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Pacific Currents

Pacific Currents is a discussion forum on Asia-Pacific economic issues. We welcome submissions from all stakeholders including academics, researchers, thought-leaders, civil society, business leaders; and other policy experts. Submissions should cover issues related to economic policy and integration in the region. Articles should be written for a general audience and not technical but should have a foundation in objective policy analysis. Articles should also conform with PECC nomenclature - if you are not familiar, the editor will provide you with appropriate guidelines. Acceptance of articles is entirely at the discretion of the Editor. Articles should be in an op-ed format of around 1000 words but longer submissions are also occasionally accepted. Submissions are done in the name of the author and represent their individual opinions and not those of the institutions that they work for. To submit an article, please send in Word format to:

Enough TPP paranoia, already

Hugh Stephens
Vice Chair, CANCPEC
Fellow of the Canadian Defence and Foreign Affairs Institute
Executive-in-residence at the Asia Pacific Foundation of Canada

[Published in iPolitics, January 14, 2014]

The failure of Trans-Pacific Partnership (TPP) trade ministers to conclude the TPP agreement this past December in Singapore no doubt pleased many critics of the agreement.

Criticisms have been widespread — ranging from the ‘secrecy’ of the negotiations, to possible limits on national sovereignty arising from required changes to Canadian law, to wild accusations that it will undermine Internet freedom for Canadians. The Council of Canadians, never a friend of trade liberalization, has had particularly harsh words for the TPP.

According to one of the many anti-TPP posts by the Council, the TPP “could lead to the dismantling of Canada’s important supply management regimes for dairy, poultry and egg production; the race-to-the-bottom potential in a proposed regulatory harmonization chapter; extreme intellectual-property protections for big drug companies that would limit access to life-saving medicines; investor-state provisions that would allow companies to sue governments over rules to protect the environment; government procurement restrictions and copyright rules that undermine Internet freedom”.

Heavens. Could it get worse?

An iPolitics columnist, Devon Black, claims that “the agreement … doesn’t just involve trade provisions. It could also require signatories to change domestic law in a huge range of areas”. She goes on to say that “this treaty could end up radically changing how Canadians are able to engage with each other — and with the rest of the world — through the Internet.” This theme has been echoed by others, including Michael Geist, who argued in the Toronto Star that “a TPP based on the (leaked) U.S. (IP chapter) proposals would signal a near-complete surrender of a made-in-Canada approach to intellectual property, leading to risks of lost Internet access, expansive border seizures, increased health care costs and criminal liability for non-commercial infringement”.

Why, one might ask, has Canada embarked on such a ‘foolish’ proposition? The Canadian government promotes the TPP as a “key pillar of Canada’s pro-trade plan”, arguing that the TPP will “deepen Canada’s trading relationships with dynamic and fast-growing markets” and that it “will help ensure that Canadian business is not disadvantaged with respect to its global competitors”.

One could cite more supportive pro-business views, ranging from the Canadian Council of Chief Executives to Canadian Manufacturers and Exporters to the Canadian Cattlemen’s Association, but let us accept as fact that there will be advantages from the TPP for both exporters and consumers. The real issue for the opponents seems to be both the cost of the ‘concessions’ Canada may have to make to win these commercial benefits, along with the negotiating and ratification process of the TPP. The first and most vocal objection of many of the opponents is that the TPP is a ‘secret’ deal.

While it is true that the provinces are not at the negotiating table as they were with the Canada-EU CETA negotiations, that unprecedented provincial presence was the result of the EU insisting that Canada be in a position to deliver on removal of trade restrictions falling under provincial jurisdiction. The consultative process with non-government stakeholders was essentially the same as it has been with the TPP and all recent trade agreements.

For the TPP, there have been parliamentary studies and public consultations, a range of stakeholder meetings at each negotiating round and (although this wasn’t part of the plan) probably more leaked negotiating texts than any other trade negotiation. These leaks are, in fact, part of the problem; draft negotiating texts include maximal demands and extreme positions set forth by the negotiating partners — which leads to a distorted view of possible outcomes and a flood of ‘worst-case-scenario’ reactions. All trade negotiations are conducted on a confidential basis, for good reasons. The TPP is no exception; secrecy is the norm.

A number of ‘sky is falling’ commentaries have focused on the draft text of the intellectual property (IP) chapter of the TPP in which the U.S. lays out its wish-list. Resistance to some of these demands, by Canada and others, gives them more value as negotiating coinage when trade-offs have to be made, so it’s not surprising to find Canada and the U.S. on opposite sides as the negotiations near completion. If U.S. demands are too objectionable, the political cost of agreeing to them would be too high, making them non-negotiable. For the most part, that hasn’t been the case.

First, U.S. negotiators themselves are limited by current U.S. laws on intellectual property — unless they can get amendments approved by Congress, which is highly unlikely. It’s worth noting that in the negotiation of more than a dozen bilateral agreements by the U.S. over the past decade, the intellectual property provisions of those agreements have not gone beyond U.S. intellectual property laws prevailing at the time.

