Congress will soon debate and vote on the United States-Mexico-Canada Agreement, or USMCA, a monumental deal that modernizes North American trade for the 21st century. The new pact contains a host of critical provisions that protect and stimulate digital commerce.
By establishing modern digital trade rules, USMCA will help American tech businesses drive economic growth and create jobs in the United States and our neighboring nations.
“Digital trade” encompasses a wide variety of activity. Any time a business in one country uses the internet to deliver their services abroad, that’s digital trade. When firms sell software or cloud-computing services overseas, that’s also digital trade. Collecting, storing, and analyzing cross-border data also qualifies.
America is home to the world’s most innovative tech companies. The United States International Trade Commission calculated that in 2011 — the most recent figures available — digital trade had increased U.S. employment by up to 2.4 million positions.
The Commerce Department also estimated that services exports, potentially enabled by information and communication technology to Canada and Mexico, in 2017 totaled $31 billion and $9.2 billion, respectively.
These numbers are impressive, yet likely conservative, understating the real economic value of digital trade. After all, many digital services, including smartphone apps, maps and directions, email, and social media platforms, are free for users. These services create economic value that isn’t fully captured by the Commerce Department’s report.
USMCA’s digital provisions would further expand this trade and its myriad benefits.
In addition to providing for a precedent-setting obligation on cross-border data flows, the proposed deal is helpful in at least three more ways.
First, the proposed deal includes financial data, effectively expanding opportunities for America’s banking, insurance, and, likely, nontraditional industries that may want to offer innovative “fintech services.”
Second, the agreement encourages the use of electronic signatures, a sector in which U.S. firms are the overwhelming leaders.
Third, the USMCA encourages open government data, another worthy public objective that my trade association supports domestically as well as internationally. In this context, it is entirely possible and appropriate to support open government data while at the same time respecting private sector-developed, proprietary data.
USMCA protects technology companies’ proprietary data. Specifically, the agreement prevents countries from requiring companies to reveal their software source codes and algorithms. These protections would make it harder for governments to steal companies’ intellectual property and give it to their own domestic firms. By safeguarding intellectual property, USMCA rewards and encourages innovation.
Importantly, USMCA calls on each of the three signatory nations to adopt frameworks for protecting consumer privacy. The agreement reaffirms each nation’s commitment to the rigorous cross-border privacy rules established by the Asia-Pacific Economic Cooperation. This allows each nation to safeguard individual privacy without clamping down on cross-border data flows, a win for businesses and consumers alike.
USMCA strengthens America’s position in the global marketplace. The digital provisions of USCMA offer a critical alternative to China’s increasing restriction of data flows within and across its borders. This freedom-first approach will attract more firms and capital to the United States, further boosting job creation and enhancing our global leadership.
The trade pact’s prospects in Congress look increasingly bright. The deal already enjoys resounding bipartisan support. And the Trump administration just removed tariffs on Mexican and Canadian steel and aluminum, a key demand of several influential lawmakers.
Digital trade is crucial for American prosperity. USMCA protects that trade by safeguarding the free flow of data between nations. Congress should ratify USMCA quickly so that Americans can start reaping the deal’s benefits.
Jeff Joseph is the president and CEO of the Software & Information Industry Association (SIIA).
