The U.S. and Canada have long had close cultural, historical, and economic ties. Since the institution of free trade under the North American Free Trade Agreement (NAFTA) and the growth of the Internet and the digital economy, these ties have grown even closer.
CompTIA hosted its Technology Councils of North America (TECNA), including the seven Canadian Technology Councils, for a day of meetings to discuss the new United States-Mexico-Canada Agreement (USMCA or “NAFTA 2.0”) prior to its annual Fly-In. Among CompTIA’s 2019 Policy Priorities is advocacy efforts to secure congressional approval of the USMCA.
The USMCA includes provisions on digital trade and intellectual property that are bound to positively affect the technology industries and the growth of the digital economy across North America. CompTIA welcomed speakers from the Embassy of Canada and the Department of Commerce to speak to attendees about USMCA and its implications for technology companies.
Here are some of the key takeaways from the meeting included:
Data Flows
The USMCA’s new digital trade provisions prohibit data localization and enables cross-border data transfers. Under the agreement, governments will not be able to force private companies to localize data which directly counters digital protectionism that has become increasingly problematic for U.S. technology companies doing business around the world.
Intellectual Property
Unlike NAFTA, the USMCA prohibits governments from forcing private companies to disclose their proprietary source code and algorithms.
Privacy
The USMCA includes provisions to protect privacy and encourages the countries to work together to expand the interoperability of privacy frameworks across the globe, including the Asia Pacific Economic Cooperation's Cross Border Privacy Rules.
Section 232 Tariffs
An obstacle for the USMCA’s advancement is the Section 232 tariffs. In May 2018, President Trump used Section 232 of the 1962 Trade Expansion Act to impose a 25 percent tariff on steel and a 10 percent tariff on aluminum imports, including those imports from Canada and Mexico. And in turn, Canada and Mexico retaliated by imposing tariffs on American steel, aluminum, agricultural, and other products. The tariffs have faced strong opposition by industries on both sides of the border, as well as Congressional leadership. .
Though the Section 232 tariffs and its countermeasures are not directly related to the tech industry, it is part of the broader political discourse that will impact the ratification of USMCA. If the tariffs are not removed and the situation not resolved, USMCA may not be ratified by the participating governments.
Mexico’s Domestic Reforms
Another challenge facing the USMCA includes labor reforms in Mexico. Before USMCA can be instituted, the Mexican government must pass a number of labor reforms, including giving workers the right to form unions and protecting women from workplace discrimination. However, the current budget has no money set aside for enforcing these reforms.
Next Steps
Though the future of the USMCA is unclear, both the speakers and attendees of the event expressed optimism for the potential USMCA has to establish new trade commitments to facilitate growth of the global digital economy. Stay tuned as CompTIA will continue to work with technology leaders throughout North American to discuss the USMCA and the new rules that stand to benefit the technology industry.
