Canadian International Trade Minister Mary Ng and U.S. Trade Representative Katherine Tai met yesterday to discuss Canada-U.S. Trade issues and concerns regarding Canada’s digital policy – most notably a proposed digital sales tax and Bills C-11 and C-18 – continue to mount. The U.S. raised digital policy concern over the summer, specifically citing Bill C-11 with a reference to “pending legislation in the Canadian Parliament that could impact digital streaming services.” The latest readout suggests that the concerns are growing, as the U.S. now cites both Bills C-11 and C-18 by raising “pending legislation in the Canadian Parliament that could impact digital streaming services and online news sharing and discriminate against U.S. businesses.”
Post Tagged with: "USTR"
A Tale of Two Readouts: U.S. Escalates Trade Concerns With Canadian Digital Policy as Canada Seeks To Downplay the Issue
The first three posts in this series on Bill C-11 have focused on the risks of regulating user content, the risks to Canadian creators, and the risks of increased consumer costs and less competition. Today’s post identifies another risk with the bill: the prospect of a trade challenge under the CUSMA that could lead to billions on tariff retaliation that target some of Canada’s most important economic sectors. The possibility of a U.S. trade battle over the bill is no idle speculation even if downplayed this week by an official from Global Affairs. This summer, U.S. Trade Representative Katherine Tai raised the issue directly with Canadian Minister of International Trade Mary Ng. While the Canadian readout of the meeting notably excluded any reference to the issue, it was cited in the U.S. readout of the meeting:
The U.S. released its annual piracy watch list last week, elevating Canada to the priority watch list alongside countries such as China and Russia. If that sounds implausible, that’s because it is. The U.S. has long used its annual report on IP issues to exert pressure on other countries and this year is no different. Indeed, with the IP chapter still unresolved in the NAFTA negotiations, the decision to elevate Canada appears to be an obvious effort to place negotiators on the defensive. In doing so, the U.S. has further undermined the credibility of a review process that is widely recognized as little more than a lobbying exercise.
The U.S. Trade Representative is conducting a hearing today on the Special 301 report, its annual list of countries it claims have inadequate intellectual property protections. Several countries will appear alongside many lobby groups. I’ve previously posted on how the report from the IIPA, which represents the movie, music, software and publishing industries, badly misstates Canadian law. Indeed, with recent court decisions, Canada now has one of the toughest anti-piracy rules in the world.
I recently obtained documents under the Access to Information Act that confirm the Canadian government’s rejection of the Special 301 process. Canada will not bother appearing today largely because it rejects the entire process. According to a memorandum drafted for Canadian Heritage Minister Melanie Joly after last years’ report:
The Eli Lilly claim against Canada for hundreds of millions due to a court decision involving patent utility has attracted considerable attention with fears that the case foreshadows many more corporate lawsuits if the Trans Pacific Partnership becomes a reality. While the Canadian government has raised doubts about the independence of the Canadian Chamber of Commerce intervention in the case, the government must be a bit confused on where the U.S. stands on the issue. Yesterday, the U.S. Trade Representative issued its 2016 report on foreign trade barriers and stated the following on the case:
With respect to pharmaceuticals, the United States continues to have serious concerns about the impact of the patent utility requirements that Canadian courts have adopted.
That is consistent with the Eli Lilly argument, yet last month the U.S. State Department provided its own submission in the case. The U.S. government appears to undermine USTR arguments, seemingly siding with the Canada on the issue. The U.S. submission states each country has the right to determine how it implements the utility requirement, the possibility of revocation of patent rights, and for its patent laws to evolve: