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Thursday, Jul 12, 2018, 3:34 pm

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

BY David Dayen

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Companies are using the trade deal to handcuff Congress and protect themselves from regulation.   (Jaap Arriens / NurPhoto / Getty)

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 newscyber-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 Backpage.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 Backpage.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.

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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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