Senators Write to Biden Calling for Increased Digital Trade in the Indo-Pacific – Senator Chuck Grassley

Credit: Original article can be found here

BUTLER
COUNTY, IOWA – Every Republican member of the Senate Finance Committee sent a
letter to President Biden requesting that the Administration begin digital
trade negotiations with our allies and partners in Asia.

“[D]uring your Administration, the United States continues to sit on the
sideline,” the Senators wrote. “Our refusal to get into the game to set
the rules for trade in the Indo-Pacific encourages potential partners to move
forward without us and ensures China will hold the reins of the global
economy…”

“Foremost, digital rules must reflect American values, and directly confront China’s
abusive trade practices. These rules must ensure free flows of data, prohibit
discriminatory measures, including duties and taxes, support consumer
protection, promote cybersecurity, protect human rights, combat censorship, and
preclude governments from forcing the transfer of proprietary source code and
algorithms. United States negotiators should build on the digital trade chapter
that was negotiated as part of the United States-Mexico-Canada Agreement to
establish the type of high standard rules needed in the region.”

The letter was signed by Sens. Ben Sasse (R-Neb.), John Barrasso (R-Wyo.),
Richard Burr (R-N.C.), Bill Cassidy (R-La.), John Cornyn (R-Texas), Mike Crapo
(R-Idaho), Steve Daines (R—Mont.), Chuck Grassley (R-Iowa), James Lankford (R-Okla.),
Rob Portman (R-Ohio), Tim Scott (R-S.C.), John Thune (R-S.D.), Patrick Toomey (R-Pa.),
and Todd Young (R-Ind.). 

Background: 

On October 4, United States Trade Representative Katherine Tai gave a speech in
which she stated that the administration is committed to working with allies
and partners on trade but neglected to lay out a specific plan.  

In the absence of U.S. leadership, allies like Singapore and New Zealand are
joining digital trade pacts with the Chinese Communist Party.

This provides China an opportunity to leapfrog the U.S. in regional economic gains
and further entrench its model of authoritarian internet governance.

Expanded digital trade will have strategic and economic benefits in the United
States and will offer a counter to CCP influence. 

The full letter is available HERE and
found below.

Dear President Biden:

We write to urge you to consider the strategic and economic benefits which an
expanded digital trade agreement presents for the United States.

While we welcome U.S. Trade Representative Tai’s initial comments on her
agency’s top-to-bottom review of trade policy toward China, much still rides on
what tools the administration will bring to effectively counter Chinese
economic statecraft. 

Last November, you told the American people that, “[w]e need to be aligned with
the other democracies … so that we can set the rules of the road instead of
having China and others dictate outcomes because they are the only game in
town.”[1]

We agree. But, so far, during your Administration, the United States continues
to sit on the sideline. Our refusal to get into the game to set the rules for
trade in the Indo-Pacific encourages potential partners to move forward without
us and ensures China will hold the reins of the global economy. 

China is quickly seizing the initiative for trade policy in the East—to the
detriment of United States interests. Fifteen countries—comprising 30 percent
of global Gross Domestic Product—have signed on to a trade deal that China backs:
the Regional Comprehensive Economic Partnership (RCEP), an agreement that
comports with China’s interests, including weak rules on intellectual property
rights, and none whatsoever on state-owned enterprises. Meanwhile, while the
United States continues to disparage the Comprehensive and Progressive
Transpacific Partnership (CP-TPP), the agreement that it helped negotiate,
China now wants to join it.  

That China could someday become an outsized member of both major trade blocs in
Asia while the United States is party to neither, is a strategically
unfavorable position to be in for the United States. If this challenge is left
unanswered, China will continue to make headway in its strategy to build a
China-centric economic order and displace the United States from its
pre-eminent position in international affairs.  

To reverse and prevent such an unfavorable development from happening, the
United Sates must show effective leadership on trade; it must do so promptly;
and it must do so together with the Administration and Congress
working as one.  

