Claude Barfield has an interesting blog post for AEI about ongoing economic negotiations between the United States and Indo-Pacific allies. It’s in America’s best interest to have closer economic relationships with those allies, both for the gains from trade and for the geostrategic benefits of the anti-China alliance.
One of the top issues in the negotiations is digital-trade rules. The USMCA agreement negotiated during the Trump administration between the U.S., Mexico, and Canada had a set of digital-trade rules that some domestic progressive groups found offensive, and they’re repeating their objections with these negotiations in the current administration. Barfield writes:
Labor unions and progressive groups such as Public Citizen have launched an all-out assault on the digital terms of previous US agreements—and extension of these provisions to the IPEF. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) argues that existing agreements have allowed “unfettered cross-border data flows” to facilitate “offshoring” and hinder legitimate government regulation. As to specifics, the progressive labor coalition wants wide-latitude public intervention and regulation in determining data flow regulation, data localization, and source code and algorithm management. It should be noted that the USMCA data flows section does contain an exception for “measures necessary to achieve a legitimate public policy objective.”
US Trade Representative Katherine Tai has shown herself to be highly responsive to the Democratic Party’s labor and left-leaning elements. Last Friday, in testimony before the US House Ways and Means Committee, she repeated her mantra that traditional trade liberalization policies have often led to “deindustrialization and erosion of our capabilities.” This tracks the AFL-CIO’s warning regarding USMCA digital provisions. So, we shall see where the US stands when its position on the IPEF digital section is made public in the coming weeks.
Nearly 90 percent of American workers aren’t unionized. It’s not “pro-worker” to make policy to please the AFL-CIO, as a general proposition. It’s especially foolish to do so when there are geostrategic implications.