Last month, the Office of the United States Trade Representative (USTR) announced that it was reversing the United States' longstanding position supporting strong digital trade rules. As we have previously noted, this move would harm American workers, open the door to unfair treatment of American companies, and threaten America's global competitiveness.
These rules are in place to prevent foreign governments from unfairly targeting U.S. companies. USTR's change in policy would send a signal that the U.S. government may no longer challenge such discrimination against American companies.
The biggest concern is that small and medium-sized businesses in the United States will be hit hard. Let's take a step back, identify the problem, and consider why it's so important to the success of small businesses across the United States.
What is digital trade?
Digital transactions are commercial transactions realized by electronic means. In other words, it is anything facilitated by digital technology, whether delivered digitally or physically. For example, digital transactions include not only the purchase and digital distribution of e-books, but also the purchase and physical distribution of paper books through online marketplaces.
Why is it important for small businesses?
Digital trade is opening up markets for U.S. small businesses, with expanded opportunities abroad thanks to e-commerce platforms and digital advertising tools that can benefit (among other things):
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Find new customers through targeted online searches and other tools.
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We use electronic payment systems that ensure fast, economical and secure transactions.
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Adopt cloud technologies that enable sophisticated operations for large multinational companies.and
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We use shipping, customs, and fulfillment providers that can ship products worldwide.
How will the USTR move affect small businesses?
Unlike large corporations, small businesses with fewer products, service lines, and resources typically cannot afford the increased costs of data localization, forced technology transfer, and the application of arbitrary regulations to U.S. companies.
Eliminating U.S. support to combat cross-border data restrictions would make it easier for other countries to impose forced data localization and other measures on critical data flows. It also makes it difficult for small businesses to move data across borders.
Additionally, ending U.S. support for source code protection will make it easier for adversaries to carry out cyber and intellectual property theft against vulnerable companies, and make it harder for small and medium-sized businesses to bear the costs. .
Finally, weakening protections for U.S. businesses abroad would encourage foreign governments to adopt discriminatory practices as a means of generating revenue or achieving political goals, all at the expense of the U.S. economy. It will be done.
All of this comes at a time when global barriers such as data localization measures and other regulatory restrictions to the export of U.S. digitally tradable services are increasing. Left unchecked, these restrictions threaten to deprive American workers and businesses of the potential benefits of exporting digitally tradable services.
What's next?
A recent letter outlining the impact of the USTR decision on small businesses states:
“Staying away from the negotiating table would weaken the global competitiveness of U.S. startups and small businesses, cede leadership to countries like China that remain at the negotiating table, and cede leadership to countries like China, including those that have just been agreed. It would encourage anti-democratic and repressive governance proposals and policies that are in direct conflict with U.S. policy.''Achieved by the United States in the G7. ”
Small businesses are resilient, but that doesn't mean they're immune to the damage caused by sudden policy changes. They don't have to worry about the US government not helping them. USTR needs to restore America's longstanding support for strong digital trade rules for American businesses of all sizes.
About the author
Isabel Isso
Isabel Ixo, director of international policy at the U.S. Chamber of Commerce, advocates for the chamber's international trade and investment priorities before the administration, Congress, and foreign governments.
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