HP Policy Position. Trans-Pacific Partnership (TPP)

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1 Hewlett-Packard Company 3000 Hanover Street Palo Alto, CA hp.com HP Policy Position Trans-Pacific Partnership (TPP) Background In November 2011, the leaders of the Asia-Pacific nations of Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States announced their intention to negotiate the Trans-Pacific Partnership (TPP), an ambitious and ground-breaking free trade agreement aimed at creating a pan-pacific free trade bloc, by enhancing trade and investment among the partner countries; promoting innovation, economic growth, and development; and supporting the creation and retention of jobs a free trade agreement that comprehends and embraces the 21 st century global marketplace. Canada and Mexico recently joined the negotiations; a number of countries, including Japan, the Philippines, South Korea, Thailand, and Taiwan, have expressed interest in joining. The TPP parties have concluded fifteen rounds of negotiations, with the goal of completing negotiations in The next round of negotiations will be held in Singapore from March 4-13, HP s Policy Priorities and Recommendations for TPP Negotiators HP has presence in 170 countries, and more than sixty-four percent of HP s 2012 sales were made outside of the United States. HP, therefore, supports comprehensive and progressive international trade agreements, like the TPP, that address the type of high-tech trade issues critical to our ability to compete fairly and to continue to innovate in the 21 st century global marketplace. HP urges TPP negotiators to commit to: Open markets to our products, through duty reductions; Open markets to our services, by allowing for the free flow of data across borders and by limiting local infrastructure requirements for digital service providers; Adopt robust and interoperable privacy and data protection standards; Adopt government procurement policies that ensure competition, innovation, and efficient use of precious government resources; Increase both the protection and enforcement of intellectual property rights; Improve regulatory transparency and convergence; Restrict technology transfer requirements; and Adopt measures to facilitate trade, customs procedures, and international supply chains. Page 1 of 5

2 Increased Market Access HP supports global practices that promote innovation and job creation by lowering barriers to trade in goods and services, both of which are mainstays of HP s global footprint, and encouraging integration in new markets. Liberalization for Trade in Goods: All TPP parties, aside from Mexico, Chile, and Brunei, are members of the World Trade Organization (WTO) Information Technology Agreement (ITA), which provides duty-free treatment for most HP products. HP encourages Mexico, Chile, and Brunei to join the ITA as part of the TPP negotiations. In addition, HP urges all TPP countries to support the expansion of the ITA currently being negotiated under the auspices of the WTO. Liberalization for Trade in ICT Services: Innovation and the increasing penetration of information and communication technologies (ICT) are important drivers of economic growth, dynamism, job creation, productivity, and competitiveness for all sectors of the global economy. One of the hallmarks of cloud computing and ICT services delivery is the ability to transcend national and even regional borders. The global nature of these business models thus requires internationally conscious policies. HP s varied services, support, consulting, and cloud businesses as well as its global operating model and supply chain rely heavily on policies that allow for cross-border digital data and information flows to serve customers around the world efficiently and effectively. Small and medium enterprises (SMEs), particularly in the developing markets of the TPP region, also benefit tremendously from cross-border data and information flows by allowing such businesses and entrepreneurs to access faraway markets, scale operations, and innovate across borders, all via the digital platforms that rely on the free flow of data across borders. Free Flow of Data Across Borders: To compete effectively in the global markets of the 21 st century, enterprises and individuals alike must be assured that they can move and maintain information and data across borders in a reliable and secure manner. HP, therefore, urges TPP negotiators to adopt new, binding obligations that would require TPP country governments to support the cross-border flow of data among TPP countries. Prohibition of Server Location Mandates: Global IT business models take advantage of economies of scale to determine data center location strategies that allow companies like HP to securely store data in one jurisdiction, while providing services in others. For this reason, HP urges TPP negotiators to adopt binding commitments to prohibit TPP country governments from requiring that servers or data be physically located within the TPP country as a condition for a global company, like HP, to provide ICT services in that TPP country. HP recognizes that in some cases, such as well-defined national security and citizen welfare areas, requirements that data be located within a national border can be legitimate. Therefore, HP supports the ongoing process whereby TPP country governments are negotiating specific exceptions for which individual governments will be allowed to require that servers or data be physically located in their country. However, HP urges negotiators to ensure that these exceptions are based on legitimate national interests and are not merely disguised protectionism intended to unfairly benefit local providers or to force decisions to locate ICT infrastructure within a particular TPP country. In this way, the TPP will create a competitive environment for ICT services. Page 2 of 5

