is yes, we're both involved in the trade agreements and we pay close attention to them. At this event that I keep talking about that we had last week, we held it at 1776 in Washington DC, an incubator that's down there, and we had as our keynote speaker, Congressman Jared Polis from Colorado, who is an entrepreneur, co-founded Techstars is certainly a friend of entrepreneurs. And what he said about the trade agreements, which I thought was clever, was, what the trade agreements do is open up markets for entrepreneurs and small businesses in a way that corporations might be able to do for themselves because they have a ton of attorneys to work with. And so what the trade agreements do is they lower trade barriers, tariff barriers to engage into the global market. They say open up markets for anyone who wants to engage with them. And they try to establish to bridge gaps in rules in ways that make it easier to do business across border. Now as to some of the specific provisions, I think one of the things that this current crop of trade agreements that you're talking about, the Trans-Pacific Partnership in Asia and the Transatlantic Trade Investment Partnership in, I think I got that right, in Europe. What I think they do that's new and different is they expand the negotiations around e-commerce. And so what they specifically seek, what my understanding is that negotiators seek to do is to develop new disciplines that would commit countries to enable data to move back and forth to preserve the idea behind an open internet and then to address some of the physical barriers that discourage trade. And so for me that's all good for anyone whether they're an entrepreneur or a large business. I think one of the things that we've tended to pay attention to over the years is intellectual property rights. And so there I think there's always been a very strong focus on enforcement. And first of all I think whether you're an entrepreneur that has an idea or a large corporation, you ought to care about that and you ought to care about having an intellectual property rights protected. But on the other side there's also a need to make sure that you regulate intellectual property rights without breaking the internet. And so that you make sure you do it in a way that permits the digital economy to function. And I think in that the USTR has been a little bit more forthcoming in their emphasis on limitations and exceptions in the trade agreements. Tell these folks what USTR is. I'm sorry, the office of the United States Trade Representative which negotiates trade agreements on behalf of the United States. And so I think there particularly on the copyright side there's been more of an emphasis on making sure that you regulate intellectual property rights in a way that permits the digital economy to function through appropriate limitations and exceptions and articulating that through the trade negotiations. I think that's a little bit different than in previous iterations of trade agreements. So let me stop there. I'll just add one quick thing which is two quick things. One is that like I said 50 years ago or let's say 25 years ago really when trade policy in the US started to get moving with NAFTA. There were only really big businesses involved in trade. So it's not surprising that the policies tend to reflect that stuff. And to Jake's earlier point policy tends to lag a little bit behind and trade policy is even one step removed. So you're seeing that lag. But I also give actors in the government including United States Trade Representative people in Capitol Hill. They're starting to pick this up and I think we're partially responsible for that that going down there and kind of educating on how this stuff is going on. And the other piece I'll say is that a lot of trade policy from the US perspective in particular and I'll add on to the other negotiations. There's one called the trade and services agreement which is also a big multilateral kind of negotiation that has a potential to set some rules in the services space is based actually upon US law. So what Jake just talked about with limitations and exceptions in this intellectual property chapter of the Trans-Pacific Partnership that comes largely from the fair use section 107. That comes from that in the IP law or the Digital Millennium Copyright Act which is a law that pretty much every business, every internet business relies upon every single day to make sure that they're not liable for what's being posted on their site for any intellectual property violations. That's in a lot of US trade agreements actually and that's a big positive thing from an internet perspective. And so that's based upon US law. And so our laws like in financial services or in customs or in intellectual property or other spaces are not well designed for the internet economy. The trade law is not gonna all of a sudden reflect that. So part of it is also getting our laws in the right space and then I think the second part of it is making sure that some of those laws that do a great job make it into the trade agreements. My name is Shantan, I'm an LLM here and I probably echo some developing world perspectives in this. I'm quite in agreement with the idea that sometimes very often especially in the development world the regulations lag behind the sort of