International Preemption by “Trade” Agreement: Big Tech’s Ploy to Undermine Privacy, AI Accountability, and Anti-Monopoly Policies


The 117th Congress featured an unprecedented array of bills aimed at reining in the Big Tech giants that dominate global retail, advertising, transportation, and other sectors. Legislation that would end or mitigate big platforms’ abuses of workers, consumers, and smaller businesses was approved by committees. Lawmakers sought to counter online commercial surveillance and the exploitation of U.S. citizens’ personal data, to ensure that artificial intelligence (AI) systems do not mask discrimination or deliver inaccurate outcomes, and to level the playing field for smaller actors in digital markets. Most of these legislative proposals did not become law thanks to Big Tech lobbying. However, many of the bills will be reintroduced in the new Congress and support for regulating the digital economy is only growing.

One powerful, if stealthy, strategy Big Tech is prioritizing to derail these efforts is a form of international preemption. The goal is to excavate the policy space out from under Congress and the administration by locking the United States and its trade partners into international rules that forbid such digital governance initiatives. The goal is to secure binding international “digital trade” rules that limit, if not outright forbid, governments from enacting or enforcing domestic policies to counter Big Tech privacy abuses and online surveillance, AI discrimination, and other threats and monopolistic misconduct that threaten our economy and democracy.

This is not a hypothetical threat. Special interests have rigged past trade pacts to achieve unpopular agendas unrelated to trade. For instance, 1990s trade agreements included rules requiring the United States to extend drug patents from 17-year to 20-year monopoly terms after Big Pharma was unable to win this price-boosting change in Congress after decades of trying via regular order.

Today, Big Tech lobbyists are trying to exploit closed-door trade-negotiating processes and arcane trade terminology by pushing on many fronts for “digital trade” rules to handcuff Congress and regulators. This includes Indo-Pacific Economic Framework (IPEF) negotiations, U.S.-EU Trade and Technology Council (TTC) talks, and possible Americas Partnership for Economic Prosperity (APEP) talks. The terms being formulated for these secretive talks not only conflict with congressional proposals but the administration’s Blueprint for an AI Bill of Rights and its Executive Order 14036/2021 on Promoting Competition in the American Economy. If this strategy succeeds, rules shielding Big Tech abuses would be imposed via the backdoor of “trade pacts” here and in countries comprising much of the world economy, even as public and policymaker anger about Big Tech excesses grows across partisan divides.

This policy brief uses excerpts from 117th Congress bills and from administration policy documents to show the direct conflicts between prominent U.S. domestic digital governance proposals and the “digital trade” agenda that Big Tech interests seek in current trade negotiations. The Trump administration included a pro-Big-Tech Digital Trade chapter in the U.S.-Mexico-Canada Agreement (USMCA). USMCA Chapter 19 expands on what was viewed as a Big Tech-rigged Electronic Commerce chapter in the Trans-Pacific Partnership (TPP). Many of the restrictions on domestic policy in USMCA Chapter 19 are not found in other nations’ pacts that have digital terms. Big Tech interests have been clear that their goal is, at a minimum, to replicate the USMCA/TPP approach to “digital trade” rules in current trade talks, and with respect to some sensitive issues push for broader prerogatives for tech firms and new limits on governments.

Key USMCA “digital trade” terms conflict with digital governance initiatives here and abroad. For instance, even as President Biden has repeatedly declared that the expansive liability shield for tech platforms provided by Section 230 of the Communications Decency Act must be altered5 and members of Congress from across the political spectrum agree, the USMCA text requires countries to adopt and enforce that very policy. In this policy brief, we examine three of the most invasive provisions from the USMCA “digital trade” chapter that conflict with U.S. policy initiatives and that Big Tech interests seek to include in the IPEF and other pacts now being negotiated. These include:

  • New Secrecy Guarantees that Forbid Screening of Algorithms and Code for Racial Bias, Labor Law Violations, or Other Abuses – USMCA Article 19.16 (Source Code): In conflict with core concepts in the administration’s Blueprint for an AI Bill of Rights, the American Data Privacy and Protection Act’s rules on civil rights and algorithms, and the Facial Recognition Act of 2022’s testing requirements, among other policies, this term would ban governments from prescreening or conducting general reviews of AI code or algorithms for racial and other forms of discrimination, labor law or competition policy violations, biases in criminal justice applications, and more.
  • Forbidding Limits on Firms’ Control of Data, Including Rights to Move, Process, and Store Personal Data Wherever the Firms Choose – USMCA Article 19.11 (Cross- Border Transfer of Information by Electronic Means) and Article 19.12 (Location of Computing Facilities): The goals and core terms of policies like the American Data Privacy and Protection Act and My Body, My Data Act of 2022, or similar legislation, could be undermined if firms can evade obligations to eliminate private data according to users’ requests or minimize collection by transferring it to another firm in a jurisdiction where U.S. law enforcement cannot reach – and no similar protections are available to consumers – or if, for instance, an offshore processor is able to sell data onward to another firm that is located in a country where no protections apply. These terms would also undermine efforts to regulate the data brokerage industry.
  • Designation of Key Anti-Monopoly Policies as Discriminatory Illegal Trade Barriers – USMCA Article 19.4 (Non-Discriminatory Treatment of Digital Products): This broad USMCA provision brands policies that treat foreign and domestic firms the same, but have a greater impact on bigger firms, as illegal trade barriers that must be eliminated. Currently, this USMCA language is being used by tech industry lobbyists to attack a Canadian initiative that is similar to the U.S. Journalism Competition and Preservation Act. The concept underlying this clause has also been used to attack an equivalent Australian law; South Korea’s app store legislation, which resembles the Open App Markets Act in the United States; and the EU’s Digital Markets Act, which shares some elements with the American Innovation and Choice Online Act.

The lack of U.S. domestic digital governance policy makes the threat posed by international preemption via “digital trade” rules set in international trade negotiations particularly dangerous. Congress has not established national privacy or data safety protections or created policies to ensure that AI uses do not undermine civil, labor, and other rights or set parameters to ensure fair digital markets. That means that negotiators effectively are making the U.S. law as they negotiate the international rules, rather than being guided by domestic policies already established by Congress. Given trade negotiations occur behind closed doors and almost all of the 500 official U.S. trade advisors represent corporate interests, it is not surprising that past “digital trade” rules found in the USMCA and the TPP are so direly lopsided in Big Tech’s favor. As Congress and executive branch regulatory agencies now push to create a U.S. digital governance regime, the approach to any digital terms in trade agreements must be reconsidered and significantly altered.