The Trans Pacific Partnership, once left for dead after U.S. President Donald Trump withdrew from the agreement, is back with negotiations on a TPP11 (the original agreement featured 12 countries) set to resume next week. With reports indicating that dozens of provisions may be suspended, the Canadian government just concluded a public consultation on the issue. My full submission is posted below. It expresses concern with the lack of TPP transparency and provides comments on five substantive areas: dispute settlement, copyright, patents, e-commerce/digital trade, and culture.
TPP11 Consultation Submission: October 27, 2017
I am a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E-commerce Law. I focus on the intersection between law and technology with an emphasis on digital policies. I have appeared before many House of Commons and Senate committees on digital policy, including several panels on the Trans Pacific Partnership.
I wrote extensively about the original TPP, noting with concern the lack of transparency associated with the negotiations as well as the likely effect of many IP, e-commerce, and culture provisions. With the resumption of discussions on a “TPP11”, those concerns remain very much in place.
First, the lack of transparency associated with the TPP – trade talks took place entirely behind closed doors with little public consultation or review of proposed provisions – fostered a culture of mistrust that made it a hard sell around the world. Much of the TPP secrecy can be traced to the U.S., which insisted on absolute confidentiality of trade negotiations for its trade partners, even as it provided advanced access of the text to hundreds of its own business and trade associations. With renewed interest in a TPP11, there is the chance to develop a more open and transparent approach that includes active consultations throughout the negotiation process and more open access to draft text and terms. The rush to quickly conclude a TPP11 should be replaced with a more deliberate, consultative, open process.
Second, from a substantive perspective, the TPP was crafted as a trade agreement with the U.S. square at the centre. With the U.S. out, further trade agreements in the region should go back to the drawing board, rather than simply trying to cobble together an agreement largely based on the original TPP. Instead, a new agreement would open the door to increased trade without many of the regulatory demands and dispute settlement rules inserted largely at the behest of the U.S. delegation.
Specific areas for reform or an overhaul include:
1. Investor-State Dispute Settlement (ISDS)
The TPP’s investor-state dispute settlement provisions rightly attracted considerable attention given the risks that come with a process that gives companies the right to sue governments for hundreds of millions of dollars. The TPP ISDS provisions, which were arguably unnecessary, fell well short of the standard established in CETA, which the Canadian government has described as the “gold standard.” The TPP11 should drop ISDS provisions altogether, recognizing that an effective court system provides businesses with the assurances needed to invest and take advantage of an expanding trade relationship.
There are many reforms of the TPP needed for the TPP11 intellectual property chapter. First, Canada should insist on the inclusion of language on maintaining balance across all IP rights, the legitimate interests of users, promoting access to and preserving the public domain, ensuring that IP rights do not create barriers to legitimate trade, and facilitating access to affordable medicines. Similar language was raised in the initial TPP negotiations, but not included in the final text. It belongs in TPP11.
Second, one of the chief concerns with the TPP IP chapter involved requirements for domestic laws to extend far beyond international law requirements. The Canadian approach in TPP11 should be to require parties to meet international law standards, but to retain the full flexibility found within those laws. For example, the term of copyright in Canada is presently life of the author plus an additional 50 years, a term compliant with the international standard set by the Berne Convention. Canada should reject attempts to extend the term of copyright beyond the Berne Convention standard in TPP11.
From a policy perspective, the decision to maintain the international standard of life plus 50 years is consistent with the evidence that term extension creates harms by leaving Canadians with an additional 20 years of no new works entering the public domain with virtually no gains in terms of new creativity. In other words, in a policy world in which copyright strives to balance creativity and access, term extension restricts access but does not enhance creativity.
Third, the availability of U.S. fair use represents a significant competitive advantage for U.S. businesses and creators. To ensure a level playing field for innovation, the TPP11 IP chapter should require that all parties feature a fair use or fair use equivalent provision.
Fourth, Canadian copyright law’s anti-circumvention provisions are among the most restrictive in the world and badly undermine the traditional copyright balance in the digital world creating unnecessary restrictions on innovation. Establishing anti-circumvention rules that reflect the flexibility found in the WIPO Internet Treaties should be the guiding principle for TPP11.
For example, Article 18.69 of the TPP required Canada to add criminal liability to the list of potential remedies. This marked a significant change from the 2012 Canadian copyright reform package, reflecting U.S. desire for increased criminalization of copyright law. Canada opposed the change during the TPP negotiations, but ultimately caved in the final draft. It should oppose its inclusion in TPP11.
Moreover, Article 18.68 of the TPP contained extensive digital lock requirements for all TPP countries. Those requirements extended beyond those required by the WIPO Internet treaties. In fact, the TPP digital lock rules also extended beyond those found within CETA and the Canada – South Korea Trade Agreement with more restrictive rules on the creation of circumvention exceptions as well as criminal liability requirements. The long-term implications of the TPP digital lock rules was to lock Canada into the more restrictive, less flexible standard. Canada should revert to the WIPO Internet Treaties standard in TPP11.
