U.S. Commerce Secretary Wilbur Ross is expected to file a notice of renegotiation of the North American free trade agreement within weeks, paving the way for talks that could reshape the Canadian economy. It became clear last week that the renegotiation will involve much more than just a few “tweaks”, as a U.S. congressional hearing saw officials trot out the usual laundry list of demands including changes to agricultural supply management, softwood lumber exports, and anti-counterfeiting measures.
Those issues will undoubtedly prove contentious, yet my Globe and Mail article notes that more interesting were comments from Mr. Ross about the need for new NAFTA chapters to reflect the digital economy. The emphasis on digital policies foreshadows a new battleground that will have enormous implications for Canadian privacy laws and digital policies.
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In the early 1990s, Eli Lilly applied for patent protection in Canada for two chemical compounds, olanzapine and atomoxetine. The company had already obtained patents over the compounds, but asserted that it had evidence to support new uses for the compounds that merited further protection. The Canadian patent office granted the patents based on the content in the applications, but they remained subject to challenge.
Both patents ultimately were challenged on the grounds that there was insufficient evidence at the time of the applications to support the company’s claims. The Federal Court of Canada agreed, invalidating both patents. Eli Lilly proceeded to appeal the decision to the Federal Court of Appeal and later to the Supreme Court of Canada. The company lost the appeals, as the courts upheld the decision to invalidate the patents.
Under most circumstances, that would conclude the legal story as several Canadian courts reviewed Eli Lilly’s patent applications and ruled that they failed to meet the standards for patentability. Yet in June 2013, the company served notice that it planned to use the ISDS provisions in the North American Free Trade Agreement to claim that in light of the decisions, Canada was not compliant with its patent law obligations under the treaty. As compensation, Eli Lilly sought at least $500 million in damages.
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The Trans Pacific Partnership effectively died with the election of U.S. President Donald Trump, who wasted no time in announcing that the U.S. would not move forward with the agreement. Since the TPP cannot legally take effect without U.S. ratification, the decision to withdraw effectively kills the deal. The remaining TPP countries will meet in Chile next week to discuss what comes next. In advance of that meeting, Foreign Affairs Minister Chrystia Freeland appeared before the Senate on Tuesday and was specifically asked by Senator Joseph Day about the possibility of trying to salvage the agreement.
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Prime Minister Justin Trudeau meets U.S. President Donald Trump today with trade issues sure to be a key part of the agenda. With the TPP now dead and NAFTA headed to renegotiation, the arrival of a Trump administration has had a dramatic impact on Canadian trade policy. Last November, I wrote a piece in the Globe and Mail arguing that Canada’s trade negotiation strategy needed to focus more on the how of trade negotiations than the who:
the how of negotiation may be more important than the who. The public backlash against trade deals points to a process that leaves many feeling excluded and to terms that are presented publicly for the first time as final. The real opportunity for Ottawa is not just to explore new trade partners but to challenge some of the long-standing assumptions about such deals in order to foster greater public confidence in the outcome.
The column continued by suggesting that the government “ensure that the same emphasis on transparency and public consultation that is emblematic of domestic policy development is mirrored in the trade file.”
Last week, the Standing Senate Committee on Foreign Affairs and International Trade issued a report on free trade agreements, which it described as “a tool for economic prosperity.”
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Canadian digital policy over the past decade has been marked by a “made-in-Canada” approach that ensures consistency with international law but reflects national values and norms. On a wide range issues – copyright rules, net neutrality, anti-spam legislation, and privacy protection among them – the federal government has carved out policies that are similar to those found elsewhere but with a more obvious emphasis on striking a balance that includes full consideration of the public interest.
My Globe and Mail opinion piece notes that as with many issues, the burning question for the Liberal government is whether the Canadian digital policy approach can survive the Donald Trump administration. Trade pressures are likely to present Canada with an enormous challenge in maintaining its traditional policy balancing act since the United States is already using tough talk to signal demands for change. This suggests that many Canadian policies will be up for negotiation, although there are some potential opportunities that reside outside of the trade talk spotlight.
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