Coalition urges hearings on non-tariff attacks impacting U.S. tech leadership

The Facts -

The Growing Threat of Non-Tariff Measures Against U.S. Tech Firms

In a world where leading technological prowess is pivotal, a coalition of policy experts, civil society organizations, and trade associations has raised alarms about the undercurrent of non-tariff attacks (NTAs) targeting U.S. technology companies. These NTAs, though subtle, are threatening the very foundation of American innovation and leadership in technology, especially as global competitors like China strive to assert their dominance.

Unlike traditional tariffs and trade barriers, NTAs are a sophisticated arsenal of measures that include digital services taxes, forced infrastructure investments, and selective regulatory enforcement. These tactics, often cloaked as legitimate policy measures, aim to sap the competitive edge of U.S. firms. By extracting resources and exerting control over technological capabilities, they weaken the ability of American companies to innovate and compete on a global scale. The strategic implications are profound, as this not only affects the U.S. economy but also impacts national security in the ongoing technological rivalry with China.

Understanding Non-Tariff Attacks

The essence of NTAs lies in their ability to masquerade as domestic policies with regulatory legitimacy. For instance, the European Union's Digital Markets Act, though ostensibly neutral, effectively targets five major U.S. tech companies under its "gatekeeper" provisions. This is just one example of how NTAs exploit regulatory frameworks to systematically extract revenue from U.S. firms, as seen with the $6.7 billion in fines imposed by the EU on American tech companies in 2024.

This strategy has proliferated worldwide, with countries adopting EU-style policies. From the UK's Digital Markets, Competition and Consumers Act to Brazil and Korea's proposed regulations, these measures often explicitly target U.S. firms. The ramifications extend beyond market access, striking at the heart of U.S. innovation by mandating technology transfers, data localization, and compliance burdens that divert resources from research and development.

The Strategic Implications

The repercussions of these NTAs are significant. For one, technology transfers enforced by the EU can inadvertently benefit competitors like China, who gain insights without investing billions in R&D. Furthermore, market fragmentation weakens U.S. platforms' competitive advantages, diminishing network effects and global scale, which have historically allowed American companies to outperform state-backed Chinese enterprises.

Additionally, as resources are redirected to meet regulatory requirements, U.S. firms lose ground in frontier technologies such as AI and quantum computing, areas crucial in the U.S.-China tech competition. The irony is that countries implementing these measures may inadvertently strengthen China’s position while undermining their ecosystems.

Call for Congressional Action

Addressing the multifaceted challenge of NTAs requires a concerted effort from Congress and the Administration. While the U.S. has taken steps to protect critical technologies through export controls, it is crucial to develop a strategic framework to counter these non-tariff measures.

Recent negotiations have introduced commitments in trade agreements, such as the Korea Strategic Trade and Investment Deal, which aims to prevent discrimination against U.S. companies. However, further Congressional hearings are essential to explore policy solutions, identify legislative gaps, and reinforce bipartisan support for defending American technological leadership.

These hearings should focus on building a comprehensive factual record of the economic and strategic impact of NTAs, evaluating current policy tools, and developing legislative remedies. Moreover, establishing ongoing oversight mechanisms will ensure that non-tariff attacks are closely monitored, and U.S. responses are effective.

As these NTAs continue to evolve, timely Congressional intervention is necessary to safeguard America's technological leadership and secure its strategic position in a rapidly changing global landscape.

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