From the outset, the Biden administration has found digital trade policy a difficult challenge, underpinned by open internal disagreements and powerful dissent from progressives and labor interests. These unresolved issues have now spilled over into the crucial planning of the president’s top trade initiative, the Indo-Pacific Economic Framework (IPEF), which 13 Indo-Pacific nations have joined.

To review, the US is now playing catch-up in promoting its digital trade agenda. Though it led negotiations for the first major multilateral trade agreement that advanced digital trade rules—the Trans-Pacific Partnership (TPP) Agreement—Ex-President Donald Trump’s foolish decision to pull the US out of those negotiations left the US without an international forum to further its digital trade interests. This circumstance was partially remedied by the more complete digital chapters negotiated in the 2018 US-Mexico-Canada Agreement (USMCA).

Meanwhile, in Asia, the 11 remaining members of the TPP, led by Japan, eventually completed negotiations of a rump Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). Both the CPTPP and USMCA contain rules on digital trade, such as committing to the free flow of data transnationally, prohibition of data localization, protection of source codes, and creation of domestic privacy and consumer protections.

Finally, 15 East Asian nations, including five CPTPP members, plus Brunei, Cambodia, China, Indonesia, Laos, Myanmar, the Philippines, and Thailand, have compelled negotiations for the 15-member Regional Comprehensive Economic Partnership to contain a digital trade rules chapter. However, the accompanying exceptions and deference to “digital sovereignty” render the substantive provisions largely hortatory.

The bottom line is that, at this point, the US has no formal trade ties to any of the crucial Asian regional trade agreements that will determine the rules of the digital road in East Asia.

With the IPEF, the Biden administration hopes to fill that vacuum, at least in part. Digital trade issues are included in one of the primary four pillars projected to comprise the IPEF (the four pillars of the IPEF are: trade, supply chain-resiliency, clean energy and decarbonization, and tax and anti-corruption). Specific commitments from each of the IPEF’s signatories will be negotiated in the coming months.

As noted in previous blog posts, despite claims by some administration trade leaders, the IPEF is not an enforceable trade pact, but merely an executive agreement that could be amended or dropped by future US administrations. Still, the framework would constitute an advance in the US effort to reassert political and economic leadership in the region.

IPEF Asian members have evinced strong support for a digital element in the IPEF. Indeed, during preliminary talks before the launch, Australia, Japan, and Singapore pushed hard for a separate digital trade pillar. More recently, several members, including Malaysia, have pressed the US to make digital trade rules central to a potential “early harvest” of formally negotiated rules for the new regional trade framework. US Trade Representative (USTR) Katherine Tai has poured cold water onto such suggestions—aware of the divisions within the Democratic Party and opposition from key left-leaning civil, society, and labor groups.

The reaction of Lori Wallach, a veteran anti-trade leader, is emblematic of this internal strife, as she bluntly states that previous US digital trade agreements “are entirely rigged by big tech, solely for the purpose of evading government oversight to stop their abuses of workers, consumers, and competing businesses.” A labor source flatly stated that “the labor community would oppose any effort to split off digital policy via an early [IPEF] harvest deal.”

USTR Tai has been accused of slow-walking on digital trade issues. Regarding top goals of US trade policy, many argue that she has repeatedly sacrificed market access and efficiency in favor of “worker-centric” priorities in pursuit of environmental and labor rights goals. 

It is also true that others in the Biden administration disagree with these objectives (particularly within the National Security Council), but in the end, it is unlikely that an IPEF early harvest will include definitive advances on digital trade policy. Whether the Biden administration can ultimately overcome opposition within the Democratic coalition remains an open question.

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