Wall Street groups are putting their weight behind a push to pass a Pacific Rim trade deal this year after reaching an agreement with the Obama administration over a provision that guarantees electronic data can move freely across borders.
The Securities Industry and Financial Markets Association (SIFMA) and the Financial Services Roundtable (FSR) said Wednesday that they will support the Trans-Pacific Partnership (TPP) because the White House's new policy ensures that foreign governments are prohibited from imposing data localization requirements on flows of financial information.
“The new policy approach puts financial services firms on equal footing with other sectors who also depend on the free flow of data and server localization flexibility to run their global operations,” said Ken Bentsen, SIFMA president and CEO.
“SIFMA has long been a strong supporter of high-quality trade and investment agreements and believe the TPP will help to create jobs, increase exports and boost economic growth," Bentsen said.
The groups were concerned that the TPP language left the door open for countries in the 12-nation agreement to require banks and insurance companies to maintain data servers within their borders, raising issues of higher costs and security.
They had collectively vowed to withhold their support for the TPP until the data issue was addressed.
“FSR looks forward to continuing to work with the administration to effectively implement the new policy with respect to TPP partners and in other future agreements,” the group said in a statement.
“Recognizing this positive policy change and TPP's impact on jobs and the economy, FSR members urge Congress to move forward and consider the TPP agreement as soon as possible," FSR said.
The support from power players in the financial services industry gives President Obama a powerful ally in an increasingly difficult push to move TPP through Congress this year amid harsh anti-trade rhetoric from the Democratic and Republican presidential campaigns.
On Tuesday, Senate Majority Mitch McConnellAddison (Mitch) Mitchell McConnellMcConnell backs Herschel Walker in Georgia Senate race The Hill's Morning Report - Presented by Facebook - Democrats insist budget consensus close as talks drag on Manchin backs raising debt ceiling with reconciliation if GOP balks MORE (R-Ky.) maintained his position that the TPP's chances for passage in the lame-duck session after the November elections remain "pretty slim."
Another group, the American Council of Life Insurers (ACLI) also threw its support behind the TPP.
“ACLI’s support for TPP was made possible by a recent change in U.S. trade policy to eliminate data localization requirements in the financial services sector,” said Dirk Kempthorne, ACLI's president and CEO, in a statement.
“ACLI commends this change in policy, to be reflected in subsequent trade agreements, including those currently in negotiation,” he said.
“The policy against data localization requirements will facilitate the highest possible utilization of cross-border data flow provisions in future trade agreements."
The new data flow language was introduced as part of the Trade in Services Agreement and the Transatlantic Trade and Investment Partnership negotiations this week.
Most of the TPP’s largest trading partners are part of these agreements, including Australia, Canada, Chile, Japan, Mexico, New Zealand and Peru, so the data localization obligations would eventually apply to them.
At the end of May, the Treasury Department and the U.S. Trade Representative (USTR) announced they had hammered out a deal aimed at placating concerns to win the backing of the Wall Street groups.
But getting groups like SIFMA and FSR on board took several more weeks as the final language was completed.
The groups praised the work done by Congress, the Treasury Department and the USTR to settle the issue.
"SIFMA appreciates the constructive efforts of the Treasury Department and USTR to address our concerns regarding data transfer and localization provisions through enforceable commitments in trade and investment agreements,” Bentsen said.
"We also commend Congress for engaging in this dialogue to advance the policy," he said.