The California Chamber of Commerce has joined the U.S. Chamber and more than 150 state and local chambers from 45 states in urging the Biden administration to reverse course and support the strong digital trade rules approved by Congress in past trade agreements.
The chambers made the request in a June 12 letter to the White House National Security Council and National Economic Council.
Digital trade supports more than 3 million U.S. jobs across companies of every size, sector and state. Companies in diverse fields — services, manufacturing, arts and entertainment, and agri-business — rely increasingly on the digital economy to find customers, sell goods and services, manage operations, coordinate research and development, strengthen compliance, and ensure secure payments.
Over the years, the United States and its allies have negotiated agreements — including the U.S.-Mexico-Canada Agreement (USMCA) — to support mutually beneficial cross-border data flows and to defend against digital protectionism. These agreements protect U.S. companies from unfair treatment.
Background
In October 2023, the U.S. Trade Representative (USTR) reversed longstanding U.S. support for digital trade rules. The action risks undermining U.S. leadership and threatens the global competitiveness of many U.S. businesses.
USTR officials in Geneva announced the U.S. withdrawal of its previous proposals on data flows, data localization, and source code being discussed in World Trade Organization (WTO) negotiations on e-commerce. A USTR spokesman stated that the move was made “to provide enough policy space” for debates about digital trade to unfold.
As the U.S. Chamber has pointed out, the digital trade 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 U.S. companies and workers from their markets.
In fact the digital trade rules have:
- Opened international markets for U.S. service providers, manufacturers, and agri-food companies that rely on the global reach of a range of U.S. services and technology providers to succeed;
- Helped small and medium-sized businesses to launch, grow, scale up, and access new markets; and
- Advanced the export of digital-delivered services, which in 2022 accounted for more than 67% of all U.S. services exports and 20% of all U.S. exports.
California and Digital Trade
Earlier this year, a U.S. Chamber report outlined how digital trade benefits the U.S. economy, including breakdowns by state and congressional districts.
California benefits from digital trade, according to that report, included the following (2022 data from Trade Partnership Worldwide’s CDxports database):
- 655,128 California jobs depend on digitally tradeable exports;
- the value of California’s digitally tradeable exports is more than $142.675 billion;
- between 2013 and 2022, California’s digitally tradable exports grew 64%.
Europe was California’s top market for digitally tradeable services in 2022, following by Asia and Pacific economies (excluding China).
The top digitally tradeable services from California in 2022 were research and development/testing services; business management/ consulting services; royalties from industrial processes; financial management/advisory services; and royalties from computer software.
The numbers show that California’s need for a digital trade deal remains as strong as when CalChamber President and CEO Jennifer Barrera co-authored a commentary in August 2022 recommending that the United States “negotiate an enforceable digital trade agreement with key partners who share our ambitions.”
Returning U.S. policy to the previous strong support for digital trade rules would be an important step in the right direction.
