The Shifting Of U.S. Digital Trade Policy: Where Is USTR’s New Strategy Leading Us?

7:36PM May 6, 2024

Speakers:

Tim Lordan

Stuart Styron

Natalie Campbell

Lori Wallach

Jonathan McHale

Simon Lester

Steve DelBianco

Keywords:

rules

internet

trade

data

countries

privacy

governments

localization

space

cross border

policy

big

issue

regulation

congress

agreement

wto

exceptions

regulate

eu

Well, good afternoon. We'll go ahead and get started. My name is Stuart Styron. And I am the Senior Technology Policy Counsel for Congresswoman Anna Eshoo, who is the co chair of the Internet Congressional Internet Caucus with Mr. McCaul from Texas and on the Senate side, Senator Thune from South Dakota. Welcome to today's event hosted by the Congressional internet Caucus Academy in conjunction with Congressional Internet Caucus two separate entities I might point out, well, it'd be titled The Congressional internet I'm sorry, US digital trade policy, whereas USTR is new strategy leading us. The caucus has been doing these luncheon briefings regularly with a brief pause for the COVID pandemic since 1996, when internet caucus was founded. The next briefing will be on Friday, July 12. Here in the Rayburn Building. That event will focus on the Supreme Court's decisions on the cases involving tech platforms in the First Amendment. Today's event will feature a panel of experts who are listed here on the screen on the who are on the frontlines of digital trade issues. We have a tremendous moderator today, Tim, the Executive Director of Education Foundation, and I will turn it over to him. So enjoy your time. Thanks.

And Stuart, thank you for saying I'm a tremendous moderator. The fact is I'm not on this issue. US digital trade is one of those issues that NGOs, small, nonprofit organizations like mine and other organizations have a lot of difficulty covering digital trade, it requires a lot of time, a lot of travel, you have to learn, you have to learn how to speak several different languages. And we a lot of folks just don't have the time to cover this issue in depth. That whole statecraft is very, very difficult to cover. And in fact, there weren't a lot of journalists in the city that covered that beat, that there were a few that we found that understood digital issues and trade issues, but they had conflicts. Normally we'd have a moderator, be a journalist, someone with knowledge of the issue. But again, we couldn't really find many of them, because a lot of them don't have that beat. So you're stuck with me. And I know absolutely nothing about this topic. So what we did do is we got four different experts on the issue who probably have good passports that have stamped quite a bit to cover the issue and look at look at this issue, follow it. And in kind of to have a conversation today about what has happened recently with regard to digital trade, what digital trade is, what changes or shifts, as we kind of called it have happened with regard to administration's digital trade policy recently. And where does it go from here? And so just let me go from left to right. We have Lori Wallach from rethink trade. We have Natalie Campbell from the Internet Society. We have Jonathan McHale, who's with the communication computer and communication industry association, but everybody calls it CCI. And then on the far left is Simon Lester from World Trade law.net. Jonathan also, I mean, Simon house also has several other titles, but he can he can fill those in as need be. i This wish was brought to our attention. In in like November, apparently folks had noticed that the US Trade Representative had made a shift in US trade policy. And when it comes to digital trade, and I think I think it really is all around kind of the joint statement initiative that has something to do with E commerce. i They made a statement in October. And it really has changed kind of the the digital trade rules that they had pursued before under the Trump administration and in previous administrations. And we're here kind of to talk about that shift in trade policy. And what does it mean, a lot of folks on the Hill on the Senate side, Senator Warren specifically and Senator Klobuchar have been supportive of a shift and trade policy other other when it comes to competition issues and other things like that. And then others have been jarred by the shift and trade policy. But we wanted to kind of give an update on this from the experts in the room. And let me just before I go to that, if you're watching online, if you're if you're on YouTube, we'd really appreciate if you could subscribe to our channel, because apparently, for us to stream on YouTube, we need to have, you have to subscribe. So there's like limits, but if you could just subscribe button, we'd really appreciate it. But let me just let me just go to you guys. With regard to Natalie had brought this to our attention with an op ed she had written that there was a shift in trade policy. And I could read it it's like a sentence or two sentences. When October what the US Trade Representative but what what essentially did the US trade really quickly like what what what shift was it and what did it say?

Sure. So first of all, say that we at the Internet Society believe in open globally connected, secure and trustworthy internet. And that is our wheelhouse. We are also in the camp of those who are not usually involved in in trade conversations or even trade negotiations. But When we started paying attention was last October, because we know that the internet, since its very beginning has really relied on people intentionally supporting what it needs as a foundation to be open, globally connected, secure and trustworthy. And the United States has a really long reputation of championing this approach this policy approach in many different forums, including in trade. And that is a big part of why the Internet has grown in in developed so quickly and so famously for the United States, because of this approach to supporting what the internet needs to exist and thrive, as I said, when we started paying attention, is when we see threats to the internet. And, you know, like it or not, we it's not that we necessarily advocate that protections for the internet happened in trade conversations, but trade negotiations are increasingly dealing with issues such as cross border data flows. So it was really concerning to us when we saw the announcement for from the USTR, saying that it would stop support for cross border data flows at the WTO. And in the joint statement on ecommerce conversations, it was no longer going to be intentionally opposing mandated data localization, which is a particular type of data governance is very harmful to the internet. And it was it also as deep prioritizing opposition to discriminate discriminatory data policies, and national demands to see the source code of foreign companies. So this is when we start paying attention, because as I said, the internet you know, has a foundation that it needs to exist in thrive, it needs to be open, it needs to be globally connected. And we can't take that foundation for granted. When we see, you know, when we saw the United States taking a step back from this policy approach that you know, since the Clinton Administration has really helped flourish, the internet across the world, and a lot of countries worldwide, were influenced by this approach to the internet and wanted to have the benefits of the internet that this approach to policy took, when we saw that the United States taking a step back from that that was a huge red flag. As I said, it's not that we're advocating for Internet policy protections to be made through trade. But like could are not this has had, you know, a really enduring influence. And stepping back will just create a huge vacuum that gives away to a lot of different approaches that are not necessarily aligned with the internet that I think we're going to be talking about today. So

