▶ 0:29:33Subcommittee will come to order and good afternoon. I thank the subcommittee members for being here and certainly thank you to our witnesses here today as well. This hearing is important an important opportunity to discuss intellectual property and digital trade. Two subjects that are key to our strength and global leadership in very critical sectors. US innovation is one of our nation's greatest strengths. It is a core driver of America's economic engine and key to US national security.
▶ 0:30:01IP intensive industries account for 41% of US GDP and 63 million US jobs including 8.9 million in the US tech sector. This success is in large part thanks to robust and fair domestic laws that don't pick winners and losers but rather incentivize creativity and development. When we create an environment conducive to innovation, all sectors succeed.
▶ 0:30:27New agriculture crop varieties and inputs meet the need for affordable and nutrient-dense staples around the world. Pharmaceutical development delivers life-saving advancements. Small businesses have access to a suite of digital services to market their products at home and abroad. When trading partners unnecessarily target American innovation and technology, the trickle down effect is similarly felt throughout the economy.
▶ 0:30:54Many of our trading partners lack similar innovationfriendly rules and often impose measures aimed at undermining American companies in order to advantage their own firms. The absence of adequate and effective protection for American intellectual property rights holders in export markets also significantly hinders the ability of US innovators to export and operate overseas, harming the economic interests of the United States.
▶ 0:31:19Similarly, discriminatory digital trade and tax measures seek to erode America's competitive advantage. Despite frequent warnings from members on both sides of the aisle, the Biden administration continually enabled this bad behavior. Their misguided policies open the door to mistreatment from trading partners.
▶ 0:31:37The Biden administration's support for policies like the trips waiver for CO 19 vaccines disincentivized investment in key strategic pharmaceutical capabilities in the United States and re-evaluation of the long-standing US approach to digital trade policy undermined US leadership and led to the proliferation of numerous troublesome policies including digital services taxes or TSTs. I'm glad the Trump administration is working to write the ship.
▶ 0:32:07This past year, the administration has successfully obtained significant commitments from trading partners related to intellectual property and digital and digital trade, paving the way for continued US leadership in emerging industries. However, there's more work to do. Numerous countries continue to maintain or introduce harmful DSTs that discriminate against US companies along with a myriad of other regulations that impose a significant burden on American digital service companies.
▶ 0:32:36We cannot accept foreign discrimination under the guise of regulation. As it relates to intellectual property, I welcome the commitments countries have made that strengthen IP protection for US rights holders. Such commitments must also be paired with strong enforcement to ensure that American companies are treated fairly and rights are protected.
▶ 0:32:56We must continue to build upon these successes of the Trump administration and make sure that foreign governments know that unfair and discriminatory practices that harm US innovators will not be tolerated in the United States any longer. I now recognize Ranking Member Miss Sanchez for her opening statement. Thank you, Chairman Smith. I also want to thank the witnesses for being here today.
▶ 0:33:24I can't [clears throat] begin this hearing without addressing the elephant in the room, which is why are Republicans hosting this hearing today? Is Congress's top focus really digital trade? Right now, Americans are facing higher prices on everything from groceries to housings housing due to President Trump's tariffs. and American manufacturing jobs are declining under his watch. Since Trump took office, we have lost a staggering 68,000 American manufacturing jobs.
▶ 0:33:55Instead of taking action to address the cost of living crisis and the gutting of American manufacturing jobs, President Trump has been busy illegally invading and trying to run Venezuela. So much for America first. And here we are with all of that going on. Republicans have us talking about digital trade policies. Putting aside the ill timing of this hearing, yes, Democrats share some of the same concerns that Chairman Smith raised with respect to digital trade.
▶ 0:34:24We have long supported strong copyright and intellectual property protections in our trade agreements, which have fueled American innovation. We've also fought to level the playing field for American companies competing abroad, including by opposing digital services taxes and other discriminatory measures. Rep. Smucker and I recently led a bipartisan effort with 27 other Ways and Means Committee members, raising serious concerns with Canada's online streaming act.
▶ 0:34:51I look forward to hearing from Miss Brennan with the Motion Pictures Association about the harmful impact measures like these have on American workers and companies. Digital must be a part of our engagement with our trading partners and our trade policies should have American company should help American companies innovate. At the same time, Congress must have a say in regulating the digital economy.
▶ 0:35:14We need to consider how foreign adversaries like Russia and China manipulate and weaponize American data to harm our democracy. We must also be forward-looking when we think about the impacts that AI, as revolutionary as it can be, and other emerging technologies will have on our workforce. I'm eager to hear with Mr. Mau with the Communication Workers of America about the challenges American workers face with respect to the changes in this digital economy.
▶ 0:35:42As policymakers, we must not forget that behind these large tech companies are millions of workers who support America's digital economy day in and day out. We must be mindful of how our policies at home and abroad affect them. There is a reason why American innovation [clears throat] is the envy of the world. Most elected officials in the United States used to understand that freedom and liberty were essential to American ingenuity and economic growth.
▶ 0:36:10We cannot discuss the hearing's topic, maintaining American innovation and technology leadership, today without discussing the Trump administration's attempts to suppress dissenting views both here and abroad. At the hands of this administration, the United States is experiencing the greatest assault on freedom of speech since the McCarthy era.
▶ 0:36:32President Trump has threatened protesters, banned media outlets from covering his own administration, sanctioned law firms from defending the rule of law and political descent. This isn't an indicator of a growing American economy, but of a crumbling one. Without protections for freedom of expression, freedom of the press, and the freedom of opportunity that has brought immigrants to our country to help strengthen it, I am unsure what the future of American innovation will look like.
▶ 0:37:00Districts like mine in Los Angeles, which support large creative industries that were founded on these very principles, are facing a grave threat today. I will take this opportunity to remind my colleagues that as members of Congress, we have a duty to push back against these cruel instincts and to promote freedom of speech and freedom of the press, values that we swore to defend and values that are the bedrock of American democracy.
▶ 0:37:27With that concluding note, I look forward to hearing from our witnesses in this hearing and [snorts] I yield back the balance of my time.
▶ 0:37:33Thank you. I now have the pleasure of introducing our witnesses for today's hearing. First is Andre Yonu. He's the co-chair of the council for innovation promotion, a partner at Sullivan and Crowell and is the former under secretary of commerce for intellectual property and director of the US patent and trademark office. Next is Anissa Brennan who is senior vice president of global policy and federal affairs for the motion picture association.
▶ 0:38:00Next we have Nigel Corey, director with crow global advisor adviserss and finally Dan Mau, director of government affairs for the communication workers of America. Appreciate all of you being here today. Your written statement will be made part of the record. You each will have five minutes for your remarks and uh you'll notice the light there once it transi transitions to yellow.
▶ 0:38:25If you could uh bring bring that flight in for a landing uh that'll be good to complete that by five minutes. Uh honorable Yanku, you are recognized. Chairman Smith, Ranking Member Sanchez, and members of the subcommittee, thank you for the opportunity to testify on the vital role of intellectual property in America's trade policies, technological leadership, economic strength, and national security.
▶ 0:38:53Reliable, predictable, and meaningfully enforcable IP rights are the foundation of American prosperity and global leadership. Intellectual property is one of our most important sectors and among the very few that enjoy a trade surplus.
▶ 0:39:11In 2022, for example, the United States enjoyed an IP trade surplus of 74 billion while China had a trade deficit of 31 billion when it comes to IP. But US leadership cannot be assumed. In recent years, reduced engagement on global IP policy has allowed other governments to adopt approaches that disadvantage American innovators.
▶ 0:39:40While outright IP theft remains a concern, the greater challenge today is subtle, more subtle and systemic. Foreign governments increasingly use ostensibly neutral regulations and policies to weaken IP protections to favor their domestic players and advance their own industrial policy at US expense. The leading violator of IP rights continues to be China.
▶ 0:40:09But increasingly our allies have also been promoting policies that weaken IP. For example, recent EU initiatives initiatives such as the general pharmaceutical legislation or the proposals targeting patents essential to standards like 5G and Wi-Fi would reduce incentives to innovate and encourage free writing on American consumers.
▶ 0:40:35Addressing these issues with allies is essential both to protect US innovators and to establish a credible baseline for engagement with countries like China where challenges are deeper and The United States must also recommmit to enforcing existing agreements, including the USMCA and China's phase one agreement, which contain meaningful IP obligations that must be implemented in practice and not just on paper.
▶ 0:41:04Looking ahead, the USMCA joint review and ongoing bilateral negotiations provide critical opportunities for the US to advance a modern for forward-looking model IP chapter for trade agreements that reflects today's technological realities. Leadership means setting the rules, not reacting to rules written by others. Leadership also requires a reliable IP system here at home.
▶ 0:41:32Congress has an essential role in advancing legislation to modernize the patent system and address emerging challenges such as deep fakes, online counterfeit sales, and overseas copyright piracy. Pending bills include the Restore Act, Prevail, Perah, No Fakes, and Shop Safe, all bipartisan and bicameal, and I urge Congress to advance them this session.
▶ 0:42:01Three transformative areas of technology are good examples of the critical need for US leadership on intellectual property. Standards, biotech, and artificial intelligence. First, American companies are global leaders in standards like 5 and 6G enabled by a robust system for standard essential patents.
▶ 0:42:22The United States must defend marketdriven contractbased licensing, transparent adjudication in neutral courts, and respect for territorial nature of IP rights. I commend the Trump administration for recently standing up a working group to address these issues. On biotech and pharmaceuticals, weak IP protections abroad enable foreign countries to free ride on American innovation.
▶ 0:42:50This shifts the cost of innovation disproportionately to American consumers. IP must also remain a central consideration as the world develops policies for artificial intelligence. And again, I commend the Trump administration for recently issuing a policy statement that IP rights for AI should not be treated differently than for other technologies. In our free market system, intellectual property is a prerequisite to innovation and trade.
▶ 0:43:19By properly balancing IP protections at home and reasserting US leadership abroad, Congress can ensure American innovation and American innovators continue to set the global standard. Thank you and I look forward to your questions.
▶ 0:43:35Thank you, Miss Brennan. You're recognized for five minutes.
▶ 0:43:40Thank you, Chairman Smith, Ranking Member Sanchez, and members of this subcommittee for the opportunity to appear before you today. The Motion Picture Association represents America's motion picture, television, and streaming industry, one of our nation's most dynamic economic sectors. Our industry is a global leader, distributing content to 130 countries around the world, and maintaining a trade surplus of 15.3 billion.
▶ 0:44:06But as we've seen with digital services taxes and other measures abroad, foreign governments are increasingly pursuing discriminatory taxes and regulations that seek to punish and raise revenue from successful US industries. Promoting fair and open digital trade and robust protections for intellectual property for American creators, including through our trade agreements, is essential to growing America's global leadership.
▶ 0:44:30On behalf of the Motion Picture Association and our member companies, I want to focus my remarks today on trade barriers imposed by two of our closest allies, Australia and Canada. Before I turn to those remarks, I want to take this opportunity to thank you, Mr. Chairman, Ranking Member Sanchez, and members of this committee for your strong support and engagement on Australia and Canada and their investment obligations.
▶ 0:44:53Your engagement is critical to our shared effort to pro protect and promote the interests and competitiveness of the American film, television, and streaming industry. Domestic content mandates or investment obligations harm consumers, siphon investment from the United States, and artificially protect legacy media incumbents. What is unique and particularly egregious about the investment obligations of Australia and Canada is that these laws are in clear violation of their trade agreement obligations to the United States.
▶ 0:45:25Canada's online streaming act gives Canada's broadcast regulator the power to obligate US streaming companies to pay a portion of their revenues to subsidize their Canadian competitors and the Canadian broadcast system. In 2024, US streaming companies were ordered to pay an initial 5% of their gross revenue to government approved funds that benefit Canadian production companies.
▶ 0:45:50The regulator has been very clear that it will impose additional funding and expenditure requirements to produce Canadian programs of between 5 to 30% of foreign streaming services gross revenues. In November of 2025, Canada's regulator issued another decision imposing rigid rules around the citizenship of key creative rules and mandating that at least 20% of the intellectual property of Canadian programs be owned by a Canadian entity.
▶ 0:46:18Under these regulations, the Canadian government will essentially dictate to US companies what is produced, under which deal terms, and how is presented on screens while giving preferential treatment to Canadian content over American content. The Online Streaming Act is a clear violation of the USMCA. Australia's law mandating a local content investment obligation entered into force of January 1 of this year.
