Last month, in a stunning move, the United States withdrew its support for key digital trade demands during World Trade Organization (WTO) talks. The Office of the U.S. Trade Representative (USTR) announced the sudden policy reversal at a Geneva negotiating session of the Joint Statement Initiative on E-Commerce.
The shift in digital trade comes as a way of providing Congress with “enough policy space” to regulate Big Tech, according to the USTR’s Katherine Tai. But that makes little sense, as the WTO’s trade demands had no impact on the US’s ability to regulate tech. This is just another move from the Biden administration to push unprecedented antitrust policy.
Unfortunately, these attacks on the digital trading system will have real world consequences. Robust digital trade rules were set up for a reason; namely they serve as a safeguard against nations using regulations to exclude American companies and their workforce from their markets. Additionally, these mandates are a welcome barrier against the growing wave of global digital protectionism.
The international IP landscape is poised to suffer as a result of America’s retreat.
Even the U.S. Chamber of Commerce issued a statement condemning the move and urging a reevaluation, noting that the principles now being so hastily abandoned by the Biden administration have helped make U.S. tech firms “the envy of the world.”
Indeed, research from the Global Data Alliance reveals how data-free flows and unfettered access to markets mostly benefits startups and small and medium-sized enterprises (SMEs). Additionally, strong digital trade rules have facilitated the export of digitally-delivered services, which last year comprised more than two-thirds of all U.S. services exports and one-fifth of all total exports, according to data from the U.S. Chamber.
Consequently, the new digital trade agenda is likely to thwart tech innovation by creating more barriers to business. It is also likely to hurt digital services consumers—which is to say anyone who uses an ATM in a foreign country with a U.S. credit card or who shops online.
With the recent decision, the Chamber warns, American businesses “of all sizes and sectors” will suffer.
Additionally, the consequences of America’s retreat in the digital trade landscape will empower authoritarian regimes like China. It is likely that the Chinese model of censorship will become the new “rules of the road” for digital commerce. Unfortunately, the Chinese Communist Party (CCP) is notorious for overlooking cross-border counterfeit offenses and stealing America’s intellectual property. The CCP routinely tolerates practices like forced technology transfer, online piracy, and bad faith trademark applications, as noted in the U.S. government’s 2023 Special 301 report.
Examples abound. According to experts from the American Enterprise Institute, countries such as Australia, Canada, New Zealand, Japan, and Singapore have long pursued new digital trade provisions without losing the ability to regulate competition, cybersecurity, data privacy, content, and intellectual property.
Concerns that binding digital trade agreements somehow interfere with the White House’s ability to rein in Big Tech are unfounded. Companies cannot simply eschew U.S. laws by moving data overseas. The misguided rescission shows a limited understanding of digital trade at best — at worst, an ideological inclination to impose a new worker-centric economic world order on the part of Neo-Brandeisian progressives.
U.S. technological competitiveness depends on a vigorous set of trade rules that stand up for American workers and their international frontrunner firms. The Biden administration is at odds with Congress and the law in relinquishing U.S.-led support for open and competitive digital markets. Backing out of/Reneging on key digital trade agreements is not necessary to regulate Big Tech. The U.S. must stand up for the WTO-based /international rules-based multilateral trading system.