Trade Archives - Disruptive Competition Project

Calls to Backtrack on Copyright Balance Put Tech Backing for NAFTA in Doubt

by Matt Schruers on September 22, 2017

As negotiators converge on Ottawa to resume talks over updating the 1994 North American Free Trade Agreement (NAFTA), content interests have barraged U.S. trade officials with letters demanding that the U.S. Government abandon critical balancing mechanisms in the agreement’s copyright chapter, regarding fair use and safe harbors for Internet services.

How these issues are resolved is critical, since it will affect Internet and technology industries’ support for the IP chapter of the agreement, and potentially NAFTA itself.

There are two major moving parts here: (1) whether USTR undermines well-established safe harbors for online intermediaries, and (2) whether USTR abandons the policy of promoting balanced copyright in free trade agreements.

As previously noted here, acceding to Hollywood and recording industry demands would break with existing U.S. law, and Congressional direction in trade promotion legislation. This would also walk back priorities that were laid out by USTR itself earlier this year. Nevertheless, some in the entertainment industry are urging U.S. negotiators to do exactly that, at the risk of crossing red lines for Congress, negotiating partners, and various U.S. stakeholders.

Will Copyright Disputes Derail the NAFTA Express?

by Matt Schruers on August 28, 2017

Efforts to update the North American Free Trade Agreement (NAFTA) have been on a fast track, as U.S., Canadian, and Mexican negotiators have maintained an aggressive schedule to reboot the 1994 trade agreement.

As a new round of negotiations approaches, intellectual property issues have moved to the fore. With negotiations resuming in Mexico at the end of this week, music industry rightsholders have increased pressure on the Administration to defy Congressional directives on IP in Trade Promotion Authority. In some cases, content industry interests have pushed provisions that would extend beyond U.S. law.

The pressure for an aggressive copyright agenda out of step with U.S. law first became evident during June hearings on negotiating priorities. Recording industry interests have since doubled down on this with advertisements renewing those demands.

Host of Digital Trade Barriers Await New Top Trade Cop

by Matt Schruers on May 16, 2017

Late last week the Senate voted to confirm Robert Lighthizer as U.S. Trade Representative (USTR), the nation’s top trade enforcer. A host of challenges await Ambassador Lighthizer, a veteran of USTR under Reagan, as he takes the post. The agency’s annual survey of barriers to U.S. exports released in April, the National Trade Estimate, spanned nearly 500 pages, flagging obstacles to market access in scores of countries around the world.

In recent years, U.S. trade officials have scrambled to respond to new market access crises in critical overseas markets. One of the fastest growing hotspots in international trade has been digital trade, which received special attention from USTR in a March fact sheet. Officials have been acutely aware of these threats due to the amount of economic activity at stake. Between 2007 and 2014, U.S. digital services exports grew from $282 billion to nearly $400 billion. With millions of jobs and the fastest growing sector of U.S. employment riding on these exports, a lot is at stake.

Barriers to Digital Trade Demand Attention

by Matt Schruers on October 28, 2016

Yesterday the U.S. Trade Representative received input from stakeholders about trade barriers to U.S. exports, in an annual process called the National Trade Estimate Report. This included comments from CCIA, identifying barriers to digital trade.

When soliciting input for this report back in July, U.S. officials inquired specifically about e-commerce, a growing part of the U.S. economy. Internet-based trade represents an increasingly large component of U.S. trade, and in fact the U.S. is the largest exporter of services, which includes Internet services. (The U.S. exported $688 billion in services in 2014).

The most recent report from March reflected a special emphasis on digital trade, addressing subjects like arbitrary obstructions to cross-border data flows in China, data localization mandates in Russia and Indonesia, and news aggregation fees in EU member states. Recent research shows that problems such as these have worsened, highlighting the need for U.S. officials to focus additional resources on digital trade barriers and enforcement.

A recent Brookings Institution study estimated the global loss from Internet blackouts at $2.4 billion a year. The Brookings research described how, for example, various countries block messaging apps to prevent political activists or protesters from communicating. Independent of the burden this places on democratic discourse, these actions — often taken without legal process — also handicap service providers from reaching their users and consumers. In fact, a Deloitte study released yesterday found that the single-day cost of an Internet shutdown in a high-Internet use country could exceed $23 million per every 10 million citizens.