Fifth, the TPP’s effort to regulate how Internet providers and hosts address allegations of copyright infringement on their networks and sites was another major issue addressed by negotiators. The goals of the U.S. and Canadian government in the talks were clear from the outset: the U.S. wanted to export its Digital Millennium Copyright Act (DMCA) notice-and-takedown system to the rest of the TPP, while Canada wanted to preserve its newly created notice-and-notice approach. The TPP compromise allowed Canada to maintain notice-and-notice, but no other member country could adopt it in order to comply with the ISP liability and notice rules. This approach should be rejected in TPP11, with the Canadian system rightly treated as fully compliant with safe harbour standards and open to any party to implement in order to meet treaty requirements.
Sixth, the TPP11 IP chapter should also address the abuse of intellectual property rights that may inhibit companies from innovating or discourage Canadians from taking advantage of the digital market by including anti-IP abuse provisions in the chapter.
The TPP required several notable changes to Canadian patent law, reforms that were largely included under U.S. pressure. For example, the TPP expanded the extension patent term requirements even beyond those found in CETA. Article 18.46 required a patent term adjustment due to patent office delays. The TPP section provided that “an unreasonable delay at least shall include a delay in the issuance of a patent of more than five years from the date of filing of the application in the territory of the Party, or three years after a request for examination of the application has been made, whichever is later.” No similar extension is found under current Canadian law nor within CETA. Such a provision should not be included in TPP11.
The TPP provisions related to biological drugs were a sticking point throughout the negotiations. The optimal term of protection remains a contentious issue. The Federal Trade Commission released a study in 2009 that raised doubts about the need for any biologics-specific protection, citing the protections offered by patents and the high costs of entry as evidence that biosimilar competition would be limited. Moreover, it noted that there were already sufficient market incentives to support biologic competition and innovation. As the FTC concluded, it is far from clear that any protection is needed given market incentives and the protections that may be granted through patents. The provisions should be removed from TPP11.
A national pharmacare program may not become an immediate reality in Canada, but given the enormous cost pressures, the frustration with the pharmaceutical industry, and the support within the health care community, it seems like a real possibility in the future. The TPP sought to prescribe requirements for such a program if created, including provisions related to appeals and reconsideration of decisions for the benefit of pharmaceutical companies. The provisions should be removed from TPP11.
4. E-commerce/Digital Trade
The inclusion of privacy within the TPP was touted by governments as one of the benefits of the agreement, but the privacy provisions were so weak as to move global privacy backwards, weakening emerging international standards and locking countries into rules that would have restricted their ability to establish additional privacy safeguards. Personal information is a critical part of e-commerce and the need for public confidence in privacy protections alongside corporate certainty about their rights and obligations with the personal information they collect should be beyond debate.
For example, rather than setting the TPP privacy bar at having a national privacy law based on the OECD principles, the agreement weakened the shift toward a minimum standard of privacy protection. Article 14.8 looked promising with respect to privacy protection, but a footnote effectively meant that the TPP’s privacy requirements could be met without the need for any privacy law at all. Enforcing voluntary undertakings isn’t a privacy law, it’s an anti-fraud approach that requires companies to be truthful about their privacy promises. If the TPP11 is to include privacy requirements, it should establish internationally relevant standards that include enforceable privacy legislation.
The TPP went further in undermining privacy, however, by restricting the use of data localization requirements that might otherwise be used to provide privacy protection. For countries concerned about the weakened privacy protections, the TPP restricted the use of data localization requirements as a remedy just as more and more countries are exploring such rules. Further, the TPP’s restriction on data transfer limitations was very similar to the data localization provision. That restriction could have meant Canada ended up caught in a global privacy battle in which Europe restricts data transfers with Canada due to surveillance activities and the TPP restricts Canada’s ability address European concerns. TPP11 should ensure that there are no restrictions on any government (federal or provincial) from establishing privacy or security safeguards, including data localization requirements or data transfer restrictions.
Many of the other TPP e-commerce provisions were unnecessarily weak. The anti-spam rules allowed countries to adopt weak, ineffective standards and still comply with the TPP requirements. The net neutrality rules were so weak and unenforceable that at least half of the TPP countries far exceeded them. If there is to be an e-commerce or digital trade chapter in TPP11, Canada should seek more effective provisions consistent with Canadian law.
The Canadian position on trade and culture has been consistent for decades with successive governments requiring a full exemption for the cultural industries.The TPP’s approach to culture was different from Canada’s other trade agreements. Rather than include an exception chapter or provision, the TPP contained several annexes that identify “non-conforming measures.” This would have allowed countries, including Canada, to list exceptions to specific TPP rules. Without an exception for the cultural industries, the TPP rules banning local presence requirements and national treatment for service providers would have placed Canadian cultural rules at risk.
The TPP provisions appeared to be a permanent ban on a “Netflix tax” or virtually any expansion of Cancon contributions to currently exempt services. There were similar concerns with measures restricting access to online foreign audiovisual content. TPP11 should restore the traditional Canadian approach to culture by including a full and unconditional exception.
The TPP was a deeply flawed agreement negotiated by a different government. Canada should use the opportunity to renegotiate the agreement through TPP11 by ensuring it better reflects Canadian policies, priorities, and values.
Thank you for your consideration.