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Critics say Big Tech uses trade deals to avoid data privacy laws

USTR says any deals will leave space for Congress to ‘enact digital reforms’

Sen. Elizabeth Warren, D-Mass., said “Big tech wants to keep its code in a black box where no one can see what they’re doing."
Sen. Elizabeth Warren, D-Mass., said “Big tech wants to keep its code in a black box where no one can see what they’re doing." (Tom Williams/CQ Roll Call file photo)

Tech companies are using international trade agreements to conceal software codes behind artificial intelligence programs as well as circumvent U.S. legislation that could curb the industry’s freewheeling use of consumer data, according to lawmakers and advocacy groups.

As Congress is trying to rein in Big Tech, industry “lobbyists and lawyers are trying to rig the digital trade deals to undermine those new laws,” Sen. Elizabeth Warren, D-Mass., said last week at an event organized by the advocacy group Rethink Trade. 

Tech companies managed to add digital trade rules to the U.S.-Mexico-Canada Agreement that prohibits the parties from reviewing the source code for artificial intelligence programs and are trying to include similar provisions in the 13-nation Indo-Pacific Economic Framework trade talks, Warren said. 

“Big Tech wants to keep its code in a black box where no one can see what they’re doing,” Warren said. 

Negotiators from the U.S. and 12 other countries in Asia have been meeting in Bali, Indonesia, for the past few days to work on the IPEF, a trade deal that is the Biden administration’s signature effort to counter China’s growing economic influence in the region. 

The dispute about the role trade deals play in creating global rules for the tech industry comes as Congress is weighing legislation that would address data privacy, content moderation, antitrust enforcement and curbs on artificial intelligence technologies. 

House Energy and Commerce Chair Cathy McMorris Rodgers, R-Wash., and ranking member Frank Pallone Jr., D-N.J., say they will revive an effort to pass legislation that would create a federal data privacy standard. The committee approved a bill in the last Congress, but it didn’t get a floor vote.

Rodgers has said holding Big Tech accountable is a key part of her agenda and has called for greater transparency into algorithms and software. 

Sen. Amy Klobuchar, D-Minn., has also promised to pursue an antitrust measure aimed at tech companies. Klobuchar, the chairwoman of Senate Judiciary’s Competition Policy, Antitrust, and Consumer Rights Subcommittee, and Sen. Charles E. Grassley, R-Iowa, a member of the panel, teamed up on a similar bill in the last Congress.

The Coalition of Service Industries, a trade group representing a broad group of service industries, including tech companies, said the trade deals allow exceptions for regulatory bodies to examine software source codes and aren’t intended to limit Congress’ ability to enact domestic laws. 

The USTR has “has pursued an inclusive vision for digital trade that protects the privacy of consumers and workers, respects freedom of expression and freedom from discrimination and supports our environmental sustainability goals” in the IPEF negotiations, a USTR spokesperson said, adding that the talks and a potential deal will “provide space for Congress to enact digital reforms, as well as ensure our regulators can effectively implement our rules and regulations.”

The spokesperson also said the USTR has held more than 300 briefings with lawmakers and their staffs on the agenda.

Warren’s concerns were echoed at the Rethink Trade event by Rep. Jan Schakowsky, D-Ill., a top Democrat on the House Energy and Commerce Committee, as well as Rep. Mark Takano, D-Calif.

Pharma and WTO

Tech companies are attempting to do what pharmaceutical companies managed to do in the global trade framework created by the World Trade Organization, said Lori Wallach, director of the Rethink Trade program at the American Economic Liberties Project.  

The pharmaceutical industry was able to get the WTO to codify a 20-year patent on drugs although U.S. law up until that point only allowed for 17-year patents, she said. Congress enacted the law bringing the U.S. into the WTO in 1994. 

“When the U.S. signed that agreement, we were legally obligated to change our domestic law to conform,” Wallach said. 

Wallach cited a provision of the USMCA that precludes the parties from prohibiting or restricting the cross-border transfer of information, including personal information of users. If similar provisions are included in other trade agreements, companies can ignore future U.S. data privacy regulations and move users’ personal data to a jurisdiction beyond the reach of U.S. law enforcement, she said. 

Although the USMCA provides an exception by allowing the parties to enact laws and rules to “achieve a legitimate public-policy objective,” similar safeguards are missing from the discussion draft for IPEF, Rethink Trade and 17 other consumer advocacy groups said in a March 10 letter to President Joe Biden. 

“Trade pacts must not include terms that limit government regulation of data flows related to privacy protections or data security,” the letter said.

Rethink Trade also published a report last week highlighting USMCA provisions prohibiting countries from seeking to examine tech companies’ software or algorithms, alleging that tech companies were seeking to include similar provisions in the IPEF discussions. 

Widespread adoption of such provisions in trade deals would run against U.S. legislative proposals seeking to examine algorithms and software code behind artificial intelligence programs that can discriminate on the basis of gender, race and other factors, Wallach said. 

In addition to potentially restricting congressional action, the trade deals would give tech companies ammunition to stop legislation and regulation emerging in other countries, including South Korea, Australia and the European Union, Wallach said. 

Industry groups aren’t trying to restrict Congress’ ability to enact domestic laws, said Christine Bliss, president of the Coalition of Service Industries, which includes tech companies as well as media, telecom and financial services providers. The group backs the ongoing IPEF trade discussions.

Neither the USMCA nor the 2019 U.S.-Japan Digital Trade agreement includes provisions “that would limit the right of Congress to legislate in the privacy area, or other areas with security, or really, in the digital space,” Bliss said. 

Earlier trade agreements and the IPEF also provide exceptions for investigations, inspections and examination of software source codes when such probes stem from law enforcement actions or judicial proceedings, Bliss said.

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