So digital trade is kind of something new trade and trade issues used to be like about widgets and goods and hard hard goods going across borders and everything like that, and digital trade, or E commerce, whatever it is, is relatively recent. Even though we've been doing these briefings up here on the hill since 1996. Digital trade issues are relatively new, I'm not even sure it has a very well defined definition. So let me let me just say this, what is this new digital trade concept? How is it different from the commerce concept of beep in past trade agreements? And if you could maybe find a little context for that, Lori, super.

So I actually give some context, but also contest some of Natalie's description, because what happened in October at the World Trade Organization, in E commerce negotiations, it's called the joint statement initiative, the JSI. But it's 90 countries basically sitting in Geneva, trying to set global rules on these issues. And what happened is the US government did what's called with Drew attributions. So it took its initials off of a set of particular for particular proposals that actually had been tabled by the Trump administration. And those four proposals were actually unlike anything that had been, for instance, in the Clinton era agreements. They these rules only exist in the Trump's administration's US Mexico Canada agreement, the usmca and only exist in the US Japan agreement that didn't actually get approved by Congress. And these rules particularly involve number one extreme limits on the regulation of data flows. Now, already, there are WTO rules, which frankly, China Russia ignore, that require the use of telecommunications platforms and systems. So you know, like when China shuts down access to the New York Times, that's already a violation of the WTO. But they're not following those rules. This has to do with limiting data flows, for instance, which many governments do for privacy, or the Congress, that house just voted for 14 to zero to do with the data brokers bill and national security. The rule that was tabled in the name of the US by the Trump administration, in that had broken from these past agreements. And by the way, the first agreement, I printed these out in case any of the staff here wanted to get the citations. The US Singapore agreements from the early 2000s was the first agreement that had an electronic commerce chapter. And that agreement has what's called soft language supporting the concept of an open Internet, which is an excellent concept. And, frankly, except for like China, Russia, Turkey, most of the countries in that WTO negotiation support, it's a question of what rules. So for instance, I brought the EU's version of rules to get an open Internet, which if I had a magic wand, I'd probably have the use associated with something like that. But what they did is they pulled off of the you can't regulate data, here are a bunch of exceptions. But these exceptions don't work. We know from decades of WTO, the US withdrew one proposal, which had to do with this issue called non discrimination, that basically that was a set of rules, though labeled that way that would have undermined all the competition policies for big tech, that so many Democrats and Republicans have tabled. And I can explain why there was a decent version of this rule and the US Korea agreement. But that is not like a table. So if we go back to that, that would not be a big problem. But the version of it that the Trump administration had tabled handcuffs on Congress as far as being able to regulate for antitrust. The third thing that the US took its initials off of was new secrecy rules that sort of build on rules that are exist in the WTO, which is called article 39. Of the TRIPS Agreement. These are trade secrets rules that basically forbid government's already from stealing technology or innovations, and then giving it to someone else to make money off of. And then the final thing on data localization, that has to do with where you can store data, and we can get into the details of that. But the Europeans also have a very good proposal, the US hasn't gotten in favor of data localization or is not against open internet, they just withdrew support from these four particular kind of Loopy usmca rules. So

let's get to let's let's let's save some space for data localization for later on conversation. Let's also save some space on the interplay between all these trade agreements and what Congress can or can't do leaving space for, you know, congressional action. Let's put that off. Because although those are my only two questions as a knowledgeable moderator that I have, but let me before we get to those things, and I thought it would be less than 11 minutes before we got to tick tock and go to section. But Jon, let me just if you could just kind of respond to Lori's perspective on what what did this? What are these trade rules do? And how did you view this as kind of a step in the wrong direction?

Sure. Thank you. And thanks for the invitation here. I think there's three questions in this space writ large that one ought to consider first, is the digital trade space. engagement of the US is in national interest. Do we have economic interests in this space? I think it's pretty clear cut. We billions, hundreds of billions of dollars of exports in this space. So clearly responds to very wide ranging US economic interest. Big companies, yes. But also many small companies. Second, are there barriers in this space? I think it's well documented. There are many barriers. And third, is it helpful to have rules to to address some of the barriers that one sees that impede us company's ability to operate in this space? What the Biden administration started to do at the beginning of the IPASS negotiation, which is really where this policy shift started in start in October, as has been suggested, it started during the AIPAC negotiation. What is the with a bunch with several, I think there's maybe a dozen Asian countries who wanted to engage with the United States in various trade elements, including digital trade. And I can read you what the White House said on when this was being launched. This was a couple of years ago. On trade, we will engage comprehensively with our partners on a wide range of issues, we will pursue high standard rules of the road on the digital economy, including standards on cross border data flows, and then localization. So we're not doing that right now. And that's the big concern is this pullback is leaving the US out of the conversation and unable to negotiate further on things that would would be relevant there. One last thing I will would like to point to make. This is not a recent set of US interests. Quite a few United States believes that prayer rd should be given to an understanding on international information flows. It is critical that we address this particular area as soon as possible because of its critical role in most service sectors. And its role in technological change in all our economies. That is the US government in 1985. That we've been doing this for 45 years, I got my math correct. And because it has been core to some of the US interests in this space, thank

