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In Snubbing American Tech, Biden’s USTR Gives China a Dangerous Opportunity

The Biden administration clearly holds disdain for America’s entrepreneurs right at a time when U.S. businesses face more foreign competition and instability than ever.

One recent example of this is from the U.S. Trade Representative (USTR) under the Biden Administration, helmed by Katherine Tai. The USTR recently created controversy by dropping support for key digital trade rules and standards traditionally upheld by the U.S. at the World Trade Organization (WTO). These demands had been made to defend American economic interests and advance our values and businesses internationally as digital markets get more valuable and prominent globally. 

Tai’s decision will have damaging implications for the American tech industry and broader U.S. economic interests.

Given the complicated and interconnected nature of modern economies, international trade agreements are often complex, and therefore protecting America’s interests requires a significant amount of negotiating for various industries and principles to help the U.S. compete internationally. The morass of national and supranational regulation means organizations like the WTO help organize and streamline rules to make trade between countries less complicated and costly.

Like any country, the U.S. has historically argued for international trade rules to ensure that America’s economy, its workers, its consumers and its businesses are protected and respected in global markets. But not any longer.

As one of the strongest performing industries in the U.S., the tech sector’s strength is an important part of our economic performance. Throughout the economic instability and hardship of the early-2020s, American tech was a driving force behind the U.S. economy weathering the storm that, despite its issues, helped us come out stronger than many of our international rivals. 

That’s what makes this decision by the Biden administration so staggering. American digital trade demands were nothing radical, unprecedented, or even partisan, and our representatives consistently advocated for free data flows across borders and opposition to national mandates that would force American companies to store data abroad. The retraction of these standards heralds a new era where U.S. firms might face serious challenges accessing foreign markets.

For instance, data localization laws compel companies to store and process data within the host country’s borders, often entailing significant financial and logistical burdens. That means the money that these businesses could spend in the U.S. or on competing with foreign companies is spent on compliance paperwork and bureaucracy. Because of the success of the U.S. tech industry, damage to U.S.-led trade rules will disproportionately harm America, our workers and our economy more broadly.

Historically, the U.S. has been a strong advocate for free market trade rules that stop foreign governments from exploiting American businesses when they conduct business internationally.

The USTR’s recent moves risk abdicating our leading role at the WTO, meaning America will yield free market policies to big government ones backed by foreign countries that may prioritize state control and protectionist measures over our values of openness and freedom.

Senator Ron Wyden recently voiced concerns that this move could enhance China’s leverage over digital trade and governance. In the absence of robust U.S. advocacy for open digital trade standards, China could promulgate a model that emphasizes digital sovereignty and state control, realigning the global digital economy’s infrastructure toward their style of governance. This shift not only threatens the strategic interests of the U.S. but also carries broader economic implications, especially as more trade moves online.

Overall, the USTR’s decision to withdraw America from certain digital trade standards at the WTO is a multifaceted issue with far-reaching consequences for the U.S. tech industry and broader economic landscape. This move has sparked significant debate, underscoring the delicate balance between regulating big tech and maintaining the competitive edge of U.S. firms on the global stage. As the ramifications of this decision unfold, the need for a nuanced, strategically informed approach to digital trade policy has never been more apparent, lest the Biden administration forfeit its leadership role and U.S. economic interests in the digital age.