Washington, D.C. – Big Tech interests have opened a new front in their attack against strong privacy, anti-monopoly and algorithmic transparency policies in the United States and worldwide by trying to hijack trade deals and insert “digital trade” rules that would severely limit, if not outright ban, key aspects of these policies.

In a new report released today, “International Preemption by “Trade” Agreement: Big Tech’s Ploy to Undermine Privacy, AI Accountability, and Anti-Monopoly Policies,” the American Economic Liberties Project’s Rethink Trade program pushes back. The new report reveals how leading U.S. congressional and White House initiatives would be undermined by the specific trade-pact provisions that industry lobbyists are trying to rig into the Indo-Pacific Economic Framework (IPEF) negotiations underway today in Bali as well as talks linked to the World Trade Organization and with Latin American and other countries.

Rethink Trade examined leading digital governance policies with broad bipartisan support from the 117th Congress bills and administration policy documents to show the direct conflicts between prominent U.S. domestic digital governance proposals and the “digital trade” agenda that Big Tech interests seek to insert into current trade negotiations. Industry lobbyists seek to include extreme provisions that were slipped into the United States-Mexico-Canada Agreement (USMCA) but do not appear in other countries’ digital and e-commerce pacts.

During an event hosted today by Economic Liberties, Senator Elizabeth Warren (D-MA) said: “Giant corporations have this one great trick. If it looks like regulators just might rein you in, send out your corporate lobbyists to rig a trade deal. From Big Pharma to Big Banks, giant corporations use bad trade deals to pad their profits and ship away protections for workers and consumers. And, now that the United States is trying to rein in Big Tech, finally, their lobbyists and lawyers are trying to rig the digital trade deals to undermine those new laws.”

“We know that the Indo-Pacific Economic Framework is now being negotiated. Right now, it would represent 14 nations and 40 percent of the world’s GDP,” said Representative Jan Schakowsky (D-IL). “We have to be very, very careful, and we can’t let Big Tech take over and hurt consumers. We have an obligation here in the United States in Congress to do something to stop it right now. While these negotiations are going on, we have to be strong in defending our consumers and our workers and our small businesses.”

“We have to insist on a level of transparency and an involvement of Congress, especially when it comes to the possible preemption of some very important laws,” said Representative Mark Takano (D-CA). “The stakes are pretty high. We need to be very, very vigilant about the kind of language that ends up in a trade agreement such as IPEF. Something as basic as due process in our criminal proceedings could be at stake because the administration or the powers that be argue that we need a trade agreement to bring our allies closer.”

“If successful, this Big Tech “Trojan Horse” maneuver would make “trade” agreements a mechanism to lock in Big Tech’s monopolies and excessive prerogatives and undermine President Biden’s excellent State of the Union speech agenda on privacy, civil and workers rights, and ending monopoly abuses while threatening our economy and democracy,” said Lori Wallach, director of the Rethink Trade program at the American Economic Liberties Project.

“Policymakers around the world are grappling with one of the biggest challenges of our lifetimes: how to regulate the digital economy. One thing they should not worry about is having their policy space excavated right under their feet through obscure and secretive trade negotiations that would help industry to fend off regulations globally,” said Daniel Rangel, Rethink Trade’s Research Director and lead author of the report.

Rethink Trade analyzed dozens of U.S. bills aimed at establishing basic privacy, civil rights, and labor protections in the digital sphere, plus other initiatives that would rein in the Big Tech giants that dominate many sectors of our economy. Legislation that would protect privacy, end monopolistic abuses, fight discriminatory artificial intelligence (AI) and algorithms, and counter online surveillance would be undermined by the “digital trade” terms that industry seeks in new trade deals.

In this policy brief, Rethink Trade examines four of the most invasive USMCA provisions that collide with U.S. policy initiatives. These include:

• New Secrecy Guarantees that Forbid Screening of Algorithms and Code for Racial Bias, Labor Law Violations, or Other Abuses – based on USMCA Article 19.16 (Source Code): In conflict with core concepts in the administration’s Blueprint for an AI Bill of Rights, the American Data Privacy and Protection Act’s rules on civil rights and algorithms, and the Facial Recognition Act of 2022’s testing requirements, among other policies, this term would ban governments from prescreening or conducting general reviews of AI code or algorithms for racial and other forms of discrimination, labor law or competition policy violations, biases in criminal justice applications, and more. This is a uniquely extreme provision: Only 11 of the almost 200 agreements with digital trade or e-commerce terms in the entire world create new algorithmic secrecy guarantees for tech firms. And USMCA’s language is the most extreme of these, as it also appears to prohibit governments from requiring even descriptions of algorithms and their uses, in addition to secrecy rights for the detailed source code developed by programmers.

• No Limiting Firms’ Control of Data, Including Rights to Move, Process, and Store Personal Data Wherever the Firms Choose – based on USMCA Article 19.11 (Cross-Border Transfer of Information by Electronic Means) and Article 19.12 (Location of Computing Facilities): The goals and terms of policies like the American Data Privacy and Protection Act and My Body, My Data Act of 2022, or similar legislation, could be undermined if firms can simply evade obligations to eliminate private data per users’ requests or minimize collection by transferring data to another firm in a jurisdiction where U.S. law enforcement cannot reach or if an offshore processor is able to sell data onward to another firm that is located in a country where no protections apply. Yet addressing those issues would likely conflict with the USMCA-style rules prohibiting government regulation of data that industry seeks for the IPEF and other pacts. The terms Big Tech seeks also would directly forbid security initiatives such as the Protecting Americans’ Data From Foreign Surveillance Act. This bipartisan bill would enact export controls on transfer offshore of certain personal data when it threatens U.S. national security. Only certain countries would be eligible to receive Americans’ personal data without being subject to controls and flows to some nations would be banned, both of which violate the USMCA-style rules sought for IPEF. The industry-favored rules would also forbid proposals to require sensitive infrastructure data to be held on U.S. servers and various proposals to limit flows of Americans’ data to China.

• Designation of Key Anti-Monopoly Policies as Discriminatory Illegal Trade Barriers – based on USMCA Article 19.4 (Non-Discriminatory Treatment of Digital Products): This broad provision brands policies that treat foreign and domestic firms the same, but have a greater impact on bigger firms, as illegal trade barriers that must be eliminated. USMCA has an extreme version of this rule while previous U.S. pacts’ e-commerce chapters were more nuanced. Industry filings for the National Trade Estimate reports reveal how U.S. tech lobbyists have used the underlying concept to try to attack cutting-edge anti-monopoly policies around the world. This includes policies in effect in other countries that Congress also is considering.

The lack of U.S. domestic digital governance policy makes the threat posed by international preemption via “digital trade” rules in trade negotiations particularly dangerous. Congress has not established national privacy or data safety protections or created rules so that AI uses do not undermine civil, labor, and other rights, or set parameters to ensure fair digital markets. That means negotiators effectively are making U.S. law as they negotiate international rules, rather than being guided by domestic policies already established by Congress.

Learn more about Rethink Trade, a program of the American Economic Liberties Project, here.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.