To discuss any relationship between the National Information
Infrastructure (NII) and the recently concluded GATT (General Agreement
on Tariffs and Trade)-Uruguay Round negotiations requires an expanded
definition of the NII. Perhaps a more appropriate acronym would be III,
for international information infrastructure.
Because definitions and visions of an NII (III) abound, I'll add
that of the Computer and Business Equipment Manufacturers Association
(CBEMA). CBEMA believes the NII will be an all-pervasive network that
will enable the generation, accession, storage, processing,
transmission, and receipt of voice/audio, video, still images, graphics,
text, data, and multimedia. "All-pervasive" surely implies global; in
fact, CBEMA members who are investing in R&D to develop products and
services would not do so if the market were exclusively U.S.--the costs
and risks are too great.
Although the standards and technology exist to develop this all-
pervasive network--and many components of the infrastructure are indeed
in place--CBEMA also believes that an III is years away from becoming
reality. There are a number of reasons for this--many of them are
technical, many political, and many economic. GATT begins to solve some
of the problems in III deployment relating to the movement of products
needed to build the III and the protection of proprietary information on
the networks, but there are other standards and regulatory difficulties
that need to be resolved before either an NII exists in the United
States or an III is in place globally.
Movement of Goods
One of the achievements of the GATT negotiations was the reduction or
elimination of tariffs on NII products, such as computers and computer
parts, copiers, and printers. Tariff reductions per se will have
virtually no impact on the emerging NII in the United States, however.
Prior to GATT, the United States maintained very low or no tariffs at
all on imports of communications products needed to build the NII. And,
of course, there is an abundance of U.S.-made products. From a global
perspective, however, reductions in tariffs on computers and computer
parts, for example, will help to speed up the movement of these goods
across national boundaries and also help to reduce the costs of these
products, making them more prevalent.
Protection of Copyrighted Works
The copyright protection afforded by the GATT TRIPS (trade-related
intellectual property) text offers more promise for accelerating the
emergence of an III. Royalties for patents and copyrights represent one
of America's largest profit-generating exports. Likewise, piracy and
other unlawful use of copyrights worldwide represent annual losses in
the millions of dollars for U.S. copyright industries. In fact, any
global company with a large intellectual property rights portfolio is
threatened by piracy.
The intellectual property protection guaranteed by the GATT will
make it easier to punish those countries that are lax in enforcing their
copyright laws. Increased intellectual property protection in many
countries, especially Third World countries, will lessen the risk of
doing business in those nations as well and will serve to increase
worldwide access to NII products.
Many of the information products and services, not to mention the
entertainment products and services, that will be available will rely on
copyright to protect the right to be paid, and the TRIPS agreement will
greatly increase the confidence of vendors. Copyrights will, of course,
have to be supplemented by technical features such as encryption and
payment mechanisms so as to enforce and carry out the right of
remuneration.
Unresolved Trade Issues
United States Trade Representative Mickey Kantor and the Clinton
Administration are to be congratulated for the successful conclusion of
the GATT-Uruguay Round. Yet many trade issues relating to the NII remain
unresolved.
One particular market access issue involves the European
telecommunications market. The economic stakes are high: the European
Union (EU) and European Free Trade Agreement markets represent 500
million consumers. The issue is complex. The EU is struggling to
harmonize the telecommunications systems of its member countries. Some
of these nations, such as Great Britain, have telecommunications
structures that resemble those in the United States; most are tightly
controlled government monopolies in which telephone services subsidize
postal and other systems.
Procurement by these monopolies is also tightly controlled. The
U.S. trade representative is still negotiating with the EU to open
Europe's telecom procurements to foreign suppliers. Similar problems
exist with telecom services--determining who can use the system. Europe
and the United States hope to have created a framework agreement by the
end of 1995.
To further complicate the problem, not only is Europe attempting to
restrict access to its telecommunications market, but it is also
attempting to modernize its system by using standards based on primarily
U.S. technology, under a compulsory licensing policy that would cost
largely U.S. patent holders millions in revenues. CBEMA has filed a
complaint with the EU on behalf of these patent holders and awaits the
decision.
European telecommunications issues illustrate the difficulties that
will be associated with true implementation of an III. Japan, for
instance, has privatized Nippon Telephone and Telegraph--with the
government's retaining 60 percent. Further, after an early start, Japan
has let lapse most of its work toward an NII and now must catch up.
Technical Reality
Technical challenges also remain to creating the NII. A tremendous
amount of work needs to be done to establish linkages among diverse
computing platforms, diverse communications systems, and diverse
database structures. The standards necessary to achieve these linkages
among different countries have not been implemented.
A great deal of standards activity goes on within the Joint
Technical Committee on Information Systems and the International
Telecommunications Union. The strengthened GATT Technical Barriers to
Trade Agreement (Standards Code) will enable countries to resist other
countries' attempts to use different standards in an attempt to slow the
spread of the NII. Because the information technology industry has
adopted an approach of one international voluntary standard for each
functionality, our problems, contrasted to telecommunications, may be
minor.
Privacy and security issues are being addressed by organizations
such as CBEMA, as well as by some federal agencies. The GATT does little
to assist in these difficult areas. The EU has before it a series of
draft Directives on Data Protection (privacy) that create significant
concerns for U.S. business. The directives will apply to NII activities,
but unless they are clearly nontariff barriers, they cannot be dealt
with through the new GATT Disputes Settlement Process but must be
handled in bilateral negotiations.
The information security issues are similar. Significant issues
remain to be resolved--primarily the role encryption will play and how.
Currently, significant security policy barriers between countries exist,
but they are not susceptible to GATT discipline because they can all be
exempted under the national security clause. Thus, the slow process of
bilateral negotiations--already begun over standards for systems
security requirements-- will need to be completed before these barriers
are eliminated.
The NII Vision
Also unclear is what the final NII landscape will look like. How
dependent will it be on telephone lines, cable, or wireless
communications? Will it remain largely unregulated, or will public
utility commissions and other regulatory bodies impose burdens on the
network? Here also, the GATT will be of small help. The United States
pressed for significant improvements in these areas, but little was
achieved. In fact, there was considerable resistance to the dominance of
U.S. cultural exports: movies and audio. Given the lead the United
States has in developing the NII, to the extent that products or
services are perceived as part of "U.S. cultural dominance," we will
experience problems--particularly with Canada and France.
Few doubt the benefits to be derived from the NII. Yet no one
should underestimate the barriers to III implementation--technical,
regulatory, and economic--that will require the resourcefulness of the
public, academic, and private sectors to resolve.
Oliver Smoot is executive vice president of the Computer and Business
Equipment Manufacturers Association.