At the Office of the US Trade Representative (USTR) today, I testified on the need to include strong digital trade provisions in a United States-United Kingdom agreement. The hearing was focused on the negotiating objectives for the proposed agreement.
Software powers our economy. Software contributes over $1.14 trillion to US value-added GDP and over 10 million jobs – driving growth across all 50 states. Likewise, the United Kingdom’s software industry – Europe’s largest – is responsible for €170 billion of total UK value-added growth and supports 2.7 million jobs. More broadly, the United States had a $10.9 billion services trade surplus with the United Kingdom in 2017 – reflecting robust bilateral trade involving software and other emerging technologies.
Recognizing the importance of the software sector to economic competitiveness, the United States and the United Kingdom have each prioritized investment, with US government investment in unclassified R&D for relevant software technologies growing by over 40 percent since 2015, and UK government investment also increasing significantly.
This negotiation provides an enormous opportunity for the United States and United Kingdom to solidify a strong, transatlantic partnership and build off the robust digital trade provisions of previous free trade agreements, including the United States-Mexico-Canada Agreement (USMCA).
21st Century digital trade rules, including safeguards for data transfers across borders, are critical to US and UK global competitiveness in advanced manufacturing. Software and data are essential to advanced manufacturing, as is the ability to transfer that data across borders.
In addition to negotiating rules to safeguard cross-border data transfers, the US-UK trade agreement should contain restrictions against preferential treatment for state-owned enterprises, customs duties on electronic transmissions, and source code or algorithm disclosure requirements and other forced technology transfer mechanisms.
We urge USTR to prioritize digital trade in negotiations with the United Kingdom so that the US software industry can continue creating jobs and improving the competitiveness of US industries, while benefitting transatlantic trade relations. With cross-border access to cutting-edge software technologies and services, our economies will be best positioned to compete and thrive in the 21st Century marketplace.
