Category Archives: North America

Can Digital Privacy Be Protected By Borders?


In the United States, if the FBI thinks you committed a crime, it can go to a judge for a warrant and search your house. But if your house happens to be in Ireland, would a U.S. warrant give the Feds permission to search your property? Of course not.

But what about digital property? Does the FBI have the authority to access someone’s data, even if it is stored outside of the U.S.?

The Second Circuit Court of Appeals is trying to answer that second question. Microsoft and the U.S. Department of Justice are waiting for the decision that will determine whether or not law enforcement officials can access emails stored outside of U.S. borders. No matter which side wins, the ruling will affect discussions about national sovereignty and how it relates to the Internet for years to come.

The case began when a judge issued a warrant requiring Microsoft to turn over emails of a suspected drug trafficker that were stored on an Irish server. A lower court upheld the warrant’s validity when the company protested. Microsoft fought back, arguing that such a demand was an extraterritorial warrant and that investigators needed to get an Irish warrant to access the emails. The U.S. government countered that because Microsoft is based in Redmond, Washington, all of its data is subject to U.S. warrants.

Behind the dispute is the practical matter that it takes an average of 10 months to process a U.S. warrant request under a mutual legal assistance agreement. Pulling data from the Irish server remotely would take minutes.

Microsoft—and most other technology companies—provides its services in the cloud, storing data on remote servers to provide quick, multi-device access to consumers. However, the term “cloud” itself is a misnomer. It evokes the idea of data floating about, placeless. But this notion of the cloud is an illusion: data in the cloud is stored on physical servers that are situated squarely on sovereign territory, and the companies that manage the data are subject to the laws of that country.

If Microsoft wins its appeal, the U.S. government would be compelled to go through established mutual legal assistance processes to get its hands on data stored on servers outside of U.S borders. Judging from Ireland’s support of Microsoft’s position, other states favor this outcome and would quickly embrace an affirmation of their data sovereignty. Some countries, such as Russia and Australia, already require data about their citizens to be stored locally, in order to keep it beyond the reach of the United States. At least 20 more countries have considered similar laws.

If Microsoft wins its lawsuit, such “data localization” regulations could become the norm. But if that happens, technology companies would face a compliance nightmare. They would have to build expensive data storage facilities abroad, fork over hefty fines, or give up on major markets. Startups with fewer resources would find it exceedingly difficult to expand abroad, stifling the spread of innovation.

It’s not just a business problem, either. Many warn that if the court rules in Microsoft’s favor it could pave the way for a “Balkanization” of the Internet that would fracture the global network.

On the other hand, if the Department of Justice wins, the outcome may not look all that different. Microsoft insists that extending the reach of search warrants to data stored abroad will start a “global free-for-all” in which “any country with jurisdiction over a provider can reach into any other country” and plunder its emails. Suddenly, foreign companies offering localized data solutions would find their services in high demand with neither the companies nor their data subject to U.S. law. The resulting patchwork of local solutions sounds remarkably similar to the “Balkanization” situation the experts warn of.

At the moment, those warnings sound particularly prescient. Last week, the European Union’s Advocate General invalidated the existing Safe Harbor agreement that has governed data transfer from E.U. to U.S. servers due to concerns about privacy and government surveillance. Microsoft immediately filed a notice with the court, pointing out that the opinion “could subject U.S. companies to charges of violating European law any time they transfer personal data to the U.S., especially when U.S. law-enforcement agencies instigate the transfer.”

Concepts of national sovereignty on the Internet are getting hazier by the day. Last month, France’s data regulator ruled that the European Union’s “right to be forgotten” directive extends beyond and other European search products to all search results, worldwide, for French citizens. Google responded: “As a matter of principle we respectfully disagree with the idea that one national data protection authority can assert global authority to control the content that people can access around the world.”

Simultaneously, China is reportedly pressuring U.S. tech companies to sign a pledge to turn over user data and source code in exchange for access to the massive Chinese market. Language in the document suggests the government wants a back door into encrypted communications, which could violate the privacy of foreigners communicating with Chinese citizens. Like France, China seems to prefer extraterritorial application of its domestic Internet policy—and if companies want access to the Chinese market, there may not be much they can do about it.

