The Honorable Katherine Tai, Ambassador, U.S. Trade Representative (February 26, 2024)

Summary

A February 26, 2024 letter from the House Committee on Small Business to the Honorable Katherine Tai, Ambassador and U.S. Trade Representative, expresses concern over the recent policy decision to abandon support for core U.S. digital trade priorities as the 13th World Trade Organization (WTO) Ministerial Conference commences. The letter states that U.S. exports in the digital economy accounted for 75 percent of all U.S. services exports, totaling $594 billion, in 2021, and that 97 percent of these digital exports come from small and medium businesses. It states that the Committee learned the decision was made with little to no input from other agencies, including the SBA. It requests information no later than March 11, 2024, and the signature block names Roger Williams, Chairman, Committee on Small Business.

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                                             February 26, 2024

The Honorable Katherine Tai
Ambassador
U.S. Trade Representative
600 17th Street NW
Washington, DC 20006

Dear Ambassador Tai:

        As the 13th World Trade Organization (WTO) Ministerial Conference commences, the
House Committee on Small Business (Committee) writes to express concern over your recent
policy decision to abandon support for core U.S. digital trade priorities.1 The Committee is
disappointed that this sudden change in the U.S. position was done with little consultation with
Congress and within the Executive Branch. Newfound opposition to longstanding policies run
contrary to the interests of safeguarding American workers and businesses, particularly small
businesses. We strongly urge the Administration reconsider this approach especially in light of
the important role American small businesses play in the digital economy and urge you to
reconsider your decision with meaningful consideration of small businesses.

        The global digital economy enables job growth and creation in the U.S. and around the
world, while empowering competition and innovation. In fact, U.S. exports in the digital
economy accounted for 75 percent of all U.S. services exports, totaling $594 billion, in 2021.2
Due to American innovation, the U.S. has emerged as a global leader in the digital economy.
Significantly, 97 percent of these digital exports come from small and medium businesses.3
Many small businesses rely on the predictability and scale of global digital platforms to grow
and thrive.4 Dramatic policy reversals, such as this one, remove the stability required to ensure
small businesses have a fair shot at competing.

       For small businesses that are already facing excessive regulatory burdens, rising inflation,
and uncertainty with the U.S. economy, the impact of your decision will be far more pronounced
and burdensome in comparison to large companies. In the words of one small business owner,
“the companies being hurt by these [restrictive trade] policies . . . is not Meta, it’s us.”5 Your

1
  Press Release, Off. of the U.S. Trade Rep., USTR Statement on WTO E-Commerce Negotiations (Oct. 24, 2023).
2
  DANIELLE M. TRACHTENBERG, CONG. RESEARCH SERV., IF12347, DIGITAL TRADE AND DATA POLICY: SELECT
KEY ISSUES, 1 (Mar. 16, 2023).
3
  Letter from Engine Advocacy to Laura Buffo, Chair, Trade Policy Staff Committee, Off. of the U.S. Trade Rep.
(Oct. 23, 2023).
4
  Tiffany Smith, A Good Week for Digital Trade – Almost, NAT’L FOREIGN TRADE COUNCIL (Feb. 9, 2024).
5
  See supra, note 6.
The Honorable Katherine Tai
February 26, 2024
Page 2 of 3

decision takes the Biden Administration’s over-regulation agenda international, adding to the
289 million hours of paperwork hours and $452.3 billion in compliance costs already imposed
on American businesses by the Biden Administration.6

         Further, there are an increasing number of policies implemented around the world
targeting American small businesses and threatening U.S. innovation.7 These policies include
restrictive data localization requirements, cross-border data flow controls, and compelled
technology transfers.8 If these policies replace the longstanding digital trade principles that were
previously championed by the U.S., small business will face a disproportionate burden.9 This
drastic change in policy threatens the U.S. economy overall and further harms small businesses,
their workers, and their ability to fairly compete in the global economy.

        The Office of the U.S. Trade Representative (USTR) generally relies on advice from
other agencies, including the U.S. Small Business Administration (SBA), through the Trade
Policy Staff Committee (TPSC) and the Trade Policy Review Group (TPRG), to develop
positions on international trade issues. 10 However, the Committee learned that this decision was
made with little to no input from other agencies, including the SBA. The Committee is
concerned that you failed to thoroughly consider other perspectives, or the consequences
resulting from this policy reversal.

       As the 13th WTO Ministerial Conference approaches, we strongly suggest that you
reconsider your decision to withdraw support for core digital trade priorities, and properly assess
the impact of such policy changes on small businesses. Small businesses—which make up 99.9
percent of all businesses in the U.S.—must be heard and considered. Therefore, we request the
following information no later than March 11, 2024:

    1. Why was the SBA not included in roundtables about the impact of Ambassador Tai’s
       decisions?

    2. Did the USTR conduct any sort of economic impact analysis, including the impact on
       U.S. small businesses, before announcing its unwillingness to support longstanding trade
       principles?

    3. What has the USTR done to ensure small businesses are considered in decisions
       involving international trade issues?

6
  Explore the Data, Regulation Rodeo, AM. ACTION FORUM (last visited Feb. 15, 2024),
https://regrodeo.com/?year%5B0%5D=2024&year%5B1%5D=2023&year%5B2%5D=2022&year%5B3%5D=2021
7
  See e.g., Brian Fung, EU officials agree on sweeping new rules targeting Big Tech, CNN (Mar. 25, 2022)
(demonstrating, for example, the European Union’s Digital Markets Act almost exclusively applies to U.S. big-tech
companies).
8
  Letter from Darin LaHood, Chairman, H. Comm. on Ways and Means, Subcomm. on Work and Welfare,
Katherine Tai, Amb., Off. of the U.S. Trade Rep. (Nov. 15, 2023).
9
  Hua Wang, Restful Nights and Regulatory Insights: A Conversation with Olivia Walch, Arcascope Founder,
GLOBAL INNOVATION FORUM (Dec. 15, 2023).
10
   Executive Branch Agencies on the Trade Policy Staff Committee and the Trade Policy Review Group, OFF. OF THE
U.S. TRADE REP. (last visited Feb. 16, 2024).
The Honorable Katherine Tai
February 26, 2024
Page 3 of 3

       To schedule delivery of your response or ask any related follow-up questions, please
contact the Committee on Small Business Majority Staff at (202) 225-5821. The Committee on
Small Business has broad authority to investigate “problems of all types of small business” under
House Rule X. Thank you in advance for your cooperation with this inquiry.

                                       In God We Trust,




                                     Roger Williams
                                         Chairman
                                 Committee on Small Business




cc:    The Honorable Nydia M. Velasquez, Ranking Member
       Committee on Small Business

       The Honorable Jake Sullivan, National Security Advisor
       U.S. National Security Council


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