▶ 0:46:44This law obliges US streaming companies to invest up to 10% of their total program expenditure or 7 and a half% of their gross revenues on Australian programs. The legislation also includes a rig rigid definition of what is considered Australian. In addition, the law forces US companies to comply with invasive and draconian reporting requirements and includes stiff penalties for non-compliance that are both uneven and unfair. as such.
▶ 0:47:11Oh, and there is no market failure to be clear to justify such intervention into the streaming marketplace. And for that reason, this law is a clear violation of Australia's obligations to the United States. MPA is very grateful for the efforts of this of the administration and of USR in particular to press these issues with Canada and Australia. But we believe the time is now to take the next step and launch a section 301 investigation into these two countries investment obligations.
▶ 0:47:41In practice, these local content investment obligations force US companies to divert hundreds of millions of dollars away from investment in US content into Australian and Canadian content. Addressing and dissuading our international trading partners from adopting restrictive and often discriminatory measures is not only beneficial to US industry, it also underpins good governance practices, the global rule of law and the facilitation of ideas and information.
▶ 0:48:09Other countries from Brazil and Israel to New Zealand, Indonesia and Taiwan are watching to see how the US government responds to Canada and Australia and we see a real threat of contagion absent decisive action by the US government. I want to thank you all for the opportunity to be here today and express NPA's deep appreciation for the support of this committee and your leadership in addressing these unfair trade practices. I welcome any questions.
▶ 0:48:34Thank you. Mr. Corey, you are recognized for five minutes. Good afternoon, Chairman Smith, Ranking Member Sanchez. It's an honor and a pleasure to be testifying here again. My core point is simple. Digital trade is how America exports its ideas at scale. When US firms can enter and compete in digital foreign markets, they expand their revenue base to reinvest in US R&D, in more higher paying US jobs, and in the US capital and venture systems that help commercialize research into new products.
▶ 0:49:05Digital trade barriers are in essence attacks on scale. They reduce the market that thereby funds the next wave of American innovation. And with digital trade already growing faster than physical trade and with the forthcoming impact of AI, it's never been more important to address digital trade barriers around the world. Now, digital protectionism comes in many ways, shapes, and forms.
▶ 0:49:27force local data storage uh discriminatory local licensing certifications standards uh discriminatory sort of market restructuring rules around platforms uh there's local residency requirements there's payment service restrictions and digital service taxes uh network usage fees and many of which are these pretty much predominantly target US firms now the economics of digital innovation are susceptible to to taxes at scale scale
▶ 0:49:58because by reducing the revenue you reduce your R&D you make it harder to roll out the products around the world and ultimate ultimately you slow US Um at the moment digital protectionism as Anissa was saying is proving contagious as governments copy in um interventionist uh approaches to governing digital rules in a way that tilts the the field in favor of local providers.
▶ 0:50:24The result is a dynamic where you have countries that not only copy but then modify and ratchet regimes they're seeing quite often in the EU as it relates to competition policy, platform comp uh policy, sovereign cloud initiatives and compliance first riskbased AI laws and regulations. This is happening at a critical juncture as US firms are in increasingly fierce competition with Chinese tech firms for market share around the world.
▶ 0:50:51The example in many developing countries uh Chinese cloud providers are offering price discounts of 50 to 80% on their US competitors with which suggests uh state subsidies and financing combined with strategic market entry to secure lockin in in these emerging markets. This is critical as US cloud is a beach head for other US digital services.
▶ 0:51:15This is made harder as US service cloud services also face asymmetric compliance expectations whereby Chinese cloud providers have international certifications and standards yet are operating under a legal regime that raises serious questions about compelled access and transparency about how they operate. So in budget sensitive third country markets quite often US firms are being priced out uh as policy makers go with a near enough lowcost option.
▶ 0:51:44To its credit, the Trump administration has reversed course on digital trade and recognized that it's uh incredibly valuable to the US economy and has been securing wins both in the context of negotiations but also as a part of direct advocacy. We see important uh progress in markets around the world, Indonesia, Thailand, India, Turkey, Pakistan, New Zealand, Korea and elsewhere.
▶ 0:52:09It's important to build on this because some of these are not enforceable forcible as yet and there's still a lot of negotiations in process and we've seen trading partners already trying to um uh undercut the commitments they've already made to the Trump administration to its credit. So what should Congress and the US government do about this? Make digital market access a priority when deciding what to push for in negotiations. Pair rules with leverage, the carrot and stick.
▶ 0:52:36build a trusted data agenda to help US cloud providers um uh uh build a trust architecture or trust agenda to help them in competing with Chinese firms. Deter barriers early and consistently. Identify bad proposals before they harden. Escalate quickly through trade tools and then treat reoccurring contagious barriers as presumptively trade restrictive. Fifth, lock in duty-free digital trade, ideally permanently, at the WTO e-commerce moratorum.
▶ 0:53:06And sixth, and finally, track and react to problematic AI sovereignty proposals that will inevitably start to see because AI is the future of trade. In closing, digital trade is not a side issue. It is the operating system for American innovation and AI leadership. If the United States does not defend open enforcable trade market access around the world, others will and they'll design it such to disadvantage US firms and American innovation. And thank you. I look forward to your
▶ 0:53:37Thank you, Mr. Mau. You are recognized for five minutes.
▶ 0:53:40Thank you. Good afternoon, Chairman Smith, Ranking Member Sanchez, and members of the committee. Thank you for the opportunity to testify today. My name is Dan Mau and I'm the director of government affairs for the Communications Workers of America. CWA believes that our trade policy should be structured to raise standards globally, to level the playing field for American workers, to raise standards for exploited workers everywhere, and to create more good union jobs here in the United States.
▶ 0:54:08That should hold just as true for agreements governing the technologies of the future as for any other agreement. CWA has deep experience combating multinational corporate efforts to pit workers in the service and technology sectors in the US against workers globally in a race to the bottom. Call center customer service representatives have repeatedly seen their jobs offshored generally to countries where workers are denied their fundamental human rights and are paid too little to make ends meet.
▶ 0:54:38For example, in the Philippines, workers have long faced repression, poverty level wages, and even state sanctioned violence. Filipino call center workers have engaged in inspiring efforts to organize and improve their jobs and even to help fight union busting against American call center workers. But they still face oppression and poverty level wages, which in turn puts downward pressure on American wages and working conditions.
▶ 0:55:05This dynamic makes call center jobs here far too precarious and large majorities of call center workers report fears of offshoring and high stress levels. It's also important to recognize that digital trade relies on and impacts the lives of a huge range of workers both here and globally who are all too often subject to exploitation.
▶ 0:55:26A new survey of American data raiders, factcheckers, analysts, and others at companies like Telus and the Hitachi subsidiary Global Logic found that a majority of workers had to work at least two jobs to make ends meet. Faced unclear evaluation metrics, inadequate training, intense employer pressure to handle violent and offensive content, and unsustainable time pressures.
▶ 0:55:50Meanwhile, many members of this committee worked in the past on teleperformances treatment of content moderation workers in low-income countries. Now, US workers at subsidiary language line solutions, which provides remote interpreting services, are fighting for their rights after facing poverty level wages, wage theft, and being prevented from taking bathroom or meal breaks.
▶ 0:56:15We've also seen an explosion in the use of digital workplace surveillance tools such as keystroke and camera monitoring, surveillance of worker social media and automated productivity metrics that create unsustainable workloads. While companies have increasingly shifted managerial duties to automated software, including reassigning work tasks, hiring, firing, and discipline.
▶ 0:56:37We've also seen massive growth in the gig economy where workers often lack meaningful information about task assignment and pay algorithms exposing workers to both discrimination and underpayment. As such, the rules of the road on these issues are vital for an enormous number of workers. I also want to talk briefly about the rollout of artificial intelligence more broadly.
▶ 0:57:00We've already seen the harms when artificial intelligence is used to surveil, manage, and replace workers, like AIdriven automated management systems that squeeze workers harder and harm customer service. Some groups of workers face the risk of significant job placement.
▶ 0:57:17We've also seen societal harm from large language models encouraging you users to take their own lives, disseminating fake news and images, and an ongoing situation where child sexual abuse material is being widely shared online and more. Yet, our federal government has almost no rules of the road on AI or on da d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d d da privacy with few exceptions.
▶ 0:57:40Even worse, the president issued an executive order last month attempting to block states from establishing rules governing AI and jeopardizing the successful roll out of broadband access to underserved areas in the process. I can recall no other situation where the federal government has tried to preempt state and local rules on a policy matter while itself having no rules in place on that policy. This failure of our domestic rules greatly impacts our digital trade policy.
▶ 0:58:08If we want trade policy that levels the playing field and raises standards on issues like AI or data privacy, how will we do that when the US is itself missing an action? I urge members of the committee to advocate for policies governing the digital economy that protect good jobs, worker and human rights, and transparent markets. Thank you again for the opportunity to testify today. I look forward to any questions that you may have.
▶ 0:58:34Thank you very much. Again, thank you for your testimony. Yeah, certainly uh in a a timeefficient manner as well. Appreciate that and I think the entire uh DAS does as well. We'll begin the question and answer session now. I have a couple brief questions. I want to start out um with Korea digital concerns. In November, the US and Korea released a joint fact sheet reaffirming the historic Korea strategic trade and investment deal.
▶ 0:59:02Among other things, Korea committed to ensure US companies are not discriminated against and do not face unnecessary digital trade barriers. Unfortunately, it's my observation that Korea continues to pursue legislative efforts explicitly targeting US companies. In the meantime, Korean regulators already seem to be aggressively targeting US technology leaders. One example would be Kong through discriminatory regulatory actions. Mr.
▶ 0:59:30Corey, could you discuss the outlook for US digital companies in Korea given the current political climate and how do we make sure the the joint statement provisions on digital trade are actually enforced?
▶ 0:59:42Great question, Chairman Smith. Korea is a a unique case in following some of the problematic policies we see in Europe in um seeking to adopt uh competition policies akin to the digital markets act. The problem there being is that US firms already have a long history of being targeted by U uh Korean competition authorities. I authored a report based on surveys with US firms for the National Bureau of Asian Research last year digging into the issue.
▶ 1:00:11And while these firms uh came from different sectors and had different experiences, they all had very common complaints as it relates to their sort of persistent um uh uh targeting by Korean competition authorities. uh to the point where it clearly rises above the threshold of being a trade issue and this is not a new issue in Korea and this is why the Trump administration uh is heading in the right direction has secured initial commitment for them to take steps on it uh given that back in 2019
▶ 1:00:42um the US administration used chorus to try and flag and address some of these issues that was unsuccessful in resolving it and so it's really incumbent upon ongoing negotiations with the Koreans and I know for a fact the Korean trade minister is in town this week to try and resolve this issue so that they can remove it.
▶ 1:01:00But in essence, what US firms have found is that they've been consistently aggressively targeted by Korean competition authorities and that the Korean system lacks due process and procedural safeguards to ensure that they're treated fairly during the course of these investigations. Sometimes which run backto back and sometimes can involve criminal investigations.
▶ 1:01:20And so with that, I think it's important that with the Trump administration, as they continue negotiation with Koreans, they secure the provisions to sort of lock this in and address this issue. Finally,
▶ 1:01:31thank you. I I appreciate that. Uh, moving forward here, I do have another question about IP protection. You know, one of the harmful trade policies I believe that the Biden administration pursued was its support of the trips waiver, which I would characterize as actually handing handing over hard one American intellectual property to our global rivals while doing little to improve global access to medicine.
▶ 1:01:56Certainly the vaccine the IP surrounding the the vaccine did not get the vaccine in arms actually and but clearly that trips waiver undermined our long-standing IP policies here in the US and I I think there's going to be a long-term impact to that. Mr. Yonu, what is your perspective on the trip's waiver for vaccines related to CO 19?
▶ 1:02:22And then looking forward, what specific trade policy actions do you believe we should uh pursue to protect and grow US leadership in the strategic domain of life-saving innovative medicines?
▶ 1:02:35Thank you, Chairman Smith. Um uh I agree with your characterization. the um the effort uh to wave IP rights um under the trips agreement during the COVID pandemic was was uh thoroughly misguided. One of the biggest problems was that there was no evidence. People went uh and policymakers made decisions u not based on studies or evidence.
