At the November G20 Summit in Argentina, the new trade deal, US-Mexico-Canada Agreement (otherwise known as the USMCA), was signed by their respective countries, thereby calling on Congress to approve the new legislation. This new agreement entails new divisions to further regulate (or deregulate) trade within North America, with the biggest change coming from the introduction of a digital trade section.
Regarded as a “breakthrough” in trade agreements, USMCA is the first trade deal within North America to introduce clauses on digital trade, including laws regarding data localization, data privacy, net neutrality, and more. A look into these clauses is below. This list is purely informational, as an analysis of these clauses will come in the next blog post in the USMCA series.
Overview of the Digital Trade clauses:
- Article 19.3: Customs Duties
There will be no customs duties fees or other fees regarding the importation/exportation of electronically-transmitted digital products. This will cover products such as electronic videos, music, software, games, e-books, etc.
- Article 19.4: Non-Discriminatory Treatment of Digital Products
This clause outlaws discrimination against digital products “created, produced, contracted for, commissioned, or first made available” in other territories.
- Article 19.6: Electronic Authentication and Signatures
Electronic signatures and authentication are legally required to be accepted by all parties.
- Article 19.7: Online Consumer Protection
This clause is in conjunction with Article 21.4.2, where it states that consumer protections are applied to digital products as well.
- Article 19.8: Personal Information Protection
By suggesting APEC Privacy Framework and the OECD Recommendation of the Council, this clause requires parties to adopt legal privacy laws that pertain to personal information. It also states that the parties should work to find a “mechanism to promote compatibility between these regimes”.
- Article 19.10: Principles on Access and Use of Internet for Digital Trade
This clause does not specifically propose a net neutrality provision, but it does state “access and use of a consumer’s choice [is] available on the Internet, subject to reasonable network management”. It also requires that consumers must be afforded the ability to use services on the Internet and ability to access information on their network provider.
- Article 19.11: Cross-Border Transfer by Electronic Means
The regulation or restriction of data crossing borders is prohibited. This clause does not include information for parties who aim to achieve a public policy objective, only those who are conducting business of a “covered person”.
- Article 19.12: Location of Computing Facilities
This clause covers data localization (a measure that requires the business to develop data infrastructures in that specific country in order to conduct business there). The provisions of this article are anti-data localization, stating that parties cannot require a covered person to locate facilities in their territory as a requirement for conducting business in said territory.
- Article 19.15: Cybersecurity
This clause states that parties should recognize the dangers of digital trade threats and should work towards “building national capabilities” against said threats. This article does not require action or states prescriptive measures for protection.
- Article 19.16: Source Code
Parties are not allowed to require source code access as a prerequisite for the sale/use of another party’s products in their territory. This clause also “bars governments from requiring disclosure of algorithms expressed in that source code” unless it is needed in an investigation/enforcement action.
- Article 19.17: Interactive Computer Services
This clause was taken from the Communications Decency Act and allows online platforms to moderate their sites if done in “good faith” without fear of legal retaliation.
Representatives have not been silent in expressing their support (or opposition) of the new deal. Here in Austin, Representative Roger Williams of District 25 states:
“Austin has become a hotbed for tech companies, both established and start-up. These entrepreneurs have created a technology ecosystem that has multiplied and brought numerous other investments along with them. The new USMCA trade deal includes a first-of-its-kind chapter on digital trade that will enable our trade relationships to further grow in our increasingly tech-reliant economy. Our tech industry cannot afford to rest on the old deal.”
In the upcoming series, we will breakdown the clauses summarized above and analyze the impact of USMCA on Austin’s “technology ecosystem” as Representative Williams stated above. Further information regarding pros/cons of the new digital trade section and the differences between NAFTA and USMCA will be included in this blog series.