By David Lawder

WASHINGTON The Biden administration has suspended talks on some key digital trade aspects of its Indo-Pacific Economic Framework initiative, Democratic lawmakers said on Tuesday as negotiators from 14 countries race to finish some agreements ahead of a major Pacific Rim summit next week.

The halt comes after the U.S. Trade Representative's office last month reversed longstanding U.S. digital trade demands at the World Trade Organization -- no longer insisting on rules that protect free cross-border data flows and prohibit national requirements for data localization and reviews of software source code.

The U.S. Trade Representative's office said it withdrew its position to give Congress room to enact stronger technology regulations. That pleased liberal Democrats who want to rein in big U.S tech firms, but angered a broad array of business groups that say it undermines decades of U.S. policy that was enshrined in the 2020 U.S.-Mexico-Canada agreement on trade.

In a letter to Biden, Senator Elizabeth Warren, four other senators and seven members of the House of Representatives said they wanted to ensure that IPEF's digital trade provisions are consistent with the administration's new view.

"We thank you for suspending negotiations on aspects of the IPEF digital text that can be used to frustrate privacy, AI, civil rights and liberties, anti-monopoly, gig worker and other digital safeguards that Congress and the administration seek," the lawmakers wrote.

SUMMIT DEADLINE

USTR and the Commerce Department are hosting a seventh round of negotiations on IPEF this week in San Francisco, to try to finalize some agreements that can be announced at next week's U.S.-hosted summit of leaders of Asia Pacific Economic Cooperation countries, also in the U.S. tech capital.

People familiar with the talks say that discussions on the digital trade chapter have largely ground to a halt because the U.S. position is now unclear and being reevaluated.

A USTR spokesperson declined comment on the IPEF digital talks.

IPEF is the Biden administration's signature effort to engage economically with Asia to provide countries an alternative to deepening economic ties with China. IPEF's "trade pillar" will not seek to lower tariffs or improve market access among its members as a traditional trade agreement, but will focus on environmental, labor and other standards.

The lawmakers, who also included Senator Amy Klobuchar and Representative Pramila Jayapal, said they want to ensure that IPEF and other trade agreements do not prohibit anti-monopoly policies and consumer privacy restrictions and other steps to counter "Big Tech abuses."

(Reporting by David Lawder; Editing by Leslie Adler)