Biden administration weighs new position on global data flows

The federal government is reportedly developing a new digital trade policy to regulate when, why, and how US data should be allowed to flow across national borders.

President Biden’s administration has invested a significant amount of attention to cyber issues, like in its sweeping federal cybersecurity initiative released in July. The White House is now debating what direction to take on international data flows, Bloomberg reported, though the discussion is far from settled.

One White House source told Bloomberg the administration wanted to preserve a free and open web while also addressing antitrust issues in Big Tech and security risks introduced by AI development.

The internal deliberations come after US Trade Representative Katherine Tai officially changed direction on the issue in October, withdrawing years-old US digital trade demands at the World Trade Organization. The dropped demands include a prohibition on mandatory localization of data, opposition to laws requiring software developers to submit to government source code reviews, and support for the free international flow of data.

A US government official characterized the withdrawn guidelines as a part of a process intended to balance “the right to regulate in the public interest and the need to address anticompetitive behavior in the digital economy,” according to a transcript of the October meetings obtained by Reuters. The New York Times described the dropped demands, which were first proposed under the Trump administration in 2019, as “nearly identical” to positions of lobbyists for Google, Apple, and Meta.

Tai’s move sparked backlash from the US Chamber of Commerce and 32 senators who cosigned a bipartisan letter to the White House warning the decision could undermine US competitiveness and boost adversaries such as China and Russia, which tightly control access to the internet. Twelve Democratic lawmakers wrote a separate letter supporting the withdrawals, arguing a digital trade agreement with free data flow provisions could allow tech firms to dodge future regulations on data and privacy.

Tai defended her decision at the Aspen Security Forum in December, saying maintaining the trade demands before the US has reached a consensus on how to regulate technology might constitute “policy suicide.”

A change in US policy could have an impact on the enterprise world far beyond huge tech firms—such as where and how companies are able to store and process different categories of data, and the IT infrastructure required for compliance.

For example, Chinese laws on data localization have led some US firms that do business there to split their IT systems at significant expense, according to the Financial Times. The passage of the General Data Protection Regulation in the European Union triggered many companies to revamp their tech stacks to reach new balances between efficiency and compliance.

Bloomberg’s report suggested White House staffers are not close to any kind of new consensus on the issue.

“Some [White House personnel] think the US should move closer to the European Union and its stricter approach to regulation,” Bloomberg reported. “Others want Washington to remain an advocate for free data flows, arguing it’s an issue that is as much about human rights as commerce, as a growing number of countries restrict access to online information.”

Angela D. Perez, a spokesperson for the US Trade Representative, declined to comment further on the digital trade negotiations to IT Brew.