Why Deepening Digital Trade Ties Between UK and US May Be More Difficult Than Expected
Introduction:
The UK’s bid to deepen its digital trade ties with the US has become mired in diplomatic tension, with growing resistance to such deals in Washington. Although there are high hopes that Prime Minister Rishi Sunak’s meeting with President Joe Biden will lead to closer economic ties, experts fear that a comprehensive free trade agreement is currently off the table. Instead, trade groups had hoped the two countries would move forward on a deal to boost digital transactions. However, mounting opposition in the US has meant that talks have stalled, much to the frustration of the industry.
Why The UK and US are struggling to make progress on digital trade:
Understandably, tech insiders are perplexed and disappointed by the slow progress towards a comprehensive digital trade deal. However, the situation is not entirely straightforward. Critics suggest that the Biden administration is slowing down prospects for a digital deal with the UK, due to growing opposition from the left side of the Democratic Party. In particular, certain lawmakers are increasingly opposed to provisions that would benefit big tech companies, leading to delays in negotiations.
Furthermore, there are inherent differences between the two countries when it comes to digital trade. Under former President Donald Trump’s administration, the US included sweeping provisions to promote digital trade in agreements such as the USMCA with Mexico and Canada, and a standalone digital trade agreement with Japan. These agreements included provisions to provide legal certainty on data flows, prohibit restrictive practices such as requiring data localization, and formalize cooperation between regulators. However, there is a growing sense in the US that certain provisions may benefit UK companies to the detriment of US businesses.
Potential areas of agreement:
Despite these complications, it’s possible that the UK and US could still find common ground on some aspects of digital trade. For example, one tech expert suggests that the UK could still get a deal from the US on digitizing trade documents, for which legislation is already passing through the UK parliament. Additionally, there is scope for deeper cooperation regarding addressing the rise of artificial intelligence, an area where both countries have made significant strides in recent years.
However, it’s clear that these potential areas of agreement would fall far short of a comprehensive digital trade deal. As such, trade and tech lobbyists on both sides of the Atlantic are increasingly alarmed at the lack of movement and are pushing for greater action.
The Importance of a US-UK Digital Trade Deal:
Given the perceived lack of progress towards a digital trade deal, it’s worth examining why such an agreement is so important. Firstly, increased digital trade has the potential to boost GDP and create jobs in both countries. For example, a report by the British-American Business Council estimated that a comprehensive digital trade deal may add $20bn to the UK economy and $5bn to the US economy annually.
Furthermore, a digital trade agreement would help to provide legal certainty on issues such as data flows, consumer privacy, and e-commerce, making it easier for businesses to expand internationally. This would be beneficial for companies of all sizes, from large multinationals to small startups.
An additional benefit of a digital trade agreement is that it would provide a benchmark for other countries to follow. With the world becoming increasingly digital, there is a growing need for comprehensive agreements that cover all aspects of digital trade, from data flows to intellectual property rights. By leading the way with a digital trade deal, the UK and US could set the tone for future agreements and ensure that they are fair and beneficial to all parties involved.
Conclusion:
While the UK and US may be struggling to make progress on a comprehensive digital trade deal, there is still hope that the two countries will find common ground in other areas. Regardless, a comprehensive deal is crucial for both countries to boost their economies and create jobs, and to ensure continued competitiveness in the global market. It’s clear that there is mounting frustration on both sides of the Atlantic about the lack of progress, but with continued pressure from trade and tech groups, it’s possible that an agreement may be reached in the near future.
Summary:
Efforts by the UK to deepen its digital trade ties with the US have hit a snag due to growing opposition to such deals in Washington. Although the hope was that a deal to boost digital transactions would be agreed, mounting opposition on the left side of the Democratic Party in the US has led to talks stalling and frustrating the industry. Whilst the US is not ruling out deeper digital ties, delaying a digital trade deal and limiting this to a narrower agreement will fall far short of expectations. The US and UK must come to a comprehensive agreement on digital trade to provide legal certainty, boost GDP and create jobs in both countries. Furthermore, this would pave the way for future deals to ensure fair and mutually beneficial agreements for all parties.
