Tech Corporations Reportedly on the Verge of a Major Coup in NAFTA Negotiations

David Dayen July 12, 2018

Companies are using the trade deal to handcuff Congress and protect themselves from regulation.

If you ask Don­ald Trump’s eco­nom­ic team, there’s a method to his mad­ness of trig­ger­ing painful trade wars. He’s impos­ing tar­iffs to force coun­tries to the nego­ti­at­ing table, in order to set America’s terms of trade with the rest of the world. The first sal­vo is the NAF­TA nego­ti­a­tions with Cana­da and Mex­i­co, which have gone through eight rounds since last year and could restart as soon as August.

Trump isn’t per­son­al­ly run­ning the show. The head nego­tia­tor, U.S. trade rep­re­sen­ta­tive Robert Lighthiz­er, is a trade rem­e­dy lawyer with a core inter­est in man­u­fac­tur­ing, and he has tak­en some posi­tions that align with long-sought pro­gres­sive pri­or­i­ties, like lim­it­ing incen­tives for cor­po­rate outsourcing.

But with these promis­ing devel­op­ments also come dispir­it­ing ones, includ­ing the kind of cor­po­rate back­room deal­ing that has soured pro­gres­sives on trade agree­ments for decades. Despite vow­ing to put Amer­i­ca first, the Trump admin­is­tra­tion is facil­i­tat­ing poli­cies that use trade to over­ride U.S. law.

Accord­ing to five sources close to the talks, the U.S. is near to sign­ing off on a dig­i­tal trade chap­ter that would give Inter­net ser­vice providers like Com­cast and plat­forms like Face­book broad immu­ni­ty from lia­bil­i­ty if their users post ille­gal or pirat­ed content.

This frame­work, large­ly sim­i­lar to Sec­tion 230 of the 1996 Com­mu­ni­ca­tions Decen­cy Act, would be includ­ed in a mul­ti­lat­er­al trade deal for the first time, as a pre­lude to mak­ing it a glob­al stan­dard — a major coup for the tech industry.

An end run around Congress

The irony here is that Con­gress just got fin­ished rolling back some of Sec­tion 230 by hold­ing tech firms direct­ly respon­si­ble for host­ing sex traf­fick­ing activ­i­ty. Just months after Trump signed that bill into law, could trade nego­tia­tors effec­tive­ly nul­li­fy it through NAF­TA, deliv­er­ing a huge win to Sil­i­con Valley?

It’s amaz­ing, the assault that’s con­tin­u­ing,” says Mary Mazz­io, a film­mak­er who led the activist effort to get the sex traf­fick­ing bill, known as SESTA/FOSTA, passed. Google is tak­ing aim with NAF­TA, try­ing to export the issue around the world. It’s obscene.”

Opin­ions are def­i­nite­ly split on SESTA/FOSTA. There are cred­i­ble claims that the law has made sex work more dan­ger­ous by forc­ing work­ers back into the clutch­es of pimps. But Con­gress worked its will and set pol­i­cy, as the Con­sti­tu­tion allows. And the way in which trade agree­ments have become almost a fourth branch of gov­ern­ment, able to super­sede sov­er­eign law, has long con­cerned crit­ics of the mod­ern trade agen­da. There are decades of exam­ples of trade agree­ments being used as deliv­ery mech­a­nisms for pol­i­cy changes that would not sur­vive the sun­shine of a leg­isla­tive process,” says Lori Wal­lach of Pub­lic Citizen’s Glob­al Trade Watch.

The Trump admin­is­tra­tion will aggres­sive­ly defend Amer­i­can sov­er­eign­ty over mat­ters of trade pol­i­cy,” the trade representative’s office bold­ly stat­ed in a March 2017 report to the WTO. Then what are we to make of Sil­i­con Valley’s poten­tial­ly huge vic­to­ry, revers­ing a huge leg­isla­tive loss of just a few months ago?

Who’s to blame for ille­gal web content?

