U.S.-Mexico-Canada Agreement Enables the Digital Economy

Minutes before a midnight deadline on October 1, the U.S., Mexico and Canada agreed on a new trade pact to replace the previous North American Free Trade Agreement (NAFTA). The new trade agreement is known as the U.S.-Mexico-Canada Agreement (USMCA) and contains 34 chapters and various side letters, covering everything from tariffs and non-tariff barriers, to intellectual property rights protection and cybersecurity cooperation. All critical components of the connected, digital economy.

While NAFTA was beneficial to Cisco and the U.S. technology sector, the new agreement significantly expands those benefits by:

• Prohibiting the governments from requiring localization of communications infrastructure
• Restricting the governments’ ability to constrain cross-border data flows
• Promoting the use of risk-based approaches to cybersecurity
• Requiring governments to recognize telecom certification test reports from each other’s countries
• Promoting flexibility in approaches to telecom regulation, encourages light-touch approaches to value-added telecom services, and provides safeguards to help protect technology choice
• Binding Mexico to its Telecommunications Reforms passed in 2013, as well as to implementing regulations promoting effective competition
• Improving protection for intellectual property rights, including criminal and civil prosecution of trade secret misappropriation
• Enhancing customs-related trade facilitation by providing for advanced rulings and requiring governments to post trade documentation on the Internet
• Allowing for freer trade in remanufactured goods

One missed opportunity was that the U.S. and Canada failed to secure a commitment from Mexico to join the Information Technology Agreement (ITA). However, on balance, the USMCA achieves its goal of modernizing NAFTA and representing a positive step forward in the promotion of North American economic integration.

Cisco looks forward to working with the U.S. Congress, the Mexican Senate and the Canadian Parliament to secure passage of the implementing legislation for this valuable agreement.

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