USTR Tai’s Justification to Take a Time-out on Digital Trade Does Not Hold Up
U.S. Trade Representative (USTR) Tai has sought to justify her controversial decision to withdraw from key digital trade negotiations at the World Trade Organization (WTO), by, among other things, stating that the United States needs to have “policy space” for new laws on privacy and other issues before it can negotiate. She stated that “[USTR would be] committing massive malpractice and probably committing policy suicide by getting out ahead of all of the other conversations and decisions that we need to make as a country." Not only is this not the case, but the opposite is also actually true. Given that the United States is the predominant digital economy in the world it is malpractice to not work strenuously now to shape the global trading system to maximize digital innovation.
Tai is saying that USTR can’t make commitments on data and other digital trade issues until the United States has new laws in place. At one level this makes sense. How can USTR commit the United States to international regulations when domestic ones are not fully fleshed out? In reality, though, this is wrongheaded. It is clearly not the case that digital trade policy must follow new domestic laws, just as it clearly doesn’t apply to any number of U.S. interests and initiatives involving data and new and emerging technologies.
The Biden administration, like every administration before it going back to the Clinton White House when the modern Internet formed during the 1990s, engages internationally on digital issues separate from domestic legislation. For example, the United States doesn’t need to pass AI legislation to be able to commit to a trade agreement prohibiting foreign legislation discriminating against foreign firms. The Biden administration’s extensive AI executive order shows that the lack of an explicit AI law does not stop it from taking action domestically and internationally. Likewise, the United States doesn’t need to pass a national privacy bill (although Congress should) to be able to commit to an agreement prohibiting data localization regimes and other core issues like non-discrimination against foreign firms and digital products.
USTR Tai created this false sequencing between the domestic and international realms to justify what is an end-run around the fact that the U.S. Congress rejected competition legislation supported by progressive democrats and digital trade opponents like Senator Warren. Unable to enact their anti-innovation agenda in the democratic forum of the U.S. Congress, these members want USTR to ensure digital trade policies do not prevent foreign governments from targeting U.S. tech firms.
But even here, the intent of Congress on these issues is clear. The fact Congress approved the U.S.-Mexico-Canada Trade Agreement (USMCA) and its ambitious digital trade provisions, and that there have since been many bipartisan pro-digital trade letters statements and letters, indicates Congress’s views should be clear. The disproportionate attention progressive democrats get is made clear by the fact a bipartisan group of 32 senators recently signed letters in support of digital trade—as compared to the five that signed Senator Warren’s anti-digital trade letter.
Moreover, USTR Tai’s portrayal of digital trade is simply not borne out in reality. The United States committed to ambitious and legally binding commitments on data flows, data localization, and source code in the USMCA. The USMCA didn’t undermine California’s Consumer Privacy Act. Nor would it have prevented the proposed American Data Privacy and Protection Act (ADPPA). Neither of these laws contain localization policies or discriminate against U.S. or other foreign firms and their digital products. If the United States enacted the ADPPA, U.S. digital trade law (under USMCA) would already be in alignment, not conflict (as USTR Tai tries to paint it). Not only that, but other Biden administration initiatives like the Global Cross Border Privacy Rules framework would actually support it in providing an additional layer of accountability to ensure that firms protect data when they transfer it overseas.
USTR Tai tries to paint digital trade as if it conflicts with congressional legislative sovereignty and efforts to enact new domestic laws and regulations on privacy, competition policy, content, cybersecurity, and other digital issues. This is clearly not the case. The WTO e-commerce negotiations are led by Australia, Japan, and Singapore, and involve other advanced countries with highly sophisticated regulatory systems, like Canada, Chile, the European Union, Korea, New Zealand, Taiwan, the United Kingdom, and others. These are not labor, human rights, consumer rights, or regulatory scofflaws. Many of these countries have signed several digital trade agreements and these have not stopped them from subsequently enacting new domestic legislation. Digital trade rules, like traditional trade rules, only become a problem when domestic laws and regulations are discriminatory and act as an unnecessary and disproportionate barrier to trade. Herein lies the rub—USTR Tai does not support digital trade as she wants the European Union and other regions/countries to enact discriminatory laws and regulations to target U.S. big tech.
Further, USTR Tai’s subversion of the interagency process took advantage of the fact that the United States does not have a single digital economy minister or digital “czar” to coordinate digital policies. Digital issues break into byte-sized pieces across U.S. government agencies, which then (sometimes) filter back together as part of the White House-led interagency process. For example, Peter Harrell (former Senior Director for International Economics and Competitiveness in Biden’s early National Security Council) effectively led and coordinated the interagency process to negotiate with the European Union on the new Transatlantic Data Privacy Framework, which involved U.S. intelligence agencies, the Department of Justice, the Department of Commerce, and other agencies.
This gets to several important counterpoints to Tai’s weak justifications.
First, the Biden administration has and will continue to engage on global digital issues separate from new domestic legislation. The United States can obviously walk and chew gum at the same time. Neither Commerce Secretary Raimondo nor Secretary of State Blinken are staying on the sidelines in global digital and technology policy debates—they are publicly advocating for their positions even as Congress and others still debate these topics. There’s absolutely no reason why Tai should take a self-imposed timeout.
Second, the fact that Peter Harrell and the Biden administration were willing and able to negotiate the Transatlantic Data Privacy Framework without a comprehensive data privacy framework, or legislative changes to surveillance law, shows that it can and will engage internationally, separate to domestic legislation. The same, as noted, goes for the Department of Commerce’s work on the Global Cross-Border Privacy Rules initiative. The same goes for any number of Biden administration initiatives involving the Internet, new and emerging technologies, China’s growing digital authoritarianism, cybersecurity, and other issues.
Third, the purpose of U.S. trade policy is to promote trade and investment and protect U.S. interests abroad. Advocating for policies like the global free flow of data and dissuading other countries from implementing data localization measures directly benefits U.S. trade interests. The United States is a global leader in cloud computing services, and it has the most to lose from restrictive policies that limit the use of U.S.-based data firms. Many countries would gladly implement protectionist measures, like data localization, to disadvantage American tech firms and workers. If USTR is not willing to defend U.S. trade interests abroad, who will?
None of this should be surprising. U.S. global economic, trade, technology, and national security engagement does not depend on the United States having new laws in place for every new issue raised by technology. It’s one thing for progressive politicians to push their preferred legislation in Congress, but it’s quite another for USTR Tai to dismiss and undermine other parts of the Biden administration and their interests in U.S. global digital and technology policy. USTR Tai’s decision shows a concerning disregard for the usual boundaries between domestic debates and support for the U.S. government abroad, given how USTR Tai essentially wants to take U.S. trade policy hostage in the absence of progressive democrats preferred competition and antitrust legislation.
