On March 29, the United States Trade Representative (USTR) published its 2024 National Trade Estimate Report on Foreign Trade Barriers (NTE). The NTE is a yearly report that is mandated by Section 181 of the Trade Act of 1974, which requires USTR to identify “and analyze acts, policies, or practices of each foreign country which constitute significant barriers to, or distortions of … (i) United States exports of goods and services […], and (iii) United States electronic commerce.” The report defines trade barriers as “government measures that unduly impede the international exchange of goods and services.”
This year’s NTE does not live up to that standard. The press release accompanying the report concedes as much, stressing that it is based on the notion that “[w]e respect that each government—including our own—has the sovereign right to govern in the public interest and to regulate for legitimate public policy reasons. Over the years, the NTE report has expanded from its statutory purpose to include measures without regard to whether they may be valid exercises of sovereign policy authority.”
Because of this, there are serious questions about whether the report complies with what Congress intended when it passed the Trade Act. In fact, while the statement may be superficially true, it plainly misses the point of the report. For the NTE, the relevant question is not whether a foreign country may be able to conjure a legitimate public policy reason for imposing a discriminatory trade measure, but whether that act imposes a burden on U.S. businesses. Put differently, in compiling the NTE, the role of USTR is to provide an inventory of barriers confronted by U.S. companies overseas, not to make guesses—well-informed or not—about what has motivated foreign jurisdictions to erect those barriers.
Separate from the decision about what to include in the report is the question of whether USTR can or should do something about a particular trade barrier. Like other government agencies, USTR has a finite amount of resources and, therefore, must prioritize which foreign trade practices to actively challenge and which not to pursue. This is what in the criminal law context is called prosecutorial discretion. The existence of that discretion, however, does not eliminate USTR’s obligation to point out when foreign countries violate binding trade obligations. Because this year’s report only captures some trade barriers, those that USTR is actually committed to try to remove or water down, it paints a misleading and incomplete picture of the global environment in which U.S. companies are competing.
What makes the administration’s somewhat cavalier attitude toward digital trade barriers all the more astounding is the vital role that digital trade plays in the overall economy. According to the Department of Commerce, the digital economy represented 10 percent of U.S. GDP in 2022 and was responsible for 8.9 million jobs and $1.3 trillion in total compensation. Moreover, USTR itself lists defending U.S. interests in digital trade and digitally delivered services as a core objective in its Fiscal Year 2025 Budget Request to Congress.
Because of this, the 2024 NTE is disappointing. At a time when the use of digital trade barriers are on the rise, it is inexcusable that USTR has decided to further cede its traditional leadership role in global trade and elected to omit significant digital trade barriers that were included in last year’s report. This includes, for example, the EU’s Digital Markets Act and similar legislation under consideration in a number of non-EU countries, along with measures such as online news laws in Australia and Canada, all of which are directly aimed at U.S. companies, and data localization requirements in certain Asian countries.
To be fair, the NTE also has some positives. It does still list a number of proposals and recently passed legislation in the digital space that raise concerns. These include the potential enforcement of digital services taxes in Canada and the EU, elements of the EU’s Digital Services Act (DSA), Data Act, AI Act, and the new certification scheme for cloud services (EUCS) that is still under consideration.
All told, the 2024 NTE is another missed opportunity for USTR to stand up for U.S. businesses and economic interests abroad. Regrettably, this is part of a growing pattern of USTR inaction under the leadership of Ambassador Tai. It is past time that the administration pushed back against foreign regulations that compromise the ability of U.S. companies to compete and America’s position as the world’s global innovation leader.
