[CTC] Finance leaders, 30 other senators urge reversal of digital trade pause

Fri Dec 1 14:29:43 PST 2023

Finance leaders, 30 other senators urge reversal of digital trade pause
Inside US Trade, By Hannah Monicken | November 30, 2023
The Biden administration should scrap its decision to withdraw support for key digital trade proposals at the World Trade Organization and launch a consultation process – with federal agencies, the public and Congress – to establish a “consensus” U.S. position, Senate Finance Committee leaders, along with 30 other senators, urged on Thursday.

The Office of the U.S. Trade Representative last month announced <https://insidetrade.com/node/178191> the U.S. would pause its longstanding support for proposals on cross-border data flows, data localization and source code in plurilateral e-commerce negotiations at the WTO to create “policy space” for a digital trade rethink amid ongoing discussions in Congress, and elsewhere, about how to regulate major technology companies and deal with rapidly evolving technologies like artificial intelligence. A senior USTR official said the move at the WTO was made to “match” the U.S. approach <https://insidetrade.com/node/178464> to the Indo-Pacific Economic Framework.

The decision has elicited mixed reviews from lawmakers as well as from industry associations, consumer advocacy groups and others.

In a Nov. 30 letter <https://insidetrade.com/sites/insidetrade.com/files/documents/2023/nov/wto2023_1051a.pdf> to President Biden, 32 senators raised a number of concerns with the decision, arguing it goes against “bipartisan principles” that have already been successfully adopted in previous trade deals. Before making such a move, they added, the administration should have held a “comprehensive consultation process” to establish what the U.S. position on these issues should be.

“USTR’s decision to abandon these commitments at the WTO creates a policy vacuum that China and Russia will fill,” the lawmakers wrote. “Accordingly, before changing the longstanding U.S. position, we request that you work with Congress and run a comprehensive consultation process – with other federal agencies, with the public, and with us – to reach a consensus U.S. position on these issues that promotes U.S. competitiveness, innovation, and jobs.”

The letter was led by Senate Finance Committee Chair Ron Wyden (D-OR) and ranking member Mike Crapo (R-ID) and signed by another 30 senators, including 14 Finance members – 10 Republicans and four Democrats, including trade subcommittee Chair Tom Carper (D-DE) and ranking member John Cornyn (R-TX). Also among the signatories are Sens. Ted Cruz (R-TX), Kirsten Gillibrand (D-NY), Patty Murray (D-WA) and James Risch (R-ID).

A USTR spokesperson, in an emailed statement sent to Inside U.S. Trade on Thursday, cited the fact that “only five out of 14” Finance Committee Democrats signed the letter as evidence that there is no consensus on digital trade policy within the committee, which has jurisdiction over the issues in question.

USTR has repeatedly said it has consulted closely with Congress and other stakeholders on digital trade policy, which the spokesperson reiterated on Thursday.

“Under Ambassador Tai’s leadership, USTR held extensive consultations on digital trade policy with Congress, interagency partners, and a wide range of stakeholders, including those traditionally left out of the policymaking process,” the spokesperson said. “These conversations have made clear that there is not a consensus, including in Congress, on technology and digital trade policy. This lack of consensus means we needed to remove the 2019 proposals so that we can leave space for Congress to enact regulations policies related to the digital economy.”

Crapo and a handful of other Finance Committee Republicans, shortly after USTR announced the decision, accused the agency of misleading Congress <https://insidetrade.com/node/178223> by telling congressional staff that “they had not abandoned support for negotiating the free data flow commitments at issue.” USTR strongly denied this claim, saying it held “extensive briefings and consultations” with Congress ahead of the decision and noted “the potential for a change in policy.”

In their letter this week, the senators insist that the proposals USTR is pulling back from already include enough flexibility to allow the U.S. to enact regulation.

“We recognize that there is much interest in the digital regulation space, particularly with the rapid adoption of artificial intelligence technology. We welcome discussions and debate on the best way to protect consumers, promote privacy, and ensure a competitive marketplace,” they said. “However, these efforts do not require the United States to walk away from negotiating strong rules at the WTO that support U.S. businesses and workers – nor would these rules constrain the ability of the United States to regulate. In fact, the commitments under discussion have built-in exceptions that ensure countries can legislate in the public interest.”

The USTR spokesperson acknowledged that the agency has heard “diverse viewpoints” on its decision but cited support in particular from Finance Committee member Elizabeth Warren <https://insidetrade.com/node/178313> (D-MA) and Senate Judiciary competition policy, antitrust and consumer rights subcommittee Chair Amy Klobuchar (D-MN) as well as from labor groups and the Coalition for App Fairness <https://insidetrade.com/node/178441>, a collection of technology companies advocating for better practices from app stores, especially those run by Apple and Google.

On the other side, industry associations – including major groups like the U.S. Chamber of Commerce, the National Retail Federation and the National Foreign Trade Council – have decried the move <https://insidetrade.com/node/178316>.

The senators on Thursday echoed some of the concerns raised by industry, arguing that by pulling back on digital trade proposals the U.S. is ceding ground to more authoritarian approaches to the internet espoused by China and Russia.

“These negotiations are crucial to our strategic approach to outcompeting our adversaries: both China and Russia are at the negotiating table, actively pushing their cyber-agenda of censorship, repression, and surveillance that not only hurts their own citizens but also undercuts U.S. competitiveness. Indeed, China is actively seeking to weaken the very principles at issue so it can promote its own version of internet governance,” they wrote.

The USTR spokesperson pushed back on this concern, saying the agency remains “fully engaged” in the e-commerce negotiations at the WTO “and will not hesitate to push back against proposals from any country, including China or Russia, that run counter to our interests.”

Additionally, the letter criticizes USTR for not providing any “policy alternatives” to the provisions it is no longer backing “nor a timeline for providing them.” It concludes by reupping the senators’ request for a consultation process “before changing the historical, consensus U.S. position on these important issues.”

USTR did not directly address this criticism in its statement, but the spokesperson said the agency hopes to “have productive conversations with Congress on how our workers and businesses alike can succeed and thrive in today’s digital economy.” -- Hannah Monicken (hmonicken at iwpnews.com <mailto:hmonicken at iwpnews.com>)

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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