This week, United States Trade Representative (USTR) Ambassador Katherine Tai will appear before the Senate Finance Committee and House Ways and Means Committee for annual hearings with lawmakers to examine the Biden administration’s trade agenda. The need for these two hearings could not be more urgent. While USTR was created by Congress to advance American trade interests, under Ambassador Tai’s leadership, the agency has failed to stand up against a growing list of threats to U.S. digital trade. Unfortunately, USTR’s inaction has put American global competitiveness, innovation, and companies of all sizes at risk, and leaders in Congress should use the hearings to push Ambassador Tai to reorient USTR and return the agency to its original mission: protecting American trade interests.
Last year, Ambassador Tai withdrew her support for digital trade rules during ongoing negotiations at the World Trade Organization (WTO). Previously, these rules had bipartisan support in Congress and were seen as essential to maintain the United States’ global digital leadership. Subsequently, Ambassador Tai also suspended key digital trade negotiations as part of the Indo-Pacific Economic Framework initiative. These moves – which represented a stark reversal from long-standing bipartisan goals designed to secure free and fair digital trade policies around the globe – quickly received bipartisan criticism from leaders in Congress.
In the meantime, a growing number of foreign governments have erected digital trade barriers targeting American businesses, threatening U.S. economic interests. In March, Canada announced it would implement a digital services tax on American companies, with Canadian officials revealing that they did so because the U.S. government has “explicitly tolerated” discriminatory actions. Unfortunately, other countries, including Indonesia and Australia, are considering additional digital trade laws that would put American innovation and global competitiveness at risk.
In Europe, European Union (EU) officials have forced companies designated as “gatekeepers” under the Digital Markets Act (DMA) to comply with a new and unproven regulatory regime. The list of gatekeepers named by the EU disproportionately targets American businesses while excluding European and most other foreign-based companies, hamstringing innovative U.S.-based businesses to the benefit of their foreign competitors. And while American companies recently met with European regulators to discuss DMA compliance, EU officials announced investigations into some of those very same companies, including Google and Apple, just days after these talks concluded.
Concerningly, Ambassador Tai has failed to stand up against these discriminatory actions. Tai has signaled her support for European regulators targeting American businesses and has questioned whether the companies powering the digital economy – which accounts for more than 10% of U.S. GDP and supports the jobs of more than three million Americans – are “really American.”
Just weeks before sitting before the Senate Finance Committee and House Ways and Means Committee to answer questions about U.S. trade, Ambassador Tai minimized references to many of the digital trade barriers facing American companies in the annual National Trade Estimate (NTE) report, which Congress designed for USTR to identify trade barriers facing the United States. This latest action only signals to foreign nations that the United States is willing to tolerate discriminatory actions and invites additional digital trade barriers.
Ultimately, further inaction from USTR will hurt U.S. economic interests and innovation and encourage foreign governments to discriminate against American businesses. Leaders in Washington must use Ambassador Tai’s upcoming appearances on Capitol Hill to steer USTR back on course.
