February 09, 2022
The Digital Trade Revolution: How U.S. Workers and Companies Can Benefit from a Digital Trade Agreement underscores the promise of digital trade as a driver of dynamic growth and good jobs in the U.S. and abroad. With details on a host of industry sectors and state-by-state fact sheets, the report shows that most U.S. services exports now have the potential to be delivered to customers abroad digitally. It also reveals how companies of all sizes have the potential to benefit from digital trade and lays out principles to guide the negotiation of a digital trade agreement. Additionally, it identifies a group of economies — dubbed the “Digital Dozen” in this report — considered potentially suitable partners to join the United States in a high-standard digital trade agreement, including markets from the Indo-Pacific and the Americas to the UK.
The digital economy has become critical to the U.S. economy, driving growth, prosperity, and dynamism for every state and sector across the United States. A diverse range of firms not traditionally seen as actors in the digital economy are producing digital goods and services, including businesses in transportation and warehousing, arts and entertainment, and even mining. Nearly two-thirds of the digital economy consists of digital services, not digital goods. The digital economy is expanding nearly three times as rapidly as the economy writ large.
Digital economy jobs are proliferating in the United States. Jobs tied to the digital economy can be found in nearly every sector, and their number is growing at a faster rate than that of overall job growth over the last decade. These jobs pay well, and compensation growth for digital jobs exceeds that for all jobs generally.
Trade is key to the U.S. digital economy’s growth. The bulk of U.S. services exports are digitally tradeable, but the potential for expansion of the digital delivery of services exports remains largely untapped. Developed economies — and particularly Europe — are the top markets for U.S. exports of digitally tradeable services. These exports, coming from every U.S. state, supported more than 2 million U.S. jobs in 2020. America’s small business exporters are among those with the most to gain from digital technologies that have the potential to overcome the longstanding hurdles to exporting they face.
Foreign competitors see the same opportunities to increase exports of digitally tradeable services. Leading competitors in international markets include companies based in the European Union, India, and China.
Unfortunately, global barriers to U.S. digitally tradeable services exports are on the rise. Left unchecked, the proliferation of these trade barriers threatens to deprive American workers and companies of the potential benefits of exporting digitally tradeable services.
To counter these foreign trade barriers and secure the benefits of digital trade, the United States must act quickly to negotiate a digital trade agreement with key partners. The United States should work with like-minded partners to negotiate a binding trade agreement that guarantees the ability to move data across international borders, prohibits forced localization of data or restrictions based on nationality of ownership, and bars customs duties on electronic transmissions, among other objectives. One logical focus is a group of economies, dubbed the “Digital Dozen” in this report, considered potentially suitable partners to join the United States in a high-standard digital trade agreement: Australia, Canada, Chile, Colombia, Japan, Korea, Mexico, New Zealand, Peru, Taiwan, the UK, and the members of ASEAN.
The United States finds itself at a moment of promise and peril on digital trade. Export opportunities for digitally tradeable services are expanding rapidly, and the United States is well positioned to build on its formidable advantages in these areas. However, these opportunities are endangered by the spread of digital protectionism and the accumulation of discriminatory digital rules that often target American firms.
To forestall these threats, the United States must act now to push forward a vision for a digital trade agreement that can secure these opportunities for American workers, small businesses, services industries, and others. The case for American leadership on digital trade is strong: It is time for the United States to move forward on this important initiative.
 “Digitally tradeable services” includes exports tied directly to information technologies and the movement of data (e.g., telecommunications services, computer software services, cloud computing and data storage, and other computer services) as well as services that have the potential to be traded digitally: architectural, engineering, project management, and specialized design services; accounting, bookkeeping, auditing, and payroll services; legal services; consulting; research services; advertising; audiovisual and photographic services; banking, insurance, and other financial services; travel arrangement and reservation services; and waste management. The United States is home to world-beating firms in all of these growing industries.