USMCA: Canada’s Innovation Catalyst

As the world’s premiere innovation economy, the U.S. knows that innovation provides. It provides well-paying jobs to 45 million strong in a workforce of 160 million; it pours back into the economy, accounting for $6.6 trillion of our nation’s GDP; it provides access to safe medicines and consumer goods. Innovation provides, and the rest of the world is catching on – including our neighbor to the North, Canada.

Canadians have made a notable effort to strengthen their national intellectual property – or “IP” – environment in recent years in order to drive innovation. Proving the point, the U.S. Chamber of Commerce 2019 IP Index benchmarked Canada’s progress, showing that its score has increased year-on-year since the inaugural edition of the report in 2012. However, Canada is uniquely poised to further improve its national IP environment by harnessing the power of USMCA.

USMCA has created an opportunity for the U.S., Mexico, and Canada to harmonize and strengthen IP protections across North America to create a continental innovation powerhouse. The Agreement includes strong IP protections which lay the foundation for 21st century IP protection in trade agreements. Recently, GIPC released an analysis benchmarking USMCA against the standards in our International IP Index, which represent the gold-standard for IP protection in global markets. The research found that the IP commitments in USMCA surpass those included in TRIPS, NAFTA 1.0, and the original TPP agreement. Needless to say, effective implementation of the IP provisions in USMCA will help ensure that Canada can better harness the benefits of robust IP provisions.

While USMCA still hangs in the balance, it is important to analyze just how Canada’s current IP environment could be improved under USMCA.  Three examples from a rich IP chapter make the case: 1) USMCA includes up to 10 years of regulatory data protection (“RDP”) for biologics, 2) criminalization of trade secrets theft, and 3) ex officio border enforcement against suspected counterfeit goods, including those in-transit.

These advancements on current IP laws send a powerful signal to Canadian consumers and businesses, both large and small, that Canada is committed to protecting their IP.  For instance, increasing Canada’s current RDP period not only makes it more competitive with the U.S. standard of twelve years in the desired bio-tech sector, but lays the basis for speedier patient access to more advanced, potentially life-saving medicines.

Additionally, expanding the protection of trade secrets is crucial to protecting Canadian businesses from misappropriation of their proprietary know-how, relationships, and data. Although the Security of Information Act accounts for trade secret enforcement, currently, Canada has no formal intellectual property protections for trade secrets, making it difficult for SME’s who lack the resources for legal battles to protect their trade secrets.

Lastly, the USMCA includes the most comprehensive enforcement provisions of any trade agreement, including ex officio authority for law enforcement officials to stop counterfeit or pirated goods in-transit. Under current statute, Canada has recorded an average of 16 seized shipments a year. In comparison, the U.S. seized 34,143 infringing shipments in 2017.

Strengthened IP protections provided by USMCA could translate to an economic boost for Canada. For instance, Canada found in 2017 that companies holding industrial design patents saw a 16% increase in revenue per employee.  Harnessing the power of intellectual property protections allows firms to protect their innovations and boost revenue and income, benefiting everyone from the firm itself through increased revenue, to the workers through increased wages, to the consumer through higher-quality, more advanced products.

In order for Canada to bolster the socioeconomic benefits the economy could receive through USMCA, the government must put the right policies in place to foster an investment in innovation.  Effective IP laws, like those included in USMCA, create the conditions for private sector investment in the capacity to innovate – think hiring researchers, building laboratories, and training employees.

Interested in learning more about the benefits to Canada from IP in USMCA? Join the GIPC and the MacDonald-Laurier Institute on Thursday, May 23, for an event discussing why the USMCA is good for the innovative economies of North America. Learn more about the event here.

Sophia Robichaux is the Associate Communications Manager of the U.S. Chamber of Commerce Global Innovation Policy Center. 

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