Tech­nol­o­gy experts cred­it Sec­tion 230 for the Internet’s sur­vival. The pro­vi­sion allows sites to host user-gen­er­at­ed con­tent with­out incur­ring heavy fines for ille­gal activ­i­ty, which arguably would have stran­gled com­pa­nies like Face­book and YouTube in the crib. Accord­ing to its defend­ers, Sec­tion 230 enables web­sites to let mil­lions of users to post instant­ly, allow­ing for clas­si­fied ads on Craigslist, user reviews on Yelp or Ama­zon, and con­stant streams on Twit­ter. The music and movie indus­tries have long hat­ed Sec­tion 230, how­ev­er, because they feel their prod­ucts are being used with­out their per­mis­sion or compensation.

But episodes like fake news, cyber-scams and dis­crim­i­na­to­ry adver­tis­ing have dam­aged Big Tech’s pub­lic image and point­ed out the harm that Inter­net users (includ­ing adver­tis­ers) can do. The threat is not lim­it­ed any­more to post­ing the blink­ing white guy gif with­out com­pen­sat­ing the TV show it was pulled from. Web users are using tech plat­forms to sell opi­oids, pirate entire films and albums, or stalk their girl­friends. Add to that the Cam­bridge Ana­lyt­i­ca scan­dal and the threats to elec­tions, and Con­gress has been more hos­tile to Big Tech in the past few months than they have been in the his­to­ry of the Internet.

Sec­tion 230 could lim­it Big Tech’s lia­bil­i­ty for such con­duct by let­ting web­sites shift the blame onto users who post mis­lead­ing infor­ma­tion or adver­tis­ers who dis­crim­i­nate. This has led law­mak­ers to recon­sid­er the wis­dom of hand­ing some of the world’s most pow­er­ful com­pa­nies what amounts to a get-out-of-jail-free card.

Sec­tion 230 already had excep­tions for crim­i­nal law, and still Con­gress felt the need to write SESTA/FOSTA. That’s because courts were con­sis­tent­ly rul­ing in favor of web­sites like Back​page​.com that ran online pros­ti­tu­tion ads, uphold­ing Sec­tion 230 regard­less of the crim­i­nal excep­tion. Expand­ing Sec­tion 230 into trade deals would leave lia­bil­i­ty up for inter­pre­ta­tion in the courts, with unpre­dictable results.

Even if SESTA/FOSTA could still go for­ward, the con­ver­sa­tion here isn’t only about sex traf­fick­ing,” says one source involved in trade issues. Face­book fil­ter­ing tools allow adver­tis­ers to exclude cer­tain races from see­ing hous­ing or job list­ings. If a coun­try want­ed to charge Face­book with vio­lat­ing anti-dis­crim­i­na­tion laws for that, a Sec­tion 230-style trade rule could release the site from lia­bil­i­ty. Web­sites that enable finan­cial scams or for­eign elec­tion med­dling or ille­gal mar­ket­ing to chil­dren could get off the hook the same way.

You could have web­sites cre­at­ed that are untouch­able,” said Rick Lane, a for­mer lob­by­ist who worked with activists on SESTA/FOSTA. It’s a per­fect world if you want to be a bad per­son. It’s mak­ing the cur­rent Inter­net the dark Web.”

From TPP to NAF­TA: Google and Microsoft’s long quest

With Sec­tion 230 under threat of broad revi­sion by Con­gress, firms like Google and Microsoft have tried to cement it into trade deals. Accord­ing to sources famil­iar with the mat­ter (who request­ed anonymi­ty because they con­tin­ue to lob­by on trade issues), tech lob­by­ists first sought a place for Sec­tion 230 in the Trans-Pacif­ic Part­ner­ship years into the long nego­ti­a­tions. But it was too late to get it through the inter­a­gency process required for trade agree­ments. Then they turned to the Trade in Ser­vices Agree­ment (TiSA), a sprawl­ing deal with over 50 coun­tries. Sec­tion 230-style lia­bil­i­ty was present in leaked text of the agree­ment. But that deal has foundered since Trump’s election.

