Big Tech Companies Still Mad With USTR Decision on Global Data Storage

Apparently, global tech companies like Google are still up in arms over the Oct. 26 decision by U.S. Trade Representative Katherine Tai to pull out of the World Trade Organization’s joint initiative on digital trade. The administration’s past proposal would prohibit the U.S. or any country from passing laws to restrict where consumer and business data can be stored by Amazon, Microsoft, or Chinese companies. Ambassador Tai rightly changed our position, in part due to the fact that Congress has been fiercely debating the issue, but has not come to an agreement.

On one hand, Senator Ron Wyden (D-OR) and others have supported the Big Tech position that no country should restrict where data should be stored, in America, Iceland, or China. On the other hand, a group led by Senator Elizabeth Warren has argued that Congress should be able to legislate to protect the data of consumers and businesses held by companies.

Many other countries have enacted, or are considering, rules to protect their own consumer data and national security interests in the case of data stored in China or other adversarial nations.  Ambassador Tai’s decision is the right one because it does not allow Big Tech to block consumer protection and national security data rules from being considered and passed by Congress or other countries around the world.

The New York Times published a long op-ed weighing on the matter, agreeing with Tai’s position and suggesting the tech giants, their lobby firms, and their press officers were blowing up the phones and email inboxes of the Times’ newsroom staffers. Stateless multinational corporations have long used trade agreements to impose rules on countries that would never pass those countries’ national parliaments, misleadingly wrapping their proposals in the cloak of “free trade”.

Big Tech, Big Mad

“The term we would use is ‘gobsmacked,” John W.H. Denton, secretary general of the International Chamber of Commerce, told Times editorial board member Farah Stockman. “We don’t understand what’s going on.”

Washington’s prior position, which Tai and the Biden administration had just scrapped, was a small minority position within WTO members. Only 34 percent of WTO members have open data transfer policies like the United States, according to a 2021 World Bank working paper, while 57 percent have adopted policies more like the European Union’s, which allow data to flow freely but leave room for laws that protect privacy and personal data.

Japan, Singapore, and Australia were the only countries that at least somewhat supported the Big Tech position. It’s unfortunate that U.S. allies and even some American officials were taken by surprise, Stockman wrote, then added in a surprise twist…”but it was the right call.”

CPA CEO Michael Stumo took to Twitter, now known as X, and said that global, corporate giants that deal in borderless data transfers “get upset when they cannot use international trade deals to usurp Congress.”  Such a move by the WTO, if agreed by members, would make companies like Google even more globally-centric than they already are. In fact, such a rule would likely increase the likelihood of local data centers being moved offshore, where land and other costs are cheaper. Stumo referred to such a move as “anti-national sovereignty”.

While CPA is not involved with big tech companies or their rivals, the issue at hand is trade rules – no matter who is writing them – and how those rules affect the broader U.S. economy. Trade rules that favor a handful of multinational corporations, enticing them to offshore, are a negative for the United States.

Data is incredibly valuable for Chinese, American, and other big companies that control it. Chinese want to store data in China where the CCP can analyze it.  Microsoft, Amazon, and Google want to make copies of data in any country where they think they can shave a few cents of data farm cost off their business.  But digital trade is a misleading name because it not really “trade”.

It is just an effort by big companies to prevent consumer or data privacy laws.  Many countries, including in Europe have passed such laws. The U.S. is vigorously debating consumer protection and data privacy laws but has not yet enacted any.)

Currently, there is no “fast track” – expedited Congressional consideration procedures – in place to move forward on digital trade the way the global tech firms would want it in the recent WTO discussion. CPA would be against fast-tracking any data rules like the one Tai has temporarily scrapped. What is important here, in light of this recent ‘debacle’ in the data world, is that it is the policy that matters most, not where that policy derives, even if it derives from the WTO.

“Ambassador Tai and the Biden Administration made the right call. Trade agreements long have been treated as an anti-democratic omnibus legislation grab bag by stateless multinationals who can’t get unpopular policies passed in Congress,” said Stumo. “Very little about trade agreements have been about trade. The unresolved debate in Congress on consumer and data protection rules is reason enough for Tai to pull the proposal. However, negotiators in future trade deals should be wary of the inherent sovereignty infringing risk of taking big policy areas out of the hands of sovereign governments.”