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Chairman Reichert Opening Statement at Hearing on Expanding U.S. Digital Trade and Eliminating Barriers to U.S. Digital Exports

July 13, 2016

WASHINGTON, D.C. – Ways and Means Trade Subcommittee Chairman Dave Reichert (R-WA) today delivered the following opening statement at a Trade Subcommittee hearing on Expanding U.S. Digital Trade and Eliminating Barriers to U.S. Digital Exports.

Remarks as prepared for delivery:  

“Good morning. The Subcommittee will come to order. Welcome to the Ways and Means Trade Subcommittee hearing on Expanding U.S. Digital Trade and Eliminating Barriers to U.S. Digital Exports. Before hearing from our witnesses, I’d like to make a few points.

“The United States is, far and away, the world’s leading exporter of digital goods and services. This is a great position for us to be in, because digital trade is growing at a rapid pace. And this means more jobs and more opportunities for Americans across the country.

“Our country is succeeding in digital trade because of the innovative spirit of the American people and American companies of all sizes. Our companies lead the world in creating digital products and content, as well as in data storage and analysis. In fact, U.S.-based websites represent more than half of the top 100 websites in every region of the world except Europe.

“In order to remain the global leader of digital trade, we must maintain access to the world’s expanding digital markets. 

“Digital trade, including the use of online platforms and data flows, benefits both high-tech companies and traditional companies in a wide range of industries, like manufacturers, retailers, and service providers. These businesses depend on digital platforms to export goods and services. Small businesses in particular benefit from the opportunities that digital trade provides through global digital platforms, including e-commerce websites such as Amazon, search engines such as Microsoft’s Bing, and payment systems such as Paypal. And when our companies are successful because of digital trade, they grow and create more jobs here at home. 

“We must build on the great success of U.S. companies in this area. We need to do more to tear down barriers to U.S. digital exports so we can allow our job creators to grow. For example, too many of our trading partners have imposed or threatened requiring the storage of data in-country, which can make it impractical for U.S. companies in various industries to serve – or even obtain – customers in those markets.  

“Arbitrary blocking of cross-border Internet traffic, which effectively prohibits digital trade by U.S. companies, is another long-term problem in many countries throughout the world. China is a particularly extreme example. In addition, inadequate protection of intellectual property rights – such as digital piracy of media or software – hurts our innovative companies.

“Trade agreements can be an effective tool to lower these and other barriers and open markets for America’s digital exports.  

“Many of the problems our digital exporters now face arose after our existing trade agreements were negotiated years ago. That is why Congress set forth important new and expanded principal negotiating objectives relevant to digital trade in goods and services and cross-border data flows in the Bipartisan Congressional Trade Priorities and Accountability Act that became law last year. Our future trade initiatives must reflect these priorities.

“In that regard, I believe TPP holds great promise to tear down barriers hurting digital trade. It would prohibit tariffs on digital goods, including software, video, and music. It would facilitate trade of both digital and physical goods by encouraging paperless trading and requiring the recognition of electronic signatures. TPP also includes commitments to ensure the free flow of global information and data at the heart of the digital economy. It would prohibit data localization measures. But I share the disappointment of many Members of Congress and the financial services community that financial services were excluded from this localization commitment. I believe that the Administration has heard our concerns, and I appreciate that the Administration is working constructively to address this issue. I welcome our continued work to create a clear and enforceable ban on localization requirements in this sector for all TPP countries. Resolving this issue and other outstanding issues, as well as developing implementation plans to assure that TPP will be fully implemented and enforced, is essential to getting Congressional support for TPP.

“Finally, the negotiation of a trade agreement with the EU and the Trade in Services Agreement with 22 parties both hold great promise for digital exports, as long as they are comprehensive, high-standard agreements that address the barriers faced by digital exporters and do not exclude important sectors such as financial services.”