The U.S.-led Digital Trade World Order is Under Attack by the U.S.
The U.S. has long championed the free flow of data at the World Trade Organization (WTO). FABRICE COFFRINI - AFP - GETTY IMAGES
This year, America’s digital trade negotiator made a startling announcement at the World Trade Organization (WTO). The negotiator spoke at the behest of U.S. Trade Representative Ambassador Katherine Tai. At the time, Congress and various U.S. regulatory agencies were considering new regulations for large tech companies, which meant that the U.S. would no longer support language at the WTO related to cross-border data flows. In the words of the Office of the U.S. Trade Representative (USTR), the U.S. now needs “policy space” to regulate the tech giants.
Although the USTR stressed that the U.S. would continue to participate in the trade talks to set rules on e-commerce, the arguments sent shock waves through the trade, tech, human rights, and diplomatic communities. Such a policy reversal might affect U.S. credibility as a negotiating partner. Moreover, the policy reversal does not make sense given America’s dominant position as a leader of the democratic open world as well as the data-driven global economy.
Today, most economies are built on a foundation of data. Where nations once grew rich solely from their natural resources and human capital, nations today also rely on their citizens’ ability to collect, analyze, and create goods and services built on large pools of data. Data is multidimensional—the same dataset can be both a commercial asset and a public good, which governments should provide and regulate effectively.
Data also underpins the global internet. The U.S. has long led efforts to encourage the cross-border data flows that sustain the internet. In 1997, then-president Bill Clinton announced the Framework for Global E-Commerce which stated “The US government supports the broadest possible free flow of information across international borders [. . .] The Administration [. . .] will develop an informal dialogue with key trading partners [. . .] to ensure that differences in national regulation [. . .] do not serve as disguised trade barriers.” The framework was later adopted by the members of the OECD and it served as the basis for language in early bilateral and regional e-commerce agreements. At the beginning of discussions regarding e-commerce at the WTO, the U.S. drafted a 2019 white paper outlining the economic, social, and political benefits of the free flow of data
For the past 15 years, the U.S. has included language in trade agreements calling for the free flow of data/information as well as language limiting how and when other nations can erect barriers to digital trade. For example, the Japan-U.S. Commercial and Industrial Partnership issued on Nov. 14 notes, “we will continue collaborating to facilitate cross-border data flows and effective data and privacy protections globally, in support of our efforts to enable cross-border data flows and operationalize Data Free Flow with Trust.” The U.S. has also drafted and supported language at the most recent G7 and G20 meetings–and for good economic reason: Digital trade underpins traditional trade in goods and services but digital trade is growing faster than traditional trade.
Support for the free flow of data is not just integral to trade policy–it is also essential to the open internet and America’s support for democracy around the world. The U.S.-led Declaration on the Future of the Internet commitssignatories to “[p]romote our work to realize the benefits of data free flows with trust based on our shared values as like-minded, democratic, open, and outward-looking partners.” In its 2022 National Security Strategy, the Biden White House asserted that the United States is “rallying like-minded actors to advance an international technology ecosystem that… promotes the free flow of data and ideas with trust, while protecting our security, privacy, and human rights, and enhancing our competitiveness.”
The free flow of information is also essential to U.S. competitiveness in various forms of artificial intelligence (AI). America’s openness to cross-border data flows has powered new types of data-driven innovation including new platforms to receive information such as Bing Chat, a browser powered by Chat-GPT 4. But that same openness has also brought new competitors to keep America’s data giants on their toes. For example, TikTok, a platform operated by the Chinese company ByteDance, has been for the last two years the world’s most downloaded app.
The free flow of information will also help these firms improve their AI. AI chatbots such as Chat-GPT are widely used by individuals and firms around the world, even though they often spout inaccurate or incomplete information. These chatbots are built on two main sources of data: proprietary data (collected, developed, or purchased by firms) and web-scraped data. However, web-scraped data is essentially a snapshot of the internet, which can be inaccurate, biased, and incomplete. America’s generative AI firms can only improve these models with access to more and better data, which is only possible if many nations agree to rules governing the free flow of data at the WTO.
Meanwhile, our allies are confused by the decision to abandon America’s longstanding support of the open digital economy. They are also concerned about what this decision could signal about U.S. accountability and reliability. After hearing concerns from U.S. business leaders, many members of Congress, and U.S. allies, the National Security Council is holding a series of stakeholder meetings at the White House in December 2023 to rethink this decision.
Finally, as the Clinton administration noted more than 26 years ago, there is no data-driven economy without trust. But the policy reversal has undermined trust. Although the Biden administration meant well, this decision was a mistake. America can regulate Big Tech without disrupting the cross-border data flows that underpin our economy and society.
This commentary is by Susan Ariel Aaronson. She is a senior fellow at the Centre for International Governance Innovation, a professor at George Washington University, and co-principal investigator at the NSF-NIST Institute for Trustworthy AI in Law & Society.
This article was published in Fortune magazine.
