Trade regimes as a tool for cyber policy
| DOI | https://doi.org/10.1108/DPRG-08-2018-0042 |
| Date | 14 January 2019 |
| Published date | 14 January 2019 |
| Pages | 19-31 |
| Author | Karl Grindal |
| Subject Matter | Information & knowledge management,Information management & governance,Information policy |
Trade regimes as a tool for cyber policy
Karl Grindal
Abstract
Purpose –This researchdevelops a framework for assessing internationaltrade regimes which could be
used to address global cybersecurity challenges based on the corresponding costs of implementation
and their distribution. Trade regimes, such as export controls, tariffs, investment restrictions and
localizationrequirements, have disparateeffects on foreign and domestic producersand consumers.
Design/methodology/approach –These trade regimes and their effects are explored through a
literature review and conceptual framework. A case study then assesses trends in the use of the
Committeeon Foreign Investment in the United States (CFIUS).
Findings –CFIUS investment restrictions have justified blocking specific Chinese acquisitions of
American companies,at least partially, on cybersecurity grounds using a targetedand evidence-based
approach. Because of its targeted effect, CFIUS is the least likely of these trade regimes to block
legitimate internationaltrade. Restrictions on international trade,without sufficient cause, produce dead
weightloss under the theory of comparative advantage.
Originality/value –These costs should be accounted for in any policy-based decision, particularly as
policy entrepreneurs increasingly push for embedding cybersecurity reforms into these traderegimes.
While the literatureon trade regimes and cybersecurity is growing,this paper advances this research with
its comparativeframework.
Keywords Cybersecurity, Trade, CFIUS, Export controls, Investment restrictions
Paper type Research paper
Introduction
The international trade in hardware, software and data is complicated by cybersecurity
challenges. Domestic regulations and enforcement fall short when foreign criminals and
governments are out of their jurisdiction, and cheap insecure technologies proliferate
worldwide. Meanwhile, the global supply chain regulates the flow of everything fr om guns to
toys covered in leaded paint. Many security experts consequently look t o restricting trade as a
mechanism to promote domestic cybersecurity, or to implement some form of global arms
control. Yet, as with any restriction on trade, these proposals have major, potent ially negative
economic consequences. This paper explores these topics through a brief description of
cyber relevant trade regimes, a literature review, framework description,and case study.
The framework assesses various Trade Regimes, defined by Black’s Law Dictionary as a
“[s]ystem of non-tariff and tariff barriers aimed to strengthen local producers
competitiveness.” Specifically, this paper is interested in those regimes that inhibit trade as
a policy mechanism for improving cybersecurity. These trade regimes included: arms
control regimes, foreign investment restrictions, tariffs, and localization policies. The four
regimes were categorized basedon a framework to assess questions, such as:
Q1. Howfocused they were in application?
Q2. Whichactors would bear the highest cost?
Q3. Whatis the likelihood of retaliation? and,
Q4. Howwould these policies contribute to global Internet fragmentation?
Karl Grindal is PhD
Candidate based at
Georgia Institute of
Technology, Atlanta,
Georgia, USA.
Received 22 August 2018
Revised 6 November 2018
Accepted 8 November 2018
DOI 10.1108/DPRG-08-2018-0042 VOL. 21 NO. 1 2019, pp. 19-31, ©Emerald Publishing Limited, ISSN 2398-5038 jDIGITAL POLICY, REGULATION AND GOVERNANCE jPAGE 19
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