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United States Trade Representative Katherine Tai is seen during a House Ways and Means Committee hearing to discuss the President’s 2023 trade policy agenda on Friday, March 24, 2023.
At a pivotal moment in global trade, the United States stands at a digital crossroads.
Just a few months ago, the U.S. trade representative (USTR) sparked widespread concern—both at home and abroad—by unexpectedly stepping away from digital trade principles that have been the bedrock of American innovation and economic progress. Now, as the World Trade Organization (WTO) convenes for its upcoming session, the USTR has a critical opportunity to articulate America’s vision for the future of digital commerce. Failing to seize this moment would not only muddle the U.S.’s stance on a key global issue but also hand China an enduring strategic edge. This is more than a chance for clarification; it’s a crucial test of the U.S.’s ability to lead in the digital era.
Historically, the United States has championed the free flow of data, products, and services among allies and like-minded nations. This policy has both fueled our economic dynamism and also laid the groundwork for the U.S. to out-innovate global competitors on critical emerging technology like artificial intelligence (AI).
Yet, in a surprising pivot last October, the USTR announced its departure from long-supported digital trade doctrines that protected the free flow of data across borders, prohibited data localization mandates, and safeguarded software source code from forced disclosures. Some of these very principles were most recently implemented as an integral part of the 2020 United States-Mexico-Canada Free Trade Agreement and the 2019 U.S.-Japan Digital Trade Agreement. The USTR’s abrupt policy shift rightly ignited bipartisan criticism, with more than 30 senators condemning the move as a boon to authoritarian regimes like China and Russia.
The USTR’s withdrawal signifies more than just a policy reversal; it’s an alarming step back from the United States’ role in championing international technology standards that reflect our democratic values and bolster our economic security. This move not only undermines the capacity of the U.S. and other democracies to advocate for the free exchange of information across borders but also risks emboldening countries with authoritarian agendas. These regimes could enforce policies, such as mandatory in-country data storage and compulsory source code transfers, that directly jeopardize American technological leadership and compromise global technology security.
One senator described the USTR’s decision as “a win for China,” which underscores the gravity of the issue. In today’s political climate, where bipartisan agreement is rare, there’s a unique consensus in Washington that China poses the preeminent challenge to U.S. leadership. This shared understanding presents an opportunity for the U.S. to push back against the authoritarian ambitions and global influence of the Chinese Communist Party (CCP). Digital free trade stands at the heart of this strategic rivalry, cutting across party lines and affecting all Americans.
This issue also tests the U.S.’s commitment to policies driving tech sector success and job creation. Amidst a backdrop of global economic malaise and post-pandemic inflation, last year the U.S. economy grew faster than any other advanced country, buoyed by a robust 2.5 percent rise in Gross Domestic Product (GDP). This surge was largely attributable to technological advancements that fueled productivity and spurred investment in infrastructure and manufacturing. Digital trade is the lifeblood of our new economy and the USTR’s policy reversal puts this forward trajectory at risk.
The WTO meeting is a chance for the United States to shape the future of digital trade by reiterating our strong support for digital trade principles based on American values. In doing so, we not only advance our own economic interests and enhance future competitiveness, but also reaffirm our nation’s role on the world stage as an advocate of innovation, economic strength, and the free flow of data necessary to address global challenges.
Kent Conrad represented North Dakota in the Senate from 1986 to 2013. Saxby Chambliss represented Georgia in the Senate from 2003 to 2015. Conrad and Chambliss serve as advisers to the American Edge Project, a coalition dedicated to the belief that American innovators are an essential part of U.S. economic health, national security and individual freedoms.
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