Momentum around the benefits of thoughtful digital trade policies continues to mount, with one notable exception.
Last week, 50 House Republicans led by House Energy, Climate, and Grid Security Subcommittee Chair Jeff Duncan (R-S.C.) and Rep. John Joyce (R-Pa.) released a letter to U.S. Trade Representative Katherine Tai and Federal Trade Commission Chair Lina Khan and Assistant Attorney General Jonathan Kanter expressing concern and disappointment with USTR’s decision to abandon support at the World Trade Organization (WTO) for certain core digital trade principles.
This makes almost 120 Senators and Representatives who have weighed in on a bipartisan basis since USTR announced last fall that it would no longer pursue core digital trade provisions to constrain foreign governments from discriminating against cross-border data flows or demanding data localization or disclosure of source code as a condition of doing business.
Separately, proponents of renewing the WTO’s long-standing customs moratorium on electronic transmissions released a Global Joint Statement signed by 178 associations from some 130 countries around the world, including associations in India, Indonesia, and South Africa, whose governments are skeptical of its renewal. Organizers are still receiving signatures from new associations and expect to reach 200 prior to the launch of the 13th WTO Ministerial Conference (MC13) on Feb. 26, 2024. If the moratorium is not affirmatively renewed at the Ministerial, it will expire, opening the door for countries around the world to introduce new taxes and burdensome paperwork requirements for the delivery of digital goods and services. The breadth of support for renewing the moratorium reflects the view across multiple sectors and businesses of all sizes that governments should focus on policies that enable the growth of the digital economy and not impose new costs and barriers to digital trade.
The same day, the US-EU Trade and Technology Council Transatlantic Initiative for Sustainable Trade (TIST) hosted a stakeholder day focused on “Crafting the Transatlantic Green Marketplace,” which featured compelling discussions on how digital tools contribute to achieving sustainability goals. For example, using digital labels on apparel would cut approximately 5.7 million miles of label tape – enough to stretch from the earth to the moon, and back, twelve times each year – resulting in the elimination of at least 343,000 MT of CO2 while also providing more information to consumers. Digital trade facilitation measures such as trusted trade initiatives, digital passports, digital single window for customs transactions, and the use of e-invoicing, e-signature, and e-payments help to reduce greenhouse gas emissions in addition to making the customs clearance process more efficient.
Frustratingly, this positive momentum was dimmed by comments from Ambassador Tai, who skipped the TIST stakeholder discussions to join U.S. and EU competition regulators at the Antitrust, Regulation and the Next World Order conference for a fireside chat on connecting trade, competition and industrial policy.
Rather than celebrating the innovation of American industry, Amb. Tai bizarrely portrayed the growth and success of leading U.S. technology companies as a “massive problem” that trade policy and competition regulators need to work together to rein in.
This view aligns with a handful of anti-trade activists and progressive politicians, but fails to account for the broad authority trade agreements with strong digital trade protections also provide to regulators for legitimate public policy objectives, consumer protection, data security, and other public interest priorities. Indeed, many of our trade partners who are the strongest champions of digital trade provisions also have some of the most robust regulations on consumer protection and data security. Even the European Union, which is in the midst of implementing some of the most aggressive (and discriminatory) digital markets regulations, still supports the same trade rules on cross-border data flows, data localization, and source code, that USTR now insists interfere with the U.S. Government’s ability to regulate competition policy.
Ambassador Tai seems incapable of seeing beyond her disdain for a handful of leading U.S. companies (so-called Big Tech) to the opportunities that a global digital economy based on U.S. innovation and values can offer. As the business community, Congressional leaders and transatlantic policy makers highlighted, thoughtful digital trade policies can contribute to Biden Administration priorities like enhancing supply chain resilience, driving the green transition, and providing greater economic opportunity to women and in underserved communities.
I wish that she could hear the voices of the entrepreneurs like Olivia Walch, whose Virginia-based small business Arcascape relies on global data flows, trusted app stores and intellectual property protections to develop best-in-class circadian algorithms to help shift workers sleep more and feel better. Thousands of startups and small businesses rely on the scale, reliability, and predictability of our world-class global platforms to sustain and grow their businesses.
The most important task for the next three weeks is getting the WTO e-commerce moratorium renewed at the WTO’s upcoming Ministerial Conference. This is never an easy task, but failing to renew it would be a tremendous blow to digital trade worldwide and a significant step backward for the WTO as a trade institution. There is now ample evidence that imposing customs duties on digitally delivered goods and services will not generate significant new revenue for governments and losing the moratorium could actually undermine economic growth and harm small businesses. That message is starting to be reflected in the growing support for renewal from developing countries and on this point, thankfully, the United States.
Afterwards, it will be up to the Biden Administration and Congress to decide whether to join like-minded trade partners such as Australia, New Zealand, Singapore, Japan to advance a thoughtful and ambitious global digital trade agenda, or to continue to sit on the sidelines while the world moves on without us.
– NFTC Vice President for Global Trade Policy, Tiffany Smith