Introduction
Beware of Big Tech “Special 301” in “Trade Act of 2021 Amendments” to USICA!
The China bill heading to the Senate floor includes a last-minute “Trade Act of 2021” amendment that designates a hands-off approach to Big Tech governance as an “American Value[s].” It requires U.S. trade officials to punish other countries that seek to break up Big Tech monopolies or regulate digital entities, and establishes new tools to do so. Terms in this amendment sought by Big Tech interests are framed as countering Chinese government online censorship, while in reality, the terms apply worldwide and deem any domestic policy upon which Big Tech operations are conditioned to be a form of censorship. The amendment would require the Office of the U.S. Trade Representative (USTR) to become an agent of Big Tech by creating a new “Special 301” process for USTR to continually monitor other nations’ existing and proposed digital governance policies to report on and undermine important pro-consumer, pro-worker, pro-privacy, pro-competitive and pro-fair-business-practices policies and proposals.
Effectively, this amendment would empower Big Tech to hijack extraordinarily powerful U.S. government trade enforcement tools to undermine digital governance initiatives worldwide. This move attempts to replicate a Big Pharma strategy that has led to decades of attacks and the rollback of access to affordable medicine policies worldwide after Big Pharma interests hijacked trade enforcement tools in the 1980s. Since then, Special 301 for Big Pharma has resulted in an annual hit list of policies worldwide to bring down medicine prices and increase access to medicine, with the U.S. government helping Big Pharma undermine these initiatives by threatening U.S. trade sanctions and other penalties against countries sponsoring the policies.
The proposal to extend extraordinary U.S. Special 301 trade enforcement power to Big Tech contradicts the initiatives now underway by Democrats in the Senate and House to establish U.S. digital governance policies that protect worker rights, consumer privacy, health and safety and fair business practices related to anti-monopoly and competition policy problems. The amendment captures gig worker protections, competition policy enforcement and digital governance policies under vague language that designates facially neutral regulatory policies that could have a greater impact on larger or market-dominating firms as illegal trade barriers and constraints on market access.
As a technical matter, the ‘strike and replace’ language in Sections 7111-7113 of the amendment offered by the Finance Committee chair and ranking members (Sens. Wyden and Crapo) designates various forms of digital regulation as illegal trade barriers that are subject to Section 301 tariffs and other penalties. (Section 301, the statutory basis for the Trump administration’s China tariffs, is a part of the Trade Act of 1974 that empowers the USTR to impose sanctions on foreign countries that are deemed to engage in acts that are “unjustifiable” or “unreasonable” and burden U.S. commerce.) The amendment also would newly establish a Special 301 annual review and reporting program for Big Tech. These terms require USTR annually to review all significant trade partner countries’ digital governance policies and prepare a report on policies that limit U.S. firms “market access” or otherwise limit their activities or content. Since Big Pharma was able to get such annual reviews inserted into Section 301 in 1984, the mechanism that this amendment would extend to Big Tech has been used as a powerful unilateral bullying and sanctions tool to undermine medicine price caps and access to medicine policies worldwide.
There are many extremely controversial and problematic aspects to this proposal. Any measure that would enact a major new U.S. policy of extending the powerful trade enforcement tools of Section 301 to target specific policies worldwide, and especially one on a subject on which numerous Members of Congress and committees are currently legislating, should be subject to broad debate and a markup, not slipped into unrelated legislation as a surprise amendment. Other aspects of this amendment, for instance regarding forced labor, are appropriate for a bill focused on China trade and competitiveness. But Section 7111-7113, the technology language, must go.
As the section-by-section analysis below explains, an initial revision of the amendment prior to its inclusion in the chairman’s mark did not remedy its most problematic terms. Rather it shifted the amendment from being a disastrousproposal to a very damaging one that would freeze – or penalize – many important pro-consumer, pro-privacy, pro-competition, pro-fair-business-practices proposals being advanced worldwide for digital governance. By the time the final Senate vote occurred, only Section 7111, which newly established a Big Tech Special 301 annual review and report, and the pro-Big Tech Generalized System of Preference (GSP) language remained in the Trade Act of 2021 amendment to the Senate China bill. Opposition from other Senate Finance Committee members resulted in Sections 7112 and 7113 being stripped at the last minute. However, Big Tech lobbyists then shifted their focus to the House, seeking to get these terms restored in the House version of the China legislation. Because each aspect of the original amendment reflects a different mechanism that Big Tech interests have sought to insert into domestic legislation as well as into what they have dubbed “digital trade” agreements, this memo reviews all three original provisions.
