OpEd: The United States Is Abdicating Responsibility on Digital Trade

OpEd: The United States Is Abdicating Responsibility on Digital Trade
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OpEd: The United States Is Abdicating Responsibility on Digital Trade (Chicago, IL) — The American economy is going digital, and here in Illinois, small and large businesses alike are embracing digital trade. In the past decade, companies based in Illinois have increased digital exports by 65%, and in 2022, digital trade brought in $28.3 billion and supported more than 141,000 jobs in the state, according to a report.

Illinois Congressman Darin LaHood, a co-founder and co-chair of the Digital Trade Caucus with Rep. Suzan DelBene (D-Wash.), has worked to position the U.S. as the global leader of the digital economy, including through the introduction of legislation this month seeking broader trade ties in the Indo-Pacific.

This week, U.S. Trade Representative (USTR) Ambassador Katherine Tai reiterated the Administration’s stance that they are no longer pursuing strong digital trade rules on the global stage. Ambassador Tai told the House Ways and Means Committee on April 16 that the reason to abandon the protection of U.S. digital exports abroad is because the prior policy—which held bipartisan support for decades—was “rooted in an outdated understanding that data is only needed for facilitating trade transactions.” She added, “U.S. digital trade policy has also been reliant on a proxy that what is good for an American digital or technology company is also good for American innovation, American workers, the US economy.”

This represents a fundamental misunderstanding of the importance of digital trade to the broader U.S. economy and the meaning of data flows. It is also historically inaccurate: digital trade never focused predominantly on facilitating good transactions (as a cursory look at the first FTA with a dedicated digital trade chapter, the US-Singapore FTA, should make abundantly clear).

U.S. exports of goods and services in the digital sector are generally a bright spot for our nation’s trade agenda. The United States enjoyed a $256 billion surplus in digitally-enabled services trade in 2022. The digital economy also supported more than 3 million jobs and contributed $2.6 trillion of value-added, or 10% of the nation’s GDP in 2022.

The United States historically holds a trade surplus in services, a sector that is highly reliant on digital services—in fact, 70% of U.S. services exports in 2022 were made up of digitally-enabled services exports. Digital trade not only supports the services sectors and technology industry, it promotes the open internet and freedom of expression abroad, allows manufacturers to conduct quality control between their locations around the world, and enhances U.S. competitiveness internationally.

All of these services rely on cross-border data flows. That data is not a “commodity,” in the way Ambassador Tai suggests. It is the facilitation of an American movie download, a comment on a YouTube video, a dataset of tests on automobiles or pharmaceutical drugs, and much more.

The pursuit of these outcomes should all be fundamental goals for the United States in its economic agenda.

However, this Administration has instead abruptly reversed course on digital trade, contradicting long-standing, bipartisan consensus that has been a pillar of U.S. policy since 1998.

President Obama’s USTR Ambassador Michael Froman once boasted of work “to negotiate, conclude, and implement strong trade agreements that not only open markets for U.S. exports but address new and emerging issues such as digital trade.” Even a Deputy Trade Representative in the Biden Administration recently acknowledged the need to ensure there’s an “open and free system that is good for consumers.”

Over the course of the past several months, we’ve seen a series of examples of USTR abandoning U.S. interests on the global stage. Last month, the Office of the United States Trade Representative (USTR) released its annual report on significant trade barriers, the National Trade Estimate (NTE) report. This congressionally-mandated report is designed to prioritize U.S. enforcement goals in foreign markets, yet alarmingly, this year’s report omitted a swatch of previously cataloged restrictions impacting U.S.-based exporters of digitally-enabled products and services. In late 2023, USTR withdrew critical proposals on digital trade in international trade negotiations including the World Trade Organization or the Indo-Pacific Economic Framework, leaving key regional allies such as Australia, Japan, and Singapore in the lurch.

We’re at the point where USTR is failing to enforce the current rules, fundamentally undermining the viability and future of rules-based trade systems.

We are used to seeing the ebb and flow of administrations and their priorities. But what is playing out right now at USTR is a complete abdication of responsibility. With this latest report, USTR appears in many cases to have made a decision to side with other countries over U.S. interests.

Make no mistake: whatever short-term political gain or ideological experiment the USTR and the Biden Administration appear to be engaging in, this failure to stand up for American businesses against discriminatory practices will have real-life impacts on our economy, our national defense, and consumers across the globe.

OpEd: The United States Is Abdicating Responsibility on Digital Trade


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