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The UK’s hopes of securing a quick deal to deepen digital trade ties with the US have landed in the diplomatic sands amid growing resistance to such deals in Washington, tech insiders have warned.
The industry’s frustrations surfaced when Prime Minister Rishi Sunak landed in Washington for a meeting with President Joe Biden in which the two leaders are expected to seek closer economic ties.
Tech groups hoped London and Washington would move forward on a deal to boost digital transactions, though they ruled out talks on a more comprehensive free deal trade agreement for now.
In April last year in Aberdeen, Scotland, the United States and the United Kingdom agreed set out an “ambitious road map” to deepen trade ties, including “harnessing the benefits of digital trade”.
But critics say the Biden The administration is now slowing down prospects for a digital deal with the UK, as some lawmakers on the left side of the Democratic Party increasingly oppose provisions that would benefit big tech companies.
“The reality is that nothing has happened since the Aberdeen joint statement because the US has not been willing to engage substantively in digital trade negotiations for domestic political reasons,” said Sabina Ciofu, head of International Policy and Trade Program at the TechUK advocacy group.
Under former President Donald Trump, the United States has included sweeping provisions to promote digital trade in the USMCA agreement with Mexico and Canada and concluded a standalone digital trade agreement with Japan.
These agreements included provisions to provide legal certainty on data flows, prohibit restrictive practices such as requiring data localization, and formalize cooperation between regulators.
Biden has proposed a chapter on digital trade in the Indo-Pacific economic framework, his plan to strengthen US economic ties in the region. But bodes ill for supporters of a UK digital trade pact, US business groups have expressed concern that Biden is now “wavering in promoting high-level standards for digital trade” in the IPEF, according to a letter sent last month.
Biden has taken heat from the left for even considering more open digital commerce around the globe. Last month, US Senator Elizabeth Warren, an influential Democrat from Massachusetts, accused the White House to allow “Big Tech” companies to twist the rules of digital commerce in a way that would limit the US government’s ability to promote competition and regulate the industry.
“While we appreciate your commitment that digital trade negotiations do not conflict with the federal government’s active work on technology policy, we remain concerned that Big Tech companies are advocating for an approach to digital trade that will do just that.” Warren wrote in the letter. , signed by six other Democratic lawmakers. The US Trade Representative and the White House National Security Council declined to comment.
A US official disputed any link between pressure from lawmakers and the Biden administration’s stance. “I would strongly reject the notion that we are resisting a digital trade deal with the UK just because of Congress,” the official said.
Furthermore, the US is not ruling out that some deeper digital ties may still be discussed in the coming months as Biden and Sunak trade officials begin to outline specific areas for improving their economic ties.
Nigel Huddleston, UK International Trade Minister, he told reporters on the sidelines of a meeting of Commonwealth trade ministers in London this week, it was said that “constructive conversations” on digital trade were still ongoing.
One tech expert has suggested the UK could still get a deal from the US on digitizing trade documents, for which legislation is already passing through the UK parliament. It’s also possible that the US and UK could agree on deeper cooperation regarding addressing the rise of artificial intelligence.
But these would fall far short of a digital trade deal, leaving tech and trade lobbyists on both sides of the Atlantic alarmed at the lack of movement.
“[This] is yet another example of [Biden] discouraging approach to trade by the administration. A US-UK trade deal would be a timely opportunity to set a new global benchmark for modern, comprehensive and digitally focused commerce in the 21st century,” said Jason Oxman, chief executive officer of ITI, the lobby group US technology company headquartered in Washington.
Jake Colvin, chairman of the National Foreign Trade Council, a lobbying group in Washington, said: “It’s no secret that the Biden administration is under pressure to relinquish US leadership on digital trade,” warning that such a position would only lead to “discrimination” against US companies “from Brussels to Beijing”.
https://www.ft.com/content/3bef641c-004a-435b-b2bf-6c25b962924b
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