Will Canada - China Changes Include a Shift on Intellectual Property?
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Tuesday February 07, 2012
While China-based piracy is unquestionable a concern, Canada has too often used the issue to curry favour with the U.S. at the expense of developing the China relationship. In recent years, our support for the Anti-Counterfeiting Trade Agreement (which deliberately excluded China) and now the Trans Pacific Partnership (which also excludes China) does little to help relations. China could be a strategic ally on global IP issues as both countries face significant external pressure for reform. While compliance with international rules should be the starting point for any dialogue, focusing on the flexibility that exists at international law to address domestic concerns is in both our interests.
The biggest Canadian blunder was the decision to join a U.S. complaint against China at the World Trade Organization in 2007 alleging that China’s domestic laws, border measures, and criminal penalties for intellectual property violations did not comply with its international treaty obligations. The case was a big loss. China was required to amend parts of its copyright law but on the big issues - border measures and IP enforcement - almost all of the contested laws were upheld as valid.
More interesting are the background documents that demonstrate that the Canadian government was unable to muster credible evidence of harm among Canadian companies.
I chronicled the background information in a column in 2009 based on documents obtained under the Access to Information Act. The key findings:
Government records reveal that the U.S. began to pressure Canada to join the case as a full party in 2006, months before the case was formally filed with the WTO. In April 2006, officials at the Department of Foreign Affairs asked the Beijing and Shanghai consular offices for information on intellectual property infringement problems, but neither provided much assistance.
Two months later, with the case making little progress (in May, an RCMP official wondered aloud why Canada was even concerned with enforcement in other countries), Foreign Affairs launched a public consultation on intellectual property enforcement abroad. The consultation was not limited to China, as officials decided to keep it open-ended.
The consultation generated 55 responses, but officials hoping to build a solid case against China were left sorely disappointed. According to a government summary (the consultation results have never been disclosed to the public and were obtained under Access to Information), only one-third of the responses specifically referenced China as a problem. In fact, there were more responses that criticized the United States and the consultation itself.
By the end of the summer, the U.S. had provided Canadian officials with its legal arguments, but Canada was without the evidence it needed to demonstrate harm and thereby participate as a co-complainant in the case. Indeed, on the key issue involving criminal enforcement thresholds, a Department of Justice official noted that Justice and RCMP guidelines used similar thresholds for prosecutorial decisions and that the Chinese could effectively make similar claims against Canada.
Given the weak position, Canadian officials could not support becoming a co-complainant, instead recommending that Canada join as a third party. Anticipating an October 2006 complaint, a press release was prepared but was never issued after the U.S. decided to delay launching the case.
With no complaint in sight, the Canadian Recording Industry Association, which had been the most vocal supporter of Canadian participation, met with senior Foreign Affairs officials in January 2007. Documents prepared by department officials in advance of the meeting noted that CRIA's previous efforts to encourage participation had "lacked specifics." The memo concluded that "we remain of the view that we do not have enough information related to specific Canadian experiences and interests to go forward as a co-complainant" and that "there is still no real concrete information however, of Canadian interests that have been harmed in China."
Over the next few months, Canadian officials grappled with several concerns as a U.S. complaint appeared inevitable. For example, with plans for Canada to participate in the intellectual property case against China but not in a second case on market access, officials feared that the Canadian steel industry would voice its objections.
Further, as Canadian officials drafted a formal letter of notification of its participation, a Geneva-based official asked "do we have statistics to mention about intellectual property owned by Canadians sold in China or something like it to explain why we are interested?" Without solid statistics, the formal notification did not reference the issue, instead merely stating Canada's "concern" with Chinese practices.
The U.S. commenced its action on April 9, 2007. Canada filed its notification as a third party participant two weeks later and within hours, CRIA wrote to Foreign Affairs to offer its assistance on the case. Given the weak position, Canadian officials could not support becoming a co-complainant, instead recommending that Canada join as a third party.
Tuesday February 07, 2012