The Demise of the TPP and its Impact on Copyright

 For all intents and purposes the Trans-Pacific Partnership (TPP) is dead—or at the very least it will be in a state of suspended animation for a considerable period to come— given that President-elect Trump has announced that he will initiate the process to have the US withdraw from the Agreement on Day 1 of his Presidency. And that will end the TPP as we know it because of the Agreement’s terms; it will come into effect two years after signature (which took place in February of 2016) provided that at least six of the twelve countries representing 85% of the total GDP of the partners ratify and bring it into force. Between them the US and Japan represent about 80% of the GDP total (US-62%) so in effect this gives both countries a veto, with the US alone being able to prevent the deal from coming into effect. It has been argued that if the Agreement isn’t implemented that it doesn’t die, but rather just sits on the shelf. Technically that is true, and under a future US Administration it could be dusted off and revived if all parties agreed, but by the time that happens it will be a different world and considerable renegotiation will be needed.

There are many reasons to lament the fate that has befallen the TPP, including the missed opportunity to remove so many tariff and non-tariff barriers, to open up government procurement, put disciplines on State Owned Enterprises, implement labour and environmental standards, institute capacity building for the TPP’s lesser developed members, put in place measures to assist small and medium sized enterprises, and so on, not to mention the geopolitical impact of surrendering trade policy leadership to China, which will now push its version of a regional Asian trade agreement, known as the Regional Comprehensive Economic Partnership (RCEP). This is centered on the ten ASEAN countries and notably excludes the US, Canada, Mexico and South America. There will now in effect be a line down the middle of the Pacific. The TPP would have set a high standard in many areas including intellectual property and investment regulation so that aspirants to TPP membership, and there were many including Indonesia, Korea, the Philippines, Taiwan, Thailand and others, would have had to accept the rules of the “club”. Now the club, under Chinese leadership, will have different, less trade-liberalizing rules of entry that will include lower standards on intellectual property protection, among others.

So what does all this mean for rights-holders and copyright industries in the TPP countries?

It will mean that some of the gains that had been promised as negotiation outcomes will likely not take place, at least not right away. For six of the TPP partners, (Japan, Canada, New Zealand, Malaysia, Vietnam, Brunei) implementing the TPP meant that they would extend the term of copyright protection by an additional twenty years, from author’s life plus 50 to 70 years. New Zealand, where copyright term extension was particularly controversial owing in large part to a misleading and discredited study disseminated by the Ministry of Foreign Affairs and Trade (as I noted in an earlier blog) that claimed there would be a net outflow of $55 million dollars (NZD) annually owing to longer copyright terms, a misguided conclusion that presumably guided New Zealand’s negotiating strategy, won a long phase-in period of eight years to extend their copyright term to the TPP standard. What New Zealand’s negotiators had to concede to other trading partners in order to “win” this concession (which will only hurt New Zealand copyright holders) can only be guessed at. Some other countries, notably Vietnam (5 years), Brunei (3 years) and Malaysia (2 years) also negotiated phase-in periods to bring their laws into alignment with the TPP standard of 70 years.

The TPP would have brought a number of other benefits in terms of strengthening copyright throughout the region. Among these were provisions protecting against circumvention and removal of Technological Protection Measures (TPMs) and Rights Management Information (RMI). The TPP provided for strong civil penalties and criminal proceedings where circumvention was wilful and done for profit or commercial purposes. The treaty protected encrypted broadcasting signals, promoted government use of legitimate software and spelled out regimes for ISPs within the TPP countries with regard to legal remedies and safe harbours. It also required ISPs to “expeditiously remove or disable access to material residing on their networks or systems upon obtaining actual knowledge of the copyright infringement or becoming aware of facts or circumstances from which the infringement is apparent, such as through receiving a notice of alleged infringement from the right holder or a person authorised to act on its behalf”. This takedown policy is an important measure to combat online piracy. The TPP text also required accession to a number of World Intellectual Property Organization (WIPO) treaties such as the WIPO Copyright Treaty (WCT) and the WIPO Performers and Phonograms Treaty (WPPT) in cases where TPP countries were not already members.

None of these provisions will now come into effect through the implementation of the Agreement although it is worth noting that not all the new requirements applied to all TPP members since a number of them were already compliant. For example, most are already members of the WCT and WPPT, many already protect encrypted signals, six of the twelve already have a TPP-compliant 70 year copyright term, etc. However, what the Agreement would have done is bring all 12 members, over time, up to the same standards, and copyright holders throughout the region would have benefited.

While the demise of the TPP is a setback for the copyright industries, all is not lost. In the absence of the TPP, trade discussions will still go on in other forms. One of the most prominent is NAFTA, where Mr. Trump has vowed to renegotiate or tear up this twenty year old agreement between Canada, the US and Mexico. Both Canada and Mexico, in the immediate aftermath of Mr. Trump’s electoral victory, indicated that they would be willing to discuss “updating” of NAFTA. The NAFTA Agreement was finalized in 1994 and negotiated even earlier. The world has moved on since then; for example most issues of digital trade were not addressed as they were not an issue at the time. NAFTA was one of the first trade agreements to have an Intellectual Property Chapter but it is woefully out of date. Other aspects of the agreement could also be updated to the benefit of all three partners. Certainly Canada and Mexico will have their own negotiating objectives if the US decides to re-open the NAFTA. And if the US does re-open it, among the objectives that it will no doubt pursue will be strengthened intellectual property measures, including in the area of copyright. This will of course be of benefit to US industries, but also to copyright industries in both Canada and Mexico as well. As a result, some of the lost TPP gains could be recouped through a renewed NAFTA.

It is less clear how this process will unfold with regard to some of the other TPP countries. The US already has bilateral Free Trade Agreements with Australia, Singapore, Peru and Chile. New Zealand would desperately like to have an agreement with the US, and may seek to negotiate bilaterally. If they do, an eight year phase-in for copyright term extension is unlikely to be sustainable. Vietnam and Malaysia would like to upgrade the limited TIFA (Trade and Investment Facilitation Agreements) that they have with the US, and if and when they do, many of the TPP’s strengthened intellectual property provisions will be on the table. And then there is Japan. Will the US enter bilateral negotiations with Japan? That is unclear at the moment as Mr. Trump’s future trade policy (other than scrapping the TPP and renegotiating NAFTA) is unclear. Canada for its part will almost certainly resume the bilateral negotiations with Japan that were suspended when Japan joined the TPP negotiations. For copyright interests, however, a Canada-Japan treaty is unlikely to make much progress.

In summary, the demise of the TPP is a loss and a disappointment. It may yet rise again someday as it is difficult to envisage the US permanently ceding trade leadership in the Asia Pacific region to China. When it is revived, it will build on the negotiated text that was achieved but there will be a need for updates and changes, and possibly even some new negotiating partners. In the meantime, some of the gains in the copyright area may be achieved through a NAFTA renegotiation or new or renewed bilateral discussions, particularly between the US and trading partners in Asia and North America.

© Hugh Stephens, 2016. All Rights Reserved.

Author: hughstephensblog

I am a former Canadian foreign service officer and a retired executive with Time Warner. In both capacities I worked for many years in Asia. I have been writing this copyright blog since 2016, and recently published a book "In Defence of Copyright" to raise awareness of the importance of good copyright protection in Canada and globally. It is written from and for the layman's perspective (not a legal text or scholarly work), illustrated with some of the unusual copyright stories drawn from the blog. Available on Amazon and local book stores. View all posts by hughstephensblog