Tech sector’s hopes dim for quick US-UK digital trade deal

UK hopes of securing a quick deal to deepen digital trade ties with the US have run into the diplomatic sands amid growing resistance to such pacts in Washington, technology industry insiders have warned.

The sector’s frustrations emerged as Prime Minister Rishi Sunak landed in Washington for a meeting with President Joe Biden at which the two leaders are expected to seek closer economic ties.

Tech groups have been hoping for London and Washington to forge ahead towards a deal to boost digital transactions, even if they have ruled out talks on a more comprehensive free trade agreement for now.

In April last year in Aberdeen, Scotland, the US and the UK had agreed to set out an “ambitious road map” to deepen trade ties, including “harnessing the benefits of digital trade”.

But critics say the Biden administration is now soft-pedalling the prospects of a digital deal with the UK, as some lawmakers on the left side of the Democratic party increasingly balk at provisions that would benefit big technology companies.

“The reality is that nothing has happened since the joint statement in Aberdeen because the US has been unwilling to engage substantively in digital trade negotiations for domestic political reasons,” said Sabina Ciofu, the head of the International Policy and Trade Programme at the lobby group TechUK.

Under former president Donald Trump, the US included sweeping provisions to boost digital trade in the USMCA agreement with Mexico and Canada, and struck a standalone digital trade deal with Japan.

These deals included provisions to provide legal certainty on data flows, ban restrictive practices such as requiring data localisation and formalise co-operation between regulators.

Biden has proposed a digital trade chapter in the Indo-Pacific economic framework, his plan to boost US economic ties in the region. But in a poor omen for proponents of a pact with the UK on digital trade, US business groups raised concerns that Biden is now “wavering in its promotion of high standard rules for digital trade” in IPEF, according to a letter sent last month.

Biden has been taking heat from the left for even considering more open digital trade around the world. Last month US Senator Elizabeth Warren, an influential Democrat from Massachusetts, accused the White House of allowing “Big Tech” companies to skew digital trade rules in a way that would restrict the US government’s ability to promote competition and regulate the sector.

“While we appreciate your commitment that digital trade negotiations will not conflict with the federal government’s active work on tech policy, we remain concerned that Big Tech companies are advocating for an approach to digital trade that will do just that,” Warren wrote in the letter, which was signed by six other Democratic lawmakers. The US trade representative and the White House’s National Security Council declined to comment.

One US official disputed any link between pressure from lawmakers and the Biden administration’s stance. “I would strongly push back on the notion that we are resisting a digital trade deal with the UK just because of Congress,” the official said.

Moreover, the US is not ruling out that some deeper digital ties could still be discussed in the coming months as the Biden and Sunak trade officials begin to shape specific areas for improvements in their economic relations.

Nigel Huddleston, the UK international trade minister, told reporters on the fringes of a Commonwealth trade ministers meeting in London this week that “constructive conversations” were still occurring on the digital trade.

One tech insider suggested that the UK could still secure an agreement from the US on digitising trade paperwork, for which legislation is already passing through the UK parliament. It is also possible that the US and UK could agree on deeper co-operation with regards to addressing the rise of artificial intelligence.

But these would fall far short of a digital trade agreement — leaving technology and trade lobbyists on both sides of the Atlantic alarmed at the lack of movement.

“[This] is yet another example of the [Biden] administration’s discouraging hands-off approach to trade. A US-UK trade agreement would be a timely opportunity to establish a new global benchmark for modern, comprehensive, and digitally focused trade in the 21st century,” said Jason Oxman, the chief executive of ITI, the Washington-based US tech lobby group.

Jake Colvin, president of the National Foreign Trade Council, a lobby group in Washington, said: “It’s no secret that the Biden administration is facing pressure to abandon US leadership on digital trade,” warning that such a position would only lead to “discrimination” against US companies “from Brussels to Beijing”.