Richard OwensCanada’s stance on dropping provisions around intellectual property (IP) in the Trans-Pacific Partnership (TPP) negotiations makes no sense, writes Richard Owens.

By Richard Owens, Nov. 14, 2017

After some dramatic and inappropriate to and fro by Prime Minister Justin Trudeau in Asia over the weekend, it appears that Canada has condescended to proceed with continuing negotiations on the Trans-Pacific Partnership (TPP) trade treaty — provided that the provisions around intellectual property (IP) are dropped. There is absolutely no sound or even plausible policy for dropping them. Canada should proceed with the whole treaty. What could have led the prime minister to abandon that plan in favour of a last-minute whim?

A CBC reporter explained that “Canada’s tech sector has also warned TPP’s original intellectual property rules would have favoured the more dominant U.S. and its firms, which have already amassed a far bigger portfolio of patents, copyrights and trademarks.” This sounds like the views of Jim Balsillie, the innovation pooh-bah for federal government trade negotiations and co-founder of the company now known as Blackberry. It also echoes the views of other advocates of weak IP rights, including Professor Michael Geist at the University of Ottawa, whose blogged critiques of the TPP’s IP provisions do not really reflect the text or its intent.

But if this is the government’s reasoning, it’s silly. First, relative sizes of IP portfolios have nothing to do with anything. All bigger countries will tend to have more IP than Canada does, and bigger companies within those countries will have more IP than smaller Canadian companies have. So what? This would only matter if balance of trade concerns affected sound IP policy, and it has been clearly shown that they do not.

There’s a manifestly wrong but widely held idea that developing countries benefit from weaker IP.

It has also been shown that short-term gains (if there are any) to a trading partner with stronger IP are more than offset by gains Canadian firms enjoy from better IP protection. Moreover, Canada’s cultural and technology exports are robust: our trade in copyright goods and services is in surplus and the trade deficit on other technology goods is not large relative to the size of that trade.

There’s a manifestly wrong but widely held idea that developing countries benefit from weaker IP. In fact, empirical studies demonstrate that stronger IP is in their interests as much as it is for more developed countries. Anyways, is Canada really a developing country?

Unfortunately, supporting robust IP protection is out of fashion in Canada. I recently met with people from Canada’s IP community at a meeting to discuss Canada’s position on an IP chapter in NAFTA hosted by Minister of Foreign Affairs Chrystia Freeland. Many argued that weak IP rights were best, and that it was better not to use NAFTA as a vehicle to adjust IP policy. If these voices have Canada’s ear, innovation in this country is in trouble.

IP has become a mainstay of trade. The extensive IP provisions of the Trans-Pacific Partnership are a case in point. We need shared rules to allow trade and investment to occur. Who would trade internationally with nations where trademarks, copyrights and patents are disrespected, or worse, pirated?

Canada’s innovation economy is not made up of large, established technology companies. Canada’s technology companies are generally small to medium-sized enterprises (SMEs). It is important that our trade and IP policies nurture them. Strong IP rights greatly benefit SMEs. IP rights help them attract financing. Strong IP protection provides a much firmer footing for smaller firms to deal with larger ones. It also encourages foreign direct investment, which greatly improves local technological expertise and networks of knowledge.

Canada’s technology companies are generally small to medium-sized enterprises (SMEs).

Those IP terms Canada has demanded stripped out of the TPP would actually be perfect for NAFTA, too. It would extend our copyright term to life plus 70 years, up from 50 years and making it equal to our other trading partners; adopt improved data protection and patent-term extension for pharmaceuticals, to encourage R&D in that field in Canada; and improve interdiction of counterfeit goods at the border.

Canada’s trade negotiators should listen less to Canadian IP curmudgeons and look at how the world’s most innovative economies are leading in protecting the rights of creators. The Trudeau government talks up innovation and its role in helping Canada’s economy grow but, as in other areas of policy, the seriousness of its engagement fails to measure up to its talk. What has the government actually delivered? More subsidization for innovation exactly like the sort that has always failed in the past, as exemplified by the vapid plan for government-created “superclusters.”

Yet, faced with the opportunity to increase IP protections through the TPP, which would improve growth, competitiveness and trade opportunities for Canada’s innovation sector, Canada decides to bail out at the last minute. If this is how Ottawa manages trade negotiations, it’s a bad sign for NAFTA. Days later, Canadians still haven’t heard a decent explanation for Trudeau’s sudden flip-flop on the TPP. We are owed one.

Richard C. Owens is a Munk Senior Fellow at the Macdonald-Laurier Institute and an adjunct professor at the University of Toronto Faculty of Law.

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