Where doesn’t America have a trade deficit? Look no further than its digital services industry.
Two tech and trade-focused Congress members launched a Digital Trade Caucus May 1 to educate lawmakers on issues facing the globally connected economy, just as the Trump administration tees up to renegotiate the North American Free Trade Agreement (NAFTA).
Digitally-delivered services run a $159 billion trade surplus for the U.S. economy, according to Rep. Suzan DelBene (D-Wa.) and Rep. Erik Paulsen (R-MN), who co-founded the bipartisan caucus. Digital trade, which impacts industries as diverse as retail to financial services, accounts for more than half of U.S. service exports, DelBene said.
Tech trade groups, such as ITI and Internet Association, which represent companies like Alphabet Inc.’s Google and Facebook Inc., encouraged lawmakers to join the caucus in a statement May 1.
More than 20 bipartisan representatives have joined the group, which aims to address a wide range of digital trade issues, including easing customs barriers for e-commerce, promoting free cross-border data flows and eliminating requirements that businesses transfer technology or encryption keys or be forced to store data within a country’s borders.
Rep. DelBene said she hoped the new caucus would educate members about the importance of digital trade provisions in any trade agreement negotiated in the new administration, including talks surrounding NAFTA. The 1994 trade deal was enacted well before America’s internet sector became an economic engine.
“Trade has gone digital and protectionist policies don’t work in an internet-age,” DelBene said in a statement. “We need continued American leadership in the digital economy and for that to happen our laws need to be up to date with the way the world works."
President Donald Trump’s trade representative nominee, Robert Lighthizer, said he supported the addition of a digital trade chapter to NAFTA during his Senate Finance Committee confirmation hearing March 14. Lighthizer stopped short of listing specific provisions, and has yet to be confirmed.
Mexico and Canada agreed to digital provisions that were applauded by the U.S. tech industry as part of the 12-country Trans Pacific Partnership trade deal negotiated under the Obama administration, but Trump pulled the United States from the trade deal in January.
DelBene said U.S. Secretary of Commerce Wilbur Ross recently indicated to her he agreed that the TPP’s provisions addressing cross-border data flows were a step in the right direction and would make a good starting point for the issue in future deals.
Last week,Trump said he was considering terminating NAFTA completely, then said talks to renegotiate would start very soon. Trump has recently scrutinized the U.S.’s trade relationship with Canada’s lumber and dairy industry.
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