Stephen Ezell led a workshop on value-driven service innovation at the Said Business School in Oxford, England on October 23 and 24.
Innovation Mercantilism’s Dangerous Consequences for American Manufacturing
Over the last decade, a growing number of countries have come to embrace a new kind of protectionist trade policy that seeks to expand domestic innovation capacity and technology exports by manipulating the international trading system and subverting the intent of free trade. ITIF calls these practices “innovation mercantilism,” and they cover a wide range of methods, including localization barriers to trade (LBTs), indigenous innovation, currency manipulation, and intellectual property theft. Together, these policies drastically inhibit the ability of U.S. enterprises to effectively compete.
How to Craft an Innovation Maximizing T-TIP Agreement
The Transatlantic Trade and Investment Partnership (T-TIP) Agreement should be designed to maximize innovation in the United States and the European Union. Innovation is a central driver of economic growth, and thus a key focal point of U.S. and EU economic development strategies. Ideally, the T-TIP would eliminate all tariffs and non-tariff barriers to trade. However, realistically, both the European Union and the United States are going to make trade-offs, and it is important to make these trade-offs in a manner that promotes innovation-based trade as a fundamental driver of global growth.
Eliminate all tariffs in trade on innovation industries.
Liberalize trade in innovative services, especially telecommunication services and audiovisual services.
Create transparent, science-based regulatory regimes in the pharmaceutical, automotive and agricultural sectors.
Prohibit the use of data center localization as a condition of market access.
Honor existing international data flow agreements, such as the Safe Harbor.
Introduce rules to prevent restrictions on the import and use of commercial encryption technologies.
Lower all barriers to foreign direct investment.
Implement an expansion of the EU-U.S. procurement commitments.
Outlaw the use of forced offsets.
End government production subsidies to areas of innovative trade, like aerospace.
Clarify the scope and coverage of national treatment in the General Agreement on Tariffs and Trade (GATT), explicitly subjecting state-influenced entities to a robust national treatment obligation.
Enshrine 12 years of data exclusivity for biopharmaceutical products.
Adopt a common definition for trade secrets: any information that has economic value (actual or potential), is not generally known to the public, and for which the trade secret owner has taken reasonable measures to keep private.
Establish a bilateral R&D participation model in order to coordinate cross-border pre-competitive research partnerships.
Allow companies participating in pre-competitive research to freely transfer ownership and access rights for foundational IP to affiliates across and between the European Union and the United States.
Implications of Localization Barriers in the Modern Global Economy
Robert Atkinson will speak on forced localization at the "Implications of Localization Barriers in the Modern Global Economy" event in Geneva, Switzerland. He will be a part of a discussion among senior diplomats, business leaders and policy experts on the impact of localization measures on international trade.