A group of senators from the Senate Finance Committee have warned that the withdrawal of the U.S. Trade Representative’s (USTR’s) demands for a level playing field in digital trade at the World Trade Organization (WTO) could “cede U.S. digital leadership to China” and bolster the Chinese Communist Party’s internet censorship and surveillance.
In response to the decision “to end U.S. support for combatting China’s predatory practices in international digital trade negotiations,” Sens. Mike Crapo (R-Idaho), Chuck Grassley (R-Iowa), John Cornyn (R-Texas), Tim Scott (R-S.C.), Steve Daines (R-Mont.), John Barrasso (R-Wyo.), Thom Tillis (R-N.C.), and Marsha Blackburn (R-Tenn.) said: “We have warned for years that either the United States would write the rules for digital trade or China would. Now, the Biden administration has decided to give China the pen.”
U.S. Trade Representative Katherine Tai dropped longtime U.S. digital trade demands in the WTO talks on Oct. 25 to allow Congress to control giant tech businesses, according to a Reuters report on Oct. 26.
The United States is backing down from suggestions made by the Trump administration in 2019 that would have required that WTO e-commerce rules prevent national restrictions for data localization and evaluations of software source code and instead demanded open cross-border data flows.
According to Reuters, a U.S. official said at the WTO meeting that the country was reevaluating its approach to trade laws in confidential areas such as data and source code, prompting the withdrawals.
But the move has drawn criticism from some lawmakers and industry groups who claim that it would hurt U.S. interests.
“In [withdrawing], USTR, which touts a ‘Worker-Centered Trade Policy,’ is choosing to side with China over the 8 million Americans who work in the digital economy and generate 10 percent of U.S. [gross domestic product],” an Oct. 26 statement—viewed by The Epoch Times—from Mr. Crapo, the Senate Finance Committee’s ranking Republican member, and his colleagues reads.
“China made clear it opposes free data proposals precisely because it wants the right to require all data be stored under whatever terms China’s laws or regulations may dictate, including forcing data to undergo government security reviews. China’s laws and regulations routinely facilitate technology theft, human rights abuses, and the loss of American jobs.”
Rob Strayer, executive vice president of global policy at the Information Technology Industry Council (ITI), was likewise unhappy with the USTR pullout, and he expressed concern that it would hurt innovation, the global economy, and the United States’ ability to compete internationally.
“It’s deeply disappointing that USTR—whose core mission is to advance U.S. economic competitiveness—has decided to abandon its support for protections against forced technology transfers, data localization, and source code disclosure,” Mr. Strayer said in a statement—also released on Oct. 26—viewed by The Epoch Times.
Level Playing Field Needed
According to the U.N. Conference on Trade and Development, the global exports of ICT services exceeded $912 billion in 2022, 55 percent of which was accounted for by U.S. digital services exports.However, according to the ITI, barriers to digital trade and e-commerce have continued to emerge in markets across the world, including in the markets of some of the most important U.S. trading partners, which impede U.S. exports of products and services across a wide range of sectors.
U.S. tech companies, in particular, face trade barriers in more than 35 key markets, according to the ITI, which is why the “USTR [needs] to pursue new digital trade commitments and increase efforts and resources within the government agencies to support a robust U.S. digital trade policy agenda.”
According to the association, the United States is also a global leader in the innovation and delivery of data-driven products and services, and the economy and middle class benefit greatly from other nations’ technological innovation.
Space for China
According to Reuters, the USTR argument for the withdrawal was to allow Congress greater flexibility for regulating big tech firms and to check anticompetitive practices in the digital economy.The USTR’s move was also in line with the Biden administration’s goals of tightening oversight of tech giants and steering digital trade negotiations toward the U.S.-led Indo-Pacific Economic Framework for Prosperity group of Asian nations.
“The Biden administration’s claim that it wants to ensure ‘policy space’ is spurious. The Trump administration’s proposals—supported by a number of U.S. allies—explicitly permit legitimate public policy regulation of how companies might handle customer data. The United States-Mexico-Canada Agreement (USMCA), which passed Congress overwhelmingly, also includes these commitments. Unfortunately, the only party getting any ‘space’ here is China, and that space allows China to assume the leadership role formerly held by the United States,” the senators’ statement reads.
The senators are upset that the USTR not only failed to consult with Congress “before reversing its policy on free data flows” but also misled it.
