When the United States negotiates trade agreements, it has the chance to give startups a similar legal framework abroad that they rely on domestically. This is critically important for smaller companies looking to effectively compete in an increasingly global ecosystem. While Congress still has the ability to update that digital legal framework as it sees fit, the inclusion of digital trade protections in trade agreements gives startups the certainty they need to compete globally.
That’s why Engine was pleased to see digital trade language included in the U.S.-Japan trade agreement, which was ratified in Japan on Wednesday. At the same time, it’s why we are concerned by recent reports that Speaker Nancy Pelosi (D-Calif.) is pushing to remove intermediary liability protections from the United States-Mexico-Canada Agreement (USMCA), currently in its final stages of negotiations. These protections, which have been enshrined in U.S. law for over two decades as part of Section 230 of the Communications Decency Act, protect Internet startups from potentially ruinous legal liability for hosting user-generated content. These provisions are not the “boon” for big tech firms that critics make them out to be; rather, the protections found in CDA 230 and in Article 19.17 of USMCA help companies of all sizes host and potentially remove user-generated speech without the fear of facing ruinous, frivolous litigation.
The advent of digital trade has allowed for exceptional growth of the global economy. It has allowed companies, both old and new, to communicate with and reach consumers inexpensively and with relative ease. But the natural growth of digital trade that came with the proliferation of the Internet has brought with it the usual difficulties of country-specific laws and trade barriers which bring uncertainty to entrepreneurs seeking to expand their ventures abroad.
The claim that intermediary liability protections should not be included in USMCA because the issue is under discussion in Congress misses the mark. Not including standard provisions of U.S. law in trade agreements because Congress may choose at some point to legislate would result in rarely or never engaging in trade agreements. Moreover, including these provisions in USMCA in no way ties Congress’ hands in legislating on intermediary liability in the future. In fact, nothing in USMCA prohibits Congress, or the legislative bodies in Canada and Mexico, from addressing intermediary liability in their respective countries. Rather, the inclusion of these provisions provides certainty to small businesses and startups seeking to expand their reach across an increasingly connected world, with some certainty that they will not be forced to quickly shut down due to the costs of frivolous litigation in their efforts to expand outside the country.
While some have pointed to a letter Chairman Pallone and Ranking Member Walden sent to USTR regarding Section 230-like language in future trade agreements as proof that Article 19.17 should not be included in USMCA, this letter instead asked for consultation on platform liability provisions between the Energy and Commerce Committee and USTR prior to their inclusion in future trade agreements after USMCA. The letter was not demanding the provisions be stripped out of USMCA. Following Pelosi’s remarks this week, Energy and Commerce ranking member Greg Walden (R-Ore.) cited the letter but said on Twitter, “Let me be clear[,] I support the #USMCA. ... Let's get it done.”
Other critics of Section 230 and similar language in trade agreements have made inaccurate claims that platforms themselves use 230 to justify blatantly illegal activity. Section 230 in no way protects platforms that violate federal law. Perpetuating this false narrative not only creates more uncertainty for emerging companies seeking to host user-generated content, but it endangers the ability of companies large and small to become globally competitive moving into the future.
Earlier this week, Engine submitted comments to the House Ways and Means Subcommittee on Trade following the panel’s November 20th hearing on the U.S.-Japan trade agreement, which included a discussion about making digital trade provisions a component of international trade deals. We noted in our comments that these digital trade provisions are critical because they allow startups “to compete in the increasingly global tech ecosystem.”
Simply put, enshrining digital provisions rooted in U.S. law is good for American businesses and is crucial for startups and small businesses to even consider entering a globally competitive marketplace. Engine applauds the inclusion of these provisions in the U.S.-Japan agreement and strongly encourages these provisions to continue to be included in USMCA and any future trade agreements the U.S. pursues.