▶ 1:03:02There was no evidence at the time and there isn't today that IP rights acted um uh to block access to the vaccines or any other technologies. As a matter of fact, almost all the studies show that robust intellectual property rights both domestically and internationally create more opportunity not just for the innovation itself, which it does of course, but also for trade and for the exchange um and commercialization of
▶ 1:03:32that innovation. So um uh so so the policy was put in place. It did not deliver a single additional vaccine to any patient and instead as you indicated, Mr. chairman. It's um uh created a negative climate for intellectual property which unfortunately I am afraid will um will harm the ability of our innovators and the investors in that innovation to create additional um uh technologies to solve the pandemics
▶ 1:04:03of the future. to address that and the second part of your question. Whatever we do um the policies that we uh enact in our free market economy, we must ensure that we have robust intellectual property rights.
▶ 1:04:20Having robust intellectual property rights here at home as well as demanding it from our trade partners number one incentivizes more innovation and investment in that innovation in order to create new technologies that save people's lives and improve the human condition. And number two, it protects that investment and that innovation from future attack including domestic markets.
▶ 1:04:48And finally and importantly for this committee and this hearing, it enables trade. When when a society operates and the economy operates under the rule of law, when intellectual property is respected, it encourages more companies to trade with each other and to provide additional access both domestically and international internationally to that to that innovation.
▶ 1:05:14Very well. Thank you very much. I now recognize Miss Sanchez for her Mr. Mau, how have recent developments in the digital economy affected workers?
▶ 1:05:28And I'm particularly interested in hearing you expand on some of the issues that you raised in your written testimony, including the difficult conditions that social media content moderators have working in East Africa and how Congress could think through a just transition to artificial intelligence that elevates workers rather than um damages them.
▶ 1:05:49Um yeah, thank you so much, Congresswoman, for the question. Uh let me start uh with AI. um as because as I mentioned before the US doesn't have any meaningful national policy on AI and I think that's a critical failure and I think to fix that we need workers impacted by the technology to guide the solutions for that and I mean that in two ways first I I would encourage members of Congress to uh listen to workers and their representatives um in formulating policy and I also mean that on
▶ 1:06:20an actual policy outcomes to make sure that some of what you're seeking uh is to empower power workers to make sure that workers have a voice on the job to make sure that workers are able to access data and see how it's impacting them.
▶ 1:06:33Um I can CWA has personal experience with this because we've seen for workers in many of the industries that we represent workers uh when things are done jointly in collaboration with companies where our members have a seat at the table uh that often goes very successfully and we're able to build more productive uh workplaces and have everyone have better jobs. It's quite the opposite. Uh when companies go it alone, we see workers sped up. Um we see often the spread of inaccurate data and conflicting instructions.
▶ 1:07:04So I would really uh urge Congress to put workers at the center of that policy. Um on the issue of content moderation, just briefly, um you're right, it's spawned between content moderation and um and uh data uh feeding data for AI models. There's a huge industry of workers often making as little as $1 a day who are facing having to uh see violent sexual and other content all day puts huge mental stress on them. So in our digital trade policy I think that should be a key consideration.
▶ 1:07:33Yeah. Thank you so much for your um your insight into that. Miss Brennan, as you noted in your testimony, in 2023, the US film, television, and streaming industry supported over two million jobs in the United States, amounting to about $229 billion in wages. I was concerned to hear that President Trump was planning on imposing film tariffs, which could harm this critically important American economic engine. I often tell people that our biggest export is our culture. It's our movies, our music.
▶ 1:08:03Um, while it's true that some film and TV production jobs are being lost to overseas markets, and that includes good paying union theatrical stage jobs in California, I don't happen to think that slapping tariffs on is going to be the right approach. In your opinion, would a federal tax incentive or other proposal be helpful to continue to grow the US film industry and address those concerns about
▶ 1:08:30Congresswoman, thank you for that question. And before I respond to your question, I did want to take this opportunity to thank you again for your ongoing leadership and really supporting the US film, television, and streaming industry. We confront ample barriers overseas and knowing that we have your back is is much appreciated on a federal film incentive 100%. Yes, it would make a meaningful difference to promoting production back in the United States.
▶ 1:08:57Um, as you know, the global production environment is highly competitive. For about 20 years, 70 countries or so have moved forward with their own production incentives and the US just hasn't been on hasn't been there. We don't have a federal incentive as you great state of California and other states have state level incentives, but is distinct and different from having a federal film incentive production incentive.
▶ 1:09:22And so yes, we do think that would make a meaningful difference in leveling the playing field and making the US more competitive. I should also note that um we work with a broad coalition of industry stakeholders who have endorsed a federal film production incentive and this includes all of our creative unions, the Teamsters, the Independent Film and Television Alliance, as well as the president's Hollywood ambassadors.
▶ 1:09:47We've all gotten behind the idea of a federal film incentive because we think it could make a meaningful difference in augmenting US competitiveness.
▶ 1:09:55I think it would be better than the tariffs. Mr. Mau, I'm going to squeeze in this last question. How have President Trump and Republican policies advanced by Congress in digital trade or any other realm affected your industry? Have they brought back jobs or improved working conditions for your members?
▶ 1:10:10Thanks, Congresswoman, for that question. I'd say the president's policies are simply not delivering for our members and their jobs. Um that's partly due to what the subject of the hearing today that there's a chaotic and unfocused trade policy that I don't think is built to deliver results but also uh due to other reasons like the passage of HR1 uh which incentivize offshoring cuts to job core and other training cuts to scientific research and the fact that we've undermined the rule of law and the reliability of our economic data.
▶ 1:10:40I thank you and I yield back. Thank you. Now recognize the chairman of the full committee, Mr. Smith.
▶ 1:10:46Thank you, Chairman Smith. Um, the Trump administration, in my opinion, has achieved major victories last year, and I don't think it's just in my opinion, I think it's facts. When both Canada and India agreed to remove digital service taxes that targeted US jobs, tech companies, and digital providers. So that alone is a huge accomplishment for workers in America.
▶ 1:11:14I welcome this course correction from the ineffective approach of the last administration who was completely out to lunch on all trade policies. President Trump has been proactive in defending American innovators and has taken a strong strong stance against trading partners that seek to [snorts] undermine American businesses.
▶ 1:11:39Sadly, other trading partners, including our allies like the European Union and Australia, have continued to pursue DSTs and other digital trade barriers, including those related to video streaming um services and artificial intelligence. Mr. Corey, my question is to you.
▶ 1:12:01How might Congress help strengthen the Trump administration's enforcement actions in this space beyond our continued support of the administration's use of exist existing section 301 investigations to combat DSTs and other discriminatory measures imposed by our trading partners against American innovators?
▶ 1:12:25Thank you for the question uh Representative Smith. I completely agree with you that uh the Trump administration's approach is a a welcome reversal from the last administration and that even um 12 13 months in we've shown some impressive wins around the world on a wide range of issues. Uh the key now I think for Congress and for the Trump administration is obviously building on that and locking them in.
▶ 1:12:51Um and in and I say that in that even in some of these early wins uh there are already troubling signs that some trading partners are walking back on the commitments they made. And not only that, for example, with the European Union, there have been several new initiatives that uh can be added to the list since they made their joint US EU uh framework agreement with the Trump administration mid last year.
▶ 1:13:15And so the challenge remains uh to keep them in line to ensure they live up to their commitments to make them enforceable. To your last point, I think it highlights the role of Congress and the role of the trade tools that the United States has at its disposal with 301's in cases where trading partners after the negotiations and and and uh uh sort of through the usual trade channels been unable to address them.
▶ 1:13:45and you elevate them and you put them on a platform to the same extent that you have with digital service taxes and that thereby um puts them in another level for addressing and I think we may eventually get there as it relates to some of the EU's sort of exanti digital regulations um that we've just both in Europe but also in Korea and elsewhere that sort of form their own distinct sort of category of trade barriers that need special
▶ 1:14:13Thank you. The the Biden administration made the unprecedented and misguided decision to wave IP protections for COVID 19 vaccines under the WTO agreement on trade related aspects of intellectual property rights known as TRIPS agreement.
▶ 1:14:32In contrast, the Trump has demanded fair treatment for American workers and businesses, including as it relates to protections for US IP right holders.
▶ 1:14:46High IP rules and standards foster the innovative spirit that drives America's techn technological leadership and a large part of our national economy with our IP innovators accounting for 41% of US GDP and some 63 million US jobs according to a 2022 report. Um Mr.
▶ 1:15:12Yonu to help provide a clearer understanding of what's been achieved and where we still need to focus our attention. What are the most impactful commitments on respecting American IP that the Trump administration has already secured from our trading partners? And and where do you see gaps that still need to be
▶ 1:15:39Uh thank you, Chairman Smith. I agree with your characterization. As I mentioned last time, the uh the decision by the prior administration to wave IP rights uh uh during the pandemic was misguided. Anytime IP rights is in our constitution, anytime that somebody thinks that they should be waved, it better be preceded by a thorough study and to determine what impact it might have on the economy, whether positive or negative.
▶ 1:16:10that uh that waiver was done. It was unprecedented and hopefully it will never be repeated again and it was done with no such study um uh of of of an impact. Um now um what can we do uh in the future that can further improve our standing around the world? Look, Mr. Chairman, the the the there is a global freewriting problem that's taking place with respect to American innovation.
▶ 1:16:36It comes um across industries from pharmaceuticals to uh standardsbased technologies like 5G and 6G to the movie industry and and other uh artistic uh endeavors. It's across the board and what's happening because other countries do not have equally robust intellectual property regimes. What's happening is that the cost of that creation and innovation is borne disproportionately by the American consumer.
▶ 1:17:07So the Trump administration is doing a great job uh focusing uh discussions with our trade partners to elevate the standards and raise the standards globally when it comes to IP. What I would love to see down the line is a robust model IP chapter that can be used in in negoti from negotiation to negotiation that has minimum standards.
▶ 1:17:33In addition, I think we should press our European allies to um to abandon their misguided uh recent general pharmaceutical legislation. Um that reduce reduces uh protections over there for intellectual property rights and uh as a result it will have a further detrimental effect on American um on American consumers.
▶ 1:18:00And we also need to press our um uh our neighbors to the north and the south in the US MCA renegotiation to increase their standards and abide by the agreements already made but also further equalize the playing field when it comes to IP. But importantly, Mr. Chairman, that we equalize them at a higher standard. We do not want a race to the
▶ 1:18:26Thank you, sir. I want to thank each one of the witnesses for taking time being here today and I want to thank you, Mr. Chairman, for hosting this hearing. I yield back.
▶ 1:18:36Thank you, Mr. Chairman. I now recognize Mr. Petta from California for 5 minutes.
▶ 1:18:40Thank you, Chairman Smith, and I agree with Chairman Smith in regards to uh your hosting uh this type of hearing. I I believe it's really helpful to hear more about the types of trade policies that can definitely support American innovation and technology and especially with our leadership in those areas.
▶ 1:19:00That said though, I do admit that I'm struck by how this administration's actions are undermining American global leadership across many sectors. Many of you have emphasized in your testimonies the importance of the United States rallying international consensus around emerging technology standards, intellectual property protections, and digital trade rules.
▶ 1:19:26However, I struggle to see how we can achieve that goal when our partners increasingly view the United States as unreliable and borderline capriccious, especially in our trade policies. For example, we're giving China one of the world's worst offenders when it comes to intellectual property vi violations, a more favorable tariff treatment than the EU. I believe this weakens our credibility and makes it even more difficult to rally partners around stronger standards.
▶ 1:19:57The administration's decision to block dues to international organizations like the WTO abdicates our leadership role. It undermines negotiators as they attempt to preserve critical frameworks that protect United States innovation like the e-commerce moratorum.
▶ 1:20:15At the same time, the president has put forward incoherent tariff policies that not only raise prices for American consumers, but these tariffs also sow distrust among our allies and signal a willingness to reneg on trade commitments. the trade frameworks that he's touting lack enforcement mechanisms and are already running into implementation challenges.
▶ 1:20:40So today I just want to focus a couple of questions on the impacts of the administration's policies on US techn technological leadership and explore some steps that we need to truly support innovation. Mr. Yanku, in your testimony, you mentioned that USMCA includes meaningful IP commitments, and I think you hit on that in your last few answers. And as a result, the USMCA review, I believe, and I'm sure you do too, is pretty significant coming up here this year.
