Washington — The U.S. Trade Representative has issued its annual National Trade Estimates (NTE), the Congressionally-mandated report identifying barriers faced by U.S. firms in foreign markets. Although barriers relating to digital products and services have seen steady growth, this report, by the agency Congress tasked with protecting U.S. trade interests, has chosen to minimize many previously cited barriers, implicitly legitimizing impediments to some of the United States’ most competitive exports.
The NTE report is meant to provide a country-by-country overview of governmental measures that impose unreasonable restrictions on trade and investment, through market distortions or outright discrimination. Although many such measures may fall outside the scope of trade rules, the NTE provides a snapshot of barriers that lays the groundwork for USTR review to consider whether they are unjustified restrictions and if so, what action to pursue.
The NTE also serves as a signal to foreign governments about which laws, regulations, and policies are areas of concern for the U.S. government. In the past, USTR has identified regulations like Europe’s Digital Markets Act, the EU’s AI Act, Indonesia and Vietnam’s data localization requirements, and both Australia and Canada’s Online News levies as trade barriers. This year, these barriers were not identified by USTR as problematic or have been significantly scaled back from last year. This troubling retreat can only embolden foreign governments to target U.S. firms for extractive revenue schemes or disproportionate burdens, while shielding domestic competitors. To its credit, USTR did continue to list Europe’s digital sovereignty requirements, network usage fees, and digital services taxes in the list of trade barriers.
The Computer & Communications Industry Association has advocated for U.S. digital exports for more than 50 years. CCIA filed comments last fall identifying over 300 enacted or pending measures unduly restricting digital trade and encouraging USTR to address them. The tech industry is a key U.S. exporter, delivering $626 billion in exports in digitally-deliverable services in 2022, which represented 70% of all U.S. services exports.
The following can be attributed to CCIA President & CEO Matt Schruers:
“USTR seems to be doubling down on its new stance to abandon U.S. trade interests, abdicating the role Congress assigned it. In a decade where the U.S. has experienced persistent and growing deficits, the tech sector is a bright spot in U.S. exports, delivering a $256 billion trade surplus. Standing down in the face of digital trade barriers will have grave consequences for U.S. global competitiveness and supply chain resilience.
“USTR buries the news that it is abandoning the most dynamic U.S. export sector on a Friday ahead of Easter weekend. This is an unwise precedent that will cost U.S. economic growth.”
The following can be attributed to CCIA Vice President for Digital Trade Jonathan McHale:
“Following a year-long retreat on negotiating new market-opening rules, USTR has further disengaged from its Congressionally-mandated role by turning a blind eye to many barriers that hinder U.S. exports and arguably breach existing rules. With a weak record on enforcement, USTR is now not even fully cataloging the measures it is charged with reviewing. It’s one thing to not take action, but quite another for diplomats to close their eyes and no longer track barriers Congress directed it to address, in what appears to be a misguided attempt to support a particular political or regulatory agenda.
“With this report, USTR appears in many cases to have made a decision to side with other countries over U.S. interests and presume that many well-documented barriers of our trading partner’s barriers are somehow justified. While trade partners always have the opportunity to defend a barrier as legitimate, USTR’s initial task is to identify significant trade restrictions, and hold partners accountable. Short circuiting that process, and presuming that further investigation of the many laws and regulations impeding trade is not called for appears inconsistent with USTR’s Congressionally-mandated task.