Congress Should Prioritize U.S. Innovation As it Examines the Biden Administration’s 2022 Trade Agenda

This week, the U.S. Congress will examine the Biden Administration’s trade agenda for 2022 in hearings held by the U.S. House of Representatives Ways and Means Committee and the U.S. Senate Finance Committee. This is an important opportunity for U.S. Trade Representative Katherine Tai to highlight key policies that will ensure the United States remains a leader in the development and deployment of digital technologies that support a large and growing segment of American exports, jobs, and economic growth. Where the United States engages with international partners in bilateral, plurilateral, or multilateral policy contexts, policymakers should prioritize digital trade commitments that ensure American companies can deliver goods and services around the world to support jobs in the U.S. To that end, we urge Members of Congress and Ambassador Tai to focus on the following priorities as they pursue the United State’s trade agenda:

Combatting Digital Protectionism. The United States is a global leader in the innovation and delivery of data-driven products and services and benefits greatly across sectors from technological innovation and digital trade. In recent years, there’s been a proliferation of damaging barriers to digital trade that modern U.S. trade provisions are designed to counter, including in the markets of some of the United States’ largest trading partners. Some of these barriers include data localization policies, discriminatory regulatory and licensing requirements, and policies that inhibit the flow of data across borders. We urge the administration to prioritize market openness by broadening the acceptance of state-of-the-art digital trade commitments, principles and text-based approaches that facilitate the movement of data across borders, prohibit data localization, expand market access for digitally-enabled goods and services, and foster compatible, non-discriminatory approaches to data governance and the regulation of new technologies in different jurisdictions.

Advancing an Ambitious Indo-Pacific Economic Framework. Both democratic and authoritarian governments around the world are advancing policies that restrict the movement of information, goods, and services under the guise of data protection, data sovereignty, cybersecurity, government access to data, or industrial policy. To drive engagement around forward-looking digital commitments, Ambassador Tai and her team should prioritize the development of digital trade rules with trusted partners in the Indo-Pacific, building on those included in recent agreements, that center on driving inclusive growth and innovation through digital trade. Further, the administration should commit to including market access provisions to yield broad-based benefits for U.S. firms and workers and incentivize trade partners to sign onto the Framework.

Supporting U.S. Competitiveness and Innovation in the EU. Digital industries are an important source of American competitiveness and will be key to the United States’ ability to innovate, grow its economy, and maintain technology leadership in the years to come. However, the EU continues to pursue an active legislative agenda under the broad umbrella of “digital sovereignty,” and various initiatives that comprise this agenda will, in some instances, disproportionately impact U.S. companies and carry significant implications for the global governance of new technology. For example, the EU recently enacted the Digital Markets Act, which appears to primarily apply to a handful of American companies, while keeping most European, Chinese, and other third-country competitors out of scope. Further, the EU is also increasingly using technical standards as a tool of industrial policy, most recently through the European Standardization Strategy, which risks furthering fragmentation in the development of global technologies. We urge Ambassador Tai to consider how the U.S. is working with the EU to ensure that its emerging policy approaches do not inhibit the competitiveness of innovative U.S. firms. We also urge the Ambassador and the rest of the Biden Administration to consider how to best leverage the U.S.-EU Trade and Technology Council and other bilateral efforts to achieve this end.

Addressing the U.S.-China Relationship. The United States and China have a complex relationship in which both nations strive to compete with each other for global influence, yet both nations’ economies are simultaneously interdependent. Ambassador Tai should expand the administration’s efforts to develop a comprehensive strategy for bilateral engagement with China, and explain how USTR intends to move forward bilaterally to address China’s unfair trade practices, as well as its significant market access restrictions in key sectors such as cloud services. The USTR strategy to address trade issues with China must include the complete rollback of section 301 tariffs in place, which have failed to engender meaningful change to the Chinese government’s technology-related acts, policies, and practices. These tariffs exacerbate ongoing supply chain challenges and increase the costs of making technology products in the United States, making the U.S. a less competitive location globally for manufacturing.

The global technology industry is committed to driving America’s economic competitiveness. We encourage Congress, Ambassador Tai, and the Biden Administration to work with our industry to address these priorities to the benefit of businesses, workers, and consumers across virtually every sector of the U.S. economy and ensure that the United States remains a global leader in innovation and technology.