▶ 1:21:08The administration has repeatedly floated the idea though of splitting USMCA into two separate bilateral agreements or worse, walking away from the agreement altogether. Could you expound on the IP commitments included in USMCA, why they're significant, but also what would happen if the United States just walked away from USMCA and how would that affect our ability to protect IP in North America?
▶ 1:21:37Uh, Congressman Petta, thank you for the question. Um, uh, so the USMCA does include a, uh, robust intellectual property chapter. um and um it is up for renegotiation. And one of the key things that is was negotiated last time but did not make it through the ratification process is the um increase of uh of of data protection uh regulatory data protection
▶ 1:22:07uh provided in Mexico and Canada to levels that uh at least approximate uh what we have here in the United States. Uh here in the United States for biologic drugs for example we have 12 years of uh data protection. Um Canada has eight, Mexico uh has even less than that.
▶ 1:22:27And um the the uh prior round of negotiations uh it was agreed to raise it uh raise theirs to 10, but that didn't make it through ratification. And um um hopefully we can go back uh go back to that.
▶ 1:22:44And uh frankly what we really in addition to that what we need to do is to hold their feet to the agreements that they have um already made um and that is especially with respect to Mexico and its treatment um of counterfeit goods um and and digital rights.
▶ 1:23:03So obviously it's beneficial that we stay in the the agreement. Correct. It's beneficial that we maintain a robust IP uh agreement with both Mexico and
▶ 1:23:12Okay. Thank you. Mr. Corey, I want to ask you my last question. Uh you've probably heard the EU recently signed a free trade agreement with Mercer nations. They also are negotiating free trade agreement with India. Given the tensions between the Trump administration and the EU and the fact that we're not pursuing these types of comprehensive free trade deals, I didn't say frameworks, deals, which is a big difference as you know. Uh I'm concerned that the US is being cut out of setting trade standards.
▶ 1:23:40Can you um you note that the EU has many digital barriers. What does the EU's leadership on trade mean for digital trade standards? And should we take this as a call to step forward and engage? Most definitely it's a call to step forward back into the game of setting very detailed prescriptive uh binding trade law uh in the with the the gradual slide in in relevance of the WTO whatever you what might what make of that it's incumbent
▶ 1:24:10upon the trading partners to work with other like-minded partners to set the rules that work for them and in the case of the EU they're going to do uh that in a way that uh reflects their domestic uh digital And as we're sort of discussing here today, that's often to the detriment of US firms. And so the US's reaction has to be to a similar level to a similar extent to a similar level of detail to ensure that um the EU's advancing trade agenda does not come at the cost of US
▶ 1:24:40Outstanding. Thanks to all of the witnesses. Thank you, Mr. Smith. Chairman Smith reel back.
▶ 1:24:44Thank you. And I recognize Mr. Hood from Illinois for five minutes.
▶ 1:24:48Thank you, Mr. Chairman. I want to thank the panel for your testimony here today and uh on this important topic. Uh the title of today's hearing is maintaining American innovation and technology leadership and I think it's worth reminding folks when we think about uh US global dominance in technology and digital trade.
▶ 1:25:09Um a statistic that I think is um worth mentioning is on its own the US digital economy would would be the world's eighth largest economy uh surpassing uh countries like Canada and Russia uh just on digital trade and it continues to grow and I would argue that why is that um our free market system that is predicated on good tax policy has incentivized innovation uh and entrepreneurship
▶ 1:25:40and has put us in the position we are. And we we should constantly think about that as we uh look at policy here that affects the free market system and taxes moving forward. And I think if you look at the one big beautiful bill particularly what we did on bonus depreciation R&D tax credit 199A and many others on creating that uh roadmap ahead of predictability and certainty for short and long-term investments.
▶ 1:26:08Uh that that helps put us in this global dominance position we're in today. Um, I also happen to be the co-chair of the US Digital Trade Caucus with Congresswoman Del Benny. And I can tell you that digital trade touches um, some people think these are um, you know, companies on the east and west coast, but I think about my district in middle America.
▶ 1:26:30It affects my manufacturers, my farmers, my large and small businesses and is fundamental to the s success of so many industries. While the US has been the driving force in setting fair and effective digital trade rules, other countries, and I would highlight in particular China, but there are others, are continuing to advance digital trade policies that are in direct contradiction to our American values and I would argue the free market system.
▶ 1:26:58We need to be prepared to use the necessary tools to enforce current trade rules and stand up against unreasonable and discriminatory trade I believe we need to accelerate pressure and be more aggressive, working with our like-minded partners and allies to build on the progress made during President Trump's first administration and the current administration.
▶ 1:27:22That includes promoting the robust standards set in the digital trade chapter of USMCA, which is in my view the gold standard for future trade agreements. As we look at digital, from digital regulations and taxations to quantum and AI, US leadership in digital trade is critical to protecting American innovation, setting uh predictable rules of the road, and encouraging a robust market in digital trade. Um, Mr. Yangu, I have a question for you.
▶ 1:27:50Um, beyond serving on the ways and means committee, I also serve on our intelligence committee and our select committee on China. And as we look at the strategic competition against China, um we have taken uh initiatives and measures in this Congress and through the administration when it comes to Huawei, uh obviously Huawei is a Chinese technology company and is subject to widespread sanctions by the US um but has unfettered access to the US patent system.
▶ 1:28:20Each year it's one of the recip one of the top recipients of US patents. Will the changes you are proposing in the US patent system make it easier for companies like Huawei to harass American
▶ 1:28:35Uh uh no I don't think so. Uh Congressman um I think what's it's really important for uh the US patent system to be uh generally non-discriminatory when uh it comes to the origin country of origin of the applicant. What's what's important is what is the innovation and then of course we have to have a robust enforcement system that is well balanced.
▶ 1:29:00In other words, the patent owners whoever they are have access to the US courts which are independent and fair and transparent. Um but of course to police for potential abuses uh of the system and if we see abuses in the system we really need uh need to correct them and you know um uh litigation patent litigation uh for example that deals with a lot of technology uh a lot of it proprietary technology needs to be carefully managed by the courts and usually
▶ 1:29:30it is um uh with protective orders to ensure that uh there is uh no leakage of um of of of the confidential information and the like. But those are process questions that are generally addressed by the courts and I think uh they usually uh do a good job when it comes to that.
▶ 1:29:49Uh Mr. Chairman, if I could submit uh one um letter for the record. Uh this is from the National Taxpayers Union titled US trade policy should reduce international barriers, protect US companies from digital service taxes and I ask unanimous cons unanimous consent to submit this for the record um here
▶ 1:30:11Without objection, so ordered.
▶ 1:30:12Thank you. I yield back.
▶ 1:30:14Thank you. I now recognize Miss Delen for five minutes.
▶ 1:30:18Thank you, Mr. Chairman, and thank you to all the witnesses for your time joining us today. Um, American digital services are a corn cornerstone of our economy and a critical driver of American jobs, accounting for over 28 million jobs in 2024. Digital services are a critical resource for American families and small businesses to help keep costs down.
▶ 1:30:40But our leadership in this sector is increasingly threatened by discriminatory regulations abroad that function as protectionist trade barriers against US companies. Trump has talked a lot about digital trade, but the kind of quote unquote deals he's negotiated have no enforcement tools. For example, the administration's trade deal with South Korea includes language that should protect US companies from discriminatory digital practices and provide them with fair treatment in South Korea's legal system.
▶ 1:31:10However, I'm hearing from companies in my home state of Washington like Kong that Korean regulators are already violating these commitments. The administration's chaotic tariffs and closed-d dooror negotiations are failing to deliver for American businesses and for workers. And what we need is a congressionally led effort to set the digital trade rules that safeguard privacy, support innovation, and protect our companies operating abroad. Uh Mr.
▶ 1:31:40Corey uh you have written extensively about business conditions in South Korea. Do you think the treatment of American companies operating in South Korea has been consistent with the commitments made in the administration's uh deal? And um what further tools do you think we need to address these concerns with South Korea?
▶ 1:32:00Thank you for the question. Uh in short, I don't think American firms have been treated that the treatment of American firms has not changed thus far. Um and that also is a carryover from past administrations in highlighting that um their unfair treatment under Korean competition authorities has been there for some time and has uh received high level attention under chorus back in 2019 still to no effect.
▶ 1:32:27And so the challenge as you rightly highlight is to take what Korea has made initially um to ensure that US firms are treated fairly and turning that into a very detailed enforcable regime so that US firms when they're operating in Korea know that they will be treated fairly. And the key thing I heard from them when talking to them uh as a part of this report last year was due process and procedural saf procedural fairness safeguards.
▶ 1:32:56At the moment, they just don't have those protections whereby they feel constantly harassed from Korean competition authorities. They have no mechanism to defend themselves from these types of investigations. And further to to to Chairman Smith's question is that's what gives them so much concern about new legislative proposals that if they're already having such a hard time now under existing legislation, how much worse could it get if there's new platform regulation which is in part inspired by EU
▶ 1:33:26DMA like regimes?
▶ 1:33:28Yeah. Um, so speaking of the digital markets act um, from the EU, another prime example of rules that really are designed to apply predominantly to US companies and while sparing their domestic and or even big Chinese competitors. Um, Mr. Corey, again, your testimony highlights how the EU's digital market acts imposes these significant compliance burdens that target American companies.
▶ 1:33:53I wondered if you can elaborate on how these regulatory barriers directly impact American jobs and the affordability of digital services for US consumers. And then in your view, what is the appropriate role for Congress in ensuring foreign companies stop discriminating against US companies?
▶ 1:34:12Thanks. I think starting with the latter question before getting to the first, I think back to my prior answer. I think as much as there's been a special 301 on DSTs, I think we uh Congress could consider putting these types of Exante regulations in their own special bucket in a with a specific investigation in the same manner in part because they represent a real uh non-tariff barrier to trade and they're contagious in terms of where we're seeing them pop up in Korea, Japan,
▶ 1:34:42Thailand, and elsewhere. And so I think they deserve special attention. But to your earlier point, uh these regimes um in how they affect the product and service designs means that how US firms set up their systems are continuously being changed jurisdiction by jurisdiction. This is a highly complicated uncertain regime to operate in and they are coming under a regime where it's not that they're being asked to uh address a specific activity or a harm.
▶ 1:35:12it's been to redesign their products to fit a certain outcome and that outcome is set by the enforcer and the the that that outcome constantly changes and so it creates uncertainty but long story short what it means is that US firms are increasingly dedicating more and more engineering and legal and compliance resources to uh abiding by these regimes instead of dedicating it to innovation and competition and that's the long and short of it and if these these rules
▶ 1:35:42are allowed to spread even further, the challenge facing these US firms and their US workers involved in this will only grow.
▶ 1:35:49Thank you. Um I yield back, Mr.
▶ 1:35:52Thank you. And I recognize from Texas, Mr. Arrington for five minutes.
▶ 1:35:56Thank you, Mr. Chairman. Uh panelist, we appreciate your time and insights. Uh it's amazing to see the contrast in policies and results between the two uh administrations. While we have agreement on some things, fundamentally we believe in less uh government intervention, tax and regulatory burden where it's unnecessary and unduly burdensome.
▶ 1:36:25Uh we believe in work incentives for able-bodied uh folk. We also um believe in that fair trade is the precondition for free trade. To me, it's the only way to look at it.
▶ 1:36:42I think most people agree with that, except when they want to disagree about the style and strategy of the president who's actually been effective in achieving the outcomes of a level playing field and access to our producers and manufacturers. I mean, it's one of those deals where you say, I can't argue with the with the results and we could all armchair quarterback how we do it. The fact is no one's done it.
▶ 1:37:10Not like Republicans or Democrats in recent Quite frankly, it's mostly because they don't have the political will to resist the various special interest pressure that is applied to every politician in this town as it relates to uh what is necessary to negotiate from strength to get us to this place.
▶ 1:37:37Now, a lot more work to be done, but um one thing of the many that was levied as a criticism against President Trump on account of his reciprocal trade policy was that it would be inflationary.
▶ 1:37:53Today we got another uh consumer price index report and for another quarter um uh we or another month rather we've seen our country's uh inflation exceed expectation. Core inflation's at 26. It continues to stay steady. It obviously lower than the uh average of about four and a half percent of the four years of President Biden.
