Erik Paulsen: Guest opinion: USMCA fuels America's innovation economy
By Erik Paulsen
July 14, 2019
In late June, Mexico ratified the new North American trade agreement. The deal, formally called the United States-Mexico-Canada Agreement, is a much-needed modernization of NAFTA, which was signed more than 25 years ago.
USMCA will catalyze growth across the economy, especially in sectors that rely on strong intellectual property protections. America's creators and innovators depend on lawmakers' quick approval of USMCA as negotiated by its three signatory nations.
Innovation is the heart of the U.S. economy. We're home to the most creative business community in the world, regularly generating groundbreaking intellectual property in every conceivable industry, from movies to smartphones, medicines to drones.
Today, America's Intellectual Property is worth an astonishing $6.6 trillion and accounts for more than half of all U.S. merchandise exports. These vital industries — from tech, to manufacturing, and even agriculture — support more than 40 percent of U.S. economic growth.
IP-intensive companies also employ 45 million Americans — a full third of the labor force. Over the next ten years, job opportunities in IP-intensive industries are expected to grow faster than those in other sectors.
When NAFTA was drafted in the early 1990s, the internet was in its infancy. To most Americans, WiFi, smartphones, and high-speed internet weren't even imaginable. So unsurprisingly, NAFTA is desperately out of date. USMCA modernizes NAFTA to account for several decades of break-neck innovation and establishes a clear, fair framework for American inventors.
For starters, it requires Mexico and Canada to extend their copyright protections to match America's, up to the author's life plus 70 years. This change is crucial to the health of the arts.
The recording industry adds nearly $10 billion a year to the economy. And our movie and television industries are the envy of the world, generating $134 billion in sales in 2016 and supporting more than two million jobs.
Inadequate copyright protections in Mexico and Canada deprive American artists of well-deserved earnings: Local companies are allowed to prematurely create knock-off products and steal sales. This abuse leads to lost revenues, lost jobs, and a hobbled economy here at home. Expanding copyright protections will stem this bleeding and keep our music, movie, and TV sectors humming.
USMCA also cracks down on piracy. The Chamber of Commerce estimates that piracy costs Hollywood $71 billion every year. USMCA beefs up border security, empowering agents to more effectively identify counterfeit and pirated goods. This will ensure that American innovators can reap the full benefits of their labor.
Next, USMCA smooths the channels of digital trade. It prohibits custom duties on digital products, including software, e-books, and games. These charges drive up overhead costs for creators, which ultimately raises product prices for consumers. By eliminating these unnecessary expenditures, digital entrepreneurs and consumers alike benefit from USMCA.
The deal also creates new protections for the code and algorithms behind new software. In effect, these safeguards make it harder for nefarious actors to steal lucrative Intellectual Property.
Put simply: USMCA ensures that American Intellectual Property-intensive companies can easily sell and operate in foreign markets.
Lastly, USMCA installs robust new Intellectual Property protections for advanced medicines derived from living cells. These treatments, called "biologics," were in their infancy when NAFTA was signed. But today, they're our most promising weapons against cancer, multiple sclerosis, rheumatoid arthritis and other punishing conditions. By raising "data protection" in Mexico and Canada closer to the American standard, USMCA helps ensure innovators have a chance to recoup their upfront research costs for new scientific discoveries and medical breakthroughs.
USMCA erects a sturdy, forward-thinking Intellectual Property regime that will power decades of American prosperity. Mexico has already ratified it. And Canada has explicitly indicated it's waiting for America to move next. Canadian Foreign Minister Chrystia Freeland recently said "Our plan is to move forward in tandem with the U.S."
The next step is clear. Congress must ratify USMCA. This deal updates the NAFTA framework for the 21st century, protecting the innovation at the heart of the American economy.
Erik Paulsen represented Minnesota in the U.S. House of Representatives from 2009 to 2019. He currently serves as honorary co-chairman of the Pass USMCA Coalition.