My appearance before the Trade Committee on the TPP

Here are my introductory remarks to the House of Commons Standing Committee on International Trade studying the TPP earlier today.

I would like to thank the committee for inviting me to appear today to provide input on the Trans-Pacific Partnership.

I am a senior partner with the law firm McCarthy Tétrault and am the former chair of its Intellectual Property Law Group.

I am an adjunct professor at Osgoode Hall Law School where I teach intellectual property law.

I am here today in my personal capacity and not representing any clients.

The TPP has been heralded as a 21^st century trade agreement. The e-commerce and IP chapters reflect this in my view.

The e-ecommerce chapter is truly innovative in that it reduces non-tariff barriers to the use of the Internet and other networks to conduct trade. This gives Canadian businesses the opportunity to do business in the other 11 TPP countries from Canada, giving Canadians a chance to develop and maintain high paying jobs in this country. Some of the highlight are the following:

• No Party can impose customs duties on electronic transmissions. Taxes may still be imposed.
• Parties must remove impediments to recognition of electronic documents and signatures by requiring treaty countries to be compliant with one of two international standards for recognition of electronic documents and signatures, the UNCITRAL Model Law on Electronic Commerce or the UN Convention on the Use of Electronic Communications in International Contracts. This will bring the other TPP parties to standards already adopted in Canada.
• Parties cannot block market access by preventing Canadian businesses from transferring personal information to Canada for processing or require Canadian businesses to establish data centers in the other countries in order to conduct business there.
  • These provisions have been criticized as going too far. However, there is flexibility to pursue legitimate public policy objectives.
  • They cannot be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; and do not impose restrictions on transfers of information or the use or location of computing facilities greater than are required. Also, the treaty permits exceptions to protect Canada’s security interests.
• Parties must maintain minimum standards for protection of personal information, to prevent spam, and to promote consumer protection. Canada meets and exceeds these standards.
  • Some have criticized the treaty for not going farther. But, it is unrealistic to have expected a trade treaty – and not a privacy, anti-spam or consumer protection treaty – to do this.
• There is an exemption that gives Canada flexibility to protect Canadian culture.

The TPP also prescribes minimum standards for intellectual property protection. Canada played an active role in the negotiation of these provisions.

The IP chapter has been subject to criticism. In particular, concerns have been expressed that the TPP will require Canada to make significant changes to our IP laws and will lock Canada into an undesirable IP framework.

In assessing the claims about the IP chapter in my view the following should be taken into account.

• There are minimal changes required by the treaty to Canadian law.
• The impacts of changes that have been publically identified are not in the aggregate significant, especially in relation to the overall context of the treaty and the CETA. This includes the amendment requiring an extension to the term of copyright (the effects of which have been exaggerated by Prof. Geist based on a recent study by Professors Barker and Liebowitz), the addition of criminal sanctions for those who would engage in facilitating piracy by removing rights management information from digital products, and requiring a criminal sanction that targets computer hacking to steal trade secrets that is detrimental to Canada’s economic interests, international relations, or Canada’s defense or national security.
• Canada is already committed to many of the TPP’s IP requirements including through other international agreements. It seems unlikely that Canada will repudiate or unwind these obligations or need to materially change how they have been implemented here. It also seems unlikely that any particular change we might want to make would merit Canada pulling out of its other international obligations or would merit Canada not joining the TPP to permit this.
• Intellectual property laws promote innovation and commercialization of IP based products. The 21^st century, and the 4^th industrial revolution we are in the midst of increasingly relies on IP to raise capital and to foster innovation and commercialization.
• The Canadian market, by itself, is too small for Canadian businesses to support the level of investment needed for high technology and IP based companies to succeed.
• Canadian businesses need to compete internationally to be successful. The US and Japan are two of Canada’s largest trading partners. Accordingly, Canadian businesses will need to compete in foreign markets under the IP regimes in place in those countries whether Canada joins the TPP or not.
• The IP framework in the TPP is one that has supported the most innovative national economies.
• There are advantages to scaling businesses under one set of framework IP laws.
• The TPP preserves the flexibility to enact or maintain exceptions in accordance with international standards.

In summary, it is hard to see how Canadian businesses would be disadvantaged by agreeing to keep the standards of protection and framework for exceptions for IP protection we already have, regimes that have proven to be successful in other countries, and regimes we have to compete under to be successful in foreign markets anyways.

My remarks are not intended to suggest that the IP systems as implemented in other countries are perfect or couldn’t be improved. But, many of the problematic rules pertaining the IP regimes in foreign markets are not mandated by the TPP. The U.S. court system (which Mr. Balsille expressed concerns about) for resolving IP disputes is one example. Frivolous suits by non-practicing entities or patent trolls in the U.S. is another.

My remarks are also not intended to suggest that the IP and ecommerce chapters taken alone or in combination with the rest of the TPP establish the conditions for Canadians to succeed domestically or internationally. Canada must have policies that support Canadian innovation and commercialization and Canadians must learn to be successful in growing, innovating, and commercializing 21^st century products and services.

A lot of what has been said about the IP and e-commerce chapters of the TPP is not accurate and potential problems have been exaggerated. I am submitting to the Committee several blog posts I have published that deal with these criticisms and I would be delighted to answer any questions you may have about them or my remarks today.

*  The audio of the Trade Committee hearing featuring Jim Balsille, Michael Geist, Lawrence Herman and I can be accessed at this Parlvu link.