▶ 1:38:21uh things are cooling off and things seem steady. Why did even Republican or conservative free market economist get that wrong? I mean, Chairman Pal and the Federal Reserve Board cut Fed funds rates and they said, I think Jerome Pal's words, Chairman Pal said, you know, we will see whatever modest disruption that it has some inflationary effects dissipate
▶ 1:38:52in the first quarter and and and effectively we will be on a much better glide pla path and our growth rate is 4.3 and 3.8 and eight respectively the last two quarters. So where was the boogeyman of inflation in that? Why was it missed? Uh and I open it up to to anybody, but I'll start with you Mr. Mr. Yonu. Uh well uh thank you Mr.
▶ 1:39:22uh Congressman. Um uh that's uh a bit far a field from uh my IP expertise, but um I will just say that um as a general principle, the Trump administration has uh done uh a fabulous job um uh strengthening American intellectual property uh provisions here at home.
▶ 1:39:42um first and foremost with uh director squires at the US uh PTO uh uh and through trade agreements and uh uh asking our trade partners to raise uh raise their standards.
▶ 1:39:56One way to think about it, at least from my intellectual property uh lens, US intellectual property lens is that um uh American innovation has to be uh compensated and incentivized and people have to make an investment and recoup that investment somehow. And if we have weak intellectual property laws then a lot of that will be borne by the American consumer.
▶ 1:40:23If we raise the global uh standards and we reduce the global free writing of American innovation, prices across the board in the United States for that innovation will come down. Let me I've got 18 seconds left. Um I agree with you. I agree about the model IP chapter. Stronger protections abroad going up to our standards, not down to others. Here's a fundamental philosophical question for me.
▶ 1:40:52What what's the balance between a nation's sovereign choice on tax and regulatory policies? Because I would guard ours pretty versus what we think is fairness as it relates to taxing and regulating our products and services. That that is a philosophical question.
▶ 1:41:14At what point is it unfair for somebody to say you're in our market you're have our citizens as your customers and we want some of that revenue or we want to regulate the activities online is it if they apply that to everybody in their home state I'm just saying that is a central question that I tend to not get a clear definitive answer on on either side.
▶ 1:41:40So I'll leave that with you all if somebody could address that at some point in this and and thanks for the indulgence.
▶ 1:41:47Thank you. I recognize Mr. Byer from Virginia for five minutes.
▶ 1:41:50Mr. Chairman, thank you very much. And again, thank you. Uh wonderful education on all these things. Mr. Mau, thank you. Especially President Trump has ratcheted up the effective tariff rate. Obviously, it's the highest it's been since the 1930s. And this is supposedly in an effort to decrease outshoring and offshoring and increase employment and wages here at home. We've had manufacturing jobs fall for eight straight months. We be and we've seen unemployment ratchet up. I think it's 4.7 right now.
▶ 1:42:21How as a representative of Communication Workers of America, how are your members seeing this and have they seen any benefit to the president's trade policy so far?
▶ 1:42:30Yeah, thanks so much Congressman for that question. And I just say this, I think the reality is that Trump's trade policies have not delivered for American workers. And that's really a shame because the trade enforcement policies he's using are super important in terms of being able to protect American jobs and workers and production and industries from unfair practices by foreign governments, by foreign companies. Um, but I think he's fallen down the job and identify, I think, four reasons for that.
▶ 1:42:57One, Trump's tariffs are too chaotic to spur domestic investment. when tariffs are 10% one day, 126% the next, and 18% a week later, no company is going to build a factory off of that unpredictability. Two, the administration hasn't coordinated with allies at all. And that's really important because it means that if you're in a high tariff country, you can send something on to a lower tariff country, slap a sticker on it, and send it on to the US state at the lower rate.
▶ 1:43:26And that sort of loophole only exists because of that lack of coordination and work with our allies. Three, the Trump administration has gutted global worker rights enforcement. I'm glad that that um Ambassador Greer has continued utilizing the rapid response mechanism, but with uh the International Labor Affairs Bureau having been decimated, our capacity to help on the ground to make sure that workers aren't being exploited, to make sure that they're being paid fairly so that it helps level the playing field for
▶ 1:43:57American workers goes down. And then lastly, I just say number four, in many cases, I don't think President Trump is even trying to bring back American jobs. Instead, he's doing things either to reward or punish countries based on if he gets along with their leader or to just help enrich pharmaceutical or big tech companies. And I'll give you an example of uh in many cases it's been reported they've been pursuing more licenses for Starlink.
▶ 1:44:22And is more profits for a multi-billionaire who right now is actively enabling the spread of child sexual abuse material on his platform a good goal of government policy. Like I don't think it is. And so I think that's the problem that he's he's just not getting the job done. In some cases he's not trying.
▶ 1:44:39Thank you very much Mr. Corey. In your writt testimony, you talked about the importance of the US leading the effort on the permanent extension of the WTO moratorum on on customs duties on e-commerce. And you also expressed support for their provisions in their joint statement initiative on e-commerce about data flows, data localization, transfer source code. I'm a big supporter of WTO here.
▶ 1:45:03um it's had a lot of problem with the appellet body and and the unilateralism, but how would you characterize this administration's approach to David? What should they be doing on the in the runup to the ministerial coming in March?
▶ 1:45:18I completely agree with you and uh a fun fact is that even though the Trump administration has many concerns with how the WTO operates as you mentioned with the appellet body, it has uh referenced WTO initiatives like the moratorum uh the joint statement initiative on domestic services regulations in several of the trade uh frameworks and agreements it's announced.
▶ 1:45:43And so it's been reinforcing parts of what it likes about the WTO, which is good because then it shows nuance and how it uh understands and appreciates what the WTO is trying to do. I'm I'm thankful and I've heard that the USR is far more proactively leading the effort to uh not only renew but hopefully make permanent the moratorum at the upcoming ministerial conference in Cameroon in March.
▶ 1:46:08That is a noted change from a few years ago and that um that they've been working with allies who obviously share the same goal in having this uh the moratorium made permanent. Um most critically within the context of its bilateral deals, it secured a commitment from Indonesia to uh abide by the moratorum and if that alone could change the dynamics um they need to lock them into that.
▶ 1:46:35More broadly, it would be obviously great if the United States rejoined the JSI e-commerce moratorum because it addresses many of the same concerns. That may not happen, but it can at least implicitly support uh its ongoing efforts to make that permanent at the WTO as well.
▶ 1:46:51Great. Thank you very much, Mr. Chairman. I yield back.
▶ 1:46:54Thank you. And I recognize Mrs. Miller from West Virginia for five minutes. Thank you, Chairman Smith, for having the hearing today and for your leadership in the digital trade issues. And I also want to thank all you all for being here today. President Trump is making historic strides to ensure that American dominance in the digital trade sector.
▶ 1:47:16For the first time ever, countries are specifically agreeing not to discriminate against the United States tech firms in the bilateral trade deals that are negotiated by President Trump. This is a welcome change. After the Biden administration abandoned the digital trade sector, which then opened the door for other nations to impose discriminatory taxes and regulations upon American digital trade firms.
▶ 1:47:44It's duly important for Congress that they ensure that these agreements are enforced as other countries continue with attempts to stifle the free flow of digital trade. This is most apparent in South Korea, where the National Assembly continues to advance legislation that targets US companies, including a recently passed censorship bill and recently launched a political witch hunt against two American executives.
▶ 1:48:16Mr. Corey, do you believe that the recent actions taken by Korea is meant to squeeze American firms out of the Korean market? and does it raise national security concerns? How should Congress address this or these issues?
▶ 1:48:32Thank you, Congresswoman Miller, and I appreciate your leadership on on these issues as it relates to digital trade in Korea. Korea should be one of the United States's closest digital trade allies. Yet, it has a frustrating list of uh issues that make life hard for US firms, and uh it continues to add to them.
▶ 1:48:52As you mentioned, there's a a network bill that they've proposed uh which may be problematic uh for US firms and there's a proposed platform fairness bill as well, which also could make things worse as it relates to what the KFTC, the Korean uh Fair Trade Commission does as it relates to US firms.
▶ 1:49:10And so there's there's ongoing frustration that things in Korea don't get easier and better despite Chorus's long existence and the the range of rules within it and the pressure born there.
▶ 1:49:24Um, and so I think it's a matter of keeping obviously a close eye on it and keeping pressure on the administration to turn the initial commitments they got with Korea into real tangible enforcable uh rules there and ensuring that like the EU they don't add new barriers to it after the fact.
▶ 1:49:43And so it's going to be ongoing scrutiny which is another key role for Congress to ensure that trading partners don't try and add to it once they've got a deal done and and they think the limelight moves on. Well, I'm concerned about the European Union and that they are not upholding their commitment to not discriminate against the US firms despite agreeing to address unjust unjustified digital trade barriers in the US EU agreement.
▶ 1:50:14The EU has taken discriminatory actions that are estimated to cost the United States companies up to 97.6 6 billion dollar annually in compliance costs, revenue losses, and financial penalties. What's even more troubling is that this is not occurring in a vacuum. The EU regulators appear to be actively campaigning globally for our trading partners to replicate their approach.
▶ 1:50:42Countries like Brazil, Australia, and the UK have all adopted or are actively considering copycat versions of the digital market act and other EU policies. Mr.
▶ 1:50:54Corey, other than the financial burden that these actions put on the United States companies, how do they threaten the United States innovation and leadership in the digital The contagion of these DMA style statusbased uh exante regulations is that it will inevitably lead the US's leading digital firms mostly American to essentially redesign products and services jurisdiction by jurisdiction.
▶ 1:51:22insteading instead of setting the system in place once and then working around the edges there the DMA regime systems require them to re-engineer in some way or another in jurisdiction after jurisdiction and so that means that their it makes obviously their operations much harder. It makes it much harder for them to develop new products and roll them out. And so you'll see product delays, you'll see less innovation, you'll see and by byproduct of that, less trade.
▶ 1:51:50And that's just with what we're seeing at the moment. And so if the contagion spreads to more jurisdictions, the operational burden this puts on how they engineer their systems and how they come up with new innovations and how they deploy those innovations only gets harder. Lastly, but not least, what it's also will lead to is US firms facing a growing range of punitive investigations and increasingly large fines.
▶ 1:52:16It's been bad enough that we see this in Europe, but if this starts happening to a similar degree in multiple markets, then it becomes really
▶ 1:52:23I don't like it. With that, I yield
▶ 1:52:25Thank you. And I recognize for five minutes Miss Su from Alabama.
▶ 1:52:30Thank you, Mr. Chairman, and good afternoon. And I want to thank our witnesses for their testimony today. I believe that the United States needs to lead in advocating and advancing strong intellectual property protections and of course that Congress has an essential role to play in that effort. IP intensive sectors drive exports, grow GDP, create high-paying jobs and increases America's global competitiveness.
▶ 1:52:56Therefore, Congress needs to work to improve US patent law while also advocating uh for stronger IP provisions in trade agreements. I am a strong advocate for enforcement. Our trade provisions are only effective if we are willing and able to effectively enforce them. I agree with many of the witnesses that we must support the ITC while also enforcing IP commitments uh in our trade deals like USMCA.
▶ 1:53:25Furthermore, we must continue to aggressively push back against discriminatory digital service taxes. However, we must never forget that our IP and digital policy must benefit American workers and prioritize labor standards. The American workforce is beginning to navigate the new world of AI, and in many ways, the workforce are anxious about the future of work.
▶ 1:53:49Uh, it's more important than ever that we get our digital trade policies right, including AI deployment, data privacy, and the regulation of unsafe content for our children. Moreover, we can't forget that the data centers created to support AI expansions have a very real impact on our communities and our environment.
▶ 1:54:10Many of my constituents in Bessmer, Alabama are voicing their deep concern about a proposed 14.5 billion dollar 700 acre data center that will consume up to 2 million gallons of water per day and consume 90 times the amount of electricity used by all the residents in that small city.
▶ 1:54:32data center uh developers came to our communities uh like Bessmer promising massive tax revenue but they uh must remain and be very transparent and responsive to the community's very real concerns. Our policy decisions on AI, digital trade and IP will impact every American. So we need to get it right. My first question goes to you Mr. Corey. Um as you know we are currently reviewing the US MCA trade agreement.
▶ 1:55:00uh what do you think um what do you think about the current digital trade rules that are in the US MCA and are there improvements that we can make and advocate uh with this administration on?
