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Misleading Claims on NAFTA Copyright Provisions

· May 24, 2018

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As negotiations to update the North American Free Trade Agreement (NAFTA) have “stalled,” media coverage has begun focusing on the ‘culprit’ sticking issues, including certain sensitive intellectual property issues.  

One unresolved IP issue involves some copyright industry groups’ hostility to “balance” provisions that have been included in previous trade agreements, including the TPP.  While copyright groups celebrated the TPP deal in 2015, [1] [2] some now criticize various provisions of the same deal.

Recently, a group identified as the “U.S. Alliance for Music” criticized TPP provisions with an ad campaign that, as I observed last week, is highly misleading.  As part of the campaign, the U.S. Alliance for Music released a statement directed to U.S. Trade Representative Lighthizer. It recommended that the USTR:

re-commit to promoting American creativity by providing strong copyright protections and reject the damaging loopholes of the Trans-Pacific Partnership (TPP) which render such protections essentially meaningles [sic]. These flawed TPP provisions cost American music creators $1 billion a year* and should not be exported to Canada and Mexico.

These claims require examination.

First, the reference to “damaging loopholes” in the TPP seems to refer to balanced copyright provisions such are fair use and relevant limitations and exceptions that promote innovation and other important goals  (outlined in Article 18.82 and Article 18.66 of the final text). As DisCo has noted before [1] [2] [3], provisions that ensure balanced copyright frameworks are not “loopholes” in copyright enforcement.  Balanced provisions such as fair use are cornerstones of U.S. statutory IP law (17 U.S.C. § 107).  These are entirely consistent with international agreements (like Berne), and are key features underpinning the U.S. technology sector.  Similar provisions work in tandem with copyright protections around the world.

Second, the statement that these TPP provisions have cost American music creators $1 billion a year is entirely without foundation.  A fine-print footnote in the statement cites ambiguously to a “2017 Phoenix Center study” to support this claim. The implication from this citation is that the source shows that TPP provisions cost U.S. rightsholders money.

In fact, the Phoenix Center has no 2017 “study” substantiating this claim.  It did release a 2017 ‘policy bulletin’ that involved licensing negotiations, yet the bulletin had nothing to do TPP, or even trade in general.  Titled “Safe Harbors and the Future of Music Retailing,” the bulletin argues that online services such as YouTube should pay music interests as much as $1 billion more in private-sector licensing arrangements.  The bulletin is critical of the alleged licensing impact of the U.S. Digital Millennium Copyright Act of 1998 (DMCA). The thrust of this argument is that but for the Internet-era DMCA, which encourages rapid removal of online infringing content, rightsholders would receive greater royalties.  This is sometimes referred to as a “value gap.”  This “gap” is difficult to reconcile with the last five years of continued growth in the recording industry, whose success is in large part due to revenues derived from digital services — including those relying on the DMCA.

Whether one accepts the bulletin’s criticism or not, it says nothing about TPP.  Nevertheless, the U.S. Alliance for Music bootstraps it to make an attenuated claim about NAFTA.

This is to say nothing of the bulletin’s substantive problems: the document itself describes its own data as a “somewhat inaccurate characterization of the recording industry.”

More generally, the suggestion implicit in the ad — that U.S. policymakers must choose between promoting copyright exports or promoting technology exports — is a false dichotomy.  The U.S. copyright system has facilitated the growth of the strongest content sector and the strongest technology sector in the world.  U.S. copyright law provides strong IP protections which rightsholders and brandowners benefit from, while also providing the flexibility needed for technology innovation.  U.S. trade policy can do the same, giving policymakers a win-win solution.

With the variety of interests affected by trade policy, evidence-based arguments are critical. Misleading claims such as this don’t advance the debate.

Digital Trade

Companies rely on clear, predictable rules that facilitate digital trade to export their products and services around the world. These rules include balancing the competing interests between encouraging investment and enabling information access; promoting the free flow of information online; and maintaining balanced intermediary liability regimes.