Yesterday, the Congressional Internet Caucus Academy (CICA) hosted a panel, “The Shifting Of U.S. Digital Trade Policy: Where Is USTR’s New Strategy Leading Us?” The discussion focused on U.S. Trade Representative (USTR) Katherine Tai’s decision in October 2023 to withdraw the U.S. from World Trade Organization (WTO) e-commerce negotiations on free cross-border data flows, preventing data localization mandates and requiring source code review. Further, USTR has stopped contesting other digital trade barriers to American companies, a considerable policy shift from our traditional approach on this issue.
Panelists included Natalie Dunleavy Campbell of the Internet Society, Lori Wallach of Rethink Trade, Jonathan McHale at the Computer & Communications Industry Association (CCIA) and Simon Lester at WorldTradeLaw.net.
As NetChoice noted in an October 2023 press statement, the USTR’s policy shift abandoned the U.S. businesses, innovators and workers who strongly benefit from principled digital trade practices. During the panel, Lester acknowledged the political angle, stating that Biden’s regulators were giving progressives a win by shifting the USTR’s long-standing principles.
Over the course of the conversation, there was much discussion about how abandoning U.S. leadership in digital trade at the WTO would impact American businesses. While Wallach argued that big businesses should feel the pain of regulatory pressures, Dunleavy Campbell rightly pointed out that only the largest businesses could afford the costs of building data centers in every country that required data localization, now that the US has withdrawn its objection to that policy.
A representative in the audience from Engine, a nonprofit organization advocating for startups, said that USTR’s reversal will harm startups. In a recent blog post, Engine’s Nathan Lindfors explained how the USTR’s recent policy changes are particularly detrimental to these small businesses, as digital trade “help[s] them reach markets around the world.”
Simply put, the general rules of economics apply to digital trade, just as they do to other sectors: red tape hurts competition by raising costs and barriers to enter a new market, and small companies are impacted the most.
In his points, McHale detailed how significant this reversal is, compared to policies previously embraced by both political parties: “We’ve been doing this for 45 years, because it’s been core to some of the U.S interests in this space.” This decision will ultimately leave the U.S. “out of the conversation,” meaning that American interests will not be represented globally on these issues. This is dangerous for many reasons, not the least of which is that countries who do not hold values of liberty and freedom will have more influence over crafting the rules of digital trade.
As a recent CCIA report detailed, the digital economy in 2021 contributed to 10.3% of U.S. GDP, and the tech sector is one of the largest and fastest growing industries in our economy. Abandoning this large portion of the U.S. economy to the whims of global regulators would undermine our growth, innovation and competition, on both the international and domestic levels.
In her remarks, Wallach confirmed the true intentions of this effort, which is key for progressives: to aid the push to destroy American businesses with overbearing antitrust enforcement and by encouraging U.S. policymakers to follow failing European regulations. This effort, which NetChoice has previously discussed, will ultimately degrade American innovators and entrepreneurs in favor of foreign competitors in global markets. And Biden’s own regulators are spearheading this anti-American push.
President Biden’s USTR must stop pandering to progressives and instead advocate for America’s interests. Otherwise, Americans will feel the consequences— in their wallets, retirement portfolios and in their access to quality goods and services.
Image generated by NetChoice using ChatGPT’s DALL-E.