Kirtsaeng Shows Why Trade Negotiators Don’t Always Know What the Law Actually Is

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Something we commonly hear when the United States Trade Representative or others are negotiating "trade" agreements is that, to the extent that these agreements mention other areas of law or policy--such as copyright law--they are "consistent" with it. "Who could object," we are asked, "to simply restating what the law already is?"

The first problem with this is that such agreements don't just restate the law--they can freeze it in place. It is politically more difficult for Congress to pass a law if there's an argument (even a wrong one) that doing so would take us out of "compliance" with a trade agreement. If trade negotiators want to freeze US law in place they should explain that is what they are doing and not frame the issue as a technical one without real consequences.

But the Kirtsaeng decision shows why we should not take the assertion that trade negotiators know what the law is and only take positions consistent with it too seriously. The law is sometimes uncertain and subject to dispute. We need courts to clarify what it means. Today, the Supreme Court clarified that the first sale doctrine applies to goods made overseas. It's important to note that the Court did not declare that henceforth, first sale applies in this way. Rather, a convincing majority of the Court held that it always has. Supap Kirtsaeng acted legally when he imported textbooks into the United States without the permission of John Wiley & Sons. To the extent that anyone at USTR or anywhere else at the time thought otherwise, they were wrong. This is how the legal system works.

It is thus relevant that Justice Ginsburg writes, in dissenting from the majority opinion, that "nlike the Court's holding, my position is consistent with the stance the United States has taken in international trade negotiations." But trade negotiators do not get to decide what the law is: Congress passes statutes and courts interpret them. The USTR is not part of this workflow. If trade negotiators have ever taken positions that are inconsistent with Kirtsaeng then those positions are now, and always have been contrary to US law. I would make a similar argument even if Kirtsaeng came out the other way: trade negotiators should not try to anticipate how contentious legal battles will turn out. They should steer clear of these areas entirely and allow the system to do its work.

Of course, the game here is "policy laundering." If domestic law is uncertain, international agreements can be used to nudge courts to interpret it in a particular way. Ginsburg's dissent takes it as a given that policy laundering is a legitimate technique, and would apparently use a "stance" taken by the Bush and Obama adminsitrations to help interpret the 1976 Copyright Act, which in turn codified the much older common law first sale doctrine. Justice Ginsburg is a great jurist. But in this case her sympathy to the plaintiffs would have her turn over the interpretation of statutes to the executive branch. Fortunately the Court disagrees with her on this.

This is highly topical. As Sean Flynn points out, the leaked draft text of the TPP contains language that is inconsistent with the Court's holding in Kirtsaeng. While the TPP is still being negotiated, similar trade agreements are in effect today that contain similar language. As Flynn further observes, these were documents "that no one was really paying attention to when they were entered, that were negotiated with classified texts, and were approved by Congress with provisos that they do not change any US law." But today's decision shows that this was wrong.

Whatever happens with the specific issue of the importation of copyrighted goods, Kirtsaeng shows that when the law is uncertain, and when issues are repeatedly being brought before the Supreme Court, it is difficult to say what the law is. The courts must clarify it, and when the Supreme Court definitively explains the law some people are going to be disappointed. Thus, when they are representing the United States internationally trade negotiators should be clear not to overstep their bounds and attempt to bind the United States to agreements that are not consistent with the will of Congress.