Month: September 2026

The US-Canada Tariff War and the Creative Industries: More Woolly Thinking

A wicker basket filled with colorful skeins of yarn, featuring shades of blue, green, red, and brown, set against a grassy background.

Image: Pixabay

As the tit for tat imposition of tariffs between Canada and the US escalates, people in the creative industries on both sides of the border must be wondering where this will end. The latest to get tangled up in this web are knitters. Yes, knitters—of woollen sweaters, baby booties, nose warmers etc. A couple of weeks ago I wrote about the impact on Canadian artists, since various categories of original art– paintings, drawings, collages, sculptures and statuary, original prints and lithographs—are included in the “Section 338” fifty percent US tariffs imposed in retaliation for Canada’s retaliation, particularly the provincial bans on the selling of US liquor and wine. But also included in the long list of Canadian products hit by US import tariffs is the following; “Wool, excluding unimproved, finer than 46s, greasy, shorn, not carded or combed”.[i]

Well, you say, how does that affect Canadian knitters? Sheep farmers, yes, but knitters? Well, according to this Canadian Press story, it has a big impact because Canada has hardly any facilities left to transform greasy wool into yarn. As we know once upon a time, in the horse and buggy era, all sorts of things got done locally; slaughtering cattle, cleaning wool, churning butter, milling wood. Then, with industrialization, international trade and the era of specialization and transportation, local production tapered off and supply chains sprang up linked to locations where economies of scale made production competitive. Rather than processing wool close by, Canadian producers sent their raw wool to factories in the US to be processed. It was more cost effective to do so because these factories were