opportunities that this sort of trade represents. But I'm quite sympathetic towards the circumspection that the government shows in these areas. I could draw an analogy from traditional trade in which the ability to carve exceptions became more important part of trade regulation than liberalized trade itself. For general trade you have labor standards, environmental exceptions too. So till the time comes that governments can be very sure that the number of exceptions they want on a liberalized internet trade regime and are able to box those exceptions out and create them. How much, I'd be happy to give them a lot more breathing space for a longer time. So when the criticism is that they're lagging behind or they're not seizing the opportunity, I'm very sympathetic to the amount of time that they require. I'd like to ask you what sort of exception should we be looking at in a set of regulations that make this sort of trade opportune but also significantly controlled. One real problem that keeps striking me is data privacy and most of the developing world governments are really struggling with trying to ensure that its citizen's information are within the country and things like that. So in the trade negotiations that you are party to what do you think are the exceptions that people are looking at carving in and putting them in hard legal terms? Well, so the first order one is national security. So I think that kind of goes without saying and is pretty much not that, there's not that much controversy over. And then the second one, yeah, that comes to mind when it comes to the internet is certainly data privacy. And I would add data protection on top of data privacy as a kind of concept of we wanna make sure that, yeah, even if you're holding the data in some other country that it's subject to some kind of rules that whereby they don't leak that data, they're subject to punishment. If they lose that data, they're subject to punishment. If they don't treat that data with enough privacy protections and standards. And to Jake's earlier mention about the Trans-Pacific. So first of all, from the World Trade Organization perspective, the global agreement on trade and services, the GATS, which is one of the big kind of multilateral trade agreements, that includes a very broad exception for privacy rules, for domestic privacy rules. And that's, that particular provision hasn't been upheld when it came to the internet, but there was a very famous case called US versus Antigua and dealt with internet gambling. And in that case, an exception for public morals, which is a bit of a dicey kind of exception, we can talk about that because that could mean censorship potentially, which is a huge problem. That kind of exception was upheld. So presumably a broad exception for privacy, for domestic privacy regimes would also be upheld. I would just add though that probably a good caveat to some of these exceptions to think about from the other side would be, are they the least trade restrictive method for actually achieving the very legitimate regulatory goal that the nation is trying to achieve? And as long as that caveat is there, then I think the exception, they're probably, like you say, an appropriate thing for the time being. I'm just gonna make one quick logistics announcement before I take the last set of questions because we're gonna try to wrap up before one, which is when I know many of you have class. For those of you who are interested in exploring the trade related issues, both Jake and Usman have kindly agreed to come to my international trade law class, which is happening right after this at one in Wasserstein 3019 upstairs. So anyone who's not a member of that class will make it available and open to the public. You're welcome to come to that afterwards. Okay, so two last remaining questions. Let's take them in tandem and then I'll turn it over to you to wrap up. Thank you. My name is Barbara Thornton. I have a question about, I'm very intrigued by the tier two and tier three city responses and would like to know more about what's happening around the world with cities discovering this opportunity to grow their local sales tax revenue perhaps. And how can I track the evolution of this growth and discovery by cities? And speaking for Twitter, so this is Amy Ter-Hair. She asks about payment democratization and of payment infrastructure. So we've talked a lot about democratization of access to the platforms, but she's interested in kind of getting beyond the Visa Mastercard plumbing for payment and whether or not you are seeing some kind of diversification of those traditional credit card architectures. I guess there's a move. Okay. So I haven't, I'll be forthright, I haven't studied the sales tax thing from cities at any kind of granular level, especially in the developing world. So I can't speak to that, but in the United States, I think you're starting to see, there's a big push for a bill on Capitol Hill that would start charging sales taxes on internet transactions. I'm less interested in the sales tax than just in the public policy. Just look at it from the job. I think it's a greater employment. Whatever good a city would see from this, where are cities realizing this is doing something better? Well, maybe I'll just comment on that then, is I think when we talk about