Tech Policy Press - How Europe Can Expand Digital Trade to Challenge Big Tech’s Anti-Regulatory Push
Industrial policy program manager Audrey Stienon offers the analysis on Trump’s trade coercion amplifying Big Tech’s long-standing use of trade policy to erode national sovereignty and entrenches corporate power over global digital regulation.
A defining feature of United States President Donald Trump’s foreign policy in his second term has been his weaponization of trade policy and extortion of other countries to get them to rig the global economy in favor of US companies. His demands extend far beyond getting countries to remove tariffs on US exports. He has increasingly targeted national regulations that his administration sees as harming US companies, and by extension, the US itself. In particular, Trump has attacked Europe’s tech policies—from its proposed digital service taxes to its signature digital market regulations—which prevent the Big Tech platforms from having the same free rein in the European digital economy as they do in the US.
As European leaders recognized, these demands from the American president represent nothing less than an attack on other governments’ sovereign right to regulate their societies based on their national laws and the public demands of their people—a right that is a cornerstone of international rule of law.
Nevertheless, as unprecedented as Trump’s actions are in their audacity, many of his tactics are simply an amplified version of ones that tech companies have long been seeding through US trade policy. Defenders of a rules-based international order in Europe and elsewhere must therefore recognize that Big Tech’s anti-regulatory agenda will outlast the Trump Administration so long as trade policy remains a mechanism through which the US and others can restrict governments’ tech policy choices.
Even without a leader like Trump at the helm, trade policy is predisposed to being used to restrict governments’ policy options. After all, the primary purpose of trade negotiations is to get governments to remove policies, like tariffs, that impede cross-border commerce. Since global tariff rates sat at historic lows for much of the past four decades (until Trump’s election), a major focus of trade policymakers has, for years, been on removing “non-tariff” barriers—including the discrepancies between countries' regulatory regimes that could complicate a business’s efforts to operate across multiple jurisdictions.
These efforts to “harmonize” countries’ regulations have traditionally worked in one of two ways. On one hand, trade agreements raise labor and environmental standards across countries, setting a floor under governments’ regulatory choices.
On the other hand, many agreements also empower multinational companies to sue governments in private tribunals for introducing policies that threaten their financial interests. Even though these agreements include exceptions that allow governments to regulate in the public interest, in practice, trade law and adjudication processes make it extremely costly, if not impossible, for governments to use these loopholes. For many governments, the threat of a trade-related lawsuit can be enough to place a ceiling on their regulatory ambitions—even if new policies would be broadly popular among their electorate and sanctioned by their national courts.
The language that is now the standard for regulating trade in the tech sector draws heavily from a free trade paradigm with near-unquestioned faith in the benefits of enabling companies to move ever more goods, ideas, and money across borders, and deep suspicion of government policies that might disrupt these flows. When the Barack Obama administration, working closely with Silicon Valley leaders, first drafted this language for the Trans-Pacific Partnership (TPP), they included rules requiring signatory governments to allow data to freely flow across borders, prohibiting them from requiring data to be stored on local servers, and restricting their ability to regulate or require disclosures of tech companies’ source code and algorithms.
All told, digital trade agreements focus almost exclusively on the threat of government-erected barriers to the movement of data across borders—as China did with its “Great Firewall.” What they entirely overlook are the ways that tech companies can threaten trade in the global digital economy by, for example, building platforms and marketplaces that restrict the access that companies from other industries have to a country’s online consumers.
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