The Trade War Within the U.S. Government

The tug-of-war within the Biden administration continues over whether to use trade policy to restrict the very kinds of regulations of tech that the administration is championing at home. These include protections of privacy from data mining and sale; regulation of AI; antitrust enforcement of excessive concentration and price-gouging; as well as keeping Americans’ data secure from Chinese snooping.

The U.S. Trade Representative, which is the Cabinet-level agency responsible for government-wide policies, made clear in its annual National Trade Estimate (NTE), released March 29, that trade policy is not to be used to undermine regulatory policy at home or abroad. U.S. Trade Rep Katherine Tai underscored that in a statement: “The NTE Report has received unprecedented attention this year because we are taking steps to return it to its stated statutory purpose. We respect that each government—including our own—has the sovereign right to govern in the public interest and to regulate for legitimate public policy reasons,” she said.

And here’s where the story gets weird. Despite Tai’s policy, which clearly reflects President Biden’s, the National Security Council, of all agencies, keeps trying to wrest control of digital trade policy from USTR.

More from Robert Kuttner

If anything, you would expect the NSC to be even tougher, especially given the concerns over China using its own technology to spy on Americans and on the U.S. government. But the NSC wants to retain language that allows digital regulation to be treated as a trade barrier.

This stance happens to chime perfectly with that of the tech lobby and the U.S. Chamber of Commerce. The Chamber declared in a recent statement, “By dropping U.S. objections to trade violations, USTR risks giving a green light to foreign governments to raise barriers against U.S. exports or otherwise discriminate against U.S. companies.” This is the old dscredited argument that because the tech behemoths most likely to be regulated happen to be U.S. companies like Apple, Google, and Amazon, regulating tech is discriminatory against U.S. exports.

So what is the NSC up to? NSC-watchers offer three theories.

One is that the NSC is carrying water for Big Tech because of the career interests of some of the players. Both national-security and trade agencies are notorious revolving doors. As I’ve reported, Nelson Cunningham, a corporate lobbyist, has been nominated to serve as Tai’s chief deputy. Even Senate Finance Chair Ron Wyden, who is close to tech, was appalled and may block Cunningham’s confirmation.

A second theory is that this is about turf and ideology. Former USTR staff now at NSC have a more traditional view of the use of trade policy to constrain national regulation, as has been done via the World Trade Organization.

An even darker theory is that some at the NSC may want to protect Big Tech because the tech companies cooperate with the national-security state in spying on Americans, and sheltering them from regulation returns the favor. Let’s hope not.

Whatever the motivation, the government needs one policy on this. Tai’s policy happens to be Biden’s own policy, and wayward NSC staffers need some adult supervision.

Yes, National Security Adviser Jake Sullivan has a few other top priorities, notably Israel-Gaza and Ukraine. But he needs to make time to set this one straight.

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