What the U.S. court really faces in the Microsoft case is an existential decision about the sovereignty of nations in the age of a global Internet. No matter which way the court rules, the case is indicative of problems we will continue to face as technology, built not to adhere to any international political order but to facilitate broad information-sharing and communication, clashes with an entrenched system of physical borders and interlocking jurisdictions that simply cannot contain the flow of data.

Overcoming Challenges to India–U.S. Defense Cooperation

Secretary of Defense Ash Carter meets with Prime Minister of India Narendra Modi in New Delhi, India, June 3, 2015. DoD Photo by Glenn Fawcett (Released)

United States Defense Secretary Ashton Carter and his Indian counterpart Manohar Parrikar signed in June a 10-year defense framework agreement renewing bilateral commitments. Defense ties are one of the brightest spots in the tapestry of cooperation between India and the U.S. and are driven by mutually symbiotic interests of strategic posturing and enhancing defense trade and commerce, as well as preventing the use of force to resolve territorial and maritime disputes. There is a growing congruence between the United States’ and India’s Asia-Pacific policies. Both have a significant stake in ensuring regional stability through retaining the status quo and establishing a rules-based multipolar Asia-Pacific, which would ensure all countries uphold the United Nations Convention on the Law of the Sea (UNCLOS), respect territorial sovereignty, and not resort to hegemonic actions. Against the backdrop of increasing Chinese territorial assertiveness, the logic of geopolitics dictates that both India and the U.S. have vital interests in strengthening defense cooperation.

Prime Minister Narendra Modi and President Barack Obama pledged in September 2014 to deepen existing ties in defense cooperation to bolster security and treat each other as their “closest partners” in defense technology trade. Though defense trade between the two countries within a decade has reached circa $9 billion, there are structural challenges in the relationship that need to be addressed to achieve equal partnership in truest terms. So far the bulk of the India–U.S. defense trade has been through Foreign Military Sales (FMS) route—a program which facilitates sales of U.S. arms to foreign governments. However, in the long run importing through the FMS route would be untenable for the Indian government as the route is not based on competitive market principles, and dependence on arms imports from the U.S. stymies the Indian government’s intent to allow domestic industries to play a greater role in defense indigenization. The FMS route is also unsustainable for long-term development as it involves a one-time purchase from American defense contractors and does not add any technological know-how to Indian partners. Transfer of technology (ToT) is important for Indian industries to kick-start the much needed defense industrial base and generate economic spin-offs.

On the other hand, the Indian government has clearly indicated its preferred route for defense capital acquisitions: the “Buy”, “Buy and Make,” and “Buy and Make (Indian)” categories envisaged in Defense Procurement Procedure (DPP) 2013. The proposed categorization of DPP 2013 highlights steps taken by the Ministry of Defense which give precedence to Indian industries by galvanizing the indigenous defense manufacturing through the “Buy and Make (Indian)” category. The relaxation of foreign direct investment limits in defense from 26 percent to 49 percent augurs well for Modi’s vision of “Make in India” where the U.S. defense companies are encouraged to leverage partnership with Indian Defense Public Sector Undertakings under the “Buy and Make” categories to meet India’s huge domestic demands under provisions of DPP 2013.

Strengthening bilateral defense ties would also require the American government and defense companies to address India’s pressing concerns regarding the lack of credible technology transfers from the U.S.  It is understandable that Washington would be unwilling to part with the know-how of cutting-edge technology, which provides the U.S. defense industry with the competitive edge. However, India and the U.S. should make efforts to rise above the procedural challenges of ToT to focus on the Defense Technology & Trade Initiative under which both countries are exploring the joint production of military hardware. Despite a steady rise in licensing of U.S. defense hardware to India, stringent American laws on technical and manufacturing assistance agreements have failed to incentivize co-development on defense hardware between India and the U.S.. Stimulating the process of co-production would necessitate more flexible regulatory frameworks to allow American defense companies to share technologies with Indian partners expeditiously. As the scale of ToT interaction between India and the U.S. increases, issues of intellectual property rights would simultaneously gain significance. Hence, greater harmonization of Validated End-User agreements, which allows approved countries to receive U.S.-controlled products and technologies more easily and reliably, needs to be encouraged.  As India and the U.S. are making progress towards taking defense partnership to the new level, embarking on co-development and co-production of defense technologies and synchronizing end-user agreements would help develop India’s private sector into the role of systems integrator.