▶ 1:55:11Thank you Congresswoman Sarah. I appreciate your question. Still to me the USMCA's digital trade chapter are the gold standard in terms of clear detailed language about what's allowed and what's not allowed. uh as it relates to the movement crossber movement of data uh prohibiting data localization where countries force data to uh force companies to only store data within their country as it relates to financial data payments data uh it has many good provisions and it led to
▶ 1:55:42the removal of data localization policies in Canada. Unfortunately, Mexico still hasn't lived up to all of its commitments as it relates to some data localization measures they have in payments and and financial services. But that said, it is still the gold standard. I would love if the administration adopted many of the USMCA digital trade provisions into its other negotiations. Um, these provisions are well understood by our trading partners. They reflect best practice in many agreements around the world.
▶ 1:56:11where perhaps it could be improved is in addressing concerns around national security and data around cloud access uh bringing financial services issues within to the main digital trade chapter. Um obviously we could have a discussion around the role of data and AI within that because that's been a relatively new development but all in all the USMCA does a pretty good job and it would be great if it remains in
▶ 1:56:39Um Mr. Meer, um, I was wondering if you could expand on your testimony related to AI and how AI deployment could impact the workforce. Uh, what AI policies or regulations would you recommend Congress consider to preserve jobs and job
▶ 1:56:55Yeah, thank you so much for the question, Congresswoman. I think that's a great question. I I think there's uh a few big risks uh uh presented to workers by AI. One of which is job displacement which is sort of the obvious one where if people are uh AI is doing the job instead of you but there's also a a significant risk [clears throat] uh when it about job lowering job quality right where uh AI is dictating terms AI is sometimes doing taking on a bunch of managerial functions that put more
▶ 1:57:25and more pressure and we've seen this consistently with a lot how many companies in many different industries have deployed AI is to put more more and more pressure to get more and more work product out of workers in the same for the same amount of money in the same amount of time.
▶ 1:57:39So I think those are big things and I think um I so I would say number one I I think there's just a huge issue in terms of um algorithmic management that needs to get that needs to get handled because um that in particular and I highlight that issue because um that algorithm management can lead to discrimination on the basis of race or gender or age and also by the way in in on the basis of support for unions and things like that right and so so I think that there's some
▶ 1:58:09uh interesting legislation Congresswoman Bonamichi has, Senator Marque has that I think is worth uh the the Congress exploring. Thanks.
▶ 1:58:17Thank you so much. Thanks.
▶ 1:58:19Thank you. I'll now recognize Mr. Schmucker from Pennsylvania for 5
▶ 1:58:24Thank you, Mr. Chairman, for uh holding this hearing today. And I'd like to thank each of our witnesses for uh being here with us. Uh and I'm really it's an important topic. Um and it's why I'm grateful we're holding the hearing. Um, we need to continue to maintain American innovation and technology leadership uh drives our uh economy drives our culture.
▶ 1:58:46And I've seen firsthand uh the amazing results of this innovation in my own district from life sciences to software development to uh AI infrastructure that we're seeing being built out now. Uh so it's it's critical that we defend our innovators and creators from unfair practices and regulations abroad. But of course, as we're discussing today, it's also has become more challenging.
▶ 1:59:09Foreign companies are increasingly looking to American foreign countries are increasingly looking to American companies for new revenue streams through discriminary taxes. And I share the concern that's been brought up u before about Canada's online streaming act, which um of course is a law that effectively taxes American streaming services to fund Canadian content.
▶ 1:59:34uh which of course undermines fair competition and likely um goes against the spirit of our free trade agreement, the USMCA. Uh and so I've led uh bipartisan letters with uh my colleagues. Um Representative Sanchez has co-led that letter with me.
▶ 1:59:52Um, and we've sent those letters to both US TR and to the Canadian government asking that the online streaming act be rescended in order to continue our trade negotiations with Canada in good faith. Um, Miss Brennan, we've also seen curious uh how concerned you are about um some of the new proposed local content mandates such as um in Australia and Israel.
▶ 2:00:18Uh are you concerned about Thank you, Congressman, for the question. And yes, I brought your letter and I'm just we're so grateful at the MPA and with our member companies for your leadership and addressing um these unfair trade practices. And yes, we are very concerned about what's happening in Australia. You know, we've we consulted with the Australian government for many years um about how that market is operating and there's no market failure to justify a local content investment obligation.
▶ 2:00:48And frankly, the law discriminates against US companies in a way that violates the FTA. Um, with regard to Israel, Israel is also considering a local content um, investment obligation. Uh, but we are grateful for this administration's efforts to engage the Israeli government. And last, we understood um, the that provision of the legislation is subject to consultation with the US administration.
▶ 2:01:15So, I'm hopeful with um Ambassador Huckabe's continued engagement, Ambassador Greer's leadership that Israel will decide that it does not need to impose a local content investment obligation to support its creative industries.
▶ 2:01:28Just for the sake of anyone who may be listening, could you explain just a little bit more about what that uh what the um local content mandate uh is and what that means, what that could mean if unchallenged for
▶ 2:01:42Yeah. uh our film US film uh TV and music exports.
▶ 2:01:46Yeah, thank you. Um so these like kind of local content investment obligations uh basically say to a streaming service if you want to offer your service in this market you have to invest a certain amount of your revenues and the production of local content. Oftentimes these kind of local content investment mandates are also coupled with very restrictive policies around the nationality of uh key creative roles.
▶ 2:02:12So oftentimes they are inherently discriminated discriminatory towards the US workforce. They also inject government into some of the creative decision-making that goes into what kind of content a local audience might be interested in seeing. And then finally obviously is the economic impact of such policies.
▶ 2:02:30I mean the estimates are um I think if the Canadian regulator for instance were to move forward with um its determination that it may impose an investment obligation of five to 30% that could cost US streaming companies $6 billion annually. So there is a real economic impact in these policies as
▶ 2:02:51Yeah. Could have a really huge impact on on the industry
▶ 2:02:56100%. And also I should say in addition to the countries that you mentioned the the thing that's so worrisome to us is that other countries are watching what's happening and we are seeing these things um popping up in different markets around the world and it's a little bit of a whack-a-ole. So we think now is the opportunity to send a strong signal on Canada and Australia and hopefully that will have an impact in some of these other markets considering
▶ 2:03:19Yeah. So, we've sent, as I mentioned, sent letters and we're taking a stand. But what else do you suggest uh that we can do? What what can Congress do to push back uh on those efforts in these
▶ 2:03:31I think that your ongoing engagement with the governments of Canada and Australia and other countries that are coming in to express that this is a bipartisan concern and that the US expects our trading partners to uphold their trade obligations to the United States is really critical. And as I stated in my introductory remarks, we would welcome a section 301 investigation into Canada and Australia's investment obligations.
▶ 2:03:54Thank you very much.
▶ 2:03:56Thank you. I now recognize Mr. Schneider for 5 minutes from Illinois.
▶ 2:04:01Thank you, Mr. Chairman, and I want to thank the witnesses for sharing your perspectives today. I want to start by noting the title of today's hearing, maintaining American innovation in technology. Why is that important? Simply put, our historical leadership in in innovation and technological advancements has been the engine that has created the largest richest economy in the world. We need to ensure that the United States remains the best place to innovate and to commercialize the next break breakthroughs that will define the future.
▶ 2:04:29And what has been the cornerstone of our leadership? First, it's the ingenuity and brilliance of our people. whether they were born and educated here or immigrated here, attracted by the boundless opportunities our country has historically offered. But just as important has been our laws and legal system, our trade policies that open markets for companies and protect our companies from unfair practices that have allowed innovators to thrive and prosper and have protected the in intellectual property that they have created.
▶ 2:04:56Now, we could have an entire hearing on this administration's damaging policies, especially the diminishing of our country's investment in scientific research. Think NIH, and the misguided attacks on our nation's most prestigious academic institutions. Instead of inviting and welcoming the world world's brightest minds and greatest innovators, we're chasing them away. This hearing, however, is focused on the very important issues of the digital economy.
▶ 2:05:21data sharing and the digital economy have drastically changed how companies do business around the world and have highlighted the need for US leadership in this space. Like many of my colleagues, I was critical of the US. Um I was critical that the US must have a seat at the table when writing the rules of the road for digital trade, especially as countries like Canada and the European Union, Korea, and Australia use taxes on digital goods and services to unfairly target American companies.
▶ 2:05:47It's critical that digital services remain part of the trade policy convers conversation especially as we begin the six-year review of the US Mexico Canada agreement. The USMCA outlines key principles in the digital trade chapter that have been foundational to US economic leadership, supply chain resilience, innovation and technological competitiveness.
▶ 2:06:07Our digital trade policy must keep up with the advances in technology to protect US competitiveness across the manufacturing, pharmaceutical, and entertainment sectors while ensuring that American companies can innovate and retain ownership of their own intellectual property. Uh so my first question, Mr. Corey, you've written about the economic costs of data localization and other digital trade barriers. Based on that research, what are the most significant risks that these policies pose to US innovation and competitiveness?
▶ 2:06:37particularly for sectors like pharmaceuticals, manufacturing and
▶ 2:06:41Thank you for the question. Uh digital protectionism acts like a behind the border tariff on business operations and not just on tech. That's the reality we all face now. Whether it's agriculture, services, banking, uh manufacturing, we all increasingly depend on digital operations that when we turn it on, we expect it to operate seamlessly.
▶ 2:07:03The fact of the matter is is with the growing range of digital trade barriers around the world, it doesn't quite operate seamlessly anymore and more and more firms uh and especially in life science face uh jurisdiction byjurisdiction barriers. Case in point, many countries have data localization for health and genomic data.
▶ 2:07:22So, the ability of life science firms to uh uh undertake um cross-country um um uh pilot studies, why is it the phrase it the um med medical studies um is inhibited by their inability to transfer data across borders and that's obviously uh at the heart of what they have to uh what they need to do to come up with new drugs and medical treatments. Manufacturing is the same.
▶ 2:07:48They depend on logistics and and production software with supply chains around the world to know exactly what's going on when and why. In the face of growing trade barriers, that gets more costly and complicated. And the smaller the firm involved in this, the higher those costs and the higher that complic complexity because they don't have the resources to deal with it. So, um the the impact of these types of restrictions spread to every sector and to every size firm.
▶ 2:08:16I have uh four more equally robust questions and I'm looking at the time. So, Mr. Query, I think I'm going to pick up on on what you said um to focus a second, especially with the idea of uh life sciences firms using crossber data and I'll overlay that with artificial intelligence because the the marriage of that data uh decades of information about how molecules work, how about patients respond and the ability to use AI offers the prospect of finding cures for some of the diseases that
▶ 2:08:46are the scourge of humanity. whether it's diseases that are affecting developing countries or cancers and other diseases that affect everyone everywhere all around us and that's why as we go to the MCA as we go to the next round and looking at things it's so important that we maintain a focus I'll associate myself with the remarks my colleagues in particular in particular Mr. Lehood who talked about the gold standard that the USMCA was the gold standard.
▶ 2:09:12Let's make sure that we're not walking away from the successes we've had, but we're building on those successes, making them stronger, making them better, fix what's not working and what can't be fixed, finding new ways to improve and move forward. And I thank you for the extra few seconds, Mr. Chairman. I yield back.
▶ 2:09:27Thank you. Pursuant to committee practice, we will now proceed with two to one questioning. And I recognize the gentleman from Utah, Mr. Moore, for five
▶ 2:09:36Thank you, Chairman. Chairman Smith and thanks for uh having this hearing today. Thanks for I mean trade has been omnipresent in everybody's mind the last year and the chairman and his team have done a great job navigating um really really tough issues here. Um and as I as I Mr. Cor I'll ask two quick questions and see what time we have.
▶ 2:10:00But um speaking of omniresent you know, we've got to win the AI race with China is it's pretty common now. It's common place. And I worry to some degree that we just keep saying it.
▶ 2:10:16and what strategies do we have to make sure that you know we don't let what could very well something I'm very concerned about is potentially losing that uh China the AI race to China and not leveraging the powerhouse and the US's ability to use the North American market as a counterweight to scale AI innovation attract computing investment and even maintain secure supply chains um in GPU design like we do have a strategy and This has
▶ 2:10:46been uh a significant presence in um in in leveraging our our North American partners. If USMCA's digital trade commitments are weakened or allowed to diverge among the three partners, what risks does that pose to our competitiveness compared to, you know, a state directed model like China?
