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Representative David Schweikert - Vice Chairman

Chairman Paulsen Advocates for U.S. Leadership on Digital Trade in Hearing Opening Statement

Chairman Paulsen Advocates for U.S. Leadership on Digital Trade in Hearing Opening Statement

During a Joint Economic Committee hearing on "The Need for U.S. Leadership on Digital Trade," Chairman Erik Paulsen, R-Minn., argued for a stronger approach to American leadership on digital trade in the world. The remarks as prepared for delivery appear below:

Every day, when Americans sit down to order goods from a website or consume media online, we are participating in a vibrant digital economy—an economy that takes the ideas and creations of artists, manufacturers, and innovators and puts them within reach of our couches and kitchens.

Digital trade means supply chain tracking, 3-D printing, or digital platforms that lead to ecommerce, cloud computing, and social media. You know the names of the leaders in each of these areas: Facebook, Amazon, eBay, and so on. That’s because the United States has pioneered this digital revolution.

What many don’t realize is that trade in manufactured goods is itself a part of the digital economy. From the websites that market the goods, to the payment processing systems that carry out the transaction, the digital economy facilitates the movement of all kinds of consumer products from warehouses to family homes. American manufacturing relies on E-Commerce and digital trade.

The benefits of digital trade include domestic economic growth as well as spreading American ideas and culture across the world. Of course, to us, this is good. Yet, there are others who consider the free flow of information, products, and ideas a threat to their control.

Nearly three decades after the Berlin Wall fell, the way ideas and goods travel from one nation to another remains a contentious issue, both politically and legally.

In fact, because of the novelty of digitization, commercial principles and freedoms that were carefully developed for conventional trade and gained international consensus are at risk of being circumvented.

With every innovation comes opportunity for economic advancement but also opportunity for some foreign governments to grow their own power. In today’s interconnected economy, they can have wide-ranging effects on international commerce and other national economies as well as the free flow of information.

Digital technology does raise legitimate privacy and cybersecurity concerns but some governments may not be sufficiently concerned with the effects of their policies on trade and some may even be using these concerns as an excuse for protectionist and other purposes.

Some foreign governments impose additional taxes and fees, and some governments will only permit sales on the condition of storing data locally or providing the source code that will inevitably be used for a competing, state-backed product.

Some governments that otherwise enforce property and contract laws turn a blind eye to, or even facilitate, intellectual property theft. This is especially true when the division between the state apparatus and the private sector is nonexistent.

Up on the screen right now is a map of the world showing the prevalence of digital trade barriers.

The lighter colored regions like Australia, Canada, and Mexico are perceived to have taken a light-handed approach to trade barriers.

At the other end of the spectrum are trading blocs and countries like the EU and China that make access to their markets far more difficult and costly.

In part, their motivation likely is to catch up to the United States, the leader in digital technology development, and try to take the lead themselves.

American companies have always thrived in a competitive market, but the competition must be fair and free from foreign government intervention on behalf of their domestic companies.

That is why global players with large economies, such as China and the European Union, which represent large global market shares, should see the rewards of developing their own digital economies without discriminatory standards and testing requirements, localization requirements, forced technology transfers, and the like.

Governments with control over market access should not use their leverage to extract concessions from companies in competition with one another.

In the decades after World War II, U.S. companies dealt with smaller economies that saw the likely economic benefit of opening their marketplace. Their citizens benefitted from more choice, lower prices, and faster economic growth.

We must be vigilant to preserve the principles that have already led to great prosperity throughout the world in the digital trade arena.

That means addressing, swiftly and clearly, the excessive burdens foreign governments place on American digital products, so that we are not unfairly disadvantaged and can compete on the merits.

That also means negotiating new agreements that protect not just American’s economic interests, but allow the free exchange of culture and ideas throughout the world.

The world is a better place thanks to American ideas and commerce. Keeping the global digital marketplace open means continuing the fight for that better world.

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