you. Let me let me get to Simon and but the reason why yes, what I took away from what I packed, I packed I don't know Ackerman acronyms in the digital trade space. And a lot of folks watching don't either. So like, I took me JSI, it took me 20 minutes to find out what JSI stood for, which is joint statement initiative. And then I had to figure what that meant. So as far as the academics go, and the ditch that trade speak, let's try to like articulate those if we can. Simon, the big question on the table is that a lot of people have said is in the the statement, the JSI statement itself, was that we need to leave space for Congress to act. And you know, how does and this is a big topic for conversation. How do these digital trade rules, whatever we want to call them in these agreements, do they handcuff, Lori mentioned that one of them had handcuffed the United States Congress in some way? How do they how do they hinder Congress? And is that true? Or does Congress have space to operate outside of these digital trade rules? Yeah.

That's a great question. That is the big question. We're here to talk about. Maybe let me take a step back away from digital trade, because there's a long history of this in traditional regulation of goods, the widgets that you that you were talking about earlier, when trade agreements, trade negotiations first started out we were talking about tariffs, mostly, you know, import taxes imposed at the border. But what governments realized pretty quickly was that domestic regulation can also be used for protectionism. So we need to come up with some rules on that. So very early on the GATT, General Agreement on Tariffs and Trade in 1947, has rules on this. It took us a couple of decades to really get experience with them. But by the late 80s, early 1990s, we had some famous prominent notorious cases, challenging us regulations, protecting sea turtles and dolphins. Laurie was intimately involved in the criticism of those rules. And then we go in the other direction, the US challenged an EU ban on hormone treated beef. So we had a lot of disputes over the international rules that apply to domestic regulation, and a lot of criticism of did we get the international rules, right? What are the obligations? Say? What are the exceptions say? Have we crafted the right balance to give governments the policies face the flexibility to regulate if they need to? So So what's happening here, as I see it, is that debate is being brought over into these new digital rules. So we have this new area of regulation, that we're all still trying to get our heads around. I certainly have maybe the others have a better sense of it than I do in terms of domestic regulation. So what I think USTR is concern is is how do we set up international rules on digital, that don't lead to the same concerns we had with regulation of goods? Now, with regard to the relation of goods? I do think there is some degree of legitimacy to the critiques of the of the international rules? I'm not sure that we got the balance. Absolutely correct. I'm open to kind of rethinking some of the wording of the obligations and exceptions. At the same time, I do think that, broadly speaking, under these obligations and exceptions and sort of the the ability of international agreements to actually have effectiveness, to actually discipline domestic regulations. I think that there's a lot of space out there. The WTO international agreements can't make governments do anything. I mean, there can be a complaint before the WTO or under an international agreement. And you could have a ruling that a domestic regulation violates the the international rules. But that doesn't lead automatically to withdrawal of the statute or the regulation. So So I think there is actually a lot of policy space and flexibility. I think that USTR has some legitimate concerns. What I think they would be better off doing than withdrawal is to say, here is the alternative language that that we think would work to create that balance to make sure to give certainty, because I think a lot of this is just a bit of uncertainty about what what governments can do in terms of regulating if if we revised the rules, we tweaked the rules we could get we could create that certainty that Congress can legislate that the administration can regulate when they need to in these areas. Natalie,

Jonathan, how do you agree with Simon or do you think there's more

Yeah, I could just chime in here. So two lawyers on other sides of me, I'm not a lawyer. I work as a trade negotiator. So getting the rules on the books, and unfortunately, very little of these rules end up going to litigation. You don't that's the last last resort when trying to convince another government to do something. Correct. So you will have arguments on would you might you lose, might you not lose these rules have been around for a long time, we've got a data flow rule that's on the box since 1994, has not been litigated. We actually used it constructively with the Chinese went into the Chinese, they were blocking software downloads, I said, Look, you've got this access to the Internet access to the telecom network obligation, you shouldn't be blocking unless you can justify that the block is necessary. It wasn't necessary. They got it. They understood that what they were trying to block in this case was not really what what was sensitive. And so again, my my point is, yes, getting the rules, right is important. But the real goal is the United States to have a conversation with a foreign country, on whether the policy approach they're they're taking in the direction they're headed, could be accomplished in a different way that didn't impede trade, it's pretty, pretty simple. The goal is not to litigate, is to have that conversation and try and get things fixed before they become a problem.

