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U.S. lawmaker worried NSA snooping will hurt digital trade

By Doug Palmer

WASHINGTON (Reuters) - A U.S. lawmaker said on Wednesday he was worried revelations about U.S. surveillance activity on the Internet could encourage governments to erect new barriers to digital trade just as United States is pushing to tear existing ones down.

"That should be part of the equation when we're think how we should balance security and privacy. We should think about (how such surveillance activities affect) public perception in allied countries and ... how public perception impacts trade," said Representative Jared Polis, a Democrat.

With an estimated 5 billion smart phones expected to be in use by 2020, U.S. companies want to be able to offer their goods and services in as many countries as possible over the Internet.

In a speech at the Center for Strategic and International Studies, a Washington think tank, Polis said he feared free trade opponents in other countries would use the U.S. surveillance revelations to justify "protectionist measures" in cyberspace.

Polis is a former Internet businessman whose companies included an online greeting card website and a flower delivery service. The Colorado Democrat serves on the House of Representatives Rules Committee and helped to block a bill known as the Stop Online Piracy Act, which he said was a threat to free and open Internet.

The United States, in separate trade talks with 11 other countries in the Asia-Pacific region and with the 28 countries of the European Union, is pushing for rules that would make it easier for Internet companies like Google, financial services companies like Citigroup and even small start-up operations based in someone's garage to move customer data across borders.

That task has been complicated by the disclosure last month of the National Security Agency's data collection program Prism and its ties to U.S. Internet giants like Microsoft, Yahoo, Google, Facebook.

In response, those companies have sought to assure the public the NSA does not have unlimited or direct access to their data and that they respond only to lawful requests for information.

As part of its efforts to rebuild trust, Google has asked the U.S. Foreign Intelligence Surveillance Act court to allow the company to disclose the amount of requests they have received for information under the program.

"We are very focused on that piece right now and are hopeful that we will be able to be more transparent" about the company's involvement, Johanna Shelton, Google's senior counsel for public policy and government relations, said during the discussion at CSIS.

Jake Colvin, vice president at the National Foreign Trade Council, said at a separate discussion at the Information Technology and Innovation Foundation that in the short-term, "foreign companies are happily using Prism as the latest in the series of clubs to beat U.S. companies over the head."

"I think this will certainly embolden calls for digital trade protectionism," in the form of countries demanding that companies store data locally instead of in a company's home country or in the cloud, Colvin said.

The United States has been pushing against such "forced localization" requirements, which it argues add unnecessary costs and make business on the Internet less efficient.

U.S. companies also complain that foreign governments sometimes use data privacy rules as a disguised form of protection to help their domestic companies.

Google and other Internet companies also do not want to be held liable for actions taken by users over their networks.

(Editing by Mohammad Zargham)

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