The Vital Role of America’s Digital Trade Leadership

America is the global digital economy leader. The digital economy accounts for $3.70 trillion of gross output, supports $1.24 trillion of compensation, and over 18 million jobs.

Digital trade facilitates more effective access to international markets for American small businesses, farmers, ranchers, service companies and manufacturers, who rely on the global reach of a range of U.S. technology providers to succeed.

America’s global economic leadership over decades has been critical in supporting a level playing field for U.S. digital services and technology providers around the world. In the mid-1990’s, the United States was a leader in securing a ban on customs duties on electronic transmissions at the World Trade Organization. Successive U.S. Administrations have supported the development of new trade rules to ensure America’s closest trading partners do not discriminate against America’s data, digital services, technology providers or digitally-enabled small businesses. Congress has weighed in with clear advice and ambitious negotiating objectives to guide the Administration to facilitate digital trade, enable cross-border data flows, and recognize the significance of the Internet in international trade. 

Today, at the same time that foreign governments from Europe to Asia are pursuing discriminatory digital policies that threaten to undermine America’s technology edge, the Biden Administration has pulled the United States back from its traditional leadership role. In a future defined by technological innovation, the U.S. needs both strong digital rules and the will to stand up for American companies and workers.

The NFTC is committed to advocating for an open, rules-based digital economy at home and abroad to support U.S. exports of well over $500 billion in digital services every year.

America's global digital leadership is at risk

Late last year, the Biden Administration announced that it was withdrawing support for strong digital trade rules that had been negotiated across multiple previous administrations and backed by bipartisan Congressional support. The decision means that the United States is abdicating its leadership role in writing the digital rules for the global economy and preventing illegal trade discrimination and burdensome barriers against American interests.

The U.S. is currently engaged in several international initiatives that could be used to shape the international digital trade landscape, including:

  • At the World Trade Organization;
  • As part of the U.S.-EU Trade and Technology Council (TTC);
  • In the trade pillar of the Indo-Pacific Economic Framework for Prosperity (IPEF);
  • Under the Americas Partnership for Economic Prosperity (APEP)
  • The U.S.-Taiwan Initiative on 21st Century Trade; and
  • The U.S.-Kenya Strategic Trade and Investment Partnership (STIP).

Unfortunately, to date the United States is not leveraging these opportunities to advance commercially-meaningful global rules on digital trade.

What We Need from the Administration

The Administration must stand up for digital trade and American job creators on the world stage. We cannot afford to retreat from strong American leadership on digital trade at the World Trade Organization or other global platforms.  We need the administration to reverse its short-sighted decision to pull back from vigorously defending American interests globally, which will cause long-term harm for U.S. businesses of all sizes, as well as innovators and workers who depend on digitally-enabled trade to reach global markets.

We also need the Administration to stand up to the EU’s digital protectionism agenda. It is imperative for the Biden Administration to push the European Union to reject approaches to digital policies that discriminate against U.S. companies and lift-up global competitors in countries like China.

Bipartisan Congressional Consensus Champion Digital Trade Exports and Confront Protectionist Measures

There is strong bipartisan support for championing digital trade exports and for standing up against digital trade barriers and discrimination. In confronting digital trade protectionism, the Administration will find support from the bipartisan leaders of the Senate Finance Committee, dozens of Members of Congress, and former Democratic and Republican U.S. Trade Representatives.

Chairman Wyden Statement on Ambassador Tai’s Decision to Abandon Digital Trade Leadership to China at WTO 

Bipartisan Senate Letter Expressing Concern for USTR’s Lack of Support for E-Commerce Negotiations at the WTO

Bipartisan House Letter Urging USTR to Reverse Biden Administration’s Abandonment of Key Bipartisan Digital Trade Proposals

Bipartisan Senate Finance Committee Leaders Call on on Biden Administration to Fight EU Digital Trade Policies that Discriminate against U.S. Workers and Employers

Bipartisan House Letter Urging USTR to Raise Concerns Over Discriminatory European Policies at the U.S.-EU TTC

Digital Trade is Critical for American Small Businesses

A strong digital trade landscape that supports inclusive trade is vital to the success of small businesses in the international marketplace. Small businesses rely on digital tools from U.S. companies for all aspects of their operations – to communicate internally and with customers, and to market, advertise and ship their products. 

Read below to learn more about how small businesses use digital tools to participate in the global economy.

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What They're Saying

“The Biden Administration’s decision to walk away from longstanding bipartisan positions on digital trade undermines American leadership and competitiveness, surrenders the playing field to the Chinese Communist Party, and abandons our closest trading partners. There is absolutely nothing in the Biden Administration’s decision that will benefit American workers.” Ways and Means Committee Chairman Jason Smith

“Digital trade rules ensuring the free flow of information and protecting proprietary technology serve to strengthen the global competitiveness of the U.S. economy and provide valuable guarantees for U.S. businesses in every industry.” Senator Chris Coons 

“This decision by the Biden Administration [to withdraw U.S. support for key elements of a digital economy agenda at the WTO] is short-sighted and will cause long-term harm for American businesses of all sizes, as well as innovators and workers who depend on digitally-enabled trade to reach global markets. It’s particularly problematic for small businesses and undermines efforts to support more inclusive access by women and underserved communities to the global marketplace.” NFTC President Jake Colvin

Countering the EU’s Digital Discrimination Agenda

Under the broad goal of pursuing a “digital sovereignty agenda,” the European Union is developing a series of policies that discriminate against American industry and could impact U.S. companies’ access to European markets. The EU and Member States have advanced several work streams including European cloud initiatives, digital services taxes and the Digital Markets Act and Digital Services Act, which former U.S. Trade Representative Charlene Barshefsky labeled “techno-nationalism” that “threatens both US and European interests and must be stopped.”

EU leaders have been clear that they are pursuing a digital sovereignty-driven approach that is designed to preference European companies and undermine American companies’ ability to compete in their market.

  •  “We must have mastery and ownership of key technologies in Europe,” European Commission President Ursula von der Leyen
  • “Let’s go down the line — one, two, three, four, five [American companies] — and maybe six with [China’s] Alibaba. But let’s not start with number seven to include a European gatekeeper just to please Biden.” German MEP Andreas Schwab
  • “The battle we’re fighting is one of sovereignty… If we don’t build our own champions in all areas—digital, artificial intelligence—our choices will be dictated by others.” French President Emmanuel Macron
  • In 2019, then-French Secretary of State for Digital Affairs Mounir Mahjoubi assured publicly that Paris’ Digital Services Tax would “not sanction European players.”

The U.S - EU Trade and Technology Council (TTC)

In 2021, the United States and European Union launched the “Trade and Technology Council,” a unique form that promised to boost U.S.-EU economic cooperation while setting global standards for the 21st Century based upon shared values and principles of fair treatment and non-discrimination. 

Years later, the forum has not fully lived up to its promise. While European official successfully lobbied their American counterparts to discuss concerns with the Inflation Reduction Act, Europe’s digital protectionism hasn’t been on the agenda.

When senior U.S. and EU officials gather, the Biden Administration should use this unique platform to stand up for American businesses and confront the discriminatory aspects of Europe’s digital regulatory agenda.