▶ 2:11:08You're you're you're completely right in portraying USMCA as a platform for US competitiveness in that each of the partners bring a different sort of competitive advantage to the picture and that's exactly the case with digital and AI. Each have their own respective capabilities whether it's in the manufacturing that Mexico has in some regards, Canada has its own AI capabilities, but together it's stronger.
▶ 2:11:34If you tear that apart, you they become another jurisdiction where new barriers to to digital trade and AI can emerge. Instead of using the the scale of North America to launch into the world, it becomes another sort of set of jurisdictions to to juggle with.
▶ 2:11:54The extension of what you're asking as well is that um what the US should be doing is obviously bolting on with allies and like-minded trading partners with Japan, Singapore, Australia, New Zealand and others to to work together on AI and shaping similar rules so that when it comes to presenting a counterfactual to what China represents on AI, there's a greater scale to that.
▶ 2:12:17Um and that I think is a far more successful um calculation to get these trading partners on board with US AI strategy rather than the US just trying to go it alone.
▶ 2:12:29A strong USMCA plan hurt or hinder our ability to to broaden that out with other partners across the globe.
▶ 2:12:37It should be the foundation for broader US engagement with the rest of the world on setting the rules and standards on
▶ 2:12:43Excellent. Love. Appreciate it. I agree with you. Uh Mr. Yangun uh China and India dominate the generic and API market generic drug and API market often undercutting pharmaceutical companies operating in high a high IP environments. If USMCA's IP framework is weakened or stagnates, what signal does that send to third party innovators deciding where to locate the next generation of pharmaceutical
▶ 2:13:08We certainly don't want to do that. Um when it comes to IP, the USMCA IP chapter is also um a gold standard and um we should um uh increase the number of countries that um that agree to that type of uh of of protection.
▶ 2:13:25Uh there is no question that uh China, India in some respects, the European Union, they are working to weaken their intellectual property protections for uh pharmaceuticals and other uh innovations um in order to create even more free writing on um on American innovation and uh hopefully we can stop that. Um I'll give you an example.
▶ 2:13:51in the recent uh European um uh general pharmaceutical legislation where they effectively u IP data protection on market access and effectively they're saying unless you come here first with your product even if it's an American innovation unless you come here first you'll get less protection the Chinese are doing very similar things or threatening it to some extent India as well effectively what that provision,
▶ 2:14:21what that type of a policy is suggesting is and they're saying is, okay, if you don't come here first, no matter where you invented, we're going to effectively steal your IP. And the United States simply cannot tolerate that. And if we if we use um IP provisions like in the USMCA with other trade partners, I think we can be effective at stopping that.
▶ 2:14:45Thank you. Thank you all, Mr. Chairman.
▶ 2:14:47Thank you. And I recognize for five minutes, Miss Vanine from Texas.
▶ 2:14:51Thank you very much, Mr. Chairman. I recognize uh that we're here today to discuss trade, but as we talk about maintaining our competitive edge, I would be remiss if I did not express my gratitude to the Trump administration and specifically Deputy uh Assistant Secretary for International Affairs, Rebecca Burch. She came and she spoke with us last week, but I think she had a landmark victory at the OECD, which rightfully neutralized the effect of pillar 2 on US companies.
▶ 2:15:18Today's hearing comes at the right time as we review the first year of Trump 2.0, uh, which included many wins in the innovation and technology leadership space. Under the previous administration, the United States seated the playing field to other nations, including China and the EU, by stepping back from its role as a global leader on digital rules, and the results were predictable. New digital barriers that harm American innovators emerged around the world and continued to be introduced even by our allies.
▶ 2:15:47President Trump has secured unprecedented commitments from trade partners like Cambodia, uh, including pledges to improve intellectual property laws and enforcement, refrain from imposing digital services taxes, and consult with the United States before entering into a new digital trade agreement with another country that jeopardizes essential US interests. Mr. Corey, in your view, what steps should the United States take to continue reclaiming its global leadership role in the digital trade?
▶ 2:16:14Thank you for the question. I think they're off to a good start and I can I mean in addition to the ones you mentioned I'll just briefly mention that they obviously got Canada to halt the collection of the DST. France maintains a DST but they withdrew a measure to double it. Turkeyy's reducing its DST. India removed a problematic competition law. Uh Malaysia uh removed a service levy on cloud service providers. New Zealand dropped its DST.
▶ 2:16:40So I give the Trump administration a lot of credit for the things they've been able to achieve thus far. The challenge is locking them in, making them enforceable and coming up with the tailored detailed trade law provisions in the subsequent sort of following trade agreements to ensure that we all Congress and the Trump administration can hold them uh to the commitments they made.
▶ 2:17:02uh because as Anissa was saying in in relation to the contagion of streaming related provisions is that without clear strong and consistent action these problematic digital provisions will continue to spread. And so I think that's that's the challenge that hopefully is front of mind for USR Greer and the team in the Trump administration in the year ahead is how do they build on the the sort of the many wins they have but bringing them together and making a clear statement that the US will no longer put up with the types of digital trade barriers
▶ 2:17:33that they used to.
▶ 2:17:34All right. Thank you very much. Um, Miss Brennan, I'm the co-founder of uh and co-chair of the Congressional Creators Caucus and we've had them here and there is a lot of concern um about uh how we can protect our fair market access for these American creators and these streamers. These are incredibly important. They're in every single one of our districts. Um I share your concerns about Canada's online streaming act and members of this committee have raised these issues with Ambassador uh Hillman.
▶ 2:18:03How would policies like these stifle American innovation and investment in the creative industries?
▶ 2:18:09Thank you, Congressman or Congresswoman for that question. I really appreciate it. So, um, in many ways, I think policies like the OSA, um, would stifle creativity. I mean, first, it's the government is injecting itself into the business decisions of US streaming companies. It's dictating to us what we can show, when we can show it, um, how we show it.
▶ 2:18:32Um, and so that has, you know, if you can imagine that across multiple jurisdictions, this kind of heavy-handed government intervention into US companies business decisions is something that we should push back against regularly and consistently. And we're grateful the Trump administration has been a strong advocate for us in pressing these issues with both Canada and Australia.
▶ 2:18:54Um, I think in addition to the intervention of government into regular business decisions and how the companies manage their streaming companies overseas, it also obviously has a real impact on monies coming back to the United States. It's forcing our companies to invest in local content in order to operate in these markets rather than being able to make those decisions about where they want to produce, including here in the United States and the great state of Texas.
▶ 2:19:20Well, I appreciate that very much and and and I will tell you, having spoken to a number of these content creators um firsthand, it is a definite concern and these are small businesses that need all the help that they can get and having, you know, our our gentle neighbors to the to the north, you know, really kind of pushing down and demanding additional dollars from them is just unheard of. Did you have another
▶ 2:19:40and Congress, I just wanted to say to your point about small business, I think sometimes that's a piece of our industry, people don't understand, and you clearly do, but in addition to the larger studios that we represent, our industry is a nationwide network of small businesses. And these businesses rely on production here in the United States. And when we're forced to take that overseas in order to operate in a market, that has a real impact on these local economies. So, we really appreciate your support.
▶ 2:20:06Thank you. And I appreciate you being such an advocate for these creators. and I yield back.
▶ 2:20:12Thank you. I now recognize Mr. Bole for five minutes from Pennsylvania.
▶ 2:20:16Well, thank you uh Mr. Chair and thank all of the witnesses for taking your time to be with us this afternoon. Um there were there were some comments made uh a while ago that at the very least created some confusion and gave the false impression that somehow uh tariffs have not had an impact on inflation. Um let me re um let me just refer to you exactly what the Federal Reserve has said. Um this was right after their last month's meeting.
▶ 2:20:47JPAL said, and I quote, "It's really tariffs that are causing the most of the inflation overshoot." If you want to read the article for yourselves, it's from Reuters last month, dated December 10th, entitled Fed's Powell says inflation overshoot caused by Trump tariffs.
▶ 2:21:07So there is simply no question that Trump's tariffs, which let's face it, are essentially a national sales tax on imported goods, there's no question that they have increased prices for the American people, increased costs, and are a big reason why interest rates are higher today than they were predicted to be 12 months ago before the Trump tariff tax took effect.
▶ 2:21:35But you know, a lot of the attention goes to the consumer and how they are paying more because of Trump's tariff tax. What probably gets less attention is the impact that that has had on job creation in the United States and specifically the negative impact it has had. Now, I know the president and the administration keep claiming that tariffs are rebuilding American fa uh but the data tells a different story.
▶ 2:22:05According to the December 2025 jobs report, the United States lost 68,000 manufacturing jobs last year. Not gained, lost 68,000 manufacturing jobs. We also of course received the inflation report showing that we are still nowhere close to the 2% target. So Mr.
▶ 2:22:30Maril, let me turn to you because you talked about this uh a little while ago in in one of your answers and I hope you could expand more on not just the consumer side since that gets most of the attention, but specifically how Trump's tariff tax is hurting manufacturing and costing us good, high-paying American manufacturing jobs.
▶ 2:22:54Yeah. Uh thanks Congressman for the question and for all of your support for CWA's members. Um I I I would say actually in some ways the situation I think is actually even worse than you described it because in addition to manufacturing jobs and manufacturing output declining, we're also seeing a decrease in manufacturing starts.
▶ 2:23:12So uh the amount of new construction of factories, expansions of factories after we had seen a huge increase after the passage of the inflation reduction act and the chips act uh and the infrastructure bill and and so that's going to be really alarming in terms of our competitiveness in manufacturing I think for a long time to come if we stay on that trajectory. And I think part of the problem is just because they've this has been done in such a ham-handed way um that that companies don't want to invest. But the other,
▶ 2:23:42well, you referenced that before, the fact that one day the tariff rates 145%, we're suddenly liberated, the next day it's 25%. The next day it's back over 100% and who the hell knows where it'll be the next month.
▶ 2:23:55Yeah. Exactly. And that and also this pairs with a bunch of other things, right? The uh in the inflation reduction act, there was a bunch of money to incentivize companies to build factories to produce the energy sources of the future. and HR1 that this Congress passed last year took that money away. It passed permanent tax cuts for companies that move money and jobs out the country. I don't think that's a good policy. I think that's part of what's going on.
▶ 2:24:18But I think also right like it's it's systemic across the chaotic management of the administration when uh job training programs are turned on and off. Companies don't know if they're going to have a reliable workforce when I mean you've just seen the last the news the last 48 hours. Uh we don't uh we don't know if uh the chairman of the Fed is going to be indicted for very obviously transparently false reasons. Um, we you know,
▶ 2:24:44let me just since I have 30 because I feel like we're just getting into this conversation, so I wish it could go on longer, but since we now have under 30 seconds left, could you just talk about the modern supply chain and why it is such an outdated, naive, simplistic, overly simplistic view to think that everything that is uh manufactured in the United States is using a part that comes from the United States?
▶ 2:25:10Yeah. Yeah. and and and that's part of the the problem as well, right? Because um in general when there have been uh trade enforcement actions under previous administrations um of both parties, uh people have tried to make sure that they're targeted at uh at strategically important industries where that problem is taking place. In contrast, we things have been slapped on willy-nilly.
▶ 2:25:34very often there's a number of components that we don't actually make here in the United States but that uh go into finished goods that we make here in the United States. Sometimes things as you know go back the border a few times and so uh it it it ends up not actually achieving the goal uh of of giving our companies a price advantage compared to foreign companies and in fact quite the opposite.
▶ 2:25:59Thank you. Yield back. Thank you. And I recognize Mr. Estus for five minutes from Kansas.
▶ 2:26:06Well, thank you, Mr. Chairman, and and thank you to all our witnesses for joining us today to to discuss the tax and regulatory barriers that impact the digital economy. United States leads the world in innovation and technology. And with fair treatment of our businesses worldwide, we can continue to hold this title for years to come. Two years ago, I had the honor of being named the head of the US innovation tax team by Chairman Smith. In this role, we were able to to work and meet with numerous individuals and businesses that drive economic growth in the US.
▶ 2:26:36The message from them was clear. Congress needs to come up with progrowth policies that attract, create, maintain, and safeguard intellectual property in the United States. I believe that we were extremely successful with the progrowth policies that were enacted in in the working families tax cuts. you know, the big beautiful bill that everybody talks about, but there's still a lot of things that need to be done to safeguard our businesses that face challenges overseas.
