In a notable change of approach, U.S. Trade Representative Katherine Tai has decided to withdraw longstanding U.S. digital trade demands in World Trade Organization (WTO) negotiations. The move is aimed at providing Congress with more flexibility to regulate large technology companies effectively. The proposals, initially put forth by the Trump administration in 2019, had emphasized the need for WTO e-commerce rules to support unhindered cross-border data flows while discouraging national data localization requirements and reviews of software source code.
This decision has garnered mixed reactions, with some lawmakers and business groups expressing concerns about potential disadvantages for U.S. firms. The withdrawals took place during a meeting of the WTO’s Joint Statement Initiative on E-Commerce in Geneva. A U.S. official explained that the United States is currently reevaluating its approach to trade rules concerning sensitive areas like data and source code.
The official stressed that U.S. policy must strike a balance between regulatory objectives that safeguard the public interest and addressing anticompetitive practices within the digital economy. This shift aligns with the Biden administration’s goal of bolstering regulations for large tech corporations and the broader direction of digital trade negotiations, particularly within the U.S.-led Indo-Pacific Economic Framework for Prosperity (IPEF) group of Asian countries.
However, this decision has not been without criticism. Senator Ron Wyden, a leading Democrat from Oregon who chairs the Senate Finance Committee, characterized it as “a win for China” and expressed concerns that it could reinforce the Chinese model of internet censorship and government surveillance. Wyden argued that the U.S. Trade Representative’s move contradicts its congressional mandate.
On the other side of the spectrum, some lawmakers, like Democratic Senator Elizabeth Warren of Massachusetts, applauded Tai’s decision. Warren believes that it rejects attempts by Big Tech lobbyists to exploit trade agreements as tools to obstruct regulation.
The U.S. Chamber of Commerce, however, voiced its concerns about the change in stance, noting that the digital trade principles now being dropped by the U.S. Trade Representative had received significant support in Congress as part of the 2020 U.S.-Mexico-Canada Agreement on trade. The Chamber argued that these rules had contributed to making U.S. tech firms “the envy of the world” and urged a reconsideration of the decision. According to John Murphy, the Chamber’s senior vice president for international policy, these digital trade rules were crucial in preventing countries from using regulation to exclude American companies and workers from their markets.
The United States, despite this shift in its approach, intends to remain an active participant in the ongoing WTO e-commerce negotiations, reflecting its ongoing commitment to addressing the complexities of digital trade in the global context.