I'd love to build on that, as well. So I think that, you know, when it comes to having these conversations, staying silent on what the internet needs to exist, is harmful. I think that, you know, we cannot afford to take the internet for granted and the decade's worth of growth and flourishing that the digital economy has enjoyed because of these intentional policies to protect its existence to begin with. When we choose the internet, that means choosing to intentionally protect and defend it. Because we know and the internet site, he has done a lot of research on this, that there are an increasing amount of countries who want more control over what goes in and out of the countries, both in terms of data flows. And otherwise. China was an early example of a country growing a approach to the internet that doesn't align with what the internet needs to exist. And in recent years, we've seen other countries like Vietnam, Bangladesh, Pakistan and Indonesia, considering similar approaches to the internet and ideas such as mandated data localization, which is a direct fragmentation to the internet and its global connectivity. The direction that Ambassador Thai is moving towards is a lot closer to that kind of non Internet, and staying silent, even retreating. It gives a green light to countries around the world such as the ones I mentioned, but also some democratic countries to start thinking about, well, how do we approach our concerns about privacy and security in a way that might not align with the Internet. And these are really legitimate concerns. But the point is that there are ways to address those concerns in ways that don't undermine the internet. And we've seen this I'm based in Montreal and from Canada, part of my job is government relations and policy in Canada. I have seen Canada, which is very respectful, respectful, which adheres to the US MCA which has intentional obligations to protect cross border data flows. It is passing through AI legislation online harms legislation, and what's the other one? Ai online harms and privacy? And nowhere has anyone's had Wait, that that conflicts with us MCA is cross border del faux pas, it hasn't they're going through. And so this is one example of a government. I mean, these laws are not perfect. But we know that as the internet's are you looking at them, they don't undermine that fundamental foundation that the internet needs to exist in the first place. And that's where the approaches to privacy and security such as mandated data localization fundamentally differ. Laurie,

you teed off this question with mentioning that in some under some provisions that Congress was handcuffed. Can you jump into the big question here about like giving space for Congress to act with these trade agreements?

I think the most compelling example that's recent is the rules that require this extra secrecy for the big tech firms with respect to algorithms and source code, which got rolled into a UK EU agreement. And as a result, the European Union's AI Act, which has the same things that all the US proposals have for its sensitive uses of AI pre screening, to make sure that the algorithm is not going to cause harms that had to rollback, the scope of the law and how much pre screening you can do because you couldn't do the algorithmic assessments. There are the basis for all of the US civil rights and civil liberties, online regulations and or the AI rules and the AI, for instance, executive order that the administration has put forward. So that's one that's a live example from nine months ago of the conflict. But I want to actually talk about the balance question, because I think the way Simon put it is, is right, whenever you're writing these kinds of trade rules, and Jonathan wrote the US MCA rules, he was the lead negotiator, you figure out what the obligation is the commitment, and then you think about, you need exceptions. And so both pieces of those have to have balance. And so the issue is not, I think Jonathan is exactly right, the interest of the US and that we said the same thing is open Internet. Excellent. That's the right interest. The question is, what specific rules are we going to have in these instruments? And do they take into consideration the range of interests of consumers for national security, etc. And so what the administration has done is they have stepped back from one set of rules that have been tabled that they think don't do that. Now, now, we may have special insights to the interagency process has been going on for the last six months to write new rules, because that's what happened, they stood back from the old ones, they did not walk away. In fact, the joint statement initiative is going to finally get done. Because the deadlock that had been happening because the US had stuck to the Extreme Rules has broken, they've put the controversial issues in the side, they're actually going to harvest an initial WTO agreement, which has been stuck since 2019. So the US is in the middle of that the US is still at the table. Back home in Washington, there's been this interagency process to figure out if we don't like those, then what should the new approach be that actually gives us space. And that's the difference between the interest and the rules. So the sort of notion of where USTR is moving towards. It's where the US government is moving towards, across different agencies. And Congress, obviously, will have a say about how you accommodate the policy space. Now, some of these Canadian measures that have passed, it depends on the specific elements of the laws. So for people here who are with members of Congress, your bosses have co sponsored a whole bunch of particular measures on privacy, competition, policy, online civil rights, we did a report you can see on our website, which is rethink trade.org, where we actually did side by sides. And we took all of those major bills, and then we show you, here's the US MCA language. And here's where the conflict could be. And we went through more than a dozen bills to actually show with conflict is Canada's bills may or may not have the instruments that are the same mechanisms, or the same policies that we're trying to implement here. But you had, you know, ad House members, including all the ranking members, sending a letter to the trade, Ambassador to the president, praising what the ambassador is doing, and saying, Hey, we need the policy space. That's the letter that just got circulated. So you gotta love members of Congress for sponsoring these bills, who thinks there's a problem. The last thing I would just note is, and I keep mentioning this EU policy, this is for the interest of an open Internet. This is their version that's also on the table in Geneva, which Jonathan and his companies don't like. But I think this is not bad. The parties are committed to ensuring cross border data flows to facilitate trade in the digital economy and recognize that each party may have its own regulatory requirements in this regard. To that end, a party shall not I eat binding, restrict cross border data flows taking place between the parties, the countries in the context of activity that isn't with the scope of this chapter, that's defined quite widely as cross as basically activities on the internet, requiring the use of computing facilities or network elements in the territory for data processing, you can't do that, requiring the localization of data and its territory, you can't do that prohibiting storage or processing of data and the territory, you can't do that. It's a whole list of things you cannot do that are forced localization. And then there's an exception for privacy. And it's an exception that actually works as compared to the one that was net usmca language. So you know, again, if I had a magic wand, and I was trying to get the balance, right, I would head for something closer to this. Now, this won't work for your guys Data Broker law that you just passed unanimously, three weeks ago, we would need a different exception added the EU is focused on privacy. We're thinking more about data security lately, but you could take that ban on force localization activity, add a working exception for data security to the one and privacy and you would have fixed that particular rule. Get some of the other ones I also have fixes Laurie