3 Robust Privacy Protections: In this context, HP does not lose sight of the need and obligation to protect and secure personal information and privacy. HP is a leader in privacy, adopting the highest level of protection for individual s privacy rights and working globally to strengthen privacy regimes. To ensure the most effective privacy standards worldwide, HP seeks to create interoperability of international privacy frameworks and thus urges TPP negotiators to ensure that the TPP adopts robust privacy and data protection standards modeled after the APEC Cross- Border Privacy Rules or the EU Binding Corporate Rules (BCR). Government Procurement HP places great value on its status as a trusted advisor and supplier of products and services to governments around the world. Given the right procurement conditions, particularly with respect to technology procurements, governments can ensure competition that breeds innovation, quality, productivity, environmental sustainability, and efficient use of precious government resources. HP, therefore, supports provisions in the TPP that impose stricter disciplines on the role of state-owned enterprises (SOEs) in government procurements to ensure that global firms, like HP, are treated no less fairly than SOEs. To further ensure competition and efficiency, HP also urges TPP negotiators to adopt international norms versus local standards in technology procurements; to focus on the lifecycle costs of technology procurements; and to eliminate unlimited liability requirements that are untenable for reputable technology companies like HP. International v. Local Standards: In government procurement of technology, international norms versus local standards take into account rapidly changing technological innovations and the full lifecycle cost of technology versus merely the up-front, purchase price. By adopting such policies, governments open up their procurement processes to additional choice and competition, thus driving higher value and efficiency and ensuring that the procurement process does not merely become a race to the bottom at the expense of quality and reliability, particularly in large-scale public technology procurements. The inclusion of international, industry-led standards in tenders, particularly for technology procurements, ensure that government procurement officers focus on performance and functionality requirements, which has two primary benefits: The tenders remain current as innovation progresses, and they do not lock-in certain brands. In this way, technology-neutral tenders ensure that governments and other public entities can procure and utilize the latest innovations and solutions, even if tenders are drafted long before the procurement decision is made. Elimination of Untenable Terms and Conditions: Unlimited liability requirements in public tenders are untenable in the IT industry, as they suggest the possibility that companies like HP could be held liable, for example, every time a server is down. As a result, reputable companies like HP are effectively precluded from bidding on important public tenders, if unlimited liability is required, resulting in two primary unintended consequences: (1) companies of the caliber of HP would bid at a higher price to cover the risk or choose not to bid at all or (2) an unscrupulous vendor would agree to such terms and conditions but fight them afterwards when problems arise. Either way, the procuring government and its citizens are disadvantaged. Focus on Total Cost of Ownership v. Up-Front Cost: Driving the focus of government procurement from up-front cost to total cost of ownership over the lifecycle of the technology (including maintenance, Page 3 of 5

4 servicing, productivity, etc.) ensures that government customers have access to the most innovative, valuable, and cost-effective technologies. Focusing solely on up-front cost, by contrast, incentivizes governments to purchase technology from vendors that offer products and services at lower up-front costs but that require significant servicing and other costs at a later date. By factoring in total cost of ownership, governments ensure a competitive bidding process that ensures competition, quality, productivity, functionality, and value for money over the entire lifecycle of the technology. In sum, HP advocates for procurement policies that help governments stretch their budgets the furthest and make the wisest longterm investments. Enhanced Intellectual Property Rights Protection HP s business is based on innovation and relies on fair and efficient intellectual property protection. Innovators like HP and its competitors throughout TPP member countries require robust protection for their intellectual property rights in order to continue investing resources in the innovation economy. HP, therefore, supports commitments by TPP countries to undertake more rigorous protection and enforcement of intellectual property rights. Anti-Counterfeiting Counterfeit products cheat consumers who unknowingly purchase products thinking that they are genuine, thereby reducing customer confidence, damaging brand reputation due to poor quality and reliability, and oftentimes causing poor functionality in related products, for example, in the case of counterfeit ink and toner cartridges. Counterfeiting is one of HP s largest global challenges and is now more sophisticated and pervasive than ever. The sale of counterfeit HP products causes income loss, thus lessening our ability to create jobs and develop new technological advancements. HP, therefore, seeks to deter the entry of counterfeit products into the global market through both expanded intellectual property commitments and rigorous enforcement by TPP member countries. Supply Chain Facilitation HP manages the largest technology supply chain in the world, which allows HP to take advantage of important cost savings that are eventually felt by our customers and partners. HP welcomes inclusion of provisions in the TPP that aim to facilitate supply chain efficiency by eliminating duplicative and trade-distorting barriers, enhancing crossborder physical connectivity, and improving coordination among customs officials. Regulatory Coherence and Transparency HP supports simplified and streamlined customs procedures included in the TPP which would facilitate and create predictability in customs clearance in TPP member countries for U.S. exporters, like HP. Streamlining customs procedures and paperwork, harmonizing rules of origin protocols, and ensuring simplified and transparent customs regulations saves operating costs which companies like HP can pass on to our consumers. Regulatory transparency is another key factor in establishing the certainty global businesses such as HP need to operate, in general, and particularly across borders. HP, therefore, supports provisions in the TPP that would improve the notification, consideration of industry input, and accountability of regulatory processes that affect trade in TPP member countries. Conformity Assessment Often existing testing and certification requirements for high-tech products are redundant or unnecessary and result in establishing technical barriers to trade that not only result in delays but may also prevent the adoption of new, innovative, or more efficient technologies. Therefore, in cases where a government authority requires compliance with mandatory conformity assessment requirements to ensure that information technology equipment meets a standard or technical regulation for electromagnetic compatibility, HP supports efforts by TPP negotiators to have Page 4 of 5

5 such authorities accept a Supplier s Declaration of Conformity. In this way, TPP nations will remove unnecessary and costly obstacles to trade in high-tech products. Regional Cooperation on Telecommunications Equipment HP encourages TPP countries to participate in cooperative efforts to facilitate trade in telecommunications equipment through implementation of the APEC Mutual Recognition Arrangement for Conformity Assessment of Telecommunications Equipment. Encryption/Technology Transfer The use of encryption in the high-tech sector is becoming ubiquitous, as businesses and consumers alike seek to protect and secure personal information and data on devices and during data transfer. HP, therefore, urges TPP countries to refrain from imposing or maintaining technical regulations or conformity assessment procedures that require product manufacturers or suppliers, as a condition of manufacture, sale, distribution, import, or use, to (1) force companies to transfer or provide access to proprietary technologies; (2) require partnership with a domestic persons or entities; or (3) require the use of a particular technology or standard not based on a relevant international standard Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein. Page 5 of 5