[CTC] Fight heats up over tech lobby effort to ‘hijack’ trade deals

Wed Nov 2 13:37:29 PDT 2022

PDF of Report Here <https://rethinktrade.org/wp-content/uploads/2022/11/20221101-AELP-DocLayout-v7.pdf>

Fight heats up over tech lobby effort to ‘hijack’ trade deals

By BRENDAN BORDELON  Nov. 2, 2022

FIRST IN MT: TECH LOBBY LEANS IN ON TRADE DISPUTES — Lobbyists for the largest U.S. tech companies are increasingly pressing the U.S. Trade Representative over foreign tech laws they say “discriminate” against their members — an effort the American Economic Liberties Project calls an attempt to “hijack” trade agreements so they forbid new tech rules at home and abroad.

Lori Wallach, director of the left-leaning group’s Rethink Trade program, called it a “backdoor way to try and put handcuffs” on regulators seeking to rein in the tech industry. In a new report out this morning <https://go.politicoemail.com/?qs=3adac86c11b9eeff6f21ed550b975bf8d3ef9d8b983985b186930e78f11347804ec50d6465fad28d144c213cd98d3c73504231c41c5fbf2e> , AELP found tech lobbyists have asked USTR to label foreign tech rules as unfair trade barriers 30 times in the last two years.

The push comes as the Biden administration crafts new trade agreements with Asia and Europe. If the tech lobby’s arguments make it into those agreements, Wallach warned it could short-circuit plans for new laws targeting the largest tech firms.

“They're quickly mixing up huge vats of trade-agreement cement and pouring it around the ankles of numerous governments and parliaments, and hoping to God it sets before they act to regulate them,” said Wallace. “Because they want them locked in place.”

— The (trade) ties that bind: Every year USTR asks companies and their lobbyists to submit comments for its annual National Trade Estimate report, which determines which countries are imposing unfair trade barriers on U.S. firms. AELP found that the tech lobby complained aggressively in both 2020 and 2021, targeting the EU’s Digital Markets and Digital Services Acts 11 times, Australia’s News Media Bargaining Code 10 times, South Korea’s new law on app store payments five times and a new German anti-monopoly law four times.

If a country wants to trade with the United States, they’re generally prohibited from treating goods or services from U.S. companies differently than those from domestic firms. AELP says tech lobbyists are leveraging that prohibition to argue that laws like the EU’s Digital Markets Act — a new antitrust rule that imposes identical requirements on companies of a certain size regardless of origin — discriminate against U.S. tech firms (which are generally much larger than their European counterparts). If USTR agrees with that diagnosis and decides to do something about it through future trade deals, it could tie regulators’ hands.

“This is about big tech interests trying to achieve — through closed door negotiations and obscure, complicated trade language — the special protections and monopoly power lock-ins that they feel they're going to lose in public debate,” Wallach said. She noted many of the foreign laws targeted by the tech lobby have U.S. analogs, including the Open App Markets Act, S. 2710 <https://go.politicoemail.com/?qs=3adac86c11b9eefff01848d0065b73ea250deb98ef7e55e3d366544cdcb54b38fe199f79bd28a4d01e5351dd3bc87b54a9e25c9c05fc4fda> , and the Journalism Competition and Preservation Act, S. 673 <https://go.politicoemail.com/?qs=3adac86c11b9eeffbf32ec8136eb28959b408051063a1b5090f315d687b9aab7c27473764e2a3d60fa39f3d85af91fd7d138df3af888a5e8> .

— It’s just business: AELP found three lobbying firms were responsible for most of the complaints to USTR. The Computer Communications and Industry Association called foreign tech rules unfair seven times, as did the now-defunct Internet Association <https://go.politicoemail.com/?qs=3adac86c11b9eeffd631866a05e8676de69d04eb9e5ceb69f568919d8a548c2c565ec18e508a7727aa65da7c4da80921736094fe6579d903> . The Information Technology Industry Council, another tech lobbying group, levied six discrimination claims against foreign countries.

In a statement, CCIA president Matt Schruers said “the fact that AELP's funders happen to like these protectionist barriers doesn't mean they don't conflict with trade commitments to the United States.” He urged the Biden administration to “work with trading partners to address trade tensions and expand access to new markets.”

ITI spokesperson Jennie Westbrook Courts said the group asks governments around the world “to consider their policies holistically.” She called fair treatment under international trade commitments “a key part of that consideration.”