just triggered our next topic which is data logger. Session. But let me let

me actually make this concrete for the people who are lawyers who are into words if you're not lawyers. So when we're talking about the obligations, as Laurie just described, one, they tend to be pretty broad. The argument, I think is more about the exceptions. And I'll give you two different word choices they are to illustrate this. There'll be exceptions for specific policy purposes. So it could be privacy is a big one in the data field. So let's just assume privacy, in order to, when you invoke the exceptions, that as the government who's been who's regulations have been challenged, you have the burden to prove that your statute or regulation is either related to the goal of privacy or necessary for the goal of privacy, and that that related to necessary distinction, just if you just think of the ordinary meaning of those words, not in sort of the legal interpretive context, but just you know, looking up the dictionary necessarily seems like a harder thing to prove. And so the debate is often about these really specific word choices, do we want the statute regulation to be related to privacy? Or do we want it to be necessary, because that's a harder burden to prove. And that's, I think, what the specific arguments are about, it's actually a lot more complicated than that. But that's a simple distinction. We ended up with 10, or 20 words and all kinds of different convoluted clauses. And we have to figure out how much deference we're giving to governments to regulate. And

if somebody doesn't know it, and the audience doesn't know what data localization is, maybe we can kind of, you know, expand on that

I can take a stab at I mean, it's basically government saying that if you have information derived from that market, it has to stay in that market, or at least a copy has to stay in the market. Thank you just key off on this last set of of comments. So what the EU has done has, they do understand that they have strong economic interest in data moving and in not forcing every company to build a massive data center in every market, they serve. That's sort of the economics of it's just really expensive data centers can go up to a billion dollars to put in, if you had to build a data center everywhere, obviously, trade would, would be significantly restricted. The issue of on the exception with respect to the EU is they, as everybody knows, deeply care about privacy, they consider it a quote unquote, fundamental human right, and they have to wrap it in the most discretionary set of rules that they can for political reasons, based on their based on the politics of, of the impact of privacy and the value of privacy in the in the European Union. It's one thing for the Europeans to say trust us, when we say it's related to privacy, it really is. And we're going to, in this case, mandate, data can't leave or we're going to mandate you have to put and build a data center here. quite another. If it's China, Thailand, Indonesia, you name it to say, well, we've got a privacy concern, and therefore, data has to stay in my country. That's a question of whether the government that you're dealing with really has the jurisprudence and the background on implementing something in a manner that is credible. The EU that's got a strong case that they've understood privacy, they've developed it, and they've got a we don't necessarily agree with how they do it. But you can trust that, as a general matter, a lot of the privacy concerns really are sincere in many countries. That's just not the case.

I'd love to please add on to that, you know, I mentioned before states are increasingly going towards legislation, you know, of trying to figure out their approaches to data protection, in the name of privacy in the name of security, whatever it may be, in a way that seeks to expand their ability to surveil and suppress people online. You know, I mentioned a couple of countries before Bangladesh, India are some of the countries considering things like data localization, which will be actually really harmful to things like privacy and security, because of the powers that it gives them. Just think of it if you know, you're having to store and process your data in a country that has other laws and gives them the real ability to, you know, have access to this information for national security reasons. As Jonathan said, depending on what country you're in, it can be really dangerous, not just for the citizens of that country, but for anyone else, you know, who's communicating with them, or storing sensitive business data in these countries? And it's simply, you know, the one point that we haven't mentioned before, but it's also another point of this when we're talking about reining in big tech. You're actually by pushing, you know, by allowing for legislation to take approach is like data localization, you're actually creating a situation where only the largest players can be part of an E commerce because it is super duper expensive to create data storage facilities in countries around the world that have these. And it creates a patchwork of complex regulatory environments that who's going to be able to navigate if it's not, you know, the current major platforms like, I feel very bad for, you know, the internet going industry insurrection for anyone who might want to be the next myth or who might want to be, you know, part of a competition to these permanent favorites, right, we don't want a system of permanent favorites, there are ways to tackle concerns about big tech about privacy and security that don't harm the internet. And by the way, the Internet Society has a really useful tool to help governments understand how, you know, approaches to regulating the Internet, whether it's in trade negotiations, or whether it's in pieces of legislation, can be harmful to what the internet needs exist. And this is our internet Impact Assessment toolkit, we've had a lot of success working with a bunch of governments working to analyze pieces of legislation, including in Canada. And I think that it's a due diligence that we can't live without, if we want to keep having the internet,

in worth, know what it means to society. And I probably should have expanded on the organizations that have representatives United Society is not an Internet Society of big technology companies. It's a it's a nonprofit organization, and has a long history of advocating for human human rights, civil liberties and privacy. So I should have said that, but Laurie, I

