Throughout my 12-year tenure in the U.S. House of Representatives, I watched as our nation’s digital economy transformed from a fledgling industry into the driver of the U.S. economy. During my time in Washington, I worked with my colleagues on both sides of the aisle to support many of the innovative American tech companies that I advocate for now as the leader of INCOMPAS, an organization that promotes competition, innovation, and economic development in the tech industry. Today, thanks to longstanding, bipartisan principles designed to support and encourage the U.S. tech sector, American digital leadership has become the engine of our country’s economy.
However, I’m concerned that the United States’ role as a global innovator is at risk, and I find myself worried about a disastrous threat to American competitiveness.
Recently, a number of countries have implemented regulations targeting American companies that threaten to undermine U.S. digital trade. In March, the European Union (E.U.) required companies it labeled as “gatekeepers” to comply with its new Digital Market Act (DMA). The list of so-called gatekeepers disproportionately singled out American companies, forcing them to comply with the DMA’s heavy-handed regulatory regime while leaving many large businesses based in countries like China and Russia untouched. Similarly, European regulators forced Amazon to drop its acquisition of Roomba-maker iRobot, an innovative but struggling U.S.-based robotics company. Ultimately, the E.U.’s decision forced iRobot to eliminate hundreds of American jobs and paved the way for Chinese companies with frightening data privacy policies to capture the market.
Concerningly, despite the threat these actions against U.S.-based companies pose to American innovation and competitiveness, the Office of the United States Trade Representative, the federal agency responsible for advancing U.S. trade interests, has backed away from its duty to stand up against discriminatory foreign regulations.
Last fall, for example, USTR Ambassador Katherine Tai withdrew her support for key digital trade rules amid ongoing negotiations at the World Trade Organization (WTO), a move that sparked criticism from members of Congress on both sides of the aisle. In March, Ambassador Tai revealed she would scrub mentions of foreign trade barriers facing U.S. businesses in the annual National Trade Estimate (NTE) report, a document explicitly designed to identify and address discriminatory actions taken by foreign governments against American companies. Most recently, when members of Congress pressed Ambassador Tai to respond to mounting digital trade barriers during a pair of hearings in April, she doubled down on her decision to back away from her duty to protect American companies from foreign discrimination.
Already, foreign governments have taken these actions as a green light to single out American companies. Canadian officials announced recently that they would go against previous trade agreements, including the USMCA, and proceed with a digital services tax on American businesses because U.S. policymakers have “explicitly tolerated” discriminatory taxes.
These discriminatory actions pose a serious threat to U.S. interests and our ability to compete on the world stage. Protectionist digital trade policies risk choking the U.S. digital economy, which is responsible for a $2.6 trillion investment in our nation’s GDP and supports more than three million jobs, according to a recent report from the Chamber of Commerce.
At the same time, heavy-handed foreign regulations have targeted the same companies that pour billions of dollars every year into research and development and spooked startup companies, threatening to chill American innovation.
The American businesses who help drive this significant portion of the economy find themselves in a curious position where they must plead for leaders in Washington to prioritize the interests of American companies and consumers over those of foreign regulators and businesses. What is occurring right now is an abdication of American leadership and certainly an aberration from the norm. If our own leaders don’t champion American innovation, then who will?