Anger Continues in Congress Over New US Position at WTO on Data Flows

The Senate Finance Committee's top Republican, along with seven of his colleagues, accused Office of the U.S. Trade Representative officials of misleading congressional staff on what they would be negotiating on digital trade at the World Trade Organization. "As recently as this weekend, USTR officials told congressional staff that they had not abandoned support for negotiating the free data flow commitments at issue," Sen. Mike Crapo, R-Idaho, and his colleagues wrote Oct. 26.

A spokesperson from USTR responded, "USTR held extensive briefings and consultations with Congress before this decision was made. In those briefings, USTR officials noted the potential for a change in policy. Before this decision was announced in Geneva, USTR staff briefed Democratic and Republican staff from the relevant congressional committees on this change."

In their statement, the lawmakers said the “USTR announced in Geneva that it will abandon support for proposals made during the Trump Administration to allow free data flows between countries. In so doing, USTR, which touts a ‘Worker-Centered Trade Policy,’ is choosing to side with China over the 8 million Americans who work in the digital economy and generate 10 percent of U.S. GDP."

China, the senators continued, "made clear it opposes free data proposals precisely because it wants the right to require all data be stored under whatever terms China’s laws or regulations may dictate, including forcing data to undergo government security reviews. China’s laws and regulations routinely facilitate technology theft, human rights abuses and the loss of American jobs."

According to the WTO, the countries discussing e-commerce are trying to come to agreement on trade facilitation measures, such as e-signatures, electronic payments, single windows for imports, de minimis, but also on non-discriminatory treatment of digital products, cross-border data flows, privacy, services market access and source code. These talks are also seeking to make permanent a moratorium on duties on electronic goods.

House Ways and Means Committee Chairman Rep. Jason Smith, R-Mo., also reacted with dismay to the change in position, saying the Biden administration's "decision to walk away from long[-]standing bipartisan positions on digital trade undermines American leadership and competitiveness, surrenders the playing field to the Chinese Communist Party, and abandons our closest trading partners."

Nothing in the decision will benefit American workers, Smith said. "Moreover, if the Administration does not reverse course and support high-standard digital trade provisions like those included in the United States-Mexico-Canada Agreement, American businesses that serve customers around the world will have to risk handing away their competitive advantage and storing data on unreliable, unsecured servers such as those of Chinese companies like Huawei," he said.

Terming the decision a “foolish approach," Smith said it's "part of a broader, misguided policy of the Biden Administration to circumvent the will of Congress with a go-it-alone approach to trade policy. I look forward to working with my colleagues on both sides of the aisle to address these concerning developments, particularly given ongoing negotiations."

The USTR spokesperson said the office intends "to remain fully engaged and present at the negotiating table as [Joint Statement Initiative] talks continue. We will not hesitate to push back against proposals from China that run counter to our values -- and we’ve communicated exactly that to stakeholders and Congress.”

The U.S. Chamber of Commerce also weighed in Oct. 27, calling the move "a capitulation to fringe views that misread what digital trade rules do. In reality, these rules form a breakwall against the rising tide of global digital protectionism, particularly the egregious digital measures imposed by authoritarian regimes.

"Strong digital trade rules also prevent countries around the world from using regulation to lock out American companies and their workers from their markets. In no way do they impede fair regulation."