Site- and service-blocking policies are the most obvious threats to Internet exports, but policies like data localization, which compel services to retain all data handled in-country for purposes of surveillance or law enforcement access, and taxes on linking and news aggregation in Europe represent similarly problematic barriers. CCIA’s submission focuses considerably on problems arising in the EU, including a troubling proposal, covered previously by DisCo here, that would compel online services to monitor Internet users and mandate that they filter content. This particular initiative, at odds with years of trans-Atlantic practice, presents Internet services with the choice of exiting the European market or facing crippling liability risks.

The largest growth opportunities for U.S. Internet companies are international markets, and barriers to entering these markets thus pose a threat to long-term economic growth in the Internet sector. But more traditional companies utilize the Internet to reach customers as well, and threatens to Internet trade therefore pose a risk to the economy at large.

Fair Use As A Tool For Reining In Foreign Judges?

by Jonathan Band on October 20, 2016

At a conference last week sponsored by Columbia Law School’s Kernochan Center for Law, Media, and the Arts, a panel I participated in considered an unexpected prospect: the copyright fair use doctrine as a mechanism for creating more certainty in international copyright law.

Balanced copyright proponents have long supported the “export” of fair use through trade agreements. If the United States was encouraging trading partners to adopt U.S. IP standards, those standards should include not only the higher protections provided by U.S. law (e.g., copyright term of life plus 70 and prohibitions on circumvention), but also our robust exceptions and limitations, such as fair use.

This advocacy contributed to the inclusion of Article 18.66 in the IP chapter of the Trans-Pacific Partnership Agreement. Article 18.66 provides that “each party shall endeavor to achieve an appropriate balance in its copyright and related rights system, among other things by means of limitations or exceptions…, including those for the digital environment, giving due consideration to legitimate purposes such as, but not limited to: criticism; comment; news reporting; teaching, scholarship, research and other similar purposes; and facilitating access to published works for persons who are blind, visually impaired, or otherwise print disabled.” (See here for a detailed discussion of the development of this Article.)

Fair use, has its critics, however, including major content owners — notwithstanding their reliance on it as a defense when sued for copyright infringement in the United States. A common argument against fair use is that its flexibility produces too much uncertainty and encourages judges to run amok.

Yet a panel I participated in on “Fair Use and Other Exceptions” at the Kernochan Center’s conference last week, “Trading in IP: Copyright Treaties and International Trade Agreements,” stood the uncertainty argument on its head.

EU Trade Commissioner Criticises Online Censorship in China

by Christian Borggreen on July 12, 2016

The EU’s Trade Commissioner, Cecilia Malmström, raised concerns with Chinese tech policies during this week’s EU-China Summit in Beijing. Malmström warned that China’s “limits to online freedom … get[] in the way of today’s most dramatic innovations.”

“The power of the Internet is that it connects people in a single global network. Barriers to that, whether by banning certain platforms or by requiring storage of content locally, impede China’s economic progress as much as freedom of expression. And it limits your access to other views and opinions, to the exchange of experiences with other people,” Malmström said. The EU’s top trade official finally called China’s laws on national security, non-governmental organisations and cybersecurity “steps backward.”

58 percent of respondents to a recent European Union Chamber of Commerce in China survey said the Chinese censorship of Internet access significantly impacted their ability to do business in China. This is a 17 percent increase from just last year.

The EU’s linking of online censorship to trade, echoes the sentiment of the United States Trade Representative (USTR). The 2016 USTR trade estimate report on foreign trade barriers, clearly singled out China’s online censorship. The report concluded that “China’s filtering of cross-border Internet traffic has posed a significant burden to foreign suppliers, hurting both Internet sites themselves, and users who often depend on them for their businesses. Outright blocking of websites appears to have worsened over the past year, with 8 of the top 25 most trafficked global sites now blocked in China.” These sentiments in turn echoed views that European policymakers have voiced in the past ([1], [2]).

Academics and the tech sector have repeatedly warned that China’s blocking and filtering of online services constitutes a trade violation. Over the last decade, voices in academia and industry have argued that impediments to the free flow of data violate various World Trade Organization rules ([1], [2], [3]). As of yet however, no trade case against an Internet-restricting country has found its way to the WTO.

U.S. Trade Report Emphasizes Importance of Digital Trade

by Matt Schruers on April 13, 2016

The U.S. Government recently took a significant step toward a 21st century trade policy. The U.S. Trade Representative’s “National Trade Estimate Report on Foreign Trade Barriers” (NTE) singled out numerous barriers to international, Internet-enabled commerce in its annual “threat assessment” for U.S. trade. (very large PDF here). While media coverage focused on the fact that the NTE report called out direct Internet censorship in nations like China (e.g., Reuters, N.Y. Times, AP), the report goes much further than that.

