The Office of the U.S. Trade Representative’s decision to withdraw support for key data-related provisions in the World Trade Organization’s joint statement initiative on e-commerce puts the U.S. in line with China’s position on data flows, according to Global Data Alliance Executive Director Joseph Whitlock, who said the move undermines U.S. interests and raises policy questions about USTR’s decision-making process.
USTR last week said it would no longer support JSI proposals crafted to ensure the free flow of data across borders, ban data localization, impose safeguards on when governments could require companies to turn over proprietary source code, and require non-discriminatory treatment of digital products. The decision was roundly criticized by U.S. lawmakers from both parties as well as prominent business groups, though some progressives lauded it.
“Historically, that’s a very significant move,” Whitlock said in an interview with Inside U.S. Trade. “It overturns over a decade of U.S. trade policy.”
The Global Data Alliance is a cross-industry coalition that includes leading financial services, logistics, and software companies, including all the members of BSA | The Software Alliance. Whitlock also serves as BSA’s policy director.
From 2010 to 2018 he worked at USTR, first as associate general counsel and later as senior director for innovation and intellectual property.
The U.S. has since the early 2000s “faced a contested international policy environment in which U.S. strategic competitors sought to build international acceptance for digital authoritarianism, in particular for restrictions on the ability to move information across borders,” Whitlock said.
The change in the U.S. position in Geneva, he contended, “would appear, at least based on publicly available information, to resemble very closely the position the People’s Republic of China has been advancing since the inception of these negotiations.”
Whitlock pointed to an April 2019 Chinese WTO communication that outlined Beijing’s stance on many of the issues under negotiation in the plurilateral e-commerce talks, including three of the areas in which USTR has withdrawn its support.
“In the exploratory discussions, some Members mentioned digital trade rules, covering issues such as data flow, data storage, treatment of digital products, etc.,” the document says. “In light of their complexity and sensitivity, as well as the vastly divergent views among the Members, more exploratory discussions are needed before bringing such issues to the WTO negotiation, so as to allow Members to fully understand their implications and impacts, as well as related challenges and opportunities.”
For Whitlock, “There is a real question here: Why would USTR advance that position?” he asked. “Why would USTR advance China’s position in the WTO?”
“And who will benefit?” he continued. “Which countries will benefit from this change in WTO negotiation position and which countries and which interests will be harmed and changed in this position?”
The U.S.’ digital policy position was aligned with those of other democracies including Australia, Japan, Singapore, the United Kingdom, the European Union and others, Whitlock said. Now, though, the U.S. is forgoing “the opportunity to create strong disciplines that would absolutely benefit the United States” and support democratic values, he added.
A USTR spokesperson rebutted the idea that the U.S. was aligning with China on digital policy, noting that the agency has said it will remain at the negotiating table to push back on Chinese proposals that run counter to U.S. principles and values.
“Following last week’s announcement in Geneva, we have remained in close touch with stakeholders and Congress and will continue to seek their input on digital trade policy and related initiatives moving forward,” the spokesperson continued. “We appreciate the feedback we have received so far and will continue to hold meetings and briefings in the near future.”
The JSI negotiations, Whitlock pointed out, “are the most significant and most far-reaching negotiations on these critical issues that define trade policy of our day and where there are no international disciplines that cover such a broad grouping of countries.”
After withdrawing its support for provisions on data flows, data localization, and source code, the U.S. urged other JSI participants to drop unsupported positions and said it remained committed to the talks.
“We are forgoing the opportunity to prevent other countries or discipline other countries from denying the United States access to knowledge, access to information, access to data that the United States needs to make informed decisions, to prepare for the future,” Whitlock said. “And that puts the U.S. in a very weak position. Allowing other countries to impede that access for any reason or no reason at all in a way that derogates from the accomplishments of the past in terms of norms of non-discrimination is a mistake.”
USTR justified its reversal on data policy by saying the U.S. and other countries need sufficient “policy space” for domestic debates on data and source code. Whitlock rejected that argument, saying the positions USTR walked away from are firmly rooted in U.S. trade policy dating back to the 1947 General Agreement on Tariffs and Trade.
U.S. data and source code policies included in trade agreements allow countries to regulate where necessary while banning discrimination based on nationality and restrictions imposed under false pretenses, he noted. Those principles, along with the provision that policies must not be more restrictive than necessary, are the “core due process principles” in the GATT, General Agreement on Trade in Services, and other WTO pacts, such as the Technical Barriers to Trade and Sanitary and Phytosanitary agreements, according to Whitlock.
“So to say that the United States cannot undertake these disciplines because it may interfere with U.S. policymaking throws into question the relationship between U.S. policymaking and numerous areas of international trade law and we view that as an unhelpful suggestion to make,” he said. “These are core tenets of international trade law, they have been core tenets of international trade law since 1947 and they should be clearly and unambiguously extended to the digital trade realm.”
USTR’s position, Whitlock contended, “fundamentally jeopardizes” the interests of a host of executive agencies as well as the broader U.S. national interest. “Cross-border access to data is necessary for foreign development assistance by USAID, the ability of small businesses under SBA programs to gain access to economic opportunities overseas, export promotion by the Department of Commerce, financial equity and inclusion efforts at Treasury, efforts by cross-border access to information on financial crimes, corruption, money laundering, financing that is needed by Treasury and the Department of Justice, real-time cyber threat intelligence and awareness to protect U.S. cybersecurity by the Department of Homeland Security, and many other areas,” he said.
Whitlock also questioned how USTR arrived at its decision to withdraw its support for the data flow and source code provisions.
“Congress has legislated safeguards to ensure that USTR doesn’t make these kinds of fundamental mistakes,” he said. “USTR is statutorily obligated to consult not only with Congress, but also with executive branch agencies and with the 50 states, and so it really raises questions -- to what extent did USTR consult with other agencies, to what extent did they explain the implications of this policy to other agencies, to what extent did they consult Congress and the states?”
He cited statements from lawmakers expressing “bewilderment and surprise” at USTR’s decision. Those reactions, Whitlock said, indicate USTR’s consultations with Congress were less than robust.
USTR has vehemently denied allegations from Senate Finance Republicans that it failed to properly consult with Congress. USTR, an agency spokesman told Inside U.S. Trade last week, “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.”
“USTR staff briefed Democratic and Republican staff from the relevant congressional committees on this change,” the spokesperson continued. “The idea that USTR staff failed to give updates and advanced notice to Members and their staffs is wrong.”
USTR’s change in position also undermines the administration’s other stated goals, Whitlock continued. Just two days after USTR’s announcement, the White House issued an executive order artificial intelligence that calls for the government to advance U.S. leadership on AI and catalyze AI research and development, he noted.
“Artificial intelligence and machine-learning require a high quantity and high quality of information and data from all around the world,” Whitlock said. “This decision by USTR, which would allow countries to simply block access to that data for no reason at all runs directly counter to the research and development-related goals found in the White House executive order on AI. That also raises questions as to were the implications of USTR’s decision fully explained to other executive branch agencies and the White House?” -- Brett Fortnam (bfortnam@iwpnews.com)