was just gonna say that, you know, but the thing is, this gets back to what are the rules? The choice is not between either these us MCA rules that don't allow governments to limit data flows under any circumstances, versus the data localization, human rights disaster that Natalie is pointing out? The question is, where's the balance of what the obligations are and what the exceptions are? Because the reality is, there are increasingly there is awareness in many countries, that there are legitimate reasons that governments want to be able to regulate data flows, for privacy for national security, the bills, I've recently been table that are about where you put sensitive infrastructure data, to make sure you can't have a cyber attack on a nuclear power plant or water systems. These are all totally legitimate questions. They're rising increasingly now as as basically parliamentarians around the world and governments around the world are seeing things happening that make them worried it's the same reason, the concentration of the big companies is why you have all of these new antitrust policies and competition policies, because that is what is squeezing the future potential new new winners in the economy. It's not these regulations, it's the big companies basically monopolizing the space and squishing a lot of the smaller companies. But that be the case, I think a key thing is, this is not about trade. And this is the only upside, you're saying like Oh, my God, it's about trade don't make me have to, like learn a bunch of new languages, because No, everyone feels that way. But here's like the dirty little secret. This is actually about the domestic space for regulation. This is a form of international preemption. This is not about trade, per se. And just to go back to your question, the original e commerce agreements, were about facilitating trade of things on the internet. So like what was a kosher customs form online? What was a digital signature, those old ecommerce agreements basically had binding rules on that. And then had high level principles about things like we want data flows, but they weren't hard binding commitments of you cannot regulate. You just heard me read what the EU version of the rules are. The US says no party shall prohibit or restrict the cross border transfer of information, including personal information. by electronic means if this activity is for the conduct of a business of a covered person, a covered persons a business, so it's an investor or it's a service provider. So this is setting up a right for businesses to have free flows and to limit what governments can do. And then the exception is an exception that's in the WTO. That is failed in all but two of its 48 uses in decades of attempted uses. So that is the current US rule. And so the question is not so much what the hell is about trade, it's not a trade issue. The question is, how do you get the balance? So you can have domestic policy space to deal with all of these different issues. And while while I agree with Simon that there is certainly no automaticity on the enforcement, as a general matter, countries follow the rules, and one that everyone here probably has noticed of Have you noticed that There are no more country of origin labels and chicken on steaks on cuts of pork that were in the grocery store that used to say where the critter was born, raised and slaughtered. That's a WTO case, the US lost a case against our country of origin labels, and that the threat of the billion dollars of a year of trade sanctions during the Obama administration, we killed the law, which is what systematically happens, these laws get rolled, or they get chilled lemon

before I let Jonathan and Simon jump in there, I'm sure that Islam you the audience has better questions than I do. So after Jonathan and Simon jump in, if any questions, I'll just go to the audience. And, yeah,

why this is a trade issue. We export $600 billion of services abroad every year, internet, its internet enabled most of its internet, and that is the internet enabled piece to it. If you can't move data, you can't do that trade. The whole concept of a cross border service doesn't really make sense. If you can't have data attached to the service. I mean, think of any, any service think of Expedia booking a hotel abroad, think of a financial transaction, think of a normal ecommerce transaction data has to move and without the data, you're impeding the ability to offer the trade cross border, in terms of the suggestion that these rules have constricted any regulation, that's just simply not true. To say that you can't restrict the cross border flow of information doesn't say that that data is at at its heart already been been regulated. It's just simply saying that when it goes abroad, it doesn't. It's not faced with a differential set of burdens. And so that is why in trade agreements, we've been able to bind privacy rules. And the US, by the way, was the pioneer there. So in when we were negotiating TPP that's what you know, other trade partner party did that the United States put forward a an obligation that you shall protect privacy through, through through through a trade agreement. And that just shows the consistency between having domestic regulation, for example, on privacy and having a cross border rule. And the idea, of course, is that privacy protections can travel with data, you don't have to have a differential regime that has something special, just because the data goes outside of your country to make sure that it is that is protected. And that's what you want. You want the companies to be able to protect the data when they move it outside of your your country consistent with what they are required to do domestically. And that's why all these trade partners have signed on to this rule. They have much more robust privacy regimes than we do. And yet they were comfortable saying that we can live with a rule that restricts prevents restrictions on the cross border, but still maintains the domestic regime.

Simon, you

seem to be wanting just two quick points, because I know we want to get to people's questions. But I just want to push back on two things that Laurie said and she and I can talk about it later, as we probably will. But so on the country of origin labeling for meat, in my opinion, you can have country of origin labeling laws, you just can't use them as a as a means of disguise protectionism. Like any regulation, you can craft, even if it's got a non protectionist policy purpose, you can craft it in a way that actually helps domestic producers over their their foreign competitors. And that I think, is what was happening in that case. And then one more point just about the is this about trade or not? I think Laurie would probably agree with this, this narrow point where she can tell me she doesn't. So I think it's it's not only about trade, but there is a trade aspect to it. There is a protectionism aspect to all of this. So you can use data localization, to steer business towards your data centers, you can you can use it for purely protectionist purposes. You know, we just want to give the business to our data centers, as opposed to the foreign data centers. Now, there there can be security and privacy reasons for data localization, but there clearly I think can be a protectionist element to this and that I think it's worth trying to root out and I think that is a trade element. Laurie can tell me either now or later whether she agrees with me on that.

Let me go let me go to the onset. I'm gonna repeat the question for the people watching online. Steve.

Thanks, Steve DelBianco with NetChoice. And it is complicated. I don't follow it to them any better than you. But I do understand the politics. We're being told that these rules were abandoned because they were loopy and extreme and because they came from Trump, but there are people in this room that worked on the very same principles in the Obama administration. And I hope they'll have a chance to counter some of what you've heard. So the politics I understand. The rest of it is really complicated. That Obama recognized America's tech industry leads the world. The innovations in technology that we use and create, which in many cases depends on advertising to make a services free, has led the world it's important to American investors in the portfolios and American employees. The question is what is the politics that led the Biden administration to abandon what Obama and Clinton and others had embraced? What politics are driving the notion of let's embrace the European way? So

the question is, what are the politics that led the Biden administration to to take a shift away from these particular trade routes? What are the politics of it, but a lot from a larger perspective?

