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The USTR, Canada and the TPP: International Trade Politics in a Post-SOPA World

· June 19, 2012

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In late breaking news, it was announced today that Canada would be invited to join the Trans Pacific Partnership (TPP) trade talks, which–if consummated–would be largest plurilateral trade pact ever signed outside of Europe. This news comes just one day after the Canadian House of Commons passed its long awaited copyright reform legislation, C-11. Although Canada’s acceptance into the TPP was a great development, there remain troubling questions of why Canada’s entry was held up in the first place.

Canada had been trying to gain entry into the TPP since the beginning of the year, but it had been rebuffed, reportedly because the U.S.–by far its largest trading partner–wanted to use its leverage to extract concessions out of Canada.  In particular, the U.S. had a shopping list of copyright law “enhancements” that Canada had to implement in order to be allowed a seat at the table.  As Inside US Trade noted in January:

As expected, U.S. stakeholder groups with an interest in intellectual property rights (IPR) late last week urged the Office of the U.S. Trade Representative not to let Canada into the Trans-Pacific Partnership (TPP) negotiations until it first takes several steps to bolster IPR protections.

In formal comments submitted to USTR, the International Intellectual Property Alliance (IIPA) wrote that it supported Canada’s participation in TPP “at the appropriate time,” but provided a list of preconditions that it claimed “would create a platform that will allow Canada to play a constructive role in the negotiations.”

“Once Canada adopts legislation that sufficiently addresses the copyright law and enforcement concerns that the U.S. government has clearly and consistently expressed… its participation in the TPP negotiations should be welcomed,” IIPA said.

Canada is expected to pass a bill to reform its system of copyright protections sometime later this year, as demanded by the U.S. government and industry groups.

One of those demands was for the inclusion of “anti-circumvention” protections that prohibit users from disabling Digital Rights Management (DRM) technology, even when the underlying use is for legal purposes.  These provisions mirror similar U.S. copyright provisions that have had significant negative side effects and are becoming less relevant by the day. (Even the RIAA has recently admitted that “DRM is dead.”)

These anti-circumvention provisions aside, C-11 included some much needed reforms and forward-looking components, including provisions capping damages on non-commercial infringement and preserving the Canadian “notice and notice” system for dealing with alleged copyright infringers.  Taken as a whole, this legislation is a step forward for Canada.

However, it was not as good as it could have been.  The “digital locks” provision was still included–even though it faced significant opposition within Canada–largely in response to U.S pressure (applied by the USTR, which was responding to pressure from U.S. industry, including the MPAA).  Even its domestic supporters in the Canadian government seemed lukewarm to the provision, arguing that critics did not have to worry because the law was unlikely to be enforced.  (Empirically, this isn’t necessarily wrong: anti-circumvention litigation has been relatively limited in the United States.)  

The “digital locks” provision was apparently the price the the Harper government was willing to pay to not be left out of a major trade agreement.  The surprising thing was that the U.S. made this seemingly ineffective and potentially harmful provision a sticking point and leveraged the fact that nearly three-quarters of Canada’s exports go to the United States to persuade Canada into passing this peculiar “para-copyright” provision.

This leads to a more fundamental question: Why is the U.S. Government using valuable political capital pushing Canada to adopt increasingly irrelevant copyright policies?

The short answer is: the trade establishment is often even further behind the times than domestic governments when it comes adjusting for the effect of the Internet.  Consider the WTO:  they have done virtually nothing to update their e-Commerce Work Program over the last decade despite the fact that the Internet is the biggest driver of International commerce.  In fact, the WTO failed to include any Internet industry representatives on their recent panel on 21st century trade issues!

In the post-SOPA world, there is a need for Internet entrepreneurs and Internet users to pull on the levers of the international trade apparatus and counteract the significant power of legacy industries.  This often-overlooked norm-generating arena is largely responsible for the proliferation of strong intellectual property rules throughout the world.  This is potentially more important than any domestic legislative fight as international trade rules set the boundaries for domestic legislation.  Think that copyright terms are too extreme and need to be scaled back? Too bad. The WTO TRIPS agreement (incorporating standards set in the 1971 Berne Convention) mandates a copyright term of the life of the author plus 50 years.  Think that a 20 year software patent is ridiculous? Too bad. The same agreement says that the minimum patent term is 20 years from the date of the patent filing.

If U.S. Internet users could channel the same influence they used to stop SOPA and PIPA towards the USTR, then maybe the U.S. would be using its enormous economic leverage to export rules that help made the Internet economy vibrant in the United States.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.