The Story Behind Biden’s Trade Failure | Mint

The Story Behind Biden’s Trade Failure

Trade Representative Katherine Tai PHOTO: BRENDAN MCDERMID/REUTERS
Trade Representative Katherine Tai PHOTO: BRENDAN MCDERMID/REUTERS

Summary

Emails show how Lina Khan and the left co-opted Katherine Tai.

When the World Trade Organization meets this month in Abu Dhabi, will anyone from the Biden Administration stand up for U.S. economic interests? It’s a fair question now that Federal Trade Commission Chair Lina Khan and leftwing groups are hijacking U.S. trade policy.

U.S. Trade Representative Katherine Tai this month explained the Administration’s new anti-trade agenda at a conference on antitrust regulation in Brussels. She said previous Administrations were wrong to promote trade policies that would aid U.S. businesses and consumers by making markets more efficient.

“If we’re only pursuing policies to benefit people as consumers, and those policies are actually impoverishing those people as workers, the entire system doesn’t work," she lamented. No longer does Washington aim to lower trade barriers and expand American access to foreign markets. It wants trade share and production regulated by governments.

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Ms. Tai last autumn withdrew support for digital trade principles being negotiated at the WTO that would protect cross-border data flows and source code and bar discrimination against U.S. companies. Ms. Tai also shelved digital trade protections in negotiations over the Indo-Pacific Economic Framework trade deal.

Her stated reason? “To provide enough policy space" for debates over tech regulation to unfold in the U.S. That echoed a memo Lori Wallach, director of Rethink Trade, sent to Ms. Tai on Jan. 19, 2023. Rethink Trade is an arm of the leftwing American Economic Liberties Project, which has led the revival of the anti-consumer antitrust movement.

“Officials negotiating the Indo-Pacific Economic Framework (IPEF) and other pacts must not set binding proscriptive rules that could conflict with domestic policies now being created and thus must seek terms that maximize domestic policy space," Ms. Wallach wrote.

The U.S. Chamber of Commerce obtained correspondence between USTR and outside groups via a Freedom of Information Act request. The emails show that USTR officials have regularly consulted with Rethink Trade, the Open Markets Institute, and Public Citizen about the Biden digital trade agenda.

Ms. Wallach criticized the U.S.-Mexico-Canada trade agreement for barring foreign governments from requiring that data be stored on local servers. She also took issue with prohibiting governments from mandating disclosure of source code and algorithms. Authoritarian regimes including China have sought to do both.

In her view, such digital trade provisions conflict with President Biden’s antitrust agenda and efforts to regulate artificial intelligence. Forbidding restrictions on cross-border data flows, she wrote, would also enable “digital offshoring" of call center and back-office work.

Not really. The purpose is to protect intellectual property and make digital data flows more efficient. This benefits small businesses in industries such as auto-making, aviation, accounting, medical diagnostics, healthcare and agriculture. More than half of U.S. service exports in 2022 involved digital trade.

Businesses that use the cloud to store and transmit data don’t want to rent space on servers in each country where they have customers. They also don’t want to hand over their code to foreign governments, which could hand it to a domestic competitor.

Ms. Tai’s senior adviser Elizabeth Baltzan explained USTR’s trade illogic last winter in a speech at the Wilson Center: “The focus on ‘efficiency’—which is really a euphemism for the lowest possible cost—is precisely what facilitates the kind of arbitrage that puts downward pressure on labor and environmental regulation and enforcement." Just what the world needs: more inefficiency.

Ms. Baltzan forwarded her remarks to an individual at the Open Markets Institute whose name was redacted. Ms. Baltzan once worked at the Open Markets Institute, which Federal Trade Commission Chair Lina Khan helped launch. And who do you suppose was also lobbying USTR against digital trade protection?

The House Oversight Committee last autumn obtained a partly redacted March 22, 2023, letter from Ms. Khan and Justice Department antitrust chief Jonathan Kanter. “While we appreciate your partnership in advancing the Administration’s agenda with respect to competition policy, we believe we can and should do more to ensure our agencies execute on that vision," they wrote. “We plan to have senior staff in both antitrust agencies participate in all future IPEF negotiating sessions."

Ms. Khan and her sidekicks torpedoed freer digital trade because they want to make it easier for foreign governments to impose their anti-trade agenda on U.S. businesses. Since they can’t pass their agenda in Congress, they are leaning on foreign governments to do it for them.

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