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Democrats divided over Biden's move on digital trade

Gopal Ratnam, CQ-Roll Call on

Published in Political News

The Biden administration’s decision to withdraw U.S. support for digital trade provisions at the World Trade Organization and the Indo-Pacific Economic Framework, a move that has riled the tech industry, has congressional Democrats taking opposite sides over the issue.

In late October the Office of the U.S. Trade Representative informed the WTO that it was withdrawing its backing for e-commerce rules first proposed by the Trump administration in 2019.

Those provisions would require free cross-border data flows, allowing tech companies that collect data from users in one country to freely move it to another; prohibit localization restrictions that ensure such data is stored domestically; and disallow reviews by authorities of potentially harmful software source codes. The USTR also withdrew support for non-discriminatory treatment of digital products, meaning a country wouldn’t be able to give less favorable treatment to software, apps or other tech products designed or created in another country.

The trade representative suspended support for similar provisions in the IPEF trade negotiations between the U.S. and 13 Asia-Pacific countries including Australia, Japan, India and South Korea.

A group of 12 Democratic lawmakers led by Sen. Elizabeth Warren, D-Mass., and Rep. Jan Schakowsky, D-Ill., in early November wrote to President Joe Biden praising the withdrawal, saying the provisions were championed by giant tech companies using “their lobbyists and money to hijack IPEF negotiations to impose binding rules branded as ‘digital trade.’” They said the provisions could foreclose potential enactment by Congress of federal data privacy policy, legislation to prevent harms by artificial intelligence systems, or adoption of antitrust measures.

But that’s far from a consensus among Democrats.

 

A bipartisan group of 32 lawmakers led by Sen. Ron Wyden, D-Ore., chair of the Senate Finance Committee, last week wrote to Biden that the USTR’s move would create a “policy vacuum” that would enable China and Russia to potentially dictate global rules on digital trade. The group includes the Democratic chairs of the Senate committees on Appropriations, Commerce, Foreign Relations, Environment and Public Works as well 15 Republican senators.

This fight over digital trade rules has been brewing for a while.

Warren, at an event organized by an advocacy group, Rethink Trade, in March, said the tech industry is trying to “rig the digital trade deals” to undermine U.S. legislation that could force companies to reveal software code behind harmful artificial intelligence programs or curb the industry’s freewheeling use of consumer data.

A digital trade provision in the U.S.-Mexico-Canada Agreement already prohibits authorities within those three countries from reviewing the source code for artificial intelligence programs. Tech companies have tried to include similar provisions in other trade deals, Warren said at that time.

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