Last week’s revelations that the Canada – EU Trade Agreement’s intellectual property chapter draws heavily from the Anti-Counterfeiting Trade Agreement sparked widespread media coverage across Europe (initial post with links to coverage, more here, here, here, here, here, here, and here). After initially refusing to comment, the European Commission, clearly sensing the growing public pressure, provided a response in which it claimed that the leaked February 2012 text was outdated and that the Internet provider provisions in CETA (which had mirrored ACTA) had been changed. While the initial response came via Twitter, a more detailed statement was circulated to many Members of the European Parliament and others. The statement included the following:

• All FTAs negotiated by the EU, including CETA, contain chapters on IPR enforcement. They are just one aspect of a comprehensive approach. CETA is not different.
• The Commission fully respects the vote of the EP of the European Parliament on ACTA and the IPR related text of CETA is being reviewed in order to remove or adapt elements that are considered problematic in the opinions and reports adopted by European Parliament.
• The draft text of CETA of February 2012 (on which the press comments are based) is outdated and reflects thinking at a time before the ACTA vote in EP. It should come as no surprise that certain provision resemble ACTA, which both Canada and the EU had negotiated. In the meantime, negotiations have evolved and the February 2012 text no longer represents the current state of the negotiations.
• For instance, even before the ACTA vote in the EP, the provisions on IPR enforcement on the internet had already evolved. For instance, Articles 27.3 and 27.4 of ACTA, which are considered problematic in the EP, are no longer reflected in CETA.
• The final result of the IPR chapter of CETA is likely to be very close to the IPR chapter of the Korea FTA, which was endorsed by a broad majority in the Parliament, and which has been in force for over a year now.

The European Commission statement not only confirms some changes in CETA, but suggests that the final version will look like the EU – South Korea Free Trade Agreement. This disclosure raises its own set of concerns for both Europeans and Canadians. This posts outlines six major areas of concern given the current uncertainty with CETA, its linkages to ACTA, and the influence of the EU – South Korea FTA.

1. Canada Is Reluctant to Agree to the EU – South Korea FTA Model

The mere fact that the European Commission says CETA will be close to the EU – South Korea FTA rather than ACTA does not make it so. Earlier CETA leaks (this version is from early 2011) did indeed rely heavily on the EU – South Korea FTA, yet Canada did not agree to those terms. The EU – South Korea FTA would require significant changes to Canadian law and there is no indication that Canada is prepared to make those changes. It appears that the shift to ACTA within CETA was aimed at finding common ground on the copyright issue. The EU may now wish to go back to its EU – South Korea FTA model given the ACTA rejection at the European Parliament, but that suggests that the gap between the two negotiating parties will have grown on copyright. Given the ongoing disagreement over patent provisions in CETA, the IP chapter may prove the most divisive in the entire agreement.

2. The EU – South Korea FTA Is More Problematic Than ACTA In Some Areas

The EU – South Korea FTA is more problematic than ACTA in certain respects. The scope of the EU – South Korea FTA is far broader as it includes copyright term extension (it would require Canada to extend the term of copyright by an additional 20 years), a wide range of broadcasting rights, an artists’ resale right, detailed provisions on design rights, and potential criminal liability for geographical indications violations. These provisions are not found in ACTA. The European Parliament may have approved the EU – South Korea FTA at a time when the public was less engaged on IP issues, but that does not make elements of the agreement any more palatable in today’s environment. Indeed, the Green Party and European United Left/Nordic Green Left Party Group voted against the EU – South Korea FTA as the Greens drew parallels to ACTA.

3. The EU – South Korea FTA Internet Provider Provisions Are Problematic

Even assuming the adoption of the Internet provider provisions in the EU – South Korea FTA instead of the ACTA approach, there are still serious concerns. For example, that EU – South Korea FTA includes a specific provision that permits the use of website blocking and three-strikes systems:

This Article shall not affect the possibility, in accordance with the Parties’ legal systems, of a judicial or administrative authority requiring the service provider to terminate or prevent an infringement.

