How to break China’s grasp on digital trade

A click of a button. That’s all it takes for us to connect with the rest of the world.

We are living through a “Fourth Industrial Revolution,” in which the internet has blurred boundaries between our physical and digital world. This new frontier changed how we interact with one another, how we consume media, and how we sell products. Economic opportunity has been and continues to be abundant. 

In today’s hyper-connected world, the United States is at a critical moment. Digital trade is becoming the new frontier in economic strength, particularly in the post-pandemic economy.

In 2020, U.S. exports of digital services surpassed $520 billion, accounting for more than half of all U.S. services exports and generating a digital services trade surplus of $214 billion. Due to the COVID-19 pandemic, demand and reliance on digital technologies and services, data flows, and e-commerce has only increased.

Some countries have already harnessed digital trade for their gain, and our loss. China is waging a highly sophisticated and organized online assault on America — blocking the flow of data across borders, forcing technology transfer, infringing upon intellectual property rights, and stealing trade secrets.

When it comes to trade, like so many other areas, we must think anew and fashion policies suited to this century, not the last. It is time to prioritize connectivity and the subsequent adoption of digital governance to shape regional norms and provide an alternative to restrictive policies promoted by our adversaries, like China.

A successful digital trade strategy will help America’s manufacturers and job creators gain access to more markets and lift our economy. Our policies on digital trade should reflect the proliferation of digital technology in every layer of a business. And they must confront the Chinese Communist Party’s efforts to break the rules.

I recently introduced a bipartisan resolution with Sen. Tom Carper (D-Del.) that outlines the importance of the U.S. digital economy and the importance of greater U.S. leadership on digital trade negotiations with like-minded countries. Our resolution calls for the United States to negotiate strong, inclusive, and forward-looking rules on digital trade with our partners as part of its broader economic strategy in order to ensure that our values are at the very core of digital governance.

Fightingfor strong digital trade is not a new concept for the United States. The U.S.-Japan Digital Trade Agreement, signed in 2019, parallels the United States-Mexico-Canada Agreement (USMCA) as the most comprehensive trade agreement addressing digital trade barriers ever enforced. We must build on this progress and not backslide.

First, we should push for digital trade rules that penalize nations that sanction digital theft. A tougher stance from the U.S. and like-minded countries will create a landscape where bad actors avoid practices that they know will be prosecuted.

Second, we need allies in China’s own neighborhood. If we champion best practices in the Indo-Pacific, we help our partners become more transparent and willing to curb IP theft rather than look the other way for fear of retribution.

In the end, fighting for best practices in digital trade helps our American small businesses seeking to expand into new markets. If American companies want to market overseas and attract customers on a global scale, they need to know their government has their back and that their very business model is not at risk.

This is especially critical for companies who want to access a new market, but forfeit their intellectual property or trade secrets in the process of simply selling their products. In that case, a country like China can simply replicate the technology, and put the American company out of business. I know from meetings in my state that Hoosier businesses can’t afford that risk, especially as they come off the heels of a pandemic in a weakened economy.

Passing our resolution will send a signal to the rest of the world that the U.S. is not backing down on digital trade, and we will only seek to ramp up protections for our innovators and small businesses.

In a world struggling to understand how to deal with the proliferation of the digital age, we can’t let China be the best example. Instead, we must lead the way.

Todd Young is the senior senator from Indiana and is a member of the Commerce Committee.