The United States Trade Representative recently issued a document describing its NAFTA negotiations priorities. On 28 July 2017, The R Street Institute arranged a panel on NAFTA and Digital Trade. IGP’s Farzaneh Badiei was invited to take part in the panel. The panel discussed the policy and political issues surrounding the priorities on digital trade and NAFTA. This blog post will briefly discuss the points some panelists made:
Is TPP a good baseline for NAFTA negotiations?
To our surprise, the USTR position, especially the aspects related to digital trade, was not a total detour from US stances in the Trans-pacific Partnership negotiations and was quite aligned with the Trade Priorities Act 2015. The panel started the discussion by considering whether TPP is a good baseline for NAFTA negotiations for digital trade. The panel generally agreed that it was, but there were reservations about some of the provisions. One of the most important aspects of NAFTA, as IGP argued, were the provisions in support of cross border data flow and those prohibiting data localization laws. IGP believes that effective trade agreements can be a tool for enhancing global connectivity and can strengthen the rights of users who do not reside in countries with good privacy measures and the rule of law. There are some privacy concerns regarding the prohibition of data localization but trade agreements generally have clauses that allow countries to take regulatory measures when it comes to public policy and public safety. Moreover, trade agreements might even encourage countries that do not have privacy laws in place to develop such laws. For example, TPP already had provisions for privacy protection.
Online trade involving physical goods and customs procedures
USTR rightly continues its commitment not to impose customs on digital goods. It also provides provision to make the customs procedures more transparent and efficient under the section on Customs, Trade Facilitation and Rule of Origin. These provisions are very important. As IGP and other panelists pointed out, online market intermediaries such as eBay, Alibaba and Amazon are facilitating online cross border trade of goods on a scale that was not possible before the creation of these platforms. Easier customs procedures can facilitate online trade of goods and promote micro cross border sales online such as low value, high volume business to consumer transactions. This priority is also stated in US non-paper to WTO and more discussion needs to take place on their implementation.
Are some provisions in USTR problematic?
The intellectual property section, which mirrors the Trade Priority Act 2015, does not mention “fair use” as a criterion to be considered in the objectives. Moreover, intellectual property rights advocates have been leveraging trade agreements to inject a great dose of protectionism in free trade! These sections sometimes subordinate trade goals to a regulatory goals. For example, instead of facilitating free trade in the domain name market, TPP aims to require signatories to force domain name registrants to put personally identifiable information into indiscriminately accessible online public databases to help enforce intellectual property rights.
A provision that would prohibit governments from forcing companies to share their source code has been also an issue of concern, because it might not allow governments to implement source code audit laws. Access to source code can help researchers to detect and resolve vulnerabilities. But it seems like the cost of sharing source code is substantially more than its benefits, and source code can be abused for surveillance by states. The panel mentioned that this provision might have some national security implications which might obstruct trade negotiations.
The take aways:
The panel agreed that USTR priorities on digital trade were promising and that the United States administration and people/consumers should know the benefits of trade. Trade is not only about imports, it is also about exports and the US is the second largest exporter in the world. We should explore the effectiveness of trade agreements in strengthening our digital rights, and civil society organizations should understand and advocate for the benefits of digital free trade.