U.S. Digital Leadership is Vital for Women-Owned Businesses and Their Workers
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Digital tools are especially important for women-owned businesses looking to expand to international markets. Since women have a harder time accessing capital, they are more reliant on digital tools to grow their businesses. Digital tools provide women exporters with a global reach and ability to sell their products or services to a broader audience without the need for capital-intensive physical shops. The recent pause in the U.S. government’s participation in negotiations on digital policies will disproportionally affect U.S. micro, small and medium-sized businesses (MSMEs), particularly women-owned companies. The U.S. government should rejoin digital trade negotiations and restore its leadership in the digital arena.
The 2023 holiday shopping season continued to be dominated by online sales, with e-commerce sales of $253.7 billion, an increase of almost 11% compared to e-commerce sales during the 2022 holiday season.¹ The pandemic accelerated the growth of digital commerce and shifted the retail landscape permanently.
These same digital tools have been particularly important for women-owned businesses that are looking to expand to international markets and customers. Women-owned businesses are more reliant on digital tools to grow their business, with most using technology to grow rather than expanding their physical presence or locations. People around the world will buy from U.S. websites such as Tory Birch or Fenty, while downloading Taylor Swift’s music or using the event-hosting app Eventbrite.
The OECD defines digital trade as exports that are digitally ordered and/or digitally delivered² and includes items bought online and shipped cross-border as well as services delivered digitally such as music or business services. The U.S. is the world’s leader of digital trade, with 16.5% of the world’s cross-border digitally delivered goods and services American-made.³ Other countries are rapidly growing their digital trade, with India, China, and Ireland growing digital trade by more than 75% and up to 93% year-on-year.
U.S. leadership is needed to keep our commercial leadership in digital trade. Ensuring cross-border data flows, enabling data privacy regimes that protect local consumers and facilitate data flows, and protecting against forced disclosures of source code that expose U.S. companies to thefts of their innovations have been long-standing positions of the U.S. government These positions protected U.S. exporters and the jobs of their workers, as the U.S. advanced digital trade policies that addressed the market and non-market access barriers and created a level playing field.
The U.S. Trade Representative recently announced that they would pause their support for certain policies while the U.S. looks at potential changes in domestic regulations. This leaves the U.S. on the sidelines of important global conversations about data and digital policies at a time when many other countries are moving forward with more restrictive policies. It is important for the U.S. government to reengage in digital negotiations in the WTO and IPEF to establish a global governance agenda that reflects U.S. standards and values.
The absence of U.S. leadership will disproportionally affect U.S. micro, small and medium-sized businesses (MSMEs) and particularly women-owned companies who are more likely to use digital tools to reach international markets and customers. Companies that export are important to the U.S. economy - on average, women-owned firms that export pay more, are more productive, employ more workers, and report higher average sales than women-owned firms that do not export. The asset-light nature of digital trade allows women to take part as equals in the global economy, as digital trade levels the playing field for women business owners. As an example, eBay revealed that 97% of the women sellers on their platform export, reaching customers on average in 15 different countries.
Digital tools allow women-owned firms to reach new markets without requiring incremental investments or capital. In a recent report by the Trade Experettes4 , many of the women exporters interviewed about their experience didn’t even know they were exporters - they had created digitally delivered content and apps for their local markets which were being sold around the world. As an example, a hairdresser started a new line of business giving online tutorials on how to treat and style textured hair. She reached a global audience using a videoconference service provider without physically crossing any borders.
While women can face added hurdles due to the “digital divide” and lack of training or access to the internet, during COVID we saw that many women managed to overcome these impediments and export for the first time.
Digital trade is critical for U.S. women exporters, and we need the U.S. government to get back into the negotiations:
Global Reach without Physical Presence: Digital tools provide women exporters with a global reach and ability to sell their products or services to a broader audience without the need for capital-intensive physical shops that require financing and capital. Data localization requirements, differing data privacy requirements, and cross-border data restrictions would create barriers that would require investments and make exporting more challenging.
Lower Trade Barriers: Digital trade can also reduce trade costs as countries and companies streamline export processes by reducing paperwork, easing customs procedures, and minimizing logistical challenges. Digitally delivered goods or services have traded without customs tariffs for 25 years due to the E-Commerce Moratorium, lowering the complexity of trading those goods. This is especially beneficial for women exporters, who have a harder time accessing capital for their business,5 and are therefore more reliant on digital technologies to make international trade more accessible and cost-effective. The Moratorium, if not renewed, will expire in 2024 creating a host of new, complex customs issues for all digital exporters.
Online Marketing Tools: Acquiring new customers is one of the hardest parts of growing a business, and being able to use digital tools to reach customers on their mobile devices or other digital devices is critical for women trying to grow their businesses.
While the Administration launched several post-covid programs to make the internet more accessible to women and other underserved communities, more needs to be done. The U.S. worker-centered trade policy, by pausing its support of digital trade, is not upholding the Biden Administration’s National Strategy on Gender Equity and Equality. While women own 39% of the businesses in the U.S.6 and employ 12 million people7, U.S. worker-centric trad e policy has a heavy focus on manufacturing industries like steel (17% women8 ), aluminum (19% women9 ), automobiles (23% women10 ), mining (10-17% women), and clean technology (32%). Creating more pathways for women to move into these industries can help, but even more critical is supporting these businesses and restoring U.S. leadership on digital trade
For the factors outlined above, the U.S. government needs to urgently restore its leadership on digital trade. Existing trade agreements allow exemptions and flexibility for changes in domestic regulations, so the current pause seems unnecessary. Data can be a means of production, a tradable asset incorporated in a finished product, or an ingredient to enable cross-border trade of physical goods. A lack of consistent cross-border data policies will undermine U.S. exports, create cyber security vulnerabilities, and create data silos limiting visibility on supply chains. The challenges this creates will disproportionally affect women exporters. For all these reasons, the U.S. urgently needs to return to the negotiating table, which will support both the Administration’s worker-center trade and their efforts on gender equity and equality.
Notes
See OECD Handbook for Measuring Digital Trade, Second Edition
World Trade Organization, Global Trade Outlook and Statistics, April 2023
Women Business Owners Still Face Difficulties in Obtaining Capital (forbes.com)
National Strategy on Gender Equity and Equality (whitehouse.gov)
Bureau of Labor Statistics
Bureau of Labor Statistics
Bureau of Labor Statistics; International Trade Commission
*Penelope Naas is a Director and Advisor to TradeExperettes, a global organization of trade professionals, and a non-resident fellow at the Atlantic Council.
