September 7, 2018

North America for the Win


U.S. Chamber Study on Intellectual Property Points to Win-Win-Win in NAFTA Renegotiations

 

“Canada vs. U.S. is the rivalry to end all rivalries,” writes the National Post’s Steve Simmons.

But only in hockey.

Trade negotiations are a different—if sometimes equally brutal—sport. Both sides can – and should – win.

There’s blood in the air in negotiations between the United States and Canada for a modernized North American Free Trade Agreement (NAFTA), and neither side can afford to be blind to the opportunity for a win.

Nowhere is that opportunity more immediate and meaningful than in the talks on intellectual property (IP) policy. A new study from the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC), Setting a New Standard: 21st Century IP Protections for a Modernized NAFTA, reveals how an updated 21st century IP chapter in NAFTA will bolster economic growth and competitiveness across North America.

Reflecting on modern times, it can feel like everything has changed since 1994. The ways in which people listen to music today was unimaginable a quarter-century ago. But what has not changed, people need to be able to make a living at their craft. NAFTA can go a long way toward making that a reality.

Another thing that has not changed is the importance of North American trade. Together the United States, Mexico, and Canada represent 28% of the world GDP and 30% of U.S. total trade. Once again it is time for NAFTA to show its leadership and become the global benchmark for what IP protection should look like in the 21st century.

As the GIPC study suggests, when it was signed 24 years ago, NAFTA put forth unique provisions to incentivize innovation—many of those provisions shaped international standards including the global agreement on intellectual property signed a year later at the World Trade Organization (WTO). Now, dramatic changes in technology and the integration of the global economy require modernization of NAFTA, if North American leadership and competitiveness are to be maintained.

To get there, the GIPC study highlights three areas of NAFTA that require IP modernization: patents, copyrights, and enforcement. The study notes that NAFTA helped set the bar for biopharmaceutical IP rights when it went into force. Since, medical technology has rapidly evolved, requiring more advanced IP protection in order to protect the high-risk, high-capital investments made by innovative biopharmaceutical companies. Additionally, the study highlights the need to strengthen copyright protection and border enforcement measures in order to combat online piracy and better protect North American consumers from dangerous counterfeit goods.

As the Chamber’s 2018 International IP Index underlying the new study points out, difficulties in updating the IP Chapter in NAFTA have come from a series of trends hostile to IP rights such as blaming patents for high healthcare costs and viewing copyrights as an obstacle to free exchange of ideas online. These trends have slowed North American progress on rights for innovators and creators since 1994. As a result, the new study, which measures NAFTA IP protections against the Chamber’s Index, gave the current agreement less than half of the total available score, a poor showing

On the index overall, Canada ranks 18th of 50 countries measured; Mexico stands at 24th. A modernized NAFTA agreement that includes world-class IP standards would leapfrog both countries to near the top, where the United States currently sits. The GIPC study shares evidence of a strong correlation between these rankings and broader socio-economic benefits such as a country’s innovation output, its access to innovation and creativity, and job creation in knowledge-intensive industries, among many other benefits.

While the U.S. and Mexico have reached agreement on modernizing the IP Chapter in NAFTA, what happens next largely depends on Canada and its understanding of how innovative and creative sectors contribute to economic growth. Is Canada in? Is Canada out? The drama continues as talks go on in Washington, DC.

On August 27, the Office of the U.S. Trade Representative issued a press release with more details on the U.S.-Mexico agreements, characterizing the deal on IP as containing the “most comprehensive enforcement provisions”… “strongest standards for trade secrets of any U.S. FTA”, and numerous “provisions to protect innovators.”

Hyperbole aside—and final judgment will be reserved until we see the text—early indications are of a strong IP agreement, and we are very encouraged by the clear recognition by the U.S. and Mexico that innovation and creativity are paramount to North America and NAFTA 2.0 is a great way to protect it.

Intellectual property is one of the most important facets of any economy. NAFTA’s IP standards should meet the needs of today’s innovators and creators. Updating the IP chapter in a modernized NAFTA would set the stage for North America to become the most innovative and creative trading bloc in the world.

Global leadership on intellectual property creation is where a win lives for North America—for Canada, for Mexico, and for the United States.

The full study is available online here.

ABOUT THE AUTHOR
Patrick Kilbride is senior vice president at the U.S. Chamber of Commerce Global Innovation Policy Center.

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