Sunday, April 9, 2017

Digital Trade and U.S. Trade Policy

As the rules of global Internet develop and evolve, digital trade has risen in prominence on the global trade and economic agenda, but multilateral trade agreements have not kept pace with the complexities of the digital economy. The economic impact of the Internet was estimated to be $4.2 trillion in 2016, making it the equivalent of the fifth-largest national economy. According to
one source, the volume of global data flows grew 45-fold from 2005 to 2014, faster than international trade or financial flows.

Digital trade includes end-products like movies and video games and services such as email.
Digital trade also enhances the productivity and overall competitiveness of an economy.
According to the U.S. International Trade Commission, U.S. domestic and international digital trade added 3.4 - 4.8% ($517.1-$710.7 billion) to the U.S. gross domestic product (GDP) in 2011.
The Department of Commerce found that in 2014, digitally delivered services accounted for more
than half of U.S. services trade.
The increase in digital trade also raises new challenges in U.S. trade policy, including how to best address new and emerging trade barriers. As with traditional trade barriers, digital trade
constraints can be classified as tariff or nontariff barriers. In addition to high tariffs, barriers to
digital trade may include localization requirements, cross border data flow limitations, intellectual property rights (IPR) infringement, unique standards or burdensome testing, filtering or blocking, and cybercrime exposure or state-directed theft of trade secrets.

Congress has an important role to play in shaping global digital trade policy, from oversight of agencies charged with regulating cross-border data flows to shaping and considering legislation to implement new trade rules and disciplines through ongoing trade negotiations, and also working with the executive branch to identify the right balance between digital trade and other policy objectives, including privacy and national security.

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