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Australian Regulations Detrimental to the Digital Economy: Trade (Part 3)

· September 4, 2020

map of Australia

Australian Regulators Stir Trade Conflict with Demands on U.S. Tech Companies

In this ongoing series on the Australian Competition and Consumer Commission’s (ACCC) proposed Draft News Media Bargaining Code (Draft Code), DisCo has previously covered procedural concerns with the Draft Code and analyzed it from a competition angle.  This post will touch on how the Draft Code may conflict with Australia’s international commitments by disadvantaging U.S. technology companies to prop up domestic constituencies. 

As noted in previous posts in this series, the Internet has been instrumental in the distribution of news content as users increasingly seek out information online.  Search engines and social media services have been key tools for users to find links to relevant content, which drives traffic directly to the news publication website.  The framework proposed by the ACCC would mandate bargaining agreements between certain digital platforms and news publishers to force payments for this type of distribution of news content.  

The only companies the Code would apply to are Google and Facebook.  As designed, the Code would empower the Executive to decide who to apply the Code to, without sufficient clear standards on how the Executive would make this determination.  The Code fails to guarantee that the proposed framework would be protected from political whims, or used in a manner to only target foreign competitors. 

Australia’s proposed actions spark trade concerns, especially at a time when U.S. trade officials are on watch against discriminatory measures against U.S. technology companies (as evidenced by pending investigations into various digital services taxes). 

Under Australia’s current trade commitments (both under WTO agreements and the Australia-U.S. Free Trade Agreement (AUSFTA)), a country must afford the same market access to foreign investors as they do to its domestic companies.  A country cannot impose regulations that would treat foreign investors differently than their domestic counterparts, subject to limited exceptions. 

Singling out two U.S. companies for this new Code conflicts with these obligations.  The Code also imposes obligations on Facebook and Google to carry certain local content on their platforms, which conflicts with investment provisions in AUSFTA. 

Further, as the next post in this series will discuss in more detail, creating sui generis intellectual property rights for domestic industries also conflicts with longstanding international commitments regarding intellectual property.  Previous attempts at this include the imposition of “link taxes” on news aggregation services in Spain and Germany, which now are EU-wide pursuant to the recent copyright reform.  As DisCo has previously covered, creating a right to payment for content used in news aggregation services is likely in violation of Article 10(1) of the Berne Convention, which prohibits nations from restricting the right to quote. 

Rather than incite trade conflicts with discriminatory regulation, the United States and Australia should seek to enhance trade and cooperation to reflect the leadership roles each play in the global digital economy. 

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.