The U.S. government’s long-standing support for policies that reduce artificial barriers to digital trade has provided an important foundation for even the smallest American companies’ competitiveness abroad. As virtually all industries continue their transition to digital, and regulators abroad have increasingly sought policies that would exclude American small businesses and startup innovators from their markets, this federal backing has never been more important. Unlike larger companies, smaller businesses with few product or service lines usually cannot shoulder the extra costs of data localization, technology transfer, prohibitions on encryption, and arbitrary application of regulation to American firms.
App Association members often only have a few employees, but almost all of them are global enterprises. They need support from the U.S. government to prevent digital trade barriers at national borders so that they can continue to innovate, create well-paying jobs, and contribute to both the domestic and international economies. Another vital issue for our member companies is the extension of the e-commerce moratorium at this month’s World Trade Organization (WTO) ministerial conference. The 1998 Declaration on Global Electronic Commerce’s moratorium on tariffs and customs formalities on electronic transmissions, including content, has underpinned growth and job creation across consumer and enterprise markets. Especially for young software companies, the ability to distribute their products and services globally is sometimes a necessary condition. For many, making payroll would be impossible if their addressable market stopped at national borders. The moratorium has given entrepreneurs the green light to start tech-driven businesses in virtually every congressional district and a path to grow globally and to create and sustain jobs at home.
The imposition of tariffs and customs duties is already well known to raise costs for consumers, lower output, and reduce productivity. In addition, the moratorium’s expiration would lead to a new range of customs administrative requirements that small business innovators like our members would need to navigate and comply with. As organizations that are already resource-constrained and unable to distribute risk across numerous product lines in comparison to large businesses, the impact on small businesses and startups will be far more pronounced and burdensome in comparison to larger companies.
Because this issue is so important to small businesses like our members, we continue to encourage policymakers to reduce and remove trade barriers. We also recently shared our perspective with the House Ways & Means Committee following their recent hearing on the WTO ministerial. We will continue to ensure policymakers keep the needs of small businesses in mind.