Administration Calls for Digital Trade Provisions in NAFTA Rewrite

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By Michaela Ross and Alexis Kramer

The Trump administration is prioritizing the free flow of data and elimination of local data storage requirements in the upcoming NAFTA trade deal revamp, the U.S. Trade Representative said in a summary of objectives released July 17.

The administration’s renegotiation objectives also include securing commitments against customs duties for digital products and preventing governments from mandating the disclosure of source code.

Tech industry groups such as BSA|The Software Alliance and ITI, which represent companies such as IBM Corp. and Microsoft Corp., have called for digital policies to be incorporated into the 1994 North American Free Trade Agreement, which was negotiated in the early years of the commercial internet. Renegotiation of the deal between the U.S., Mexico, and Canada is set to begin no earlier than August 16, according to a USTR press release.

The policies outlined in the summary report are similar to the digital trade provisions negotiated in the Trans-Pacific Partnership (TPP), an Obama-era trade agreement finalized in 2015 between 12 countries. Trump pulled the U.S. from that deal in January.

The USTR’s objectives include a provision to promote cross-border data flows and prohibit data localization rules specifically for the financial services sector. The data transfer language in the TPP didn’t apply to financial institutions.

Sen. Ron Wyden (D-Ore.). criticized the renegotiation objectives in a July 17 statement.

“It is surprising that in key areas the Trump Administration is seeking outcomes that were achieved in the TPP, which the President said was a bad agreement,” Wyden said. “Even on digital trade, which this administration has touted as a prime area for improvement, the summary lacks the level of ambition I would expect given the promises this president has made.”

Wyden and Sen. John Thune (R-S.D.) July 14 urged the Trump administration to prioritize digital trade in the NAFTA renegotiation. They said digital trade also impacts traditional industries like manufacturing that rely on digital transactions to reach foreign markets.

To contact the reporter on this story: Michaela Ross in Washington at mross@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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