IBM Lobbyist Planted Question From USTR Official at a 2013 Public Hearing

By David Dayen, a lapsed blogger who writes for Salon, The Intercept and more. Follow him on Twitter @ddayen.

If you ever wondered just how much special interests ruled our politics, and in particular our trade policy, have I got a fun little story for you.

A couple weeks back, the Electronic Frontier Foundation released 124 pages of emails obtained in a FOIA request, asking for any communications between officials at the U.S. Trade Representative’s office and corporate lobbyists. The emails are mostly requests to set up meetings or share information between USTR leadership and representatives from either trade associations (The U.S. Chamber of Commerce, Telecommunications Industry Association, Coalition of Services Industries, etc) or corporations directly (Cigna, General Electric, Liberty Mutual Insurance, MasterCard, AT&T, etc).

You get a real sense of how it all works: some go-between tells USTR that a corporate bigwig wants to meet with them, or that they need a speaker for some lobbying event masquerading as a panel, and USTR jumps to attention, supplying whatever is needed. Seemingly USTR knows for whom they really work. Lobbyists also constantly forward USTR staff little notes or news articles or speeches to make them aware of their preferences in trade negotiations. At one point a Verizon representative asks, “Is there a way to include a placeholder in your working (trade agreement) draft?” That placeholder language is redacted.

But Steve Stewart, Director of Market Access and Trade for IBM Governmental Programs – in other words, IBM’s in-house lobbying shop – takes this relationship-building a step further. He enlisted USTR to help him get his company’s narrative out.

On March 12, 2013, Stewart sent an email to Christopher Melly, deputy assistant trade representative for services. Stewart was scheduled to speak later that day at a public hearing before the Trade Policy Staff Committee, consisting of Melly, other USTR officials and representatives from the Departments of Commerce, Labor, State and Treasury.

The subject of the hearing was then called the International Services Agreement, now known as the Trade in Services Agreement (TiSA), a sprawling, 49-nation pact under negotiation since early 2013. USTR scheduled the hearing, according to Melly’s opening statement, “to receive input from interested parties that will help us in developing the U.S. negotiating position.” Witnesses included labor leaders, trade groups, and representatives from Walmart and IBM.

I wrote about TiSA after Wikileaks released a bunch of negotiating drafts of it, which showed it to be bigger and badder than any other trade agreement currently under negotiation. The services it covers encompasses 4 out of every 5 U.S. jobs, from health care to private education, financial services to telecommunications, and plenty more. TiSA would create an effective regulatory cap on all these services, with “standstill” clauses to freeze regulations in place and a “ratchet” clause to make any broken trade barrier irreversible. An excerpt:

It may make sense to some to open service sectors up to competition. But under the agreement, governments may not be able to regulate staff to patient ratios in hospitals, or ban fracking, or tighten safety controls on airlines, or refuse accreditation to schools and universities. Foreign corporations must receive the same “national treatment” as domestic ones, and could argue that such regulations violate their ability to provide the service. Allowable regulations could not be “more burdensome than necessary to ensure the quality of the service,” according to TiSA’s domestic regulation annex. No restrictions could be placed on foreign investment—corporations could control entire sectors.

Bad news, so much so that, according to the text, the documents were supposed to remain classified for five years after being signed.

But I digress. So Stewart, the IBM lobbyist, is scheduled to testify at this public hearing about TiSA, in front of, among others, Melly. And here’s what he writes:

Since I have had to shorten my testimony to fit within 5 minutes, I deleted reference to Vietnam’s IT services decree. I would still like to reference this, so I think it would be helpful if you would ask me a question that would enable me to point to this as an example of why we need to include specific digital trade rules covering cross-border data flows and location requirements.

?

Emphasis mine. Stewart even offers Melly specific questions that he could ask in the hearing. He closes by adding, “See you in the morning.”

Authorizing cross-border data flows, which lobbyists bring up over and over again in the EFF emails, is one of the subjects that has privacy advocates up in arms about TiSA. Under this concept, financial services suppliers, e-commerce or social media sites could transfer individual client data out of a TiSA country for processing, regardless of national privacy laws. This breaks with thousands of years of precedent on locally kept business records.

IBM wants to open up data to cross-border administration, and they have created software to “securely” hold it in the cloud. But Vietnam’s draft IT services decree, released in 2012, would hamper this effort, by requiring servers for all cloud services, data centers or web-search portals to be located inside the country. Though Vietnam is not part of TiSA, their demand for local server storage has prompted corporate outcry.

So here’s this lobbyist, asking a government official to plant a question at a public hearing, which will help create the narrative for a policy position that would prove very lucrative for his client.

So what happens at the hearing? Stewart could not help himself, bringing up Vietnam’s decree unprompted. “It would be impractical… to locate servers in every country that they hope to serve,” he said. “We’ve raised a lot of concerns about that, with the help of USTR.”

But then Melly seizes the opportunity to ask a follow-up question. “Why did Vietnam see the need to have such a sweeping rule?” he mused, while acknowledging that trading partners have concerns about protecting consumer privacy and cybersecurity. “How do we address this fear factor in order to get the logical rule that you’re after, but calm the waters in terms of any legitimate concerns about how data is used and what happens to it?”

Stewart replies that the solution is not a decree to store data locally, but to “work with a private sector… to make sure that the latest available technology is being used.” That was precisely the technology IBM was pushing at the time. So Stewart earned his fee there.

And in the Wikileaks release of TiSA, the U.S. does in fact propose that parties to the agreement allow cross-border data flows, and not require data storage to be located inside their country.

It’s a small moment, but I think a critical one. The relationship between corporate America and trade officials is apparently so cozy that the corporations get to write the questions they are asked in public hearings. The overwhelming sense you get reading these emails is of no adversarial or even questioning relationship between the businesses and the government. Everyone’s on the same side. When Stewart writes “We at IBM appreciate everything you are doing” in a separate note to USTR, you believe he’s sincere. IBM maybe didn’t write the U.S. negotiating position themselves, but they certainly held the marionette strings.

TiSA has faltered of late. Both Uruguay and Paraguay dropped out of the talks earlier this month. The entirety of the trade agenda appears stalled out for the moment. But that’s not for the lack of trying by the corporate sector, as these email bear out.