With NAF­TA, [tech com­pa­nies] were much bet­ter pre­pared,” says one source. The Inter­net Asso­ci­a­tion and the Com­put­er and Com­mu­ni­ca­tions Indus­try Asso­ci­a­tion, which direct­ly rep­re­sent the tech plat­forms, have argued stren­u­ous­ly for incor­po­rat­ing Sec­tion 230 into the deal. So have dozens of civ­il soci­ety orga­ni­za­tions and aca­d­e­mics, many of whom get fund­ing from Google and oth­er tech firms. Tech defend­ers in Con­gress like Rep. Suzan Del­Bene have also writ­ten op-eds in sup­port of Sec­tion 230 inclu­sion, though a bipar­ti­san group of four Con­gress mem­bers pushed back, call­ing the pro­posed addi­tion at a time when Con­gress was leg­is­lat­ing changes to Sec­tion 230 deeply disturbing.”

While the first set of U.S. nego­ti­at­ing objec­tives didn’t include Sec­tion 230, the revised objec­tives sought to estab­lish rules that lim­it … civ­il lia­bil­i­ty of online plat­forms for third par­ty con­tent.” This is iden­ti­cal in intent to Sec­tion 230’s civ­il lia­bil­i­ty waiv­er. Sim­i­lar lan­guage appeared in a U.S. com­mu­ni­ca­tion in April to the World Trade Orga­ni­za­tion on dig­i­tal trade and e‑commerce, argu­ing that hold­ing Inter­net com­pa­nies respon­si­ble for user con­tent would sup­press vibrant online forums and sti­fle inno­va­tion in ser­vices that depend on user engagement.”

Trade pub­li­ca­tions report­ed in Feb­ru­ary that lia­bil­i­ty was the only out­stand­ing issue for NAFTA’s dig­i­tal trade chap­ter; Cana­da and Mex­i­co were resist­ing its inclu­sion. Nego­ti­a­tions are expect­ed to re-start in late sum­mer or ear­ly fall, with Mex­i­can pres­i­dent-elect Andrés Manuel López Obrador’s advi­sors included.

Adding Sec­tion 230 to NAF­TA would be the biggest ben­e­fit to tech com­pa­nies inter­na­tion­al­ly that I can remem­ber,” says one trade lob­by­ist. Most coun­tries don’t have any­thing like this.”

The Trump admin­is­tra­tion hasn’t exact­ly been friend­ly to the tech indus­try; why would it enable such a huge vic­to­ry? Some have spec­u­lat­ed that, because of his focus on man­u­fac­tur­ing, Lighthiz­er has let chap­ters like dig­i­tal trade fall to career staff, who still sup­port the Oba­ma-era posi­tion on TPP. Oth­ers point­ed to the orig­i­nal author of Sec­tion 230, Ron Wyden, the rank­ing Demo­c­rat on the Sen­ate Finance Com­mit­tee, which cov­ers trade issues. Wyden has aligned with the plat­forms on includ­ing Sec­tion 230 in NAF­TA. With Trump unlike­ly to sign NAF­TA until after the midterms, when the Democ­rats may retake the Sen­ate, pleas­ing Wyden in the dig­i­tal trade chap­ter could be crit­i­cal to get­ting Con­gress to pass the NAF­TA rewrite.

Through a spokesper­son, the office of the U.S. trade rep­re­sen­ta­tive (USTR) declined to com­ment on the specifics of ongo­ing nego­ti­a­tions.” But in dis­cus­sions with cleared advi­sors and lob­by­ists, USTR has main­tained that a clause rein­forc­ing coun­tries’ rights to adopt legit­i­mate pub­lic pol­i­cy objec­tives” would allow SESTA/FOSTA to co-exist with the lia­bil­i­ty pro­tec­tion for the platforms.

Yet Sec­tion 230 already had excep­tions for crim­i­nal law, and still Con­gress felt the need to write SESTA/FOSTA. That’s because courts were con­sis­tent­ly rul­ing in favor of web­sites like Back​page​.com that ran online pros­ti­tu­tion ads, uphold­ing Sec­tion 230 regard­less of the crim­i­nal excep­tion. Expand­ing Sec­tion 230 into trade deals would leave lia­bil­i­ty up for inter­pre­ta­tion in the courts, with unpre­dictable results.

