Saturday, May 25, 2024

America is mirroring China’s tech protectionism and reversing decades of free trade doctrine. Here’s why that’s bad news for U.S. leadership

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Under U.S. Trade Representative (USTR) Katherine Tai, the USTR is a diminished version of its former self, and may actually be harming the U.S. economy and American business.

On March 28, the Office of U.S. Trade Representative (USTR) released its annual National Trade Estimate Report on Foreign Trade Barriers–a long and often technical document that usually gets little fanfare. However, this year, the report referred to the “sovereign right” of all governments to “govern in the public interest.” That would allow governments to erect tariffs and other trade barriers if they asserted a public interest in doing so–a major pivot for USTR.

That astonishing move is part of a larger pattern emerging in the Biden Administration, which has adopted an approach to trade policy that goes against traditional U.S. foreign policy.

The USTR may simply be embracing a protectionist posture that supports the administration’s “Buy America” agenda. But in turning inward, the agency is abandoning the thousands of American businesses that fuel some $250 billion in goods and services trade beyond our borders. In short: the agency seems to have forgotten the “U.S.” in USTR.

The most recent decision follows a similarly baffling decision by USTR to withdraw support for crucial digital trade provisions at the World Trade Organization (WTO). These proposals–supported both by prior USTRs and many of our global allies–aimed to protect cross-border data flows, prohibit data localization mandates, and safeguard intellectual property. They advance the principles of fair trade and open markets that the U.S. has long championed, and that our innovation economy was built on. In backing away from them, the U.S. approach now resembles those of countries like China, and risks legitimizing authoritarian practices that hurt innovation and undermine fair competition.

The justification for this abrupt policy reversal is flimsy at best. Claims that digital trade rules would unfairly benefit large American technology companies at the expense of smaller ones simply defy reality. Digital trade barriers, including data localization requirements and forced disclosure of source code, disproportionately hurt smaller businesses, hindering their ability to compete on the global stage.

The USTR’s decision jeopardizes America’s leadership in shaping global trade norms and risks eroding America’s moral authority on the world stage. The USTR must stop leveraging foreign policy to aid a misguided domestic competition policy. Instead, the agency should recommit to a robust trade policy that prioritizes the interests of American businesses of all sizes.

The U.S. has a proud and successful history of leading the charge for open and fair trade. Amid growing protectionism and authoritarianism around the globe, our government must stand firm in defense of those values and interests. Robust trade policy isn’t just about economic prosperity but also about safeguarding the principles that define who we are as a nation.

The time to act is now, before irreparable damage is done to America’s standing in the global economy and the integrity of the international trading system. Otherwise, it would be an abdication of American leadership and certainly a departure from the norm. If our own leaders don’t champion American innovation wherever it takes place, who will?

Ed Brzytwa is the vice president of international trade at the Consumer Technology Association (CTA).

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  • Intel CEO: ‘Our goal is to have at least 50% of the world’s advanced semiconductors produced in the U.S. and Europe by the end of the decade’

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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