In her unceasing campaign to forestall new international rules for digital trade, US Trade Representative (USTR) Katherine Tai has seized upon a new rationale: the need to forge a new regime for artificial intelligence policy. In a webinar hosted by the left-leaning Center for Economic Policy Research, she amplified her animus against Big Tech, arguing that AI systems are built on an “aggregation of massive amounts of data that has been accumulated post free…by these very, very large, dominant players in our economy.” She also warned, “Algorithms can perpetuate human biases.” Having leveled these criticisms on the current push for international digital trade negotiations, she still claimed to want a path forward—though giving no indication of when or how.
Quick historical review. Digital trade rules have been a priority for the US for several decades—with provisions in the Trans-Pacific Partnership negotiated under President Barack Obama, and more fully in the e-commerce chapter in the US-Mexico-Canada-Agreement (USMCA) negotiated under President Donald Trump. The USMCA passed Congress overwhelmingly with strong bipartisan support. The key digital provisions included a strong commitment to the free flow of data, no data localization, and protection of algorithms. Significantly, for the present debate, there is also a clear public policy exception to these structures, allowing intervention for “legitimate” public policy regulations.
The Biden Administration. From the outset, the Biden administration has been deeply divided over digital trade issues. The progressive wing of the Democratic Party, allied with anti-global civil society groups such as Public Citizen and Rethink Trade, has worked assiduously to undermine current US policy, as relayed in the USMCA. And increasingly, the Office of the USTR under Tai’s leadership has sided with the progressives—resulting last October in the USTR pulling the US out of talks in the World Trade Organization (WTO) on potential multilateral rules for digital trade. After being questioned about the apparent change in US policy, Tao first claimed vaguely the need for “policy space” in light of changing technological and economic circumstances. But as noted above, more recently she has zeroed in on AI.
AI and Digital Trade Rules. Certainly, profound societal, technological, economic, and political questions and issues emerging from the rapid recent development of AI. More AEI tech policy colleagues have written extensively on many of these issues, including two recent blogs by Bronwyn Howell analyzing the difficult questions arising from (likely premature) moves to regulate the myriad uses that AI is fostering.
The claim, however, that trade rules assuring the free flow of data and discouraging data localization conflict with future AI decisions is false. First, the USMCA public policy escape clause gives governments full authority to intervene should any conflict occur. Further, it is telling that in the extensive debates unfolding in the US and many countries, no one has raised an alarm over the USMCA or similar language in trade agreements. This is true not only for US trading partners but also for debates in Congress over future AI policy: The Biden administration’s recent AI executive order was put together within the administration without fear of challenge by USMCA language.
In sum, the USTR’s rationale for the damaging US retreat from advancing new digital trade rules is a ruse to cover its face to the Democratic anti-global progressive left.
As this blog was being completed, word came that a WTO working group on e-commerce had reached an agreement on preliminary language for e-commerce rules in future WTO negotiations. A few members of the eight-nation group declined to sign off, including the United States, which raised broader privacy and national security issues—with no mention of artificial intelligence. This kind of shape-shifting in digital policy has caused experts such as Ferial Ara Saeed of the Stimson Center to argue accurately that the Biden administration “is kicking America’s market-oriented model of digital governance to the curb” and ceding global leadership on global digital trade rules to other nations.
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