Modernized Trade Deals Need Pro-Startup Policies

If the U.S. is going to “modernize” its trade agreements, we need to make sure the deals take into account the startup ecosystem that makes up so much of our 21st century economy.

Trade negotiators are meeting in Washington, D.C. this week to kick off efforts to renegotiate the North American Free Trade Agreement, or NAFTA. The wide-ranging trade deal between the U.S., Mexico, and Canada covers everything from auto manufacturing to government contracts.

Those areas may seem like a far cry from the on-demand apps and machine learning software that you think of when you hear “startup economy,” but NAFTA has major implications for startups in the U.S. that do business abroad or plan to do business abroad.

In comments we filed earlier this summer with the Office of the U.S. Trade Representative, we pushed for negotiators to include pro-startup policies and avoid altering trade deals in ways that would harm startups as they look to modernize NAFTA.

NAFTA should incorporate the protections in U.S. law that have allowed the Internet and startup economy in the U.S. to thrive. That includes intermediary liability protections like those found in Section 230 of the Communications Decency Act and balanced copyright rules, including fair use principles and the safe harbor protections found in the Digital Millennium Copyright Act. NAFTA should also avoid imposing increased burdens on digital trade that would cripple small businesses, including costly customs inspections, duties, taxes, or other barriers to digital products and services.

And U.S. negotiators should push back on attempts by other countries to make it harder for U.S. small businesses to do business abroad. Specifically, negotiators should push back on any proposals that would require U.S. companies to manage, store, or process data locally and any proposals that would require U.S. companies to give preferential treatment to local content. Negotiators should also avoid efforts to let foreign governments require backdoor access into encrypted U.S. products and services and efforts to let foreign government impose complex and unnecessary licensing requirements.

Modernizing NAFTA means making sure the trade deal keeps up with our 21st century economy. To do that, negotiators need to further the protections and flexibility in U.S. law that are responsible, in part, to the country’s vibrant startup economy.