As some nations move to clog up the internet with cross-border data impediments and forced data localization, the US remains on the sidelines, crippled by the Biden administration’s bow to the anti-global, anti-trade wing of the Democratic Party. A recent debate held by the Congressional Internet Caucus Academy illuminated the scope and depth of the US digital trade rules debate.

To recap briefly, the United States’ priority for a “free and open” internet goes back to the Clinton administration, but the most concrete advance came in the Obama administration’s negotiations for a 12-nation Trans-Pacific Partnership Agreement (TPP), which contained an E-Commerce chapter. President Trump scrapped the TPP when he came to office in 2017, but then negotiated the US-Mexico-Canada Agreement (USMCA), a free trade agreement that actually contained stronger provisions regarding digital trade rules than the TPP. The digital chapter includes solid legal affirmation of free data flows among the three nations; a prohibition against data localization; and protection of source codes. However, a solid escape clause allows government intervention where such regulation is necessary to achieve a legitimate public purpose. As a trade agreement ratified on a bipartisan basis overwhelmingly by Congress, USMCA constitutes the law of the land—though it only applies to Mexico and Canada specifically.

Thus matters stood until this past October when US Trade Representative Katherine Tai pulled the US out of key WTO e-commerce negotiations, arguing that the US needed more “policy space” on digital trade issues.

The recent debate represented key viewpoints: the anti-Big Tech populists, the US business community, a civil liberties group, and, not least, a judicial scholar steeped in international trade law.

Jonathan McHale of the Computer and Communications Industry Association presented longstanding economic arguments for prior digital trade rules: The US has over $600 billion in services exports and is largely dependent on internet-facilitated transactions, including vital movement of financial information. He pointed out that digital trade barriers really hurt small businesses rather than Big Tech, because big companies commanded large resources to circumvent obstacles. He further noted that since the USMCA passed, other nations—notably Canada—have passed digital regulation without the US raising objections under USMCA rules. On the domestic front, McHale noted that succeeding Republican and Democratic presidents had supported the concepts, if not the exact language in the USMCA (particularly Barack Obama, on whose watch the e-commerce TPP chapter largely followed later USMCA provisions).

Lori Wallach from Rethink Trade, representing the anti-Big Tech, anti-global nongovernmental organizations, came out swinging—characterizing USMCA language as a sellout to Big Tech, and naked “international preemption” of future US government regulation: “USMCA rules that don’t allow governments to limit data flows under any circumstances.” She also continuously referred to the USMCA as “Trump rules,” ignoring the fact the trade agreement passed Congress overwhelmingly with strong Democratic support.

Though McHale and Wallach articulated points from long-held policy positions, more nuanced presentations came from the other two speakers, Natalie Campbell from the Internet Society, and Simon Lester, a highly respected expert on international trade law.

The Internet Society is an organization that has a long history of pressing for digital and individual rights on the internet, working (and contesting) with governments around the world. Speaking for the society, Campbell lamented the US’s “step back” from protection-free data flows, positing that the US had greatly influenced world policy on a thriving, open Internet and the Biden administration’s reversal toward allowing discrimination was deeply “concerning.” Beyond economic arguments, Campbell asserted that the October revocation of data protections by Tai moved the US in the direction of regimes—both democratic and authoritarian—“who want more control over what goes in and out of their countries.”

Lester, speaking as an international trade law scholar, cautioned that the US probably still hadn’t gotten the “right balance.” He pointed to the legal implications of stricter versus looser exceptions to government digital interventions—for instance, the mandate that an intervention be “necessary” for a public goal versus “related” to a public goal. Given the broad implications of digital issues, he questioned whether the US Trade Representative alone should be making such decisions—though he admitted that there is a vital trade connection in that governments can use such rules for political and protectionist purposes. 

Lester’s cautions are valid, but given rising illiberal government interventions to close off the internet, the best starting point for future US policy—echoing here the Internet Society’s warnings—is to build off the restrictive USMCA language and then move from there as politically or substantively necessary. In my book, reasserting US leadership on international digital trade rules should be a high priority for whoever becomes president in 2025.