Passing USMCA will help US companies address global threats to digital trade
The word ‘internet’ isn’t in the original NAFTA. That’s hard to believe in 2020, but is helpful to understand why it is so important for the Senate to pass the United States-Mexico-Canada Agreement (USMCA) as soon as possible. Groups that represent everyone from workers and manufacturers to farmers and consumers have praised the modernized trade agreement with our North American neighbors. But there’s an important reason for Congress to pass USMCA that’s largely been overlooked. This agreement will help the United States address emerging threats to our position as the world’s leader in digital trade.
The internet sector and digital trade are fundamental to the U.S. economy. Digital services exports benefit farmers in the Midwest as much as startups in California or New York. The internet supports over 3 million American jobs across every industry. In fact, approximately 75 percent of U.S. jobs created by digital services exports are in sectors outside of the tech sector like manufacturing, agriculture and health care.
The strength of our internet sector and digital trade has yielded new jobs, lower prices for consumers, and innovative products for Americans — and the world — to enjoy. America’s leadership in this sector means that our businesses can sell their goods and services to customers around the globe. The North American digital marketplace is a prime example. Over the last 10 years, the U.S. digital trade surplus with Mexico and Canada has grown 64.4 percent, and now adds $19.2 billion per year to the U.S. economy. Beyond Mexico and Canada, the U.S. exported more than $451 billion in total digital services last year. That’s more than twice the amount of consumer goods exported and almost three times more than the number of automotive vehicles.
But America still faces significant headwinds from foreign competitors. Some of our largest trading partners have created, or are considering creating, extensive barriers that prevent American companies from doing business abroad or create an uneven playing field.
USMCA will help to combat these challenges by setting clear rules of the road for digital trade and solidifying our position as the world’s global internet leader. Our current trade agreements are woefully out of date when it comes to digital trade provisions, and it’s well past time we bring these agreements into the 21st century.
USMCA helps to strengthen America’s digital trade in several ways. First, USMCA will protect the free flow of information across borders. The internet is a borderless medium and the movement of electronic information enables virtually all North American commerce by connecting users with goods and services. The free flow of data allows farm equipment to operate properly, cloud computing to work, and small businesses to make seamless transactions. This agreement will ensure that data can move safely throughout North America, while recognizing governments’ ability to protect personal information.
Second, the agreement includes important elements of the U.S.’s strong, innovation-oriented copyright protection laws. USMCA includes safe harbors that provide clear protections of intellectual property, as well as predictability for consumers, creators, and online platforms and services. This helps to ensure that the online content we enjoy every day — like your favorite streaming music or video service — can continue to be available. It also helps to protect American companies from bad actors and gives them the option for legal recourse if necessary.
Further, USMCA protects against threats to encryption and source code integrity. Some countries force companies to disclose encryption keys or source code as a condition of market access. These measures – if left unchallenged – would compromise U.S. technology and hurt American exporters by making innovations vulnerable to theft by foreign competitors. USMCA limits governments’ ability to require disclosure of proprietary computer source code and algorithms.
Finally, USMCA will establish robust intermediary liability protections. Critical parts of online commerce, like user reviews and ratings, wouldn’t be possible without these protections. Intermediary liability protections allow American businesses and consumers to communicate and engage with people online, enable platforms to moderate what is posted on their own websites, and facilitate enormous amounts of U.S. exports, especially by small- and medium-sized businesses.
The Internet Association recently estimated that intermediary liability protections support 425,000 U.S. jobs and $44 billion in U.S. GDP annually. USMCA extends these protections to Mexico and Canada, which will allow businesses to take down harmful user-generated content, and enjoy the economic benefits of digital exports.
There are many reasons for the Senate to pass USMCA, and investing in America’s future by strengthening its place as the world’s internet and digital trade leader should be at the top of the list. Lawmakers in Washington should strive to create a policy environment in which the American economy can continue to thrive with the help of the internet and digital trade.
Michael Beckerman is the President and CEO of the Internet Association, the only trade association that exclusively represents leading global internet companies on matters of public policy.