— Crunch time: Democratic lawmakers recently warned the Biden administration <https://go.politicoemail.com/?qs=3adac86c11b9eeff884610e663b7b8f3eea4ff86ad461fb6edbcbed032d555fe30ea05262f2e765662e3a692a212722be6beb544bbd8a592> not to listen to the tech lobby as it negotiates the Indo-Pacific Economic Framework, a new trade deal set to include India, Japan, South Korea and Australia. The text of that deal could come as soon as January — and in new comments <https://go.politicoemail.com/?qs=3adac86c11b9eeffdff5682127a230f63f56bff4fc8e2e6a6376849c4b29cdcf0e41c6fd3ed405f7f77cff5d4beaa2af8cc706217630f8d4> submitted just last Friday by CCIA and ITI <https://go.politicoemail.com/?qs=3adac86c11b9eeff587ab0618d4f825d4efda4ec3ef8b4ec829a1be9a2ddf64e64e083e17928da031caa6e849cd64eb5988003a7f138b6cd> , both groups again sought to convince USTR that Australia and South Korea’s tech rules should be prohibited under a new deal.

“They're going even farther now,” Wallach said of the tech lobby. “They've doubled down.”

— A time for choosing: While elements of the Biden administration have come out swinging against the market power of the largest tech platforms, Wallach said the Commerce Department — which plays a huge role in negotiating trade deals — “ has not been shy about publicly attacking other countries’ digital governance rules <https://go.politicoemail.com/?qs=3adac86c11b9eeff9e4d137a2ad1dfbaa767a462750cf5643660e23e31f9a626896dc779157fed6ee9965037158164cc9263bd0645f513a8> , using the exact corporate discrimination language to attack facially neutral policies.” She worried other trade discussions, including ongoing negotiations at the U.S. / EU Trade and Technology Council, will be impacted as well.

“You could end up with U.S. trade agreements undermining vital anti-monopoly and digital governance initiatives all over the world,” Wallace said.

Sent: Wednesday, November 2, 2022  
Subject: Tech Firms Fake Trade Violations to Attack Anti-Monopoly Policies, New Study Finds

FOR IMMEDIATE RELEASE: November 2, 2022
CONTACT: Robyn Shapiro rshapiro at economicliberties.us <mailto:rshapiro at economicliberties.us> (201) 819 2526

NEWS RELEASE

Economic Liberties Investigation Reveals How Big Tech Interests Hijack Trade Lingo &Enforcement Mechanisms to Attack Anti-Monopoly Initiatives Worldwide

A New Analysis of the Annual U.S. Trade Barriers Report Finds Industry Misappropriating Trade Claims to Attack Other Nations’ Competition Policies, Including Some Pending Here  

Washington, D.C. – Big Tech interests have opened a new front in their attack against anti-monopoly policies worldwide by harnessing U.S. trade enforcement mechanisms to claim “discriminatory” treatment and urging trade penalties against countries adopting competition policies that may have a larger impact on dominant digital firms due to their size not their nationality.

In a new report, “Digital Trade” Doublespeak: Big Tech’s Hijack of Trade Lingo to Attack Anti-Monopoly and Competition Policies <https://rethinktrade.org/fact-sheet/digital-trade-doublespeak-big-techs-hijack-of-trade-lingo-to-attack-anti-monopoly-and-competition-policies/>,” Economic Liberties’ Rethink Trade program analyzed dozens of submissions to the U.S. government that reveal a pattern of Big Tech interests trying to use trade policy to undermine countries’ anti-monopoly initiatives. Among those targeted are policies that also are pending adoption by the U.S. Congress to end app store operators’ duopoly abuses and address the power imbalance between media outlets and the mega-platforms that currently determine what kind of content ends up reaching the public. 

“Big Tech interests hope to hide behind the trade world’s impenetrable terminology and closed-door processes but their latest ploy to evade efforts worldwide to end their abuses against consumers, workers, and smaller businesses won’t work,” said Lori Wallach, director of the Rethink Trade program at American Economic Liberties Project. “No one thinks it’s discrimination against American firms rather than countering monopolistic abuse when countries stop Apple and Google app store manipulations or make Facebook and Google share ad revenue with those writing the content they use.”