In fact, USTR specifically highlighted the NTE report’s new focus on digital trade. In addition to citing censorship, the report flags other examples of filtering and site blocking, and identifies issues like mandatory localization rules and liability standards, among other problems. As DisCo has covered before, U.S. trade policy has slowly evolved toward recognizing Internet trade as a mode of commerce that is on equal footing with physical trade.

Although more than 20 years have passed since the commercialization of the Internet, online commerce continues to be treated differently from global physical commerce. While international rules unambiguously prohibit restricting trade in goods (except in narrow circumstances), a filing by my organization, CCIA, documented widespread discrimination against Internet trade in services. Although trade scholars have argued for years that WTO rules should be understood to prohibit these digital trade barriers, [1] [2] they are frequently flouted. Aside from a handful of cases, few countries have attempted to enforce free trade rules with respect to the Internet. As I explained to a Congressional commission last year, this includes the United States, much to the detriment of U.S. exports. MORE »

The New EU Trade Strategy Should Break Down Telecoms Access Barriers

by Christian Borggreen on June 22, 2015

The European Commission is set to present its new Trade Strategy this autumn and the removal of digital trade barriers is expected to feature prominently. As part of the strategy, the EU should seek to enable cross-border data flows, simplify customs and VAT rules, discourage forced data localisation and promote non-discriminatory access to networks.

The latter is an essential, but often overlooked, requirement for a vibrant digital economy as a competitive marketplace for communications services is a necessary condition for the growth of a vibrant Internet economy that is built on top of communications networks. International corporate users rely on connectivity for networks in support of online business processes and communications. Sensitive business information increasingly speeds across networks — including between cloud platforms and the sensor-driven Internet of Things. Demand is rising for unfettered, cross-border movement of proprietary corporate information within a secure and fully reliable environment. While this is all based on IP technology, those intra-corporate communications are not done over the public internet.

Despite existing trade agreements, some countries let dominant providers of wholesale transmission capacity exploit their market positions, driving up prices for communication and IT services and reducing competition and innovation. Wholesale access (also called special access) is for instance not available in a pro-competitive way in many U.S markets. This severely affects competition for end-consumers, but also the provision of business-to-business ICT services. (However, the U.S. Federal Communications Commission is looking into the matter and strongly considering taking pro-active steps to address identified problems in the special access market.)

What Does Jurassic World’s Opening Weekend Tell Us About International IP Policy?

by Jonathan Band on June 19, 2015

Jurassic World grossed over $315 million abroad last weekend, including more than $100 million in China. The overseas success of the Universal Pictures film – and the fact that for years overseas profits have outstripped domestic ones – calls into question the perpetual narrative that foreign IP laws are non-existent or inadequate. The matter is timely, since this narrative is made in support of the copyright section of the Trans-Pacific Partnership Agreement.

Although the text of the current draft of the TPP is still secret, the IP chapter has been leaked several times during the course of the negotiations, most recently in October 2014. The copyright section of the IP chapter has been discussed several times in this blog, including here and here. Throughout the TPP negotiations, the U.S. has attempted to export certain features of U.S. copyright law, some good, some not-so-good. The good include safe harbors for Internet intermediaries and language on exceptions inspired by the fair use doctrine. The not-so-good include the DMCA prohibitions on circumvention, a life of the author plus 70 years term of protection, and statutory damages.

The new language on exceptions may cause the TPP’s copyright subchapter to be more balanced overall than the copyright subchapters in the various free trade agreements the U.S. previously entered into with other TPP countries, including Peru, Chile, Korea, Australia, and Singapore. But why are copyright issues injected into trade agreements at all?MORE »

Tech Policy and the State of the Union: What to Watch For

by Daniel O'Connor on January 20, 2015

Besides cold temperatures, inevitable musings about an Ovechkin-led Capitals being positioned to make a run at the Stanley Cup (followed by them falling off a cliff), and the occasional wayward arctic fowl, January in the District of Columbia comes with at least one constant ritual: the time honored tradition of speculating on what will be included in the State of the Union. (And, in recent times, the SOTU-themed drinking games that flow from the anticipation… even the Washington Post has one this year). Although some of the suspense has been dampened with media leaks and a multi-week presidential tour highlighting important SOTU themes, some surprises remain.

With political watchers fixated on what President Obama will and will not include in this year’s SOTU, I thought it was a good time for DisCo to lay out a potential tech policy roadmap for what to watch for this year in the President’s annual “setting priorities” exercise.

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