However, there are concerns that India is not in a position to absorb the transfer of advanced technologies. U.S. Senators John Cornyn and Mark Warner have noted that India’s heightened expectations for ToT outpace India’s offset absorption capacity. Thus, from the Indian side, the ToT proposals need to be approached from a perspective of sensitivity with regard to what can be achieved with the technology received.

Another major roadblock has been lack of accord on signing “foundational agreements,” logistics support, CISMOA (Communications Interoperability and Security Memorandum of Agreement), and BECA (Basic Exchange and Cooperation Agreement for geo-spatial cooperation), which the U.S. insists is fundamental for transfer of military technology and weapons. While India’s former United Progressive Alliance government hesitated to sign the foundational agreements due to security concerns on matters of sensitive technology, it is possible that the Modi government may take a fresh look at them, contingent on the progress and success of co-production initiatives.

India also needs to address the structural inadequacies which prevent it from developing a vibrant defense domestic manufacturing base. India’s defense planning process has been greatly handicapped by an absence of a national security doctrine and suffers from a lack of inter-service prioritization. There exists dysfunction with technology planning, development, and coordination among R&D bodies, production agencies, and end users. It is of crucial significance that India should have a Chief of Defense Staff to provide single-point military advice to the government in order to coordinate between the different inter-service agencies.

As the power balances of the 21st century shift, Indo-U.S. defense partnership will not be solely about defense commerce; instead, this vital partnership flows from geopolitical interests. To sustain the momentum of burgeoning defense ties, India and the United States should undertake proactive measures to resolve the complex policy challenges faced by both nations towards bilateral cooperation. As the U.S. continues to bolster India’s militarily preparedness through sales of sophisticated defense hardware, intensified cooperation on counter-terrorism efforts and intelligence sharing, a militarily strong India complements America’s security goal of a stable multipolar Asia-Pacific.

The Trans-Pacific Partnership and Its Critics

Creative Commons image courtesy of  KP Tripathi:

After an intense legislative battle, the U.S. Congress finally granted “fast track” trade authority to President Obama in June. The latter authority, which the White House lobbied vigorously for, will now require Congress to take an “up-or-down” vote on the Trans-Pacific Partnership (TPP) trade agreement the Obama Administration is currently negotiating. In short, Congress has relinquished its power to amend or change the forthcoming agreement and instead will simply vote on whether to accept or reject the trade pact in its entirety.

The TPP involves eleven other countries that accounted for 44 percent of American goods exported in 2013. The U.S. already has free trade agreements (FTAs) with several of the countries involved, including Australia, Canada, and Mexico, but not with other participants, such as Japan.

Domestic opposition to the TPP has been robust, both before the fast track vote and after it. Most of the opposition stems primarily from Progressives, House Democrats, and unions. However, two recent events have weakened the Republican consensus in support of the TPP. One is the currency devaluation in August by the Chinese government, which will provide China with an advantage in international markets by lowering the cost of its exports. Although China is not a party to the TPP negotiations, its actions have galvanized some conservative critics of the TPP who had pressured the Obama Administration, unsuccessfully, to include restrictions on such currency practices in the trade pact.

More importantly, the surprising surge of Donald Trump to the top of the Republican presidential pack may further roil conservative backing for the TPP.  For unlike former Governor Jeb Bush, Senator Marco Rubio, and most of the other candidates, Trump has expressed wide-ranging criticism of the proposed trade agreement. Whether the Trump candidacy will generate opposition to the TPP among some House Republicans remains to be seen.

However, it is the Democrats and trade unions that continue to provide the most concerted opposition to the TPP. Their strategy is to hammer the TPP with the “NAFTA” appellation. “NAFTA style globalization” and “NAFTA on steroids” represent the most common charge against the TPP, as if it was self-evident that the NAFTA trade pact between the U.S., Mexico, and Canada (1994) was a dismal failure that has undermined the American economy.