Much ink has been spilled in Canada by TPP opponents arguing that U.S. proposals on Internet service provider (ISP) liability will limit Internet freedom for Canadians. Ms. Black argues that “the U.S. proposal would require ISPs to disable access for customers accused of infringing copyright, and block content that is alleged to infringe copyright … for people who think of the Internet as a safe place for the open exchange of ideas, these changes would invoke stunning new restrictions on that freedom”.

This is misleading, alarmist and based on incomplete information. There is nothing in current U.S. law that requires ISPs to disable access to subscribers who are accused of copyright infringement. If a subscriber is a repeat copyright infringer, actions against them could involve various steps up to and including termination, but it’s worth noting that Canadian ISPs have similar termination provisions for copyright violation contained in their subscriber agreements — and have had them for years.

Moreover, there is nothing in U.S. law that would allow site-blocking on the basis of accusations. In the U.S., there is a ‘safe harbour’ regime in place for ISPs. They cannot with impunity ignore the illegal activities of their clients and, if notified by copyright holders, they must take action to disable or take down infringing content. If they act responsibly and promptly, they are indemnified from liability.

Prompt takedown action is required because, in this digital age, damage from copyright infringement can be widespread and immediate. In the rare event that a mistake has been made by the copyright holder in notifying the ISP, there is a provision for timely redress and restoration of the content. The proposed system in Canada — the so-called ‘notice and notice’ system — would obliged ISPs to inform consumers of allegations of infringement, but would impose on them no obligation to do anything other than forward notice after notice.

That’s not likely to be effective in protecting the rights of copyright holders, given the scope and scale of major piracy sites that base their business model on widespread copyright infringement. To suggest that more robust measures to deter copyright infringement in Canada would undermine the role of the Internet, or radically change how Canadians use it, is sheer fantasy. Does anyone really think that Americans have less access to free expression on the Internet than Canadians?

Other objections to the IP chapter in the TPP revolve around patent duration for pharmaceutical products. According to the Council of Canadians, this could “limit access to life-saving medicines”. Canada and the EU were able to agree on sensible compromises that would give brand-name pharmaceutical manufacturers some additional patent protection to compensate for time lost during the drug review and approval process without compromising the health of Canadians or bankrupting the health care system. There is no reason to think that similar sensible compromises could not be made in the TPP.

In addition, the Council objects to the potential relaxation of government procurement restrictions that limit bidding on public projects to Canadian and, in many cases, local companies — despite the fact that all evidence indicates that opening up government procurement to outside bidders results in lower costs and wider selection for the benefit of all taxpayers. The Council also insists on advocating for the continued protection of Canada’s “important” supply management system — important primarily for Canada’s 12,500 dairy farmers and the three major dairy processing companies that dominate the market. Supply management imposes a ‘tax’ of several hundred dollars annually on every Canadian family, whether their income levels are at, above, or below the poverty line. The Council’s unequivocal support for this is hard to reconcile with its stated mission of “acting for social justice”.

What about the argument that the TPP will require Canada to pass laws that will limit the government’s ability to impose restrictions in specified areas? This is true, of course, but it’s nothing new. Just about every trade agreement ever signed has required some changes to domestic law. The Canada-U.S. Trade Agreement in 1989, for example, required an omnibus implementation bill — (Bill C-130) — that amended 27 pieces of legislation to bring them into compliance with the agreement.

The point of trade agreements is that governments agree to limit their powers to legislate in discriminatory ways against foreign entities in return for reciprocal benefits. At the end of the day, if they don’t want to comply with the obligations they’ve taken on, they have the option of paying the price by losing reciprocal benefits — or withdrawing from the agreement.

Critics argue that the TPP is intrusive because it goes beyond trade, with the Council of Canadians claiming that only two of the twenty-six chapters have to do with trade. But trade agreements moved beyond simple tariff reductions and customs procedures years ago. As tariffs have come down, the real remaining obstacles to moving goods and services lie in the wide array of behind-the-border measures that governments have created: trade barriers disguised as ‘standards’, discriminatory regulatory practices, procurement preferences. The objective of TPP negotiators is to tackle these market distortions and free up trade.

If — despite the wealth of evidence demonstrating that liberalizing trade creates wealth and reduces poverty — you’re still against lowering trade barriers, and if (like the Council of Canadians) you support the maintenance of Canada’s outdated supply management system, oppose the opening of government procurement markets and equate ‘Internet freedom’ with copyright abuse, then I suppose there’s some logic in opposing the TPP.

However, to suggest that the TPP negotiations are significantly different from the process employed for other trade agreements — that the TPP will undermine the Internet, damage our health care system, reduce government’s ability to protect the environment or regulate labour — is nonsense.

It’s time we dispelled these myths and started looking at the TPP for what it is: an opportunity for Canada to establish its footprint in the fast-growing Asia-Pacific region and to position itself to take advantage of the growth prospects offered by freer trade and investment across the Pacific.

[republished from iPolitics, January 14, 2014]

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