Published
March 20, 2024
The U.S. is at a fork in the road on digital trade, facing a future of promise or peril. The digital economy, encompassing commerce and services powered by electronic technologies, is fueling growth, prosperity, and dynamism across the U.S., accounting for $2.6 trillion in GDP in 2022—that is, 10% of all U.S. economic output.
New digital technologies enable businesses of all sizes and sectors to offer new and improved goods and services, from telemedicine to GPS-enabled cars. A remarkable element of the digital economy is the broad participation of firms, extending far beyond the “tech” sector to transportation, warehousing, arts and entertainment, and even agriculture.
Nearly two-thirds of the digital economy comprises digital services, with the expansion of the digital services sector outpacing that of the overall economy. The U.S. digital economy is growing three times faster than the nation’s economic growth overall. Growth in digital economy jobs, which are well-paid and plentiful, also outpaces overall U.S. job growth.
However, global competition looms large. Foreign competitors, particularly the EU, India, and China, are aggressively pursuing their own digital economy ambitions while the rise of digital protectionism threatens U.S. companies’ access to global markets.
Even more alarming, however, is the tepid U.S. response to these challenges. Despite the urgent need to dismantle trade barriers and protect U.S. economic competitiveness, the Biden Administration is kowtowing to misguided fringe viewpoints that strong digital trade rules primarily benefit large tech companies—and in doing so, the White House is undermining U.S. leadership on digital trade.
At the World Trade Organization negotiations on e-commerce in October 2023, the U.S. Trade Representative (USTR) abruptly abandoned long-held U.S. positions supporting the free flow of information across borders, protecting against the forced transfer of American technology, and promoting open markets for American digital goods and services. The move was roundly denounced by the U.S. business community, the U.S. Chamber of Commerce, and lawmakers from both parties. The digital trade policy reversal has now hamstrung Congress’ ability to enact new laws and regulations in the realm of emerging technologies like AI hamstrung by the digital trade policy reversal.
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An open internet that promotes the flow of information across borders supports the American economy, American exporters, and American values. For decades before the Administration’s reversal on digital trade, the U.S. led the world in protecting, promoting, and expanding the open internet as a vehicle of connectivity and an engine of growth. Now, the Biden Administration’s decision to abandon these commitments creates a vacuum that our competitors and adversaries are moving to fill.
Contrary to naysayers who speak of digital domination by a few tech giants, exports of digital goods and services supported more than 3 million American jobs in 2022. Businesses, workers, and creators in every corner of the country and from every industry are among the beneficiaries.
It is not too late for the Administration to rethink its decision and restore U.S. leadership on digital trade policy. The full potential of digital trade still remains untapped: Opportunities for expansion exist in developed economies such as Europe—already a top market for U.S. exports—and in emerging markets.
A broad bipartisan consensus—and overwhelming support from the U.S. business community—continues to support the core digital trade commitments that USTR abandoned at the negotiating table. The Chamber urges the Administration to reverse course; business is prepared to work with the Administration and Congress to restore U.S. leadership in the digital economy.
About the authors
John G. Murphy
John Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy and regularly represents the Chamber before Congress, the administration, foreign governments, and the World Trade Organization.
