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U.S. negotiators are pushing for digital trade provisions in a revamped North American Free Trade Agreement (NAFTA) that go well beyond what the countries previously agreed to during their last major negotiations on digital trade, private-sector sources told Bloomberg Law.
The U.S., Mexico and Canada are entering a pivotal round of talks to modernize the 1994 trade agreement, including discussions on digital provisions. The Office of the U.S. Trade Representative (USTR) is calling for a provision that would prevent websites from being held liable for content posted on their site by third parties, known as intermediary liability protection. The USTR also wants to prevent governments from forcing companies to hand over proprietary algorithms to gain market access, the sources said.
“Those are some of the areas where the discussions will be intense,” Kenneth Propp, director of policy for BSA |The Software Alliance, told Bloomberg Law Nov. 15.
Advances in technology and changing global dynamics in internet governance make the additional provisions necessary, tech groups have said. And etching them into NAFTA would set the bar for future trade agreements, they said.Such provisions are more challenging to negotiate because they weren’t included in the digital chapter drafted by the three countries in 2015 during their last major trade negotiation—the Trans-Pacific Partnership (TPP). President Donald Trump withdrew from the TPP earlier this year. But the provisions are still championed by tech and internet trade groups like BSA and the Internet Association, which represents companies like Facebook Inc. and Amazon.com Inc. Mexico, Canada and the U.S. seem closer to agreement on the digital trade provisions for NAFTA that were included in the TPP, such as those that ensure cross border data flows and ban the trio of nations from requiring local data storage, sources said.
Review sites, social media platforms and other publishers in the U.S. have thrived under a law — Section 230 of the Communications Decency Act of 1996 — that shields them from liability stemming from content posted by their platforms’ users. But Mexico and Canada, lacking similar laws, need additional time to mull whether, and how, domestic regulation should be developed, sources said.
The USTR is also trying to prevent governments from demanding tech companies’ algorithms in exchange for market access. Search engines, social media publishers, e-commerce websites, and other tech companies develop programming algorithms, or batches of code that calculate or solve problems. Algorithms help companies automate and maximize business tasks, like targeting advertisements or customizing search engine results. Tech companies are facing heightened political pressure worldwide to be more transparent about their algorithms, as lawmakers want to better understand issues like why certain companies are listed above others in search results, or how fake news spreads on the web. Tech industry advocates have said these are legitimate concerns, but they must be balanced with companies’ rights to protect their intellectual property.
More controversial proposals outside of the digital sphere, and political threats to pull out of the agreement, have led to concerns that the trade deal could collapse.
Tech trade groups like BSA and ITI, which represents Alphabet Inc.'s Google and Microsoft Corp., said they’re pushing for successful modernization of NAFTA— the only trade deal moving forward that could include digital trade provisions the tech and internet sector see as crucial for the global growth now that the U.S. is out of the TPP. These provisions would also benefit other traditional industries that have grown more dependent on technology and data flows, they said. “We intend to play as strong a role as we can because the stakes are huge and not just for our sector,” Josh Kallmer, ITI’s senior vice president of global policy, told Bloomberg Law Nov. 15. The fifth round of negotiations is scheduled for Nov. 17-21 in Mexico City.
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