Rethink Trade reviewed dozens of industry National Trade Estimate (NTE) submissions. The NTE is an annual review of what ostensibly are other countries’ illegal trade barriers that the U.S. seeks to eliminate. It is issued by the Office of the United States Trade Representative (USTR). For years, the NTE has been used to attack as trade barriers other countries’ public interest policies that various industries dislike. Now, Big Tech has gotten into the game with attacks especially aimed at four cutting-edge anti-monopoly policies promoting fair competition that countries around the world are considering adopting, including the United States:

South Korea’s App Stores Law that, like S. 2730/H5017 The Open App Markets Act pending a Senate vote soon, requires app stores to allow diverse payment systems (not only their own) and to not forbid app developers from selling on other platforms;
Australia’s News Media Bargaining Code, a law similar to S.673/H1735 The Journalism Competition and Preservation Act that remedies Big Tech platforms’ monopolization of ad revenue and decimation of local journalism by creating the conditions for digital platforms to pay for the news they distribute;

EU’s Digital Markets Act and Digital Services Act, the European Union’s crackdown against abusive behavior by dominant digital firms and establishment of consumer rights online, which shares many elements of S.2992/H3816 The American Innovation and Choice Online Act; and
Germany’s GWB Digitization Act, a competition law revamp that proactively prevents anticompetitive actions by the biggest digital players.

“Big Tech’s claims of discrimination are nothing more than propaganda, and this report proves it” said Sarah Miller, Executive Director of the American Economic Liberties Project. “U.S. policymakers should reject Big Tech’s lies and work to accelerate world-wide efforts to protect workers, small businesses, independent news, and democracy by breaking and regulating Big Tech’s power.”

The way in which digital firms and their trade associations have tried to weaponize the NTE reporting process to attack pro-competition policies and label them as “discriminatory” or “barriers to digital trade” provides a preview of what they could do if Big Tech-rigged “digital trade” rules are expanded in bilateral, regional, and multilateral trade agreements.

The main findings of the investigation <https://rethinktrade.org/fact-sheet/digital-trade-doublespeak-big-techs-hijack-of-trade-lingo-to-attack-anti-monopoly-and-competition-policies/> include:

·         Industry associations attacked the four cutting-edge competition policies in 30 instances using the NTE reporting process.

·       The policies that received more attacks were the EU’s Digital Markets Act and Digital Services Act with 11 comments, followed by Australia’s News Media Bargaining Code with 10 comments, Korea’s App Stores Law with five comments, and Germany’s GWB Digitization Act with four comments.

The Computer & Communications Industry Association and the now-defunct Internet Association were the groups that most often used trade lingo to attack competition policies adopted by other nations. These associations both include Amazon, Google, Microsoft, and other Big Tech companies among their membership. Other organizations that routinely used their NTE submissions to challenge the analyzed policies using trade “non-discrimination” language are the Information Technology Industry Council, the U.S. Council for International Business, the Coalition of Services Industries, the National Foreign Trade Council, and the App Association.

In October 2020, the Information Technology Industry Council (ITIC) urged the U.S. government to weigh in against the Korean policy, claiming the “legislative intent” of the amendment was “to target US firms, while favoring their Korean competitors,” and also argued that the policy would be a violation of market access and investment commitments under the Korea-U.S. Free Trade Agreement (KORUS). The 2021 NTE report, largely drafted before the current USTR took office, echoed Apple and Google’s allegations, stating that the legislation “appears to specifically target U.S. providers and threatens a standard U.S. business model” despite the fact that identical legislation had been introduced domestically.

Several industry associations tried to block the adoption of the Australia’s News Media Bargaining Code,  legislation similar to the Journalism Competition and Preservation Act now making its way through the U.S. Congress. In 2020, the now-shuttered Internet Association claimed that “The internet industry has strong concerns that the Code violates Australia’s trade obligations and unfairly discriminates against U.S. companies.” Big Tech had success in recruiting U.S. government officials in their quest against the code, as in January 2021, USTR filed a submission before the Australian parliament asking it to “suspend any plans to finalize this legislative proposal.”

Regarding the EU’s Digital Markets Act and Digital Services Act, the U.S. Council for International Business claimed that that: “These unilateral regulations appear designed to discriminate against U.S. companies and to take aim at a slice of the $517 billion U.S. digital export market;” the Internet Association said: “The DMA includes an array of extraordinary prohibitions that will apply exclusively to a small group of U.S. platforms;” and the Coalition of Services Industries stated clearly the disproportionate impact argument: “The scope of the law [DMA] could impact U.S. companies disproportionately.” U.S. officials’ public criticism of the DMA has been leveraged to try to undermine a similar legislative proposal making its way through the U.S. Congress. For instance, the U.S. Chamber of Commerce argues that “the White House needs to read its own talking points [regarding the DMA], before it takes a final position on the legislation [the American Innovation and Choice Online Act]. Providing support for similarly misguided domestic bills, the administration could transform the world’s most innovative economy into one that reeks of stagnation.”

Rethink Trade is a program of the American Economic Liberties Project.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.

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