A new NAFTA for the digital age

Trade has gone digital and our agreements need to reflect this reality. The renegotiation of the North America Free Trade Agreement (NAFTA) is an opportunity to bring our trade agreements into the 21st century and the administration shouldn’t let it pass us by.

At its signing ceremony in 1993, President Clinton declared, “ours is now an era in which commerce is global and in which money, management, technology are highly mobile.” At the time, the internet was still in its nascent stage, and optimistic estimates put the number of users between 20 million to 30 million worldwide. Nearly 25 years later, as we head into the sixth round of the NAFTA renegotiations, there are approximately 3.8 billion internet users worldwide — half the world’s population — and we’re more interconnected than ever.

The explosion of internet users during the past two decades and the digitization of the global economy has fundamentally changed the way we trade, and has enabled more Americans to benefit from trade. A McKinsey study from 2016 found 86 percent of tech-based startups surveyed were involved in some form of cross-border activity. The same study also found digital flows now have a larger impact on global GDP growth than trade in traditional goods.

{mosads}Hundreds of thousands of U.S. small businesses in nearly every sector of the economy and in every congressional district in the country are harnessing the power of the internet and technology to reach new customers around the world. In addition, digital trade is now a main driver of U.S. economic strength and accounts for more than half of U.S. services exports. Online exporters in the United States also run a massive $159 billion trade surplus in digitally services, which supports millions of high-paying American jobs. 

While there was healthy debate about the Trans-Pacific Partnership (TPP), the 2015 agreement made landmark strides on digital trade, and would have established strong rules governing digital trade in some of the world’s fastest growing economies. As a result, it is more important than ever that the renegotiated NAFTA include a digital trade framework that builds on the progress of TPP, is consistent with the congressionally mandated negotiating objectives in Trade Promotion Authority, and sets a strong precedent for any future trade agreements.

Specifically, the new NAFTA must ensure information can flow freely across national borders, uninhibited by government restrictions that are fundamentally inconsistent with the transnational, open and decentralized nature of the internet. NAFTA should also include rules that prevent forced technology transfers, prohibit customs duties on digital transmissions, establish meaningful de minimis thresholds and provide appropriate limitations on liability for internet service suppliers for third-party content.  

NAFTA also needs to include strong intellectual property protections that promote exports and protect our companies that excel in innovation, research and creative content. At the same time, the intellectual property chapter of NAFTA should include a copyright framework consistent with the 21st century digital economy. Critical to this effort is the balanced approach to copyright that is enshrined in U.S. law. This approach has enabled U.S. digital service providers — from cloud services to social media — to expand their domestic and global footprints, and support good jobs in the United States, while allowing consumers to legally access content.

This weekend, I will join a bipartisan group of my colleagues from the House Ways and Means Committee in Montreal as U.S. Trade Representative Robert Lighthizer begins the next round of NAFTA renegotiations. America is home to many of the world’s most innovative companies, which is why I will stress the critical need for him to let the substance drive the timeline, and make sure the renegotiated NAFTA reflects the thriving 21st century digital economy.

Congresswoman Suzan DelBene represents Washington’s First Congressional District. She serves on the House Ways and Means Committee, which has jurisdiction over trade issues, and is co-chair of the Digital Trade Caucus.