PK tells USTR: Adopt a More Rational Trade Policy

Today, we filed two sets of comments with the Office of the United States Trade Representative (USTR). The first related to issues the USTR should consider in the context of signing the Anti-Counterfeiting Trade Agreement (ACTA) and the second related to the Special 301 review process. In both comments we suggest that the USTR should adopt a new approach as it engages with other countries on trade and intellectual property issues. This approach should view U.S. trade interests holistically, acknowledging that whole industries that contribute to U.S. trade rely on copyright limitations and exceptions and accounting for these interests. In addition, it should engage with countries diplomatically instead of forcing them to adopt particular policies. It should also employ open and inclusive processes.

A holistic approach to U.S. trade interests

For too long, the USTR has viewed large intellectual property (IP) owners as the only U.S. constituency affected by IP policy and has sought to protect those interests only. In pursuit of this goal it has sough extremely high levels of IP protections and enforcement mechanisms in agreements like ACTA and in domestic laws of other countries through processes such as Special 301. The USTR has largely ignored protestations that this approach harms the interests of many industries that rely on IP limitations and exceptions to market their products and services in this country and in others. These industries include the Internet and consumer electronics industries and creative industries such as documentary and independent film-makers that use existing copyright material to create new ones. Extremely high levels of IP protection, adopted pursuant to U.S. pressures and combined with the absence of robust limitations and exceptions in other countries would prevent these industries from expanding their business or exporting their products to other countries.

Such a result would be inconsistent with the purposes of the Trade Act. To prevent this, the USTR should include provisions for robust limitations and exceptions in IP agreements. While ACTA was a lost opportunity, the USTR should not repeat the same mistake with the proposed Transpacific Partnership Agreement (TPP). Similarly, the Special 301 should not be used to attack beneficial limitations and exceptions in laws of other countries. A holistic approach to IP agreements accounting for all of these interests would comport with the USTR’s mission to foster trade for the benefit of all Americans.

Diplomacy, not coercion

Many countries, particularly developing countries, do not find extremely high levels of IP protection or enforcement to be in their best interests. High levels of protection hamper access to educational resources and tools for research. Stringent enforcement obligations impose strains on scarce resources. Oblivious to these pressures, or perhaps indifferent to them, the USTR has tranditionally used the Special 301 review process to pressure countries to adopt IP laws with strong IP protections. ACTA takes a similar approach and the USTR has indicated that it wants developing countries to sign on to ACTA. The Special 301 process is likely to be used as a vehicle to get those sign-ons. Many countries comply with these pressures because of their relatively poor bargaining power compared to the U.S.

However, that world is changing. Emerging economies such as Brazil, Russia, India, and China are rapidly increasing their shares in the global economy and estimates suggest that these economies will overtake the U.S. by 2018. These countries will be able to resist U.S. pressures and refuse to engage in trade with the U.S., thus shutting off access to large attractive markets. Therefore, the USTR should seek to engage with countries diplomatically, instead of coercively. This would foster better trade relations – a primary goal of U.S. trade policy.

An open and inclusive process

The need for openness and inclusivess applies to all USTR processes relating to IP. As we have said often, modern IP laws affect a wide set of stakeholders including creators, libraries, museums, innovative technology companies, and the public. Yet the USTR has traditionally sought to protect the interests of IP owners alone. As a result of this approach and because of the secretive nature of its processes, the USTR consults with IP owners alone to the exclusion of others. These shortcomings are apparent in the Special 301 process as well as in the process of negotiating agreements. We have highlighted substantive problems with this process several times before. In the ACTA context, this secrecy turned out to be counterproductive. Excessive secrecy of the process provoked opposition among USTR’s trading partners, led to the pubic questioning the USTR’s credibility as a representative of its interests, and introduced significant delay in conclusion of an agreement.

As the USTR proceeds with the TPP negotiations, it should learn from the ACTA experience and adopt a more open and inclusive approach.

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