(Bloomberg) -- The White House is racing to overcome internal differences and hash out a new policy over how the US and other governments should view the rapid rise of global data flows that are fueling everything from artificial intelligence to advanced manufacturing.
In a series of sessions due to begin on Wednesday, President Joe Biden’s national security and economic teams are due to meet with companies, labor and human rights advocates, and other experts on the digital economy as part of a review launched last month, according to people directly involved.
At issue is laying out a clear US position on the rules for the global internet as governments confront an accelerating amount of data flowing across borders with mounting economic, privacy, income inequality and national security consequences.
Coming just days after the EU agreed late Friday to new regulations for AI, the Biden administration’s push highlights how governments are racing to figure out their role in a fast-evolving digital economy and competing to lead the conversation.
While there are clear international rules for the cross-border movement of physical goods and traditional services, digital trade — including e-commerce, video streaming, games and apps — is a relatively new arena that lacks a multilateral rulebook and faces barriers as countries seek to exert more control on data and information.
In an interview, a senior administration official said the US was not backing away from long-standing US advocacy for a free and open internet even as some governments around the world are increasingly trying to restrict information flows.
But advances in AI also mean the US needs to calibrate policies, the official said, as it faces national security and privacy concerns around data, as well as competition issues raised by the power of big tech companies such as Amazon.com Inc., Alphabet Inc.’s Google and Facebook parent Meta Platforms Inc.
The White House review comes after an October decision to withdraw a decades-old and bipartisan US trade position advocating protections for tech companies and the unrestricted flow of data across national borders.
That move drew an angry reaction from business groups like the US Chamber of Commerce and congressional Republicans and Democrats alike. The critics argue it has opened the door for China, ranked among the world’s most restrictive digital marketplaces, to set the rules of the road for the global internet.
The October decision to pull a US negotiating proposal from World Trade Organization e-commerce talks followed the US’s earlier withdrawal of its text for the digital chapter of a mooted trade pact with allies in the Indo-Pacific.
Katherine Tai, the US trade representative, has said she decided the US needed a new approach because of a growing domestic debate over how to regulate data. That, she said, meant that long-held US positions defending the free flow of data between countries, rebuffing requirements that it be housed within national borders and protecting US tech companies from government efforts to access source code, felt at odds with the US domestic debate.
At the core of the international wrangling is whether companies or governments should get to decide how freely data flows and where it should be stored, Tai told a Dec. 7 Aspen Security Forum event in Washington. “Those issues are very much consequential, not just for trade and economics, but for our entire society,” she said.
But critics of Tai’s move say it has geopolitical consequences with the US leaving a vacuum by abandoning at least temporarily its longstanding role as a leader in the push for an open global internet. That has opened the door for authoritarian regimes to set the rules for a global digital economy that US tech companies have dominated for years, they charge.
“Both China and Russia are at the negotiating table, actively pushing their cyber agenda of censorship, repression and surveillance that not only hurts their own citizens but also undercuts US competitiveness,” a bipartisan group of 32 senators wrote to President Joe Biden in a Nov. 30 letter calling for him to order a review.
The issue has also put a spotlight on a divide within Biden’s Democratic party and his administration over tech and trade policy and how to deal with the growing power of the US tech industry. While some Democrats like Massachusetts Senator Elizabeth Warren have backed Tai’s move, others like Oregon’s Ron Wyden, chairman of the powerful Senate Finance Committee, are vocal critics.
Some see continued support for tech companies’ priorities on the global stage as at odds with the Biden administration’s focus on antitrust and putting robust safeguards around the most advanced AI tools. They say the guidelines that Tai withdrew from the WTO — which were proposed in 2019 under the Trump administration — are incompatible with Biden’s recent executive order on AI and some of the remedies his antitrust enforcers could seek from US tech giants.
Inside the administration — and even within some departments — the move has also prompted an often heated debate over how data should be treated. Some think the US should move closer to the European Union and its stricter approach to regulation. Others want Washington to remain an advocate for free data flows, arguing it’s an issue that is as much about human rights as commerce, as a growing number of countries restrict access to online information.
“We see an increasing balkanization of the free and open internet,” the US State Department’s cyberspace ambassador, Nathaniel Fick, told a Senate Foreign Relations Committee hearing last month. At that hearing, he said he had first learned about Tai’s WTO move from press reports and that the State Department’s view remained that data should flow freely.
The White House review follows pressure from Congress. Wyden met Nov. 1 with Jake Sullivan, Biden’s national security advisor, to register his complaints and call for a proper inter-agency review of digital policy, said a senior finance committee aide. The hope is that review will be concluded quickly and before a February WTO ministerial meeting, the aide said.
The senior administration official said the review did not have a deadline.
According to another administration official, initial inter-agency meetings held as part of the White House review in recent weeks have been partly about clearing the air. Even some supporters within the administration say privately they were caught by surprise by Tai’s move at the WTO and have regrets about how it was handled internally. Congress was only notified of the decision to withdraw the US position about eight hours before it happened, the senate aide said.
A spokesman for Tai said USTR had conducted a rigorous consultation process with other agencies every step of the way. Her office, he said, also previewed its decision with members of Congress in September and again just before the announcement was made in Geneva in October.
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