Big business bristles at USTR reporting change on trade

The U.S. trade representative (USTR) is changing its definition of barriers to trade in its annual report on international trade estimates, throwing out concepts long cherished by the tech industry and drawing the ire of some of the biggest business lobbies in the U.S.

“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,” U.S. Trade Representative Katherine Tai said in a statement.

The USTR says the change looks at barriers to trade with foreign countries more from the countries’ own sovereign perspectives and less from the perspective of the U.S., which U.S. multinationals say is minimizing their voice.

“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,” the U.S. Chamber of Commerce said in a statement about the USTR’s editorial change.

Technology companies in particular are fuming about the omissions, especially the exclusion of barriers to what they term “digital trade.”

“In the past, USTR has identified regulations like Europe’s Digital Markets Act, the EU’s AI Act, Indonesia and Vietnam’s data localization requirements, and both Australia and Canada’s Online News levies as trade barriers. This year, these barriers were not identified by USTR as problematic or have been significantly scaled back from last year,” the Computer & Communications Industry Association, a technology trade group, wrote in a statement.

The USTR sees the move as a return to the original form of its national trade estimate (NTE) report, which the agency says held national sovereignty in higher regard.

“Over the years, the NTE Report expanded from its statutory purpose to include measures without regard to whether they may be valid exercises of sovereign policy authority,” the agency said in a release.

Companies have been rattled by changes in the direction of U.S. trade policy under the Biden administration and the U.S.’s continued pullback from multilateral trade agreements like the one formalized by the World Trade Organization.

The Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group representing drug companies, the submitted comments for the NTE in October that highlighted “how USTR’s policies are failing to protect American innovation abroad,” calling out licensing agreements in many countries that it said are undercutting its business.

“Historically, Republican and Democratic administrations alike have sought to address these barriers by advancing trade policies and agreements that value innovation, protect IP and champion open trade. Unfortunately, the Biden administration has departed significantly from that approach,” PhRMA said in October.

The group described Biden’s trade policy as “unambitious,” presaging a letter from GOP senators to Tai earlier this month that used the same phrase in regard to agricultural exports.

The senators accused the USTR of pursuing “an unambitious U.S. trade strategy that is failing to meaningfully expand market access or reduce tariff and non-tariff barriers to trade.”