Recent Reversals from Biden Administration Officials On Digital Trade Are Bad for U.S. Businesses and Consumers 

Washington, D.C. 11/09/2023 – It’s been a bad week for the Biden Administration as key Administration agencies have continued to capitulate America’s competitive edge to foreign countries. So bad, in fact, that Politico yesterday reported there has been an “ongoing meltdown” at the National Security Council over recent decisions elsewhere in the Administration.

“Somewhere, somehow, Biden Administration trade officials have lost their way when it comes to standing up for America’s most innovative and successful companies, and they are bowing to extreme ideological theories and the priorities of other countries at the expense of American businesses and consumers,” said Chandler Smith Costello, a spokesperson for Don’t Break What Works. 

“The Administration should be focused on guaranteeing American exports are free from discrimination in markets abroad, but instead they are actively weakening American companies’ ability to compete abroad and risking Americans’ privacy and security in the process. Our allies, who have looked to us for leadership and welcome principled engagement, are aghast at this policy incoherence,” Costello continued.

Two weeks ago, U.S. Trade Representative (USTR) Katherine Tai announced her decision to pull support for key digital trade rules in the ongoing negotiations at the World Trade Organization. This effectively will invite increased barriers for U.S. companies in foreign markets, increase fragmentation, and, for authoritarian regimes, could be a green light for repressive information controls. Additionally, the Biden administration postponed digital trade talks as part of the Indo-Pacific Economic Framework.

According to Politico’s reporting yesterday, the USTR’s decision specifically reportedly set off alarms inside of the National Security Agency. Lawmakers, industry experts and scholars alike share these concerns. 

CCIA and many groups from a wide range of industries, including the tech, pharmaceutical, retail, and entertainment sectors, wrote to the White House expressing concerns about the U.S. Trade Representative’s decision to withdraw support for key e-commerce rules. In part, they wrote: 

“USTR has historically been a strong, consistent voice demanding the highest standards and accountability from our trading partners. This was true as recently as May 2022 when the Administration launched the Indo-Pacific Economic Framework (IPEF) negotiations. At the time, the White House made clear that it would “pursue high-standard rules of the road in the digital economy, including standards on cross-border data flows and data localization.”

USTR’s October 25, 2023 announcement is a complete reversal. It signals to U.S. trading partners worldwide that the Administration will not confront measures that discriminate against American companies and their workers. It will further legitimize digital protectionism across the globe and advance the interests of our adversaries, harming American companies of all sizes and across sectors.”

Senator Ron Wyden (D-OR) called the USTR’s move to withdraw support for important digital trade rules a “win for China, plain and simple.”

“…USTR is leaving a vacuum that China—an active participant in these negotiations–will be more than pleased to fill. USTR’s action today is a win for the Chinese government’s efforts to have unlimited access to U.S. data, a win for Chinese tech giants who want to bully smaller countries into following the Chinese model of internet censorship, and a win for China’s Great Firewall, which locks out American companies and locks Chinese citizens into a repressive regime of government surveillance,” he continued. 

Senator Mike Crapo (R-ID) was joined by eight of his Republican colleagues in saying, 

“We have warned for years that either the United States would write the rules for digital trade or China would. Now, the Biden Administration has decided to give China the pen…

“Moreover, Ambassador Tai makes clear in her speeches and through her actions that foreign countries are free to discriminate against U.S. companies and workers as long as these countries and USTR can concoct an excuse. Failing to stand up for America and against foreign discrimination—particularly from China—is contrary to the USTR mission.” (More statements from lawmakers can be found here). 

The Biden administration is betraying Congress on digital trade,” reads a headline in The Hill for an opinion piece by Georgetown University professor Marc L. Busch. 

“Rather than open global markets to e-commerce, the U.S. has sided, Tai sided, with those who believe protectionism will result in more ‘policy space’ in which to regulate Big Tech. In truth, this far-left flight of fancy will only hurt U.S. innovation and help the Chinese steal America’s intellectual property,” he writes. 

“The Biden Administration shouldn’t need to be asked to stand up for American businesses and consumers, but here we are. Now is the time for President Biden and his Administration to make sure that American companies are well-positioned to compete with international competitors, and sometimes even adversaries, who would be more than happy to take the lead,” Costello said.

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