I think the main politics are the administration looked at what Congress on a bipartisan basis was doing with bills and competition policy for the digital sphere, for bills on AI oversight for bills on privacy, and recognize that the old set of rules that had been put forward, were no longer compatible with what Congress was doing on a bipartisan basis. That is the politics. And so you have a lot of businesses that are internet based businesses who have come out in support of the step back to figure out what the New Balance role should be. And the breadth of support from labor, from businesses, from Republicans, from Democrats in Congress, from civil liberties groups from faith groups, the consumer groups calling for this rethink, is the politics that they're clearly following. It's the same politics that has this administration doing and all the administration competition policy, and doing all of the litigation to break up these monopolies that are raising prices, and that are hurting small businesses. That's the politics

say something very speculative here. So don't hold me to this. It could be totally politics. So

anything,

the Democrats are a coalition of progressive faction, pro business, moderate faction, in the overall Biden administration set of policies, they have to give some things, the progressive, some of the moderates, they gave this one of the progressives.

Just jump into here. So I think, you know, regardless of what the politics are, we have to stop thinking about this as a trade issue and start thinking about this is an internet issue. I don't need to be a trade expert to know what, you know, actions or inactions have led to, you know, this conversation now, all I know is that, you know, if we stay silent if the US stay silent, and if it can, continues, not intentionally protecting what the internet needs to exist and thrive and taking it for granted, we're going to lose it. There are hundreds of countries around the world that don't yet have an approach to data governance, and are looking, which approach should we take? The US has been super influential in trade and promoting cross border data flows has been very influential to countries thinking about their regulatory approaches, who might, you know, otherwise be barred from doing trade from the US? So I do understand that, yes, this conversation is happening and trade right now, and it will continue happening and trade. And I cannot tell you what exception that anyone would favor except that, by the way, the exception for legitimate public policy interest in USC, US MCA was enough for Canada to do what it needed to do to rein in big tech. But what I can say is that we need to actively protect and defend the internet, regardless of where the conversation is happening.

Let me continue on with the politics question. One more, one more thing, what happens and where we are several months away from a an election? If there's a change in administration's? Can anyone speculate and feel free to speculate? where things might go if there's a change in administration when it comes to these these trade rules? I know like, people, I'm happy to say, people on CNN do this stuff all the time. It's so unknown holds them to it.

I mean, so we've just said, What happened to the Trump ministration. And what rules were put forward? You can imagine that if Trump were president, again, he would return to the things he did the first time. I think that when you think about Trump and the Republicans in big tech, there's a lot of bashing of big tech domestically. But when it comes to pushing us tech interests in foreign markets, I think they're perfectly happy to do that. If it means increase the business of US companies for markets, they're happy to push for that. So I can see the logic of if we had Trump, we would go back to what we had back when Trump was president. And if Biden wins a second term, then I see the logic of Well, he'll keep doing what he's doing.

I think it's it's confusing, because some of the I mean, this also gets to the notion that just the progressives one, the Republicans who are supportive of what USTR did are some of the most conservative. So it's people like Rubio and hallway or its people who are just anti monopolists. Like a recently departed House Republican departed from Congress not from this earth. Oh, God bless. But the the politics I think cut down much more sort of as big versus small. It's sort of the power monopoly question because you see a bunch of companies like the match dot coms, the yelps others that are not tiny, but they're not, you know, the big biggest of the big guys who are very favorably inclined to what USTR did and are weighing in about what they think more balanced, reasonable rules are that can make sure that countries have competition, policy, space, etc, you have the civil rights groups that really care about free speech and human rights issues, trying to figure out how you balance the ability to oversee algorithms and AI and make sure there's not online racial discrimination, et cetera, and at the same time, promote free speech rights. So I think it's not it doesn't cut left, right, it kind of cuts monopolist versus I guess I would use the word populace, which in Europe is a bad word. But I guess it's more acceptable here. Because also, if you look at that letter, I circulated, you know, there are at House members on there, there are some very moderate members on there. But one of those members has a bill on civil rights online or on civil liberties online, and they realize my work could get undermined. And that's why they've come to the side of saying we need a new approach. Again, the interest can be promoted. The question is, What rules do that, and the old rules that the tech industry had promoted? And it did get pushed during Obama into the TPP. But the growing controversy about those digital rules were part of what helps sync the TPP and the US didn't join it. That's turned around. Now. It's not, you know, 2015 anymore. 10 years later, we know we need the policy space domestically,

rather than real quickly. I'm gonna go to the audience for another question. Yeah,

I claim no expertise on on the political calculus here. But I will say that A, during one of my visits to one of the one of the committees, the point was, oh, exports are only 10% of our GDP. You hear that from Ambassador tie, occasionally saying exports are not the be all and end all of our economic welfare. It's obviously true that exports are less than the domestic economy, per se. But it does come back to the fundamental question that we started with, does the US have an interest in this space? So rather than retreat? Is it important to be engaged internationally, politically, maybe it's better to be focused domestically, rather than internationally? It seems easier. But it is a big squandering of an opportunity when you have US trade partner allies really clamoring for Can't we work on these issues and these rules that we've negotiated over time that are perfectly reasonable than we did before? Finishing Kevin Rudd, the ambassador of New Zealand, some say the case of digital trade is only for the benefit of big corporations. We in Australia don't see it that way. I mean, right. I mean, these countries are not doing it for big tech, they are doing it for their own interests. They want the US there, they want to come up with a reasonable set of rules. And we're just not at the table. And

question back there. Before you do, I'm told that people can hear it online. So if you enunciate and project as clearly as Steve did, you're all set.

