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Updated NAFTA Negotiation Objectives Show Promise on Digital Trade, Balanced Copyright

· November 20, 2017

On Friday afternoon, the United States Trade Representative (USTR) released updated objectives for the renegotiation of the North American Free Trade Agreement (NAFTA). Widely anticipated by industry and the trade community, the new objectives provide an overview of U.S. priorities for the agreement five negotiation rounds in. Under the Trade Priorities and Accountability Act of 2015, USTR must “regularly update” the public on U.S. objectives following the start of negotiations. Prior to Friday’s release, USTR had not yet fulfilled this obligation with respect to NAFTA, and Senator Ron Wyden recently pressed USTR to comply with this aspect.

After concerning reports about the removal of critical safe harbors for online intermediaries in the earlier rounds and a lack of clear commitments in the original set of priorities released in July, USTR’s commitment to modernizing the agreement to better reflect the digital economy was questionable. These updated objectives represent significant progress on digital trade priorities and shed necessary light on the ongoing process, but the objectives still fall short with respect to ensuring liability protections for intermediaries for third party content paralleled in U.S. law.

Industry stakeholders have argued throughout the renegotiation process (most recently in a joint-association letter to the Administration this past Wednesday) that the U.S. must pursue protections for online intermediaries and balanced copyright rules such as limitations and exceptions. The original summary of the U.S. position released in July failed to include explicit references to either commitment, however.

The two following additions of clear commitments are a significant step in the right direction to fulfill these goals:

  1. A commitment to “[e]stablish rules that limit non-IPR civil liability of online platforms for third party content, subject to NAFTA countries’ rights to adopt non-discriminatory measures for legitimate public policy objectives.” (emphasis added)
  2. A commitment to “seek provisions governing intellectual property rights that reflect a standard of protection similar in U.S. law  . . . including, as appropriate, exceptions and limitations[.]” (emphasis added)

With respect to the latter, the explicit reference to exceptions and limitations is welcome and shows an acknowledgement by USTR of the importance of balanced copyright in trade agreements. However, it is not clear whether the position of the U.S. is to also pursue other balanced copyright protections enshrined in U.S. law such as Section 512 of the Digital Millennium Copyright Act (DMCA). The Section 512 safe harbors provide critical protection for intermediaries from liability for third parties’ content that may infringe copyright. It is concerning to see that the new objectives seem to recognize the importance of intermediary liability, but only for non-intellectual property content (see #1). This position has no bearing in U.S. law. Section 512 of the DMCA is just as critical to the U.S. economy as Section 230 of the Communications Decency Act (which provides that online platforms not be liable for the non-IPR related speech of their users).

It is also important to note that the objectives still include technological protection measures (TPMs). As DisCo has explained, the legislative history of the DMCA illustrates how closely linked TPMs are to the Section 512 safe harbors. These two provisions represented a carefully struck balance for rightsholders to protect content while allowing for the proliferation of online services. The U.S. should commit to upholding the “grand bargain” of the DMCA in NAFTA as set out in prior trade objectives.

The U.S. will truly be at a disadvantage if it pursues positive digital trade provisions such as data flows but neglects to also include other critical protections in U.S. law that the digital economy depends upon. The successful adoption of the two commitments above in the final text of the agreement will ensure that NAFTA 2.0 promotes digital trade and will enable innovation in the North American market.

Digital Trade

Companies rely on clear, predictable rules that facilitate digital trade to export their products and services around the world. These rules include balancing the competing interests between encouraging investment and enabling information access; promoting the free flow of information online; and maintaining balanced intermediary liability regimes.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.