Set the Rules of the Road for Digital Trade

To reestablish leadership in trade policy, the United States must—as a
start—negotiate and conclude high standard rules for digital trade with our
partners in the Indo-Pacific. This is an area of critical importance to the
United States, and one in which the United States, and its Asian allies, are
innovators and leaders. The digital economy contributes over $2 trillion
annually to the United States economy and supports 5 percent of employment.[2]
The United States must pursue growth in a sector critical to its economic
well-being and technological preeminence.    

Our partners in the Indo-Pacific countries are setting their own rules,
regulations, and standards to govern the digital economy. They are entering
into their own bilateral and multilateral agreements without our participation,
such as the Singapore-Australia Digital Trade Agreement, and the Singapore-New
Zealand-Chile Digital Economy Partnership Agreement, which could put U.S.
technology firms and consumers at a competitive disadvantage and ultimately
erode our potential for innovation.     

Foremost, digital rules must reflect American values, and directly confront
China’s abusive trade practices. These rules must ensure free flows of data,
prohibit discriminatory measures, including duties and taxes, support consumer
protection, promote cybersecurity, protect human rights, combat censorship, and
preclude governments from forcing the transfer of proprietary source code and
algorithms. United States negotiators should build on the digital trade chapter
that was negotiated as part of the United States-Mexico-Canada Agreement to
establish the type of high standard rules needed in the region.  

Do it Now

In August, Secretary of State Antony Blinken announced that trade deals must
wait until sufficient domestic investment is made. We think that is wrong.
Other countries, particularly China, are not waiting, and neither should the
United States. Trade expansion itself is an investment in the American
people—and a good one at that. As the Obama Administration’s own analysis
concluded, expanding exports means increased jobs, including jobs that pay on
average 18 percent more than non-export oriented jobs.[3] There is no reason to
deny American workers or businesses the opportunities that result from expanded
market access.   

A better approach is that outlined by Ambassador Katherine Tai in her October
4th speech. She said that the United States should work with allies to
“shape the rules for fair trade in the 21st century and facilitate a race to
the top for market economies and democracies” and that the core of the
administration’s trade policy is “a commitment to ensuring we work with our
allies to create fair and open markets.”  

Ambassador Tai’s point is valid—and there is no reason to delay its fruition.
Indeed, continuation of a passive approach to digital trade only allows China
to further entrench its model of techno-totalitarian governance and promote its
domestic technology champions, including those companies sanctioned by the U.S.
government for their roles in supporting genocide in
Xinjiang.   

Do it Together

A successful effort to write digital rules requires a close partnership between
the Administration and Congress. We are prepared to be your partners in this
endeavor. As you well know, the Constitution vests authority over international
trade with Congress.[4] The founders were right to do so because Members of
Congress are closest to individual citizens. In order to negotiate trade
agreements successfully, Congress must be appropriately consulted, and have
access to both U.S. and foreign negotiating proposals. Moreover, congressional
participation must extend to the modalities for how to effectuate these rules,
including whether to do a stand-alone digital trade agreement (on a bilateral
basis or with multiple countries), or as part of a reengagement and
modernization to the CP-TPP. Such a strong Executive partnership with Congress
will ensure that the United States pursues outcomes that maximize benefits for
the American people. 

The Indo-Pacific is one of the world’s most dynamic, fastest-growing regions at
the forefront of technology development and the center of global supply chains.
For decades, Congress and the Executive branch have recognized that the
security and prosperity of the United States is inexorably linked to a
peaceful, prosperous Indo-Pacific region. Although we disagree on many issues,
this particular issue is one that Republicans and Democrats have seen eye to
eye on—and must continue to do so. While a digital trade agreement does not
take the place of a comprehensive free trade agreement, it is a positive first
step.

To that end, we seek a dialogue so we can work together to move forward on a
plan to ensure that the United States—not China—writes the rules for digital
trade in the 21st Century. As part of the discussions, we remain open and
welcome the opportunity to discuss more broadly how to develop and advance an
ambitious trade agenda for the United States. 

Sincerely,