Estimated reading time: 3 minutes

The Biden administration has temporarily paused discussions on crucial aspects of the digital trade segment within its Indo-Pacific Economic Framework (IPEF) initiative, as stated by Democratic legislators on Tuesday. 

This pause occurs amidst expedited efforts by negotiators from 14 countries to conclude some pacts before a significant Pacific Rim summit scheduled for the following week.

Following a shift by the US Trade Representative’s office last month at the World Trade Organization, the US has ceased to press for traditional digital trade provisions. The abandoned stances included promoting unhindered cross-border data flows and opposing mandates for data storage within national borders and obligatory scrutiny of software source codes.

The withdrawal from these long-held positions by the US Trade Representative’s office was to allow the US Congress the leeway to introduce more robust technology regulations. 

This decision has been met with approval from progressive Democrats, who have expressed a desire to place greater controls on large US technology corporations. 

Conversely, the move has drawn criticism from a wide range of business entities, arguing it detracts from longstanding US policies that were incorporated into the 2020 trade agreement with Mexico and Canada.

A group of lawmakers, including Senator Elizabeth Warren and other senators and House Representatives, has penned a letter to President Biden, seeking assurances that the digital trade rules within the IPEF will align with the administration’s revised stance.

The lawmakers expressed gratitude in their letter for the suspension of negotiations on IPEF digital trade elements that could potentially impede the establishment of privacy, AI, civil rights, anti-monopoly measures, and other digital protections pursued by both Congress and the administration.

As the USTR and the Commerce Department host a seventh series of discussions on the IPEF in San Francisco this week, the goal remains to secure agreements ready for announcement during the upcoming summit of leaders from the Asia Pacific Economic Cooperation, also to be held in the United States.

Insiders familiar with the negotiations report a significant slowdown in the digital trade chapter talks, primarily due to the ambiguity surrounding the US’s revised stance.

A USTR spokesperson has declined to offer any comments to Reuters regarding the status of the digital trade discussions within the IPEF.

The IPEF represents a cornerstone of the Biden administration’s strategy to strengthen economic engagement with Asia, offering nations an alternative to increasing their economic interactions with China. 

Unlike traditional trade agreements, the trade component of the IPEF does not aim to cut tariffs or enhance market access but instead focuses on upholding environmental, labour, and other standards.

The concerned legislators, including Senator Amy Klobuchar and Representative Pramila Jayapal, emphasised their intention to ensure that IPEF and subsequent trade agreements will not hinder the implementation of anti-monopoly policies, consumer privacy protections, and other measures against the exploitative practices of ‘Big Tech’.