The EU – South Korea FTA Internet provider provisions also contemplate removal of content without a court order, as the limitation on liability for hosting ends when a provider becomes aware of a potential illegal activity and does not act expeditiously to remove or disable access to the information. These provisions go beyond the requirements under current Canadian law.

4. The ACTA Internet Provider Provisions Are Only Part of the Internet Chapter Problem

Changing the Internet provider provision alone does not even address all the concerns associated with the ACTA/CETA Internet chapter. For example, the ACTA/CETA technological protection measures provisions (often referred to as digital locks) has more expansive language than that found in EU – South Korea FTA. While ACTA/CETA refers to the need for “adequate legal protection and effective legal remedies against the circumvention of effective technological measures”, the EU-South Korea FTA refers only to “adequate legal protection” and adds a knowledge requirement. The Commission has not indicated which language it supports. Canada adopted ACTA-like language in Bill C-11, while the EU directive is more consistent with the EU – South Korea FTA.

5. The ACTA Internet Chapter Is Only Part of the ACTA Problem

While the European Commission has indicated that the ACTA Internet provider provision has been changed in CETA, this only touches on part of a much bigger problem as there are also concerns with the civil enforcement, criminal enforcement, and border measures provisions. For example, the ACTA/CETA injunction provision for civil enforcement states:

Each Party shall provide that, in civil judicial proceedings concerning the enforcement of intellectual property rights, its judicial authorities have the authority to issue an order against a party to desist from an infringement, and inter alia, an order to that party or, where appropriate, to a third party over whom the relevant judicial authority exercises jurisdiction, to prevent goods that involvethe infringement of an intellectual property right from entering into the channels of commerce.

Yet the EU – South Korea FTA version of this provision does not go as far:

Each Party shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement.

The difference is significant as the EU – Korea FTA requires a finding of infringement, while ACTA/CETA versions do not.

The ACTA/CETA scope of criminal liability is also broader than than found in the EU – South Korea FTA. It includes language that says “acts carried out on a commercial scale include at least those carried out as commercial activities for direct or indirect economic or commercial advantage.” No similar language is found in the EU – South Korea FTA. This becomes particularly important since all agreements include language on aiding and abetting, which significantly increases the scope of potential liability.

Moreover, the criminal penalties provisions are broader in ACTA/CETA (requiring penalties that include imprisonment as well as monetary fines sufficiently high to provide a deterrent to future acts of infringement) when compared to the EU – South Korea FTA (which require sentences of imprisonment and/or monetary penalties that are effective, proportionate and dissuasive). The difference between the two is significant since the EU – South Korea FTA leaves imprisonment as an option rather than a mandatory requirement and adds a proportionality standard.

The ACTA/CETA criminal chapter also includes an anti-camcording provision, with the CETA version even stricter than that found in ACTA. The EU – South Korea FTA does not contain such a provision at all.

The border measures provisions also go further in ACTA/CETA than the EU – South Korea FTA. For example, on determination as to infringement, the EU – South Korea FTA includes the following balancing provision:

In considering a request for corrective measures, the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account.

No such provision exists in ACTA/CETA. Moreover, ACTA/CETA includes a border measures provision on security bonds, but the EU – South Korea FTA does not.

Does the Commission now plan to switch back to the EU – South Korea FTA language on all of these issues?

6. ACTA, CETA and the EU – South Korea FTA All Share a Common Trait: Lack of Transparency

If there is a common bond between ACTA, CETA and the EU – South Korea FTA, it is that all three agreements were shrouded in secrecy during the negotiations. The lack of transparency associated with ACTA in particular created enormous distrust and is widely viewed as one of the reasons for the massive public backlash against the agreement. Yet despite the obvious public opposition to secret negotiations, CETA faces a similar level of secrecy with no official releases of draft texts. With negotiators meeting this week on CETA, both sides should agree to an immediate release of the draft text at the close of this round of negotiations so that the public can provide informed commentary on the direction of the agreement.