If you listen to the TPP critics, American FTAs—such as NAFTA—represent a primary cause of U.S. trade problems. Yet Germany and Japan do not participate in a FTA with the U.S. but collectively ran a merchandise trade surplus of $140 billion with the U.S. in 2014. In addition the U.S. deficit with Germany has more than doubled since 2010 and Germany maintains the highest current account balance (trade surplus) to gross domestic product (over 7 percent) of any major economy.

NAFTA is critically important for the U.S. as almost a third of all U.S. manufactured exports head to the Canadian and Mexican markets. The Eurozone, China, the United Kingdom, and Japanese markets combined did not match this figure in 2012. Furthermore, the U.S. merchandise trade deficit with NAFTA last year was not even close to the Germany-Japan deficit, despite the fact that the U.S. imported $120 billion in oil and gas from Mexico and Canada.

The lobby Public Citizen, in turn, holds NAFTA and “related” agreements accountable for the loss of five million manufacturing jobs. Yet manufacturing employment in the U.S. began its decline in 1979, fifteen years before NAFTA, and has continued its gradual descent ever since. Automation and computer processing, which have enhanced productivity in the manufacturing sector, have drastically reduced the number of manufacturing jobs as is recognized by even the most caustic critics of the TPP such as economist Robert Reich.

Rarely do the opponents of FTAs and the TPP acknowledge that manufacturing jobs have declined everywhere, not just in the U.S. Germany, the United Kingdom, and even China have experienced shrinking manufacturing employment over the past twenty years. The expansion of the service sector has further reduced the size of the manufacturing sector as consumer dollars increasingly flow into cell phone and Internet service, health care, and education.

Another line of attack is to suggest that the TPP is “not really about trade” as most of the rules under negotiation have to do with “behind-the-border” issues such as intellectual property (IP), investor dispute settlement procedures, rules of origin, and government procurement. But these non-tariff barriers to trade and investment are the new problematical areas in the 21st century as tariff barriers have receded in importance. Their resolution is critical to keeping the engine of international commerce moving along.

Approximately 40 million American jobs are tied to intellectual property intensive-industries alone. For the U.S. to sit on the sidelines while other governments set up the IP rules would be foolish. Also, the TPP will attempt to ensure fair competition between privately owned American firms and large Asian, state-owned enterprises.

Senator Elizabeth Warren has attacked the “investor–state dispute settlement” (ISDS) provisions of the TPP as they will allow foreign investors to challenge the laws and regulations of TPP member states, with arbitration carried out by an international panel of jurists rather than by national court systems. Warren inexplicably refers to these as “rigged, pseudo-courts.”

The toxic consequences, according to Warren, include the weakening of American sovereignty as foreign firms contest American financial, environmental, and labor regulations.

However, these criticisms are wildly embellished. The U.S. has never lost an ISDS arbitration as yet and the United States Trade Representative’s office is insisting upon rigorous TPP standards to avoid frivolous lawsuits. Moreover, national courts are not always the most neutral venue to resolve investment disputes as the government of the country itself may be charged with breaching its trade obligations.

In addition, despite what some critics have suggested, under all U.S. ISDS agreements an ISDS panel can only order compensation for damaged investments; it cannot overturn domestic laws and regulations. The same would apply for the TPP.

United States participation in the TPP is critical to protect American business interests in the exploding Asian markets. It will cut the costs and risks of doing business, enhance the efficiency of global supply chains, and level the playing field for all participants. It will also incorporate World Trade Organization standards into the agreement as well as establish a “best practices” trade template that will pressure outsiders (China) to adhere to down the road.

As preferential trade pacts are proliferating across Asia and much of the globe, the U.S. needs to finalize the TPP as soon as possible. Yet the most recent group meeting of the TPP participants in late July failed to do so as disagreement continued over auto and agricultural trade issues. President Obama now finds himself chasing the clock as he struggles to complete the TPP before he leaves office in 2017 and before election year politics threaten to further unravel support for the agreement.

