FACT SHEET on U.S.-Japan Digital Trade Agreement

As two of the most digitally-advanced countries in the world, the United States and Japan share a deep common interest in establishing enforceable rules that will support digitally-enabled suppliers from every sector of their economies to innovate and prosper, and in setting standards for other economies to emulate.

The United States-Japan Digital Trade Agreement parallels the United States-Mexico-Canada Agreement (USMCA) as the most comprehensive and high-standard trade agreement addressing digital trade barriers ever negotiated. This agreement will help drive economic prosperity, promote fairer and more balanced trade, and help ensure that shared rules support businesses in key sectors where both countries lead the world in innovation.

Key outcomes of this agreement include rules that achieve the following:

• Prohibiting application of customs duties to digital products distributed electronically, such as e-books, videos, music, software, and games.
• Ensuring non-discriminatory treatment of digital products, including coverage of tax measures.
• Ensuring that data can be transferred across borders, by all suppliers, including financial service suppliers.
• Facilitating digital transactions by permitting the use of electronic authentication and electronic signatures, while protecting consumers’ and businesses’ confidential information and guaranteeing that enforceable consumer protections are applied to the digital marketplace.
• Prohibiting data localization measures that restrict where data can be stored and processed, enhancing and protecting the global digital ecosystem; and extending these rules to financial service suppliers, in circumstances where a financial regulator has the access to data needed to fulfill its regulatory and supervisory mandate.
• Promoting government-to-government collaboration and supplier adherence to common principles in addressing cybersecurity challenges.
• Protecting against forced disclosure of proprietary computer source code and algorithms.
• Promoting open access to government-generated public data.
• Recognizing rules on civil liability with respect to third-party content for Internet platforms that depend on interaction with users.
• Guaranteeing enforceable consumer protections, including for privacy and unsolicited communication, that apply to the digital marketplace, and promoting the interoperability of enforcement regimes, such as the APEC Cross-Border Privacy Rules system (CBPR).
• Ensuring companies’ effective use of encryption technologies and protecting innovation for commercial products that use cryptography, consistent with applicable law.

Together, these provisions will set predictable rules of the road and encourage a robust market in digital trade between the two countries – developments that should support increased prosperity and well-paying jobs in the United States and Japan.