After months of negotiations and significant political tension, the United States, Canada and Mexico announced a new trade agreement earlier this week. The “new NAFTA” will be known as the United States-Mexico-Canada Agreement, or the USMCA. In addition to other changes, the new deal includes a chapter on digital trade.
While the USMCA will primarily impact North American residents, there are a number of changes that could have greater implications for the broader digital community. The deal also highlights key negotiating priorities for member countries, which may be reflected in future global trade agreements.
Notable elements of the USMCA
Restriction of data localization provisions
From a privacy perspective, this change is important. The USMCA limits the extent to which governments can require companies to keep data locally, within a specific jurisdiction. Some jurisdictions have used data localization requirements to ensure that sensitive or personal information, including patient data, remains stored within their jurisdiction and subject to their own privacy laws. Notably, if the EU data protection model requires restrictions on data transfers and the USMCA prohibits these restrictions, countries could find themselves caught between conflicting sets of rules.
Protection for internet platforms from liability for third-party content
The USMA includes “safe harbor” provisions that protect businesses from liability for failing to take down third-party content shared to their platform. While US laws include safe harbor protections, they have been absent in Canadian legislation. Coupled with the preservation of the Canadian “notice-and-notice” system, which is seen to shift mandatory content removal to the decision of the courts, this change is viewed as an overall victory for free speech online.
Extensions of copyright protections
In Canada, the USMCA will extend copyright from 50 years beyond the life of the author to 70 years beyond the life of the author. Where a copyright term is not based on the life of a person, the protection extends to a minimum of 75 years after the first authorized publication. Although this US-led shift will primarily impact the citizens of Canada and Mexico, it will restrict the works moving into the broader public domain. It also indicates that copyright may be a core priority for the US when negotiating other global trade agreements.
Digital trade protections, including restrictions on imposing duties for digital services & products
The USMCA contains a number of positive provisions that recognize the realities of e-commerce and take steps to ensure that member countries limit barriers to digital trade. These protections include preventing countries from imposing duties on digital services & products, and removing requirements that companies have physical presences in locations where they would like to conduct e-commerce.
Investors can no longer sue governments through NAFTA’s Chapter 11 provisions
NAFTA contained a controversial provision that allowed investors to sue member countries before a private international tribunal if they implemented legislation or policies that could negatively impact corporate profits. This has previously been used by investors to sue when their profits were impacted by a country’s environmental or health & safety protections. From a digital perspective, there was some concern that chapter 11 could also be used to challenge net neutrality and privacy protections, especially as the US has moved away from net neutrality in particular. In this respect, the loss of chapter 11 is seen a significant win.
Protecting digital rights in international trade
While the USMCA includes some wins for digital rights and free speech, the risks shouldn’t be overlooked. In particular, the restrictions on data localization policies may pose a significant risk to citizen privacy rights and their ability to control their data and personal information. Trade agreements like the USMCA also limit the ability of member countries to make their own policies and strategies for the emerging digital world. For privacy-conscious digital citizens, international trade remains an important area for awareness and advocacy.