New Trade Rules May Allow Large Tech Firms to Avoid Competition Policies, Warn Democrats

Democrats have cautioned that new international data rules being advocated for in the trade negotiations for an Indo-Pacific framework could limit regulators’ ability to regulate some of the biggest tech firms in the US. The tech industry is pushing for rules that would enable personal information to be sent anywhere instead of being securely locked in the US. The Democrats argue that this would conflict with President Biden’s efforts to promote competition and limit regulators’ and Congress’s ability to regulate these companies.

The US tech industry could evade competition policies if they have their way in the Indo-Pacific trade negotiations, according to a group of Democratic lawmakers. The lawmakers argue that international data rules being advocated by trade groups could allow personal information to be sent anywhere, instead of being securely locked in the US. The rules could limit regulators and Congress, in conflict with President Biden’s efforts to promote competition. Senators Elizabeth Warren, Amy Klobuchar, Sherrod Brown, and Richard Blumenthal, along with Reps. Jan Schakowsky, David Cicilline, and Rosa DeLauro have signed a letter to the US Trade Representative and Commerce Secretary urging them not to include any digital trade text that conflicts with the whole-of-government effort agenda. The proposed provisions could enable tech firms to evade competition policies by claiming that they subject them to illegal trade discrimination.

According to the lawmakers, including such provisions could undermine efforts by US policymakers to pass new legislation and anti-trust enforcers to crack down on anti-competitive conduct by large tech companies, and they could also be used to undermine similar efforts by trading partners. The lawmakers have cited concerns that the tech wish list for trade talks would limit the ability to regulate artificial intelligence and the transfer of sensitive personal data. There is also concern about the fast pace of negotiations, with a finalized framework reportedly targeted for November this year.

Trade and tech groups have backed strong digital trade provisions in the Indo-Pacific Economic Framework, saying that they would help American small businesses compete globally. The Democrats’ letter argues that these provisions could impact tech regulation both at home and abroad. They are especially concerned about the potential implications for AI regulation and the transfer of sensitive personal data.

In 2019, then-House Speaker Nancy Pelosi pushed to keep language that echoes tech’s legal liability shield, Section 230, out of the United States-Mexico-Canada Agreement. Democratic lawmakers have previously raised concerns about tech provisions being included in trade agreements.

The US Trade Representative has regularly briefed and consulted with Congress throughout the negotiations and has had nearly 400 briefings with members of Congress and their staff in the past year, many of them relating to the Indo-Pacific Economic Framework. The US Chamber of Commerce has stated that omitting digital issues from free trade priorities would shackle US economic policy to the 20th century. The Chamber’s Senior Vice President of Antitrust, Sean Heather, said the commitment to not discriminate was not about digital trade but about upholding the central tenant of trade. The Information Technology Industry Council’s President and CEO, Jason Oxman, said that the Biden administration should be pursuing trade agreements that establish US economic and diplomatic leadership on the world stage rather than attacking companies that are growing the US economy.

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