Sen. Maria Cantwell (D-WA) has directly challenged US Trade Representative (USTR) Katherine Tai’s adamant opposition to stronger digital trade rules in US trade agreements. She charged that USTR has “stopped standing up against digital protectionism abroad.” Cantwell is chair of the Senate Commerce, Science, and Transportation Committee, and a member of the Senate Finance Committee, which has jurisdiction over trade policy. While the future is uncertain, Cantwell’s strong statement may portend a turning point in congressional traction against the Biden administration’s reversal of bipartisan support for strong US leadership in continuing US leadership in forging “rules of the road” for future digital trade policy.
Background. As this blog has chronicled, the drive to include e-commerce chapters in trade agreements goes back to the Obama administration, though the most important advances came in the language included in the 2018 United States-Mexico-Canada Agreements (USMCA). Passed overwhelmingly with bipartisan support, the USMCA contained strong rules for digital trade, including provisions for the free flow of data across borders, safeguards against data localization, and protection of source codes. Significantly, the restrictions all contain an exception for legitimate public policy purposes.
From the outset, the Biden administration was divided over digital trade policy. Within that divide, Tai and her staff at the trade office were increasingly influenced by progressive NGOs and labor unions who argued that USMCA provisions constituted a sell out to Big Tech. As a result of these cross pressures, the administration did not include a digital trade section in its signature trade initiative, the Indo-Pacific Economic Forum. Then, to widespread criticism, in October 2023, USTR pulled the US out of e-commerce discussions in the World Trade Organization, arguing that the US feared that “policy space” would be limited if multilateral rules were actually put in place. She has specifically cited artificial intelligence and privacy as prime examples.
In her objection to Tai, Sen. Cantwell directly challenged USTR’s position: “In my view, this proposal is fully consistent with existing trade rules such as those in the USMCA and would not interfere with your ability to replicate those rules in other trade forums.” She is likely to find solid support for this stance from the chair of the Senate Finance Committee, Ron Wyden, who labeled the decision to withdraw from WTO e-commerce talks “a win” for China.
The Future. There’s much to fear from the trade policy community of a second Donald Trump administration. But, ironically, it could lead to a better outcome for digital trade. The USMCA passed under Trump’s leadership, and he would undoubtedly defend the strong digital trade provisions. Should Kamala Harris and the Democrats win, however, party divisions over digital trade would not doubt come into play, with USMCA defenders such as Sen. Cantwell squaring off against progressive digital trade skeptics led in the Senate by Sen. Elizabeth Warren (D-MA).
Stay tuned.
Learn more: Two Democrats, Two World Views on Tech, Trade, and Globalization | A History Lesson for Robert Lighthizer | US Digital Trade Policy Is in Limbo. . . and That’s Not Good | Huawei’s 5G Resilience: Will It Last?