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Sources: Digital trade text on the table in first NAFTA round

August 17, 2017

Digital chapter texts to be included in the updated North American Free Trade Agreement were slated to be tabled by the U.S. at the first round of talks this week, industry and congressional sources told Inside U.S. Trade.

The U.S. delegation was “very actively coordinating” on text for an e-commerce provision last week, Kenneth Propp, director for global trade policy at BSA | The Software Alliance, told Inside U.S. Trade on Aug. 17. He added that U.S. negotiators, coordinating across agencies, hoped to put “quite a bit of text on the table” during the first round.

“It has been reinforced in recent meetings we have had that they understand digital trade is – to a significant extent – the 'modernization' in modernizing NAFTA,” Propp said.

Some sources said the text on the digital trade chapter was tabled during talks today.

Propp said e-commerce was an area with a “strong basis for commonality” among all parties.

Mexico, in its negotiation objectives released earlier this month, included the digital economy and e-commerce among its key priority areas for NAFTA. Canadian officials have also identified e-commerce as an area ripe for modernization in the talks.

The U.S., meanwhile, last month issued a summary of its negotiating objectives that included four digital trade pillars, two of which are identical to those outlined in the Office of he U.S. Trade Representative's summary of its objectives for the Trans-Pacific Partnership in 2015. The digital trade objectives were challenged by some trade analysts and lawmakers as lacking ambition and clarity.

Propp and others have pointed to the Trans-Pacific Partnership – to which Canada and Mexico are parties – as a likely starting point for an e-commerce chapter in NAFTA.

“We believe that TPP by and large will serve as the basis of the U.S. text for the e-commerce chapter,” he said, adding that the negotiators would not limited to it but would “at least” use it at as a platform.

Others at the round have questioned whether Canada and Mexico would accept TPP text as a starting point, claiming that doing so would amount to an immediate concession for the two countries.

Canada could also scoff at provisions the U.S. may try to include on banning data localization or rules governing forced data transfer, sources said. Those issues could also be covered in a text on cross-border services, these sources said.

Michael Geist, research chair for internet and e-commerce law at the University of Ottawa, believes those issues, which were addressed in TPP, will be covered in the NAFTA talks.

“The Trans Pacific Partnership included restrictions on data localization requirements at the insistence of U.S. negotiators. Those provisions are likely to resurface during the NAFTA talks,” he said in a recent blog post.

BSA members pitched a digital trade agenda in May, advocating limiting market access barriers and discrimination against “innovative software services.” Propp said the group pushed similar pillars in a series of recent meetings with USTR. He said the group also believes the protection of forced transfer of source code as a condition of entry should include algorithms.

“We believe algorithms are also deserving of protection against that type of conduct and we have urged that in these discussions,” he said. -- Isabelle Hoagland (isabelle.hoagland@iwpnews.com)

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