Trade tensions between Canada and the U.S. have been rising in recent weeks with the U.S. Build Back Better Act proposing to create a tax credit for electronic vehicles that Canadian officials argue violates the Canada-U.S.-Mexico Agreement. The U.S. plan is said to be the equivalent of a 34 percent tariff on Canadian assembled electric vehicles. While trade disputes are not particularly noteworthy, the Canadian government response certainly is. Last week, Finance Minister Chrystia Freeland and International Trade Minister Mary Ng wrote to eight U.S. Senators with the following warning:
Beyond possible retaliatory actions, if the U.S. proceeds with the tax credit provisions as drafted, we would see this as a significant change in the balance of concessions agreed to in the USMCA. As such, we would consider the possible suspension of USMCA concessions of importance to the U.S. in return. Those concessions could include suspending USMCA dairy tariff-rate quotas and delaying the implementation of USMCA copyright changes.
Canada now says it is willing to align the EV incentives to address the issue, but the prospect of trade battle is still on the table. The potential copyright changes involved one key, costly change: the extension in the term of copyright protection from the current international standard of life of the author plus 50 years to life of the author plus 70 years. The additional 20 years could cost Canadian education millions of dollars and would delay works entering the public domain for an entire generation. Indeed, Canada long resisted extending the term of copyright given the absence of a strong economic or policy rationale for doing so.
The Canadian letter represents an explicit acknowledgement that the agreement to extend the term of copyright was a significant concession to the U.S. While many would argue that it was a concession negotiators should have resisted (having done so for years in other agreements), it is worth noting that Canada was able to extract some important limitations on the extension.
This includes a 30 month implementation delay that opened the door to considering less damaging mechanisms to incorporate it into Canadian law. That led to a consultation earlier this year in which department officials seemed willing to give away the other important limitation, namely the ability for Canada to establish a registration requirement for the additional 20 years (my submission here). That approach was recommended as part of the copyright review since it provides an ideal mechanism to allow rights holders to extend the term of copyright for their works, while ensuring that the remaining works enter the public domain consistent with the Berne Convention standard of life of the author plus 50 years. Further, contrary to claims in the consultation document that registration “raises serious questions in the context of Canada’s international obligations”, there is broad support from leading copyright scholars that such an approach is permissible under international copyright law.
The latest trade dispute opens the door to shelving the term extension altogether, a move that is clearly in the Canadian national interest. However, should the EV issue be resolved, Canada should unquestionably follow an implementation plan that it negotiated by establishing a registration requirement that would give rights holders the extension they seek and limit the broader harm to Canadian culture and education.