Even if the courts decid­ed that SESTA/FOSTA still held, the con­ver­sa­tion here isn’t only about sex traf­fick­ing,” says one source involved in trade issues. Bak­ing Sec­tion 230 into trade deals could lim­it future reg­u­la­tion. For exam­ple, Face­book fil­ter­ing tools allow adver­tis­ers to exclude cer­tain races from see­ing hous­ing or job list­ings. If a coun­try want­ed to charge Face­book with vio­lat­ing anti-dis­crim­i­na­tion laws for that, a Sec­tion 230-style trade rule could release the site from lia­bil­i­ty. Web­sites that enable finan­cial scams or for­eign elec­tion med­dling or ille­gal mar­ket­ing to chil­dren could get off the hook the same way.

A glob­al legal code writ­ten by corporations?

The Elec­tron­ic Fron­tier Foun­da­tion, an Inter­net civ­il lib­er­ties orga­ni­za­tion that had ben­e­fit­ed from Google fund­ing, has been very explic­it about want­i­ng to hand­cuff U.S. law. NAF­TA comes at a time when Sec­tion 230 stands under threat,” wrote Jere­my Mal­colm this Jan­u­ary. As uncom­fort­able as we are with the lack of open­ness of trade nego­ti­a­tions, bak­ing Sec­tion 230 into NAF­TA may be the best oppor­tu­ni­ty we have to pro­tect it domestically.”

Although the EFF has his­tor­i­cal­ly been seen as a pro­gres­sive orga­ni­za­tion, what they’re describ­ing is the kind of thing that has infu­ri­at­ed pro­gres­sive trade deal crit­ics for years: using trade deals as a back­door route to smug­gle in rules that wouldn’t fly in Con­gress. In fact, oppo­si­tion to weak­en­ing Con­gres­sion­al pre­rog­a­tives in law­mak­ing doesn’t map clean­ly onto left-right lines. This is the kind of thing the Free­dom Cau­cus has typ­i­cal­ly been dis­turbed about,” said Beth Baltzan, a for­mer USTR and Con­gres­sion­al staffer. This is about nation­al sovereignty.”

For decades, trade deals have rou­tine­ly includ­ed chap­ters set­ting food inspec­tion stan­dards, open­ing up state and local gov­ern­ment pro­cure­ment, enforc­ing patent pro­tec­tions for phar­ma­ceu­ti­cals and enter­tain­ment prod­ucts like movies and music, and putting a cap on finan­cial reg­u­la­tions. All of these issues should be gov­erned by con­gres­sion­al statute. But under fast track” rules, Con­gress rat­i­fies trade agree­ments through an up-or-down vote, with­out the abil­i­ty to amend or fil­i­buster. Law­mak­ers must weigh low­er tar­iffs or greater mar­ket access against sov­er­eign­ty-decay­ing pro­vi­sions, and his­tor­i­cal­ly they’ve sub­mit­ted to a president’s wish­es. The way trade deals are nego­ti­at­ed in secret and exe­cut­ed with a Con­gres­sion­al rub­ber stamp allows cor­po­ra­tions a smooth chan­nel to accom­plish their agen­da out­side of Capi­tol Hill.

The Sec­tion 230 fight is a thresh­old issue for the future of glob­al trade. Will these deals enact a cor­po­rate wish list, or will they bal­ance the con­cerns of work­ers and restore nation­al gov­ern­ments’ pre­rog­a­tives to make their own laws? The Trump admin­is­tra­tion has talked a good game; but bend­ing to Sil­i­con Val­ley giants would make that rhetoric ring hollow.

An ear­li­er ver­sion of this sto­ry said that Sec­tion 230 pro­tects Inter­net com­pa­nies from lia­bil­i­ty for copy­right infringe­ment by their users. That is actu­al­ly cov­ered by a dif­fer­ent part of the U.S. Code.

David Dayen is an inves­tiga­tive fel­low with In These Times’ Leonard C. Good­man Insti­tute for Inves­tiga­tive Report­ing. His book Chain of Title: How Three Ordi­nary Amer­i­cans Uncov­ered Wall Street’s Great Fore­clo­sure Fraud won the 2015 Studs and Ida Terkel Prize. He lives in Los Ange­les, where pri­or to writ­ing about pol­i­tics he had a 19-year career as a tele­vi­sion pro­duc­er and editor.
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