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Democrats warn large tech firms could evade competition policies under new trade rules

If the tech industry gets its way in trade negotiations over an Indo-Pacific framework, U.S. regulators may be limited in how they can regulate some of the country’s largest companies, a group of Democratic lawmakers warned in a letter to Biden administration officials.

Tech and business trade groups have advocated for new international data rules that lawmakers argue could allow personal information to be sent anywhere, instead of locked securely in the U.S.

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Rules that the industry is advocating to include in the trade agreement “would tie Congress’s and regulators’ hands and conflict with President Biden’s whole-of-government effort to promote competition,” they wrote in the Friday letter to U.S. Trade Representative Katherine Tai and Commerce Secretary Gina Raimondo.

It’s not the first time Democrats have raised concerns about tech provisions being included in trade agreements. In 2019, then-House Speaker Nancy Pelosi, D-Calif., pushed to keep language that echoes tech’s legal liability shield Section 230 out of the United States-Mexico-Canada Agreement.

This latest letter is signed by Sens. Elizabeth Warren, D-Mass., Amy Klobuchar, D-Minn., Sherrod Brown, D-Ohio, Richard Blumenthal, D-Conn., and Reps. Jan Schakowsky, D-Ill., David Cicilline, D-R.I., and Rosa DeLauro, D-Conn. The group urged Tai and Raimondo “not to put up for negotiation or discussion any digital trade text that conflicts” with the agenda set by the whole-of-government effort.

“Big Tech wants to include an overly broad provision that would help large tech firms evade competition policies by claiming that such policies subject these firms to ‘illegal trade discrimination,'” the Democrats wrote. “This language would provide a basis for Big Tech firms, as well as foreign governments, to attack tech policies as ‘illegal trade barriers’ simply because they may disproportionately impact ‘digital products’ of dominant companies that happen to be headquartered in the U.S.”

The language could impact tech regulation both at home and abroad, the lawmakers warned.

“Inclusion of such provisions could undermine efforts by U.S. policymakers to pass new legislation and antitrust enforcers to crack down on anti-competitive conduct, including price fixing and self-dealing, by the largest tech companies,” they wrote. “Tech companies could also weaponize these digital trade rules to undermine similar efforts by our trading partners.”

The letter cited a U.S. Chamber of Commerce blog post about a trade group coalition note advocating for strong digital trade provisions in the Indo-Pacific Economic Framework (IPEF). That letter, addressed to Tai and Raimondo and signed by tech-backed groups like the Computer & Communications Industry Association (CCIA) and Information Technology Industry Council (ITI), said “securing high-standard digital trade rules in the IPEF is among the highest priorities.” The groups said doing so would help open American small businesses to new customers and better compete globally.

But the Democratic lawmakers raised concerns that parts of the tech wish list for the trade talks would also limit the ability to regulate artificial intelligence as well as the transfer of sensitive personal data.

The group said it is especially concerned because of the fast pace of negotiations, with a finalized framework reportedly targeted for November this year.

“The U.S. is committed to building trust and promoting confidence in the digital economy and seeks to include provisions designed to avoid unfair trade practices, while recognizing the need to be able to address legitimate public policy objectives in the digital trade area,” USTR spokesperson Sam Michel said in a statement.

USTR has regularly briefed and consulted with Congress throughout the negotiations. It’s had nearly 400 briefings with members of Congress and their staff in the past year, many on IPEF.

“Omitting digital issues from our free trade priorities would shackle U.S. economic policy to the 20th century,” CCIA President Matt Schruers said in a statement. “The U.S. can simultaneously secure commitments from trading partners to open their markets to US exports and pursue legitimate regulatory objectives at home.”

“The US government should never stand idly by when foreign jurisdictions unfairly target American companies and their workers,” Sean Heather, senior vice president of antitrust at the U.S. Chamber of Commerce said in a statement. “The commitment to not discriminate is not about digital trade, it is about upholding the central tenant of trade and that is not open for negotiation.”

“The Biden Administration, with Congress’ support, should be aggressively pursuing trade agreements that establish U.S. economic and diplomatic leadership on the world stage,” ITI President and CEO Jason Oxman said in a statement. “Rather than attack companies that are growing the U.S. economy, members of Congress who are concerned about protecting consumer data should heed our call and act on comprehensive, federal privacy legislation.”

The Department of Commerce did not immediately provide comment.

“If trade agreements contain rules that allow tech companies to plead ‘illegal trade discrimination’ to avoid accountability for monopolistic and discriminatory behavior, not only will personal privacy and consumers’ trust in the Internet be threatened, but the United States’ economic and national security as well,” the lawmakers wrote.

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