Wall St. groups take cautious stance on TPP data storage proposal

Financial services industry leaders have registered cautious wait-and-see reactions to an Obama administration proposal aimed at protecting their data outside the U.S. border in trade agreements. 

The powerful Wall Street groups said a proposal that would largely prohibit data transfer barriers and data localization requirements for the financial sector in future trade deals is a step in the right direction but more work lies ahead.

{mosads}Ken Bentsen, president and CEO of the Securities Industry and Financial Markets Association, said that his group values “the hard work that the Treasury, USTR and others have done in getting us this far” and they “look forward to learning more regarding these proposals as we continue to work with the administration and Congress to reconcile these issues in TPP.”

“We are particularly encouraged by what future trade and investment agreements may provide in terms of securing for financial services firms protections similar to those afforded other industries,” Bentsen said. 

The Treasury Department and the Office of the U.S. Trade Representative (USTR) on Wednesday said they had reached an agreement with the sector aimed at calming their concerns and smoothing passage of the Trans-Pacific Partnership (TPP) in Congress.

Financial services firms have said they would hold back support of the TPP until the Obama administration resolves the data and other issues such as protections for high-tech medicines. 

Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce, said “this proposal represents an important step forward for U.S. trade and investment policy, though there is still much work to be done to implement it.”

“We urge the administration and Congress to redouble their efforts on this front and to address remaining areas of concern in the TPP,” Brilliant said.

Capitol Hill reaction to the plan struck a similar tone to that of the business groups. 

Rep. Ed Royce (R-Calif.), chairman of the House Foreign Affairs Committee, called the proposal “a positive step, but further action is necessary.”

“We must push forward with a strong Trade in Services Agreement and side deals with the four TPP countries not in those talks,” Royce said.

“I am optimistic that we can create a level playing field for the financial services sector.”

The new framework would apply only to ongoing and future trade negotiations, such as the Trade in Services Agreement, the Transatlantic Trade and Investment Partnership with the European Union and the U.S.-China Bilateral Investment Treaty.

Steve Simchak, director of international affairs for the American Insurance Association (AIA), said “we hope that this approach will be used during the accession of future parties to the TPP, and that the U.S. government will address forced localization requirements in current TPP countries bilaterally.”

Seven of the TPP’s trading partners — Australia, Canada, Chile, Japan, Mexico, New Zealand and Peru — are part of other agreements such as the trade in services talks.

U.S. officials are expected to work with Vietnam, Malaysia, Singapore and Brunei to address the issue in the TPP deal.

“When incorporated into binding international agreements, we believe that this new approach can provide badly needed relief from data protectionism while giving governments the access to data that they need for legitimate regulatory and supervisory functions,” Simchak said.