For us from advocacy, we work with small tech startups all across the country. So obviously, this issue very important to them. hearing a little bit about this framed as a big versus small issue. And Laura pointing out the elephant and I understand your, your caveat, they're not small, but I think we should really be less concerned about the next man up. So to stay, that's what I would call call Yelp as then, like the small video review, video, first review platform that we've worked with, that finds in the state of localization, for example, where it pops up, even domestic regulation abroad, they can put her they complain about but you know, maybe that's a slightly separate, separate topic. We know it's not, you know, hypothetical thing we know that these sorts of policies raise costs for startups. They caused them to lose customers, or face stronger growth headwinds.

And so I think the question I'm getting to Tim, is,

if we go down this road, are we enhancing and I understand Lori's point on domestic policies to aimed at least to support small companies. Are we what is the net? Right? Are we going to end up helping us small companies go down this road? and hopefully maybe we're gonna pass these bills or not, or arming them with with higher costs. And those those other bills to help them don't come to fruition?

Well, the first thing to know is the US has remained at the table. So the US has played a key role in the conclusion of those WTO JSI. negotiations. Well, the conclusion of the technical text which happened last week, there's still some big issues. So we'll see if the whole thing gets signed and wrapped up. But the US is having these discussions in lots of different venues with different sets of partner countries, while having a discussion at home about what should be the new position, the old one doesn't have the policy space, what's the new balance, and part of I think what's really important, and when I mentioned the inter agency process, you may have been in one of those hearing sessions that the US government, the Biden administration had for six, I can't remember hearing sessions, I know, at least the three of us were in some of those, where they're trying to figure out how you get the balance, right. So that your startups have the minimum costs and hindrances, while you still preserve the policy space for these domestic regulatory goals, which by the way, are not just here, but in our in a variety of countries, because the US approach had been a very hands off Wild Wild West approach. So relative to a lot of other countries, we have here as consumers, less privacy protections. Now, if you look at it served from the perspective of Jonathan's companies, that a lot of them started here, that was very favorable to them. And to the point we're behind is, in part because it had the damages here had to get really big before you start to regulate your own great big global companies. But we've sort of hit that point domestically, which is why Congress in a bipartisan basis has started looking at these things, and other countries are ahead of us. And so then the question is, what are the rules? So again, you know, I don't know that the EU version is exactly right. But you know, the EU language, you ban a bunch of these data localization instruments, and the latest version has two more of them that they ban. And then you have specific exceptions for the kind of limits to data flows, you would support, like security, privacy, that seems to me, like a way where hopefully your guys avoid these problems. But people still have policy space.

I'm running out of time. I guess, respond to that one question really quickly.

Yeah, I mean, I'm gonna repeat myself. The EU approach would allow Indonesia, Vietnam, etc, to say, sorry, I can't I can't move the data because of privacy purposes. Big company can afford to put their data center in that country, you probably can. And

if I could just add on quickly, you know, the beauty of the internet is that it was intended to be seamless. You can't regulate the internet, as if you're regulating, you know, something in one country, because it is a global resource for everyone that was meant to not have borders. And that is what allows it to, you know, deliver on his key value proposition that if you connect to the internet, you connect to the world. And I love that you mentioned other examples who benefit from this operational model. Another great example is Wikipedia, right? This is a great public service that offers information to people worldwide, who is super concerned about, you know, countries passing things like data localization, because it is on the front lines of requests from governments who want information about their editors information that could put people at risk of serious harm. And their whole operational model would be totally disrupted if we start to make complex rules that raise national borders online.

So one thing I tried to do is one thing as a moderator I do, I'm not very knowledgeable, but at least I can keep keep us to the time limit. So we're about wrapping things up. Just really quickly in like as little few words as possible. The last question up there is where is the USTR? Is new strategy leading us just really quickly, just go down the line? Where is it leading us real quick as a final final thought, hopefully,

to a more balanced set of rules that actually help foster the benefits of the internet, but also provide domestic regulatory policy space for the to deal with the real harms. Sorry, what was the question?

Where is the USCIS new strategy leading us?

I think it's leading us to a not internet, both, you know, we're gonna move closer towards, you know, a highly regulated approach to internet that resembles more that of those countries who like to have a lot of control over what flows in and out. And it is going to be so influential that countries around the world knowing that this you know, supporting cross border data flows and principles of the Internet are no longer a barrier to trade. They will be increasingly influenced to go into this direction and it could totally do Totally lead to the devastation of the internet.

First question is I don't know, I don't think the administration has articulated the reason for the pullback very well. Some fear mongering about what Congress may or may not do has been part of it. I think where it is headed does look like a less effective mechanism for dealing the advocate of what clearly in the US interests. Whether where it heads or not, not sure, but does not right now. It does not look like it's in a positive direction.

I don't know either. So let me raise a different question. Building on something Natalie said, Is this an internet versus a trade issue? Don't raise an institutional question here. Should USTR be doing this? Do we need a tech or internet agency that has special expertise in these issues and can lead these talks? I don't have an answer to that either. But I'll just leave with that question. And

that's an entirely new a whole new panel. We could go on that one. But although all the folks

to be clear, I don't know mine was I hope.

I want to thank everybody for coming in. Read this, please feel free to get a credit card that that's speaking up here today, because there's so much more to this issue than we just we just scratched the surface. I want to thank the internet caucus and thank you all for coming. And thanks for watching online. Thank you