when you have entrepreneurship policies in countries, they're really more at a city level. And so when you talk about startup Chile, in a lot of cases, it's startup Santiago, right? And so often what happens matters more at a city level in terms of what they're doing to engage globally, to engage, not to engage nationally, but also to engage globally. And you see this at a state level around the United States, where you have how states engage globally sometimes depends very much on what governors are doing. So Governor Christie was just in London, I think famously, past couple of days. And so states do this all the time, countries do this, cities do this all the time in countries around the world. And so if you look at individual programs that come up, they're usually around a city ecosystem. So I mean, London does this very effectively, Santiago Chile does this very effectively. I don't have a good sense about the second and third tier two cities that do this very effectively. No, yeah. I mean, yeah, I don't have anything else to add. I haven't seen anything in the cities that we've studied particularly in the developing world and even more particularly in tier two and tier three type cities where this type of stuff is going on. I think it's very early days. What I was gonna just conclude with from the sales tax perspective is you're seeing it in the US and in Europe, there's just been a rule change to kind of start applying that taxes to a lot of these e-commerce transactions. What I was gonna conclude with was once this stuff becomes big enough in those countries, you could totally see that happening in those countries as well. On the payment side, I mean, I think the evolution of payments is instrumental in enabling entrepreneurship. And you see that already, there are companies like PayPal, there are companies like Stripe. I keep mentioning Intuit, I mean, just so everyone knows where I sit, Intuit is chairing the global innovation forum and so they are generally in my mind they're chief innovation officers, our chair. But they have go payments and online technologies that permit payments to happen. It struck me we did an event back in DC in May with Living Social and they were talking about their expansion plans around the world and they went into markets like Indonesia and they had a really tough time there because there wasn't a good payment system. Just individuals did not have access to credit cards and bank accounts and the kinds of things that would allow the transaction to take place over a platform like Living Social and so what they wound up doing was hiring people on mopeds to go hand over the voucher and give cash on delivery for that last mile of service there so you could access something on the internet in order to pay for it, you would do a physical cash transaction and that's really limiting in expansion of entrepreneurship. It certainly means you can't do that on a global basis and so until payment companies are enabled within these different markets it's going to be difficult to grow entrepreneurship globally. Yeah, I'll just add a couple of quick thoughts. So the Visa and Master Cards award are actually built on the banking pipes, right? So they don't have their own pipes really they're built on the banking pipes and PayPal is as well for the vast majority of its transactions. And so there's two things that are happening. One is you're seeing kind of innovative uses of those pipes to do different things. So obviously PayPal is an example where we're kind of providing access to finance to small businesses through working capital loans which is still built on the traditional financial services ecosystem but in a way where a small business can get an approval for a working capital loan within like 30 minutes whereas traditionally that would be impossible. And then you're seeing what I imagine this Twitter question is probably directed towards which is Bitcoin, right? Which is a completely different set of rails for engaging in financial transactions. And I came here a year ago and was on a panel discussion where Bitcoin was a big hot topic. And unfortunately, or for some guests, fortunately like it hasn't become that yet but I think from a technological perspective I mean it is really groundbreaking and has the potential to be a very powerful force in kind of shifting the financial services ecosystem but right now it's being largely used for speculation and not for kind of the types of transactions that I think would be beneficial for a modern economy built on a system that's outside the banking system. Wait and see on Bitcoin. I think we are one of the first major companies or digital wallets I guess you could say where you can store a Bitcoin in something called a coin-based wallet which is a company that lets you store Bitcoins and then pay through PayPal to merchants around the world. So we are engaged in Bitcoin in a very real way and are interested and excited to see kind of how it develops. Well I think we are just right at the cusp of a really interesting, exciting age for development and the platforms that you are enabling. So please join me in thanking Jake and Nusman. And I'll note for those of you who are interested in continuing the conversation, Althea Erickson is here from Etsy so she'll join us upstairs, WCC 3019. Thank you.