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Life after NAFTA: Why no deal may free Canada on intellectual property policy

The Senate Open Caucus held a two-hour panel on NAFTA modernization earlier this week with the intention of exploring the benefits and costs of reworking Canada's most significant trade agreement. In light of signals that the United States may be laying the groundwork to cancel the existing deal, however, the discussion quickly turned to the challenges and opportunities of life after NAFTA.

My role on the panel was to focus on NAFTA's intellectual property and e-commerce implications. To my surprise, the shift in focus to a post-NAFTA world was liberating, opening the door to considering Canadian policies that have previously been viewed as unattainable given intense U.S. pressure on intellectual property policy that favours "Americanization" of global rules. A world without NAFTA would unquestionably be a shock to the economic system, but it would also free the government to establish made-in-Canada IP policies that better reflect domestic values and to pursue trade agreements that use international standards as the baseline rather than U.S. demands.

Many IP and e-commerce watchers have tracked the NAFTA negotiations with trepidation given expectations that the United States would seek significant changes to Canadian law. Canada implemented a copyright overhaul in 2012 – in part to alleviate U.S. lobbying pressure – including the adoption of strict digital lock rules that mirrored the U.S. approach and tough anti-piracy measures.

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Despite those changes, the United States has viewed NAFTA as an opportunity to demand more, such as establishing new criminal copyright penalties, beefing up border controls and extending the term of copyright, thereby blocking any new works from entering the public domain for decades. When combined with some calls for heightened liability for internet providers and mandated website blocking, the NAFTA IP chapter would (and still could) render current Canadian law virtually unrecognizable.

Those reforms – along with e-commerce chapter provisions that could undermine privacy safeguards by restricting the use of data localization requirements and data transfer restrictions – will undoubtedly remain on the table for as long as the negotiations continue. Moreover, with temperatures rising on issues such as rules of origin, dispute settlement and supply management, the IP and e-commerce provisions may get lost in the noise of those contentious issues.

Yet, should the deal fail, years of dodging U.S. pressure on IP may give way to an international-oriented approach that reflects a strong commitment to striking a balance that protects creators, facilitates innovation and entrenches user rights.

The starting point would be to commit to reforms based on domestic policy processes, not external pressure. Canada's most innovative recent IP policies – protection for user-generated content, differentiating between commercial and non-commercial infringement, an ISP notice system that has led to declining piracy rates – have come from extensive domestic consultations and an emphasis on Canadian priorities. With a copyright review scheduled to start later this year, past successes would be undermined by relying on secretive trade negotiations as the basis for new reforms.

On the trade front, a shift toward international standards could bear immediate fruit. Canada will no doubt continue with negotiations on a revamped Trans Pacific Partnership, but those talks are already exploring the prospect of major changes to the IP chapter with the United States out of the picture and new leadership in countries such as New Zealand re-examining the benefits of the deal.

Moreover, some of the world's fastest-growing economies, including India, South Africa and Brazil, are rethinking their policy on trade and IP, emphasizing the need for provisions that strike a fair balance between innovation and protection. As Canada pursues trade talks beyond North America, a more flexible IP position may help facilitate new agreements.

Intellectual property is part of any modern trade agreement, but the appropriate standard should not prioritize exports of domestic rules. Canada, specifically, should be supporting international treaty standards, not efforts to impose or export one country's rules to another.

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IP provisions should emphasize the need to comply with international IP treaties, thereby providing assurances that parties meet global standards but retain some flexibility in implementation.

This two-track approach – domestic policy process for domestic reforms and international treaty standards for trade agreements – may sound simple, but it does not fully reflect the recent Canadian experience. A NAFTA collapse would usher in considerable uncertainty, but it would also free policy makers to craft national rules consistent with Canadian priorities and makes the country an attractive partner for trade talks with countries that are in the midst of reconsidering their approach to trade and intellectual property.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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