It is no secret that the U.S. has fallen behind on trade. While other nations have been racing to sign mutually beneficial trade agreements with one another, the U.S. has not entered into an agreement with a new trade partner in a decade.
This lack of progress is not due to a lack of opportunity. U.S. exports are no longer limited to physical goods and services and digital trade remains an opportunity with tremendous untapped potential. Over the past decade, sales of services that can be exported digitally from the U.S.–such as software and computer services, audiovisual, consulting, engineering, and financial services–have more than doubled.
However, global barriers to U.S. services exports are also on the rise. Due to other nations’ protectionist and discriminatory digital rules, many of which unfairly target American businesses, the U.S. has fallen behind.
The Biden administration must not overlook this prime opportunity for American leadership. It is time for the U.S. to negotiate a digital trade agreement.
Even before COVID-19, the U.S. digital economy, valued at $2 trillion in 2019, was growing almost three times faster than the broader economy. The pandemic has accelerated this shift to digital trade. In 2020, the U.S. exported $84 billion in information and communications technology services, nearly as much as U.S. exports of aerospace products.
Businesses in every state and sector are participating in the digital economy, including many in sectors that were not traditionally viewed as digital goods and services exporters. Many of these industries contribute to the nearly two-thirds of the U.S. digital economy that now consists of digital services, not digital goods.
These opportunities, coupled with the challenge posed by new digital trade barriers, lend urgency to the idea of an enforceable digital trade agreement. When negotiating such an agreement, it is critical that the U.S. push forward a vision that builds on American strengths, prioritizes U.S. workers, and makes sure the United States leads in creating the industries of tomorrow.
For instance, any digital trade agreement should guarantee the ability to move data freely across international borders. The free flow of data is essential to allow companies of all sizes to access the global market. Data localization measures jeopardize the ability of companies large and small to take advantage of digital trade.
Digital trade negotiations should begin with what the U.S. Chamber of Commerce has called the “Digital Dozen.” This group includes established markets like Australia and the UK, as well as emerging markets such as Malaysia and Vietnam. Combined, these economies accounted for nearly 80% of U.S. exports of digitally tradeable services.
As the Biden administration looks to define its trade agenda, it has an opportunity to lock in American leadership on digital trade. It is time for our trade policy to catch up to the 21st century’s economy.
Myron Brilliant is executive vice president and head of international affairs at the U.S. Chamber of Commerce.
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