By David Lawder
WASHINGTON (Reuters) – U.S. Trade Representative Katherine Tai has made a significant move in World Trade Organization (WTO) talks by dropping longstanding U.S. digital trade demands. The decision was made to provide Congress with the necessary space to regulate big tech firms, according to her office on Wednesday.
In 2019, the Trump administration proposed that e-commerce rules in the WTO should enable free cross-border data flows and prohibit national requirements for data localization and software source code reviews. However, these proposals are now being withdrawn by the U.S., much to the frustration of some lawmakers and business groups who fear that this will disadvantage American firms.
The withdrawal of these proposals took place during a meeting of the WTO’s Joint Statement Initiative on E-Commerce in Geneva. A U.S. official stated that the U.S. is currently reevaluating its approach to trade rules concerning sensitive areas such as data and source code.
According to a transcript seen by Reuters, the official emphasized the importance of finding a balance between the right to regulate in the public interest and addressing anti-competitive behavior in the digital economy as part of U.S. policy objectives.
This move by the U.S. Trade Representative aligns with the Biden administration’s aim to strengthen regulation of large technology firms. It also reflects the direction of digital trade negotiations within the U.S.-led Indo-Pacific Economic Framework for Prosperity (IPEF) group of Asian countries.
“WIN FOR CHINA”
However, Senator Ron Wyden, the Oregon Democrat who leads the Senate Finance Committee, criticized the decision, claiming that it is “a win for China, plain and simple.” He argued that it would strengthen China’s model of internet censorship and government surveillance.
He went on to say, “USTR’s unilateral decision to abandon any leverage against China’s digital expansionism, and to oppose policies championed by allies like Australia, Japan, the U.K. and Korea, directly contradicts its mission as delegated by Congress.” Wyden is known for his support of big U.S. tech firms, including Intel, the largest for-profit employer in Oregon.
Sam Michel, the USTR spokesman, explained that many countries are currently reviewing their approaches to data and source code in relation to trade rules. He emphasized the need to provide sufficient policy space for these debates to unfold, which led to the U.S. withdrawing its support for proposals that could potentially hinder domestic policy considerations. Michel also confirmed that the U.S. will remain an active participant in the WTO e-commerce talks.
While some lawmakers applaud the move as an attempt to rein in large tech firms, others express concerns. Democratic Senator Elizabeth Warren of Massachusetts supports Tai’s rejection of efforts by Big Tech lobbyists to use trade deals to avoid regulation. She firmly stated, “We need to make clear that digital rules favoring Big Tech monopolies are a non-starter for the U.S. in any trade agreement, including IPEF.”
The U.S. Chamber of Commerce, on the other hand, is calling for a reversal of the decision. They argue that the digital trade principles being dropped by the USTR garnered overwhelming congressional support as part of the 2020 U.S.-Mexico-Canada Agreement on trade. The Chamber believes that these principles have contributed significantly to making U.S. tech firms “the envy of the world.”
Furthermore, the top business lobby group believes that these digital trade rules prevent countries from using regulations to exclude American companies and workers from their markets.
(Reporting by David Lawder; editing by Diane Craft)