Unleashing the Power of the Atom, Take Two

Core reactive vessel at a nuclear power plant (Creative Commons image courtesy of  U.S. Nuclear Regulatory Commission: perception of nuclear energy across the world is mixed. While polls show that there is a deep and entrenched divide between supporters and opponents, they also reveal significant gaps in public understanding of both the benefits and risks of nuclear power. Support increases significantly when people realize nuclear energy’s potential contribution to climate change mitigation. While this fact may compel policymakers to introduce new nuclear power projects, it ignores the elephant in the room: nuclear waste disposal. A new generation of nuclear reactors may be the answer to this dilemma.

To date, nuclear power plants in the United States alone have produced over 74,000 metric tons of used nuclear fuel. That is equivalent to the weight of more than 10,000 elephants and could cover the entire surface of a football field 21 feet deep. For years the U.S. government hoped that a centralized depository at Yucca Mountain in Nevada could address long-term waste storage. But with seemingly insurmountable political barriers and federal funding on hold, an alternative is sorely needed.

Unfortunately, the U.S. Department of Energy seems to have no alternative plan currently in place. It was barred from collecting fees that would fund a program to dispose of radioactive material because no program currently exists. With completion of a central depository still decades away, nuclear power plants are left to store their waste on-site in cooling pools and dry casks. This waste material is highly radioactive and remains a health and security hazard for tens if not hundreds of thousands of years. All parties should agree that this situation is unsustainable.

Entrepreneurs and scientists are working on technologies that offer an elegant solution: using nuclear waste from traditional reactors as their primary fuel source. Known as Generation IV reactors, they are small and modular, decreasing capital costs and distributing power more efficiently. Generation IV reactors could be built for one quarter the cost of the current generation of large-scale power plants, which cost between $6 and $9 billion. Being relatively small, they would avoid many of the NIMBY concerns that dog conventional reactors.

UPower is a startup of MIT graduates that hopes to build 1-megawatt modular reactors to provide power in remote locations. Jacob DeWitte, its founder and CEO, considers the spent fuel from traditional reactors an “asset” for his company. Using the latent energy in nuclear waste, UPower’s reactors would provide uninterrupted power for over a decade with no carbon dioxide emissions and at a faction of the cost of the diesel generators they would replace.

Transatomic Power, another MIT startup, is one of a handful of companies that are working on molten salt reactors that generate electricity using spent nuclear fuel from conventional reactors. One of their reactors would cost an estimated $2 billion and generate 75 times more electricity than conventional nuclear reactors per ton of uranium fuel. There is no risk of a meltdown because the salt’s boiling point is significantly higher than the fuel temperature, unlike water-cooled reactors in use today. And while conventional reactors can generate up to 20 tons of radioactive waste per year, a 500MW molten-salt reactor would produce just 4 kilograms.

Though UPower, Transatomic, and the like hold immense potential, they still confront the same skepticism that the public holds for conventional nuclear energy generators. Besides waste disposal, public fear centers on terrorism and potential misuse of nuclear material. Dramatic accidents, such as Chernobyl, Three Mile Island, and Fukushima have had strong and lasting negative effects on public perception, even when there is a limited understanding of the cumulative risk and danger relative to other energy sources.

Educating the public will prove a challenging task. Governments will be unable to spearhead public awareness of nuclear energy’s strengths, because the public perceives them as untrustworthy relative to scientists, environmental protection agencies, and consumer organizations. At the same time, new nuclear technologies still need government support in the fields of research, commercialization funding, and regulation.

The alternatives, however, are far worse. The deleterious effects of emissions from coal power plants and other fossil fuels are well documented. Estimated median lifecycle emissions for electricity from coal are 30 to 60 times larger than that of nuclear. Developing countries such as China, which sees nuclear as a clean alternative to coal, have successfully attracted Western investment to build a new generation of large-scale nuclear power plants.

Scientists and entrepreneurs are poised to unlock the potential of technologies that could provide clean, safe, cheap electricity using the waste from conventional nuclear reactors that has been collecting for years. Government policymakers and the general public should give these new nuclear technologies a second look and a fair shot.