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Feds Won’t Use Intelligence for Commercial Advantage but Trade Enforcement OK, Directive Says

Thursday, January 23, 2014
Sandler, Travis & Rosenberg Trade Report

President Obama issued Jan. 17 a policy directive that, among other things, limits the collection of intelligence for commercial purposes. PPD-28 is a broad statement of policy on the conduct and use of signals intelligence (e.g., the collection of information transmitted over electronic networks) and comes amid continuing fallout over the domestic and international scope of federal intelligence collection programs. Of particular concern to the trade community have been calls within Europe to suspend negotiations on a free trade agreement with the U.S. until stronger privacy protections are assured.

PPD-28 recognizes that signals intelligence activities, and the possibility that such activities may be improperly disclosed to the public, pose risks to U.S. commercial, economic and financial interests. These risks include a potential loss of international trust in U.S. firms and the decreased willingness of other nations to participate in international data sharing, privacy and regulatory regimes. The directive states that U.S. signals intelligence policies and practices must therefore appropriately take into account the increased globalization of trade, investment and information flows, as well as other considerations.

To that end, the directive only allows the collection of foreign private commercial information or trade secrets to protect the national security of the United States or its partners and allies. Signals intelligence will be collected exclusively where there is a foreign intelligence or counterintelligence purpose to support national and departmental missions, the directive states, and the collection of foreign private commercial information or trade secrets to afford a competitive advantage to U.S. companies and U.S. business sectors commercially does not qualify as such a purpose.

However, the directive leaves the door open to using signals intelligence for trade enforcement purposes by stating that certain economic purposes, such as identifying trade or sanctions violations or government influence or direction, will not constitute competitive advantage.

The Information Technology and Innovation Foundation said the directive should have gone further. “Specifically, the president should … renounce the practice of having intelligence agencies work to introduce backdoors and other vulnerabilities into commercial products,” an ITIF press release states. “In addition, the president should work with other countries to establish common rules on when intelligence communities can access foreign data so as to promote zones of free trade in digital goods and services.”

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