Published
July 20, 2023
Pending decisions on the direction of digital trade policy represent a moment of promise and peril for the U.S. economy — and for the global economy as well.
On the positive side of the ledger, export opportunities for small businesses and for digitally tradeable services are expanding rapidly, with companies in all sectors poised to benefit. The United States is well positioned to build on its formidable advantages in these areas.
However, these opportunities are endangered by the spread of digital protectionism and discriminatory digital regulations. For the U.S., the challenge is acute: Digital protectionism often targets American firms.
But given how the spread of digital trade barriers threatens growth in every country, the challenge is by no means just an American one.
The U.S. Chamber called attention to these challenges in a recent study, The Digital Trade Revolution: How U.S. Workers and Companies Can Benefit from a Digital Trade Agreement. The study underscores the promise of digital trade as a driver of dynamic growth and good jobs in the U.S. and abroad. With details on a host of industry sectors and state-by-state fact sheets, the report shows that most U.S. services exports now have the potential to be delivered to customers abroad digitally.
Consider these findings:
- The digital economy is expanding nearly three times as rapidly as the economy writ large.
- The bulk of U.S. services exports are digitally tradeable, but the potential for expansion of the digital delivery of services exports remains largely untapped.
- These exports, coming from every U.S. state (see our 50 state fact sheets), supported more than 2 million U.S. jobs in 2020.
- Small business exporters are among those with the most to gain from digital technologies that help them find customers, navigate complex customs rules, and guarantee cross-border payments.
Other economies are also benefiting from the digital trade revolution. As World Trade Organization (WTO) Director-General Dr. Ngozi Okojo-Iweala recently remarked, “The growth in services delivered across borders via digital networks is strikingly visible in the trade data.” WTO data show:
- Global exports of digitally delivered services grew by 8.1% per year between 2005 and 2022, much faster than the 5.6% growth registered for goods exports.
- In 2022, the value of exports of these services, which cover everything from streaming games to consulting services provided by video, reached $3.82 trillion — a sum worth 12% of total goods and services trade, up from 8% only a decade earlier.
- Digitally-delivered services have increased their footprint in global services trade to an impressive 54% of total global services exports in 2022.
Unfortunately, barriers to digital trade are on the rise. The Information Technology & Innovation Foundation has found that “the number of data-localization measures in force around the world has more than doubled in four years. In 2017, 35 countries had implemented 67 such barriers. Now, 62 countries have imposed 144 restrictions— and dozens more are under consideration.” The experience of Chamber member companies affirms this trend and its widespread nature.
Left unchecked, the proliferation of these trade barriers threatens to deprive American workers and companies of the potential benefits of digital trade. The same holds for companies overseas as well.
To overcome these foreign trade barriers and secure the benefits of digital trade, the United States must recommit to high-standard trade rules for digital commerce, such as those the U.S. now has in place with Canada, Mexico, and Japan (three of our top four trading partners). Not only have these rules been in place for more than three years, Congress endorsed them by a nine-to-one margin when it approved the USMCA implementing bill that gave them the force of law. Despite this clear bipartisan endorsement, USTR has in recent months refused to advance these same rules in the Indo-Pacific Economic Framework negotiations.
The U.S. must work with allies and partners to push forward a vision for digital trade that can secure these opportunities for American workers, small businesses, services industries, and others. Those allies and partners certainly share the same goal: For all these reasons, it’s time for the United States to reaffirm its commitment to digital trade.
About the authors
Jordan G. Heiber
Jordan Heiber leads the Chamber’s international privacy and data flow policy portfolio and manages a team responsible for the full suite of digital policy issues, including cybersecurity, artificial intelligence, and more.
