trending Market Intelligence /marketintelligence/en/news-insights/trending/SgxJ4OmWZ1yuDCIWfcGSnw2 content esgSubNav
In This List

Open digital trade for insurers, finance to feature in NAFTA renegotiation

Blog

Financial Institutions Factor Transition Risk into Climate-Related Stress Testing

Blog

Q&A: Data That Delivers - Automating the Credit Risk Workflow

Blog

Investment Research Brokers Ramp up Cryptocurrency Coverage

Blog

COVID-19 Impact & Recovery: Financial Industry Outlook for H2 2021


Open digital trade for insurers, finance to feature in NAFTA renegotiation

President Donald Trump's plans for renegotiating NAFTA include preventing restrictions on financial services companies' digital trade, according to a draft letter by Stephen Vaughn, the acting U.S. Trade Representative.

A section of the eight-page letter lays out the administration's position on the cross-border digital transfer of information, commonly called data flows. The White House will be seeking commitments from countries in the North American Free Trade Agreement to refrain from imposing customs duties on digital products and not to enact any measures that would impede digital trade in goods and services, according to the draft.

The policy is intended to ensure that NAFTA countries do not require the local storage or processing of data, Vaughn wrote. The draft letter specifically notes financial services data as being included in the policy.

Stephen Simchak, director of international affairs for the American Insurance Association, stated in prepared testimony April 4 before the U.S. International Trade Commission that U.S. insurers need a commitment on data flow and storage.

"U.S. insurance companies need strong commitments to protect their ability to move, store and process data in the location of their choice, and need strong enforcement of those commitments when other governments attempt to force the localization of data," Simchak said, speaking about trade globally, and not in reference to NAFTA specifically.

In his testimony, Simchak stated that forced data localization in foreign markets is posing immense challenges to U.S. insurance companies, and said that it "is essential that all future U.S. trade agreements include additional strong, binding commitments on financial services data flows."

Likewise, the Coalition of Services Industries — which includes insurer trade groups and financial services companies such as American International Group Inc. Aflac Inc. Citibank, Metlife and JPMorgan Chase Bank and Liberty Mutual Insurance Co. as members — has positioned itself against what it argues are "unnecessary barriers to cross border data flows [that] create considerable obstacles to global trade." The Coalition has written that rapid technological developments of cross-border data flows have left international trade laws outdated.

The USTR draft letter notes that NAFTA went into effect in 1994, and that since 1993, U.S. trade with Canada and Mexico has more than tripled, with the two countries accounting for 29% of total trade in U.S. goods.

The USTR is working with Congress to develop a 90-day notice letter for NAFTA negotiations, the text of which has not been finalized, a USTR spokeswoman said April 4.

"Consultations are ongoing to prepare for the formal submission of this letter, after which NAFTA negotiations will begin," she wrote by email. She noted that the USTR is working with committees and members "on both sides of the aisle," and acknowledged that a draft version of a letter to Congress exists.