▶ 2:27:01As my colleagues have heard me say many times, I believe the foreign imposed digital services taxes on US businesses are discriminatory and egregiously wrong. The proliferation of DST started in in 2019 specifically with French government target French government targeting successful American technology companies with a seat a 3% tax on gross receipts. Purpose of these taxes was very clear to advantage their domestic highly regulated firms over US innovators.
▶ 2:27:31These taxes continue to spread to other countries unchecked until last year. Although through the leadership of the administration, we've been able to secure commitments from trading partners to not adapt uh DSTs, including Canada removing their DST, which we which we applaud. That being said, there's still work to be done. Recently, the French government proposed to increase their DST from 3% to 5% or to 15%. Excuse me.
▶ 2:27:57other major trading partners continue to introduce and interact and enact DSTs or differently similar but similar in function taxes with the recent announcement of the pillar 2 sidebyside agreement which was a phenomenal agreement to help us businesses and and oppose that discriminatory OECD approach. Uh it is my hope that we use this momentum and goodwill to come to a simple resolution that resolves the DST issue permanently.
▶ 2:28:24The alternative to this would be less present less pleasant with Congress, US trade representative and in Treasury using all the tools at their disposal to protect American businesses. Mr. Corey, u in your testimony, you described the need for applying clear consistent pressure on trading partners uh as as digital mark digital market access can easily and quickly regress when trading partners think they can get away with it.
▶ 2:28:51uh what what material steps can Congress make uh take to reaffirm and to make sure that progress made by the administration on the DST issue
▶ 2:29:03Thank you for the question, Congressman. Uh I mean you're right the fact that as you mentioned these DSDs only started emerging in 2019. This is a new phenomenon whereby countries think that they can come up with a acute um system to target American firms as another source of revenue.
▶ 2:29:23The administration to its credit has uh and um gotten commitments from several countries not to enact them or to remove them, but as you mentioned there's still many out there. And so it's clearly on the administration's radar. They had the special 301 into DSTs. Um there's a strong reaction uh whenever um there's a new announcement that comes up. You mentioned France.
▶ 2:29:47I understand that the Trump administration engaged in direct advocacy to ensure that a recent parliamentary proposal to double that or triple it to 15% was was was withdrawn and so they've achieved a lot. It's a matter of maintaining that pressure and scrutiny. So constant reporting, con constant scrutiny, and then constant action. Um, as the what the Trump administration did with Canada, they sent a clear signal.
▶ 2:30:14It's now time to take that to every country that has a DST to show that you're on record and that there will be repercussions if you remain committed to pursuing these DSTs and as you mentioned these associated morphed versions of them um that are otherwise trying to do the same thing thing in terms of extracting revenue from mainly US firms.
▶ 2:30:34Yeah. Well, thank thank you for your insight. Uh, you know, I'm a big believer that people ought to be paid for the work they do. Whether they're working to create uh content, a musician or an entertainer, whether they're on a manufacturing line making computers, whether they're a software engineer that actually develops the software that runs a computer, you know, property rights are are such an inherent part of of freedom as well as innovation and making sure that we have good economic growth.
▶ 2:31:01fighting for and protecting American workers and American businesses remains the forefront of my priorities and priorities in Congress and especially within the committee. Thank you all for being here today and for allowing this important conversation to take place and as we focus on how do we ensure our businesses remain at the forefront of innovation and being able to grow the economy and be competitive for the next hundred years. With that, I yield back.
▶ 2:31:25Thank you. And I recognize Mr. Moran from Texas for five minutes.
▶ 2:31:28Thank you, Mr. chairman and thanks to our witnesses for their great work on this issue. Protecting intellectual property rests on a simple shared principle and that is this. When people create something of value, their work requires protection. That principle is foundational to innovation, entrepreneurship, and economic growth both here and at home.
▶ 2:31:47And lest we forget, Congress is specifically vested with authority under article 1, section 8 of the constitution to quote, promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. During my time on judiciary, I worked closely on this issue.
▶ 2:32:08In fact, uh, Secretary Yanu and I worked a lot on a several different issues as it relates to intellectual property, uh, that are imperative to defending US innovators on the world stage and preventing, uh, the value of US IP rights from being diminished outside of US borders. This is something I think that's important across the aisle and certainly supported across the aisle.
▶ 2:32:33Director Ianu, when you were giving your opening statements, you happen to mention two bills that piqu my interest because they're my bills. You mentioned Restore Act and the Prevail Act. Restore Act being that that provides for a rebuttable presumption that a patent holder is entitled to a permanent injunction against infringers after a final judgment finding uh that a valid patent has in fact been infringed.
▶ 2:32:58I think it's critically important, but I want you to tell those that are out there listening, why is it important for the Restore Act to be passed and for there to be this rebuttable resumption for permanent injunctions? Why is it important to American innovators?
▶ 2:33:12Well, first of all, thank you, Congressman Moran, and thank you for your tremendous support and leadership when it comes to intellectual property protections uh in the US and abroad uh and in particular for your authorship of the Restore and uh and prevail acts.
▶ 2:33:27Um you mentioned the US Constitution and article 1 section 8 clause 8 and there it uh talks about as you indicated exclusive rights and by the way the word right appears in the body of the constitution putting aside the bill of rights appears once and it's in this clause on the in the intellectual property clause. So when the constitution talks about exclusive rights, it's difficult to understand how that those exclusive rights can be enforced without the right to exclude.
▶ 2:33:57And unfortunately in the United States uh since the Supreme Court's decision in eBay v Merk exchange and the way the lower courts have uh interpreted it um it's almost impossible to um to obtain injunctions and exclude infringers. And this is really important for innovate in innovators to protect their uh inventions and to protect the domestic market from foreign infringement any kind of infringement. And um Euro restore act.
▶ 2:34:28It's a simple bill that would provide uh the constitutional exclusive right that inventors are entitled to.
▶ 2:34:35Yeah. What do what do you think happens if patent holders don't have access in American courts to permanent injunctions to protect their IP? What happens on the world stage?
▶ 2:34:44Exactly. You're right. So, if we don't lead here, um uh other countries uh will will follow suit, unfortunately. Um first of all, we definitely need to take care of our own home and protect our domestic uh uh markets from infringement, foreign and domestic. Um but when we don't take care of our own home, it's really difficult for us to advocate overseas to make sure that the other countries elevate, not depress, but elevate their IP protections.
▶ 2:35:14Yeah, the prevail act in addition to the restore act, the prevail act would set uh better standards for our PTAB system help to reduce form shopping, eliminate repetitious uh proceedings, ensure that that doesn't supplant the article 3 courts that need to actually decide these things. Uh it helps to revise the real parties and interest issues and closely aligned evidentiary standards and burdens of proof. It does all of that to again ensure that inventors are protected.
▶ 2:35:41And that's critically important as you point out because if we don't protect our inventors here and the patent holders here and innovation here, people are going to stop innovating and then all of a sudden we don't have anything to trade, we don't have anything to bargain bargain. We are no longer the world leader in the economy on the world stage because this is what makes America great, innovation and ingenuity. We must protect that. Um, uh, Secretary Yanu, I want to ask you this in closing.
▶ 2:36:08What, what countries out there are are the least reciprocal, uh, in their treatment of intellectual property rights, and what action do you think besides passing things like restore and prevail do we need to take here in Congress?
▶ 2:36:20Well, the Thank you, Congressman. The uh biggest offender of uh of intellectual property rights remains China, and uh huge attention needs to remain on that. But in addition, as we've discussed throughout the day, we have our own trade partners in in the west and otherwise that uh are pushing against intellectual property rights. I'll give you one example. Um and that comes uh with respect to standard essential patents.
▶ 2:36:45These are patents that uh protect standardsbased technologies like 5 6G and so on. Um [snorts] and um and and countries like China, the European Union, and now the UK, they um they keep trying to take control of pricing of American patents and American innovation and lower the prices of our own innovation through their foreign uh legislation.
▶ 2:37:15The United States and the Trump administration has done a good job at pushing back against that, but they keep coming back in different forms and we the administration and Congress needs to keep pushing back against those efforts to depress the price of American
▶ 2:37:31Well, thanks for your work on this issue, Mr. Chairman. I yield back. The fight continues.
▶ 2:37:36Thank you. I now recognize Mr. Miller from Ohio for 5 minutes.
▶ 2:37:41Thank you, Mr. chairman, and thank you to our witnesses for their time and testimony here today. When we talk about trade policy, we often picture goods crossing borders and containers. But one of the United States most powerful exports doesn't move through ports at all. It moves through fiber, satellites, and servers. Digital services are one of the strongest and most uniquely American services that we have.
▶ 2:38:02In 2023, US exports of digitally deliverable services, including cloud computing, software, financial services, and other digitally deliverable business services total of roughly $650 billion, accounting for nearly twothirds of all US service exports. It's massive. These exports generate a massive trade surplus measured in the hundreds of billions of dollars and support millions of American jobs.
▶ 2:38:28This leadership reflects decades of innovation and an open connected global internet that allows us firms large and small to scale to scale globally. But today that advantage is increasingly under pressure around the world. We are seeing a rise in digital protectionism, data localization man mandates, discriminatory digital regulations, and policies that raise costs for foreign firms while advantaging local competitors.
▶ 2:38:55These measures are often framed as a consumer privacy protections, but in practice they function as trade barriers that directly undermine the United States competitiveness on the world stage. If the US does not lead in setting the rules of digital trade, it's simple. Others will and not in ways that will benefit the American workers or businesses. The future of trade is increasingly digital.
▶ 2:39:18The question before us is whether the US policy will reinforce our leadership or slowly erode into one of the most important competitive advantages that we have. Mr. Corey, US leadership and digital trade also depends on whether domestic policies support the industries behind these exports. Tariffs or trade restrictions on consumer technology, semiconductors or ICT inputs can raise costs, slow deployment and reduce US digital services output.
▶ 2:39:46How should domestic trade and tariff policy be structured to maximize digital service exports and competitiveness? And are there specific changes Congress should consider to better support the United States exporters? Thank you for the question, Congressman Nilla, and I couldn't agree with you more in terms of the the envious position the United States faces it uh is in as it relates to digital services and leading the world on all of this, but that it's far from a given and that China and others are chomping at the bit and would love to take it from the United States.
▶ 2:40:17you make a good point in that um critical to the US's international success is what it does at home domestically through regulation but also through uh its inputs with tariffs and I mean to that effect obviously if you raise the cost of semiconductors server racks fiber cable and whatever may may you that will flow through thankfully thus far we've seen with a lot of the tariffs that have been enacted they've exempted a lot of these critical inputs thus um shielding being sort of the
▶ 2:40:47the the home field of uh uh the US's um global sort of uh advantage on digital technology. But the that's not enough in today's global digital economy. the US can't expect to to keep markets open to to set the rules of the road for the global digital economy unless it finds ways to work with allies because the fa matter of the fact is is that um the vast majority of the markets are outside of the United States and they're setting their own rules
▶ 2:41:17individually or with others as sometimes to the benefits of the US but often not. And so it's incumbent that the US work with them to build the economies of scale that are critical to US innovation in ways that obviously support US tech and values as well as the those of the trading partners because those on the other side visav China are very different. They have very different interests. They have very different firms. They have very different technology.
▶ 2:41:42And so it's incumbent upon Congress and the Trump administration to lean in more with its allies to help shape those rules so that uh that everyone else can use uh amazing US tech but also integrate their own ideas and technologies into the US tech stack as a part of this global
▶ 2:42:00Yeah, thank you for that very detailed answer and I really appreciate it. Look, I'm I'm with you. Uh I like to have friends. More friends the better. The more enemies you have, not so good, right? And we've been able to see that throughout history and time. Uh but when it comes to working with our allies and our true allies overseas, I I could not agree more with you. We have to reestablish trust. Uh and there is no better place than that I see than the United States of America, the leader of the free world, bringing that in and bringing it to the table. Uh I do have one more question. I'll submit it for the record. I'm over my time.
▶ 2:42:30Thank you for your testimony here today. Mr. Chairman, I yield back.
▶ 2:42:34Thank you again. Thank you to our witnesses for uh taking your time here today, offering your insights and expertise. We truly appreciate it. I think uh we can all agree that this is a timely topic that impacts so much of our of our economy. Please be advised that members will have two weeks to submit written questions to be answered later in writing. Those questions and the witness's answers will be made part of the formal hearing record. With that, the subcommittee stands adjourned. Thank you.