Two Senators released a bill last week that could have major implications for the U.S. approach to economic diplomacy in the 21st century.  Between budget fights, NSA hearings and the ongoing health care website saga, it is not surprising you might have missed it.

Senator Wyden (D-OR) and Senator Thune (R-SD) came together to sponsor a bipartisan bill- the Digital Trade Act of 2013 - that directs U.S. trade negotiators (and other diplomats with economic portfolios) to prioritize attention to the needs of the digital economy.  Although the simple bill might seem small compared to the front page political fights that have captured attention over the past few months, the long term effect of such legislation - if passed - could very well be profound as international commerce is increasingly important to global trade, but it lacks most of the protections that legacy goods and services trade enjoy.

Digital trade issues, despite the Internet's centrality to modern international commerce, currently occupy a position of peripheral importance to the United States Trade Representative (and even less to most other trade negotiators from other countries) compared with more traditional trade disciplines, such as agriculture, financial services and manufacturing.  Of note, there is not even an Industry Trade Advisory Committee (ITAC)devoted to Internet-enabled commerce and the needs of online platforms (ITAC 8, which includes e-commerce, is a hodge podge of mostly telecom and hardware interests that have much different, but still important, concerns and expertise), despite the United States International Trade Commission study acknowledging that digital trade is one of our largest export industries.  Given that ITACs are one of the main avenues through which the USTR solicits input from the private sector during confidential trade negotiations, this is a problem.

Ironically, the same rapid technological innovation on the Internet that is drastically lowering the transaction costs associated with international trade is now obsoleting the agreements and norms that facilitated 20th century commerce.  If policymakers don't keep pace with the technology, we risk backsliding into an international commerce wild west that lacks the predictability and certainty that businesses need to thrive.

Reconstructing the global trade apparatus following WWII has proven to be perhaps the biggest economic policy success of the 20th century.  The currency and trade wars that epitomized the interwar years, including the disastrous Smoot-Hawley Tariff Act in the U.S., inflamed the global depression and stoked international strife that ultimately manifested itself in another catastrophic global conflict.  Given the experience during the interwar period, migrating out from under the protection and certainty the global trade regime has afforded international commerce could have extremely negative implications.

Since the General Agreement on Tariffs and Trade (GATT) was signed in 1947 (the predecessor to the WTO), average global tariffs have dropped from 20 - 30 percent to just 4 percent.  As a result, the volume of global trade has increased 27 fold (measured from 1950 - 2006), three times more than the growth in global gross domestic product.  On top of tariff reductions, trade agreements have evolved to address non-tariff trade barriers and streamline international services trade - which is great for the United States as service industries account for 68 percent of U.S. GDP and 80 percent of U.S. jobs.  However, the dramatic increase in global trade has benefited everyone by helping fuel the dramatic rise in per capita incomes since 1950.  It's not surprising that over 80 percent of economists agree that "unfettered international trade" is a good thing.