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Does the Chamber of Commerce have an internal conflict on USMCA?

by Resurgent Insider Read Profile arrow_right_alt

Impeachment may be dominating national news, but work aimed at making the US-Mexico-Canada trade agreement (USMCA) law continues in Washington, DC. 

As much as this was supposed to be the top agenda item for the Trump administration this fall, it turns out that passage is hardly a done deal.

Politico reports today that the administration is aiming to strike a deal with House Democrats on proposed changes to the agreement this week. 

Phoenix prosecutor Rachel Mitchell questions Christine Blasey Ford as Senators, from left, Sen. Ben Sasse, R-Neb., Sen. Ted Cruz, R-Texas, Sen. Mike Lee, R-Utah., and Sen. John Cornyn, R-Texas, listen during the Senate Judiciary Committee hearing, Thursday, Sept. 27, 2018 on Capitol Hill in Washington. (Tom Williams/Pool Image via AP)

Whether labor unions choose to oppose it or remain neutral could be the deciding factor in determining whether it or not it passes (apparently Big Labor remains insufficiently happy with the agreement despite the fact that it contains big giveaways to Big Labor, like the requirement that to avoid tariffs, 40 percent of a car must be manufactured in a factory with an average wage of at least $16 per hour).

But there are other issues plaguing USMCA as well. One of them is a lack of complete alignment on it within the US business community, as purportedly represented by the US Chamber of Commerce—an organization that has traditionally positioned itself as right-of-center but increasingly has taken policy stances that demonstrate it is as interested in cronyism as free market principles, or philosophical consistency. 

While on balance, the US business community would rather have the certainty associated with USMCA passing and becoming law than the current uncertainty regarding free trade in North America, some in big business are unhappy with “Big Tech giveaways” they have spotted in the USMCA language. They want the agreement tweaked, or at a minimum for big business groups like the Chamber to lobby against those giveaways being included in future trade deals, such as the US-Japan agreement and a post-Brexit US-UK free trade agreement.

The “Big Tech giveaways” in question are USMCA’s provisions that basically make Section 230 of the Communications Decency Act (CDA) and Section 512 of the Digital Millennium Copyright Act (DMCA) the standard protecting Big Tech from incurring liability for hosting pirated content across three countries.

Passage of USMCA without a rewrite of those provisions would mean that unreformed Section 230 and Section 512 continue to apply in the US as a result of trade agreements at a time when conservatives in Congress including Sen. Ted Cruz have been advocating their reform, and companies that rely on strong intellectual property rights protection for their market standing are concerned about limited protections already being eroded by Big Tech’s bad behavior.

The US Chamber does not publicize a list of its members, but it’s virtually inconceivable that Tech giants like Google and Facebook are not members, considering its other policy endeavors that are reflective of Facebook and Google priorities, such as on high-skilled immigration.

Even if those specific companies are not members, plenty of companies who want USMCA passed with no revisions for simplicity’s sake, and because getting a better agreement is just too danged hard, are. 

At the same time, the US Chamber continues to maintain its Global IP Center, reinforcing that it has a conflict here: With the exception of the pharmaceutical industry, which got special treatment with regard to its intellectual property rights protection in USMCA, strongly pro-property rights companies are not enthusiastic about the agreement and ultimately might not be too upset if it did not pass.

USMCA has created a dilemma for conservatives, most of whom favor free trade and don’t want to see more trade wars and tariffs should USMCA fail, but some of whom also argue USMCA is a sufficiently weak deal that it’s almost not worth bothering with. 

Not only does it contain these giveaways to Big Tech at a time when Big Tech has become an incredibly hated industry on the right. It also already encompasses giveaways to Big Labor that are not present in its predecessor, the North American Free Trade Agreement (NAFTA). 

In all probability, most of the US business community—and most conservatives—would probably prefer to see NAFTA left on the books as is, as opposed to USMCA passed. However, the Chamber has made USMCA passage by Christmas a priority despite these flaws, the intellectual property rights variety of which obviously risk alienating a bunch of the Chamber’s own members.

So, once again, we may see the Chamber hamstring itself due to internal conflicts, and fail to champion legitimately free market principles because some of its members are more interested in securing government handouts or a swift, if philosophically unsound, resolution of a problem rather than advancing free market policy—its ostensible aim. 

Watch to see how much of a fuss Senate conservatives like Cruz make about USMCA’s Big Tech giveaways. In practice, there may be no rewriting the deal now, and tearing it down may ultimately be more dangerous than allowing it onto the books as flawed as it is. But there is ample opportunity for a stink to be made so that future trade agreements don’t look like this one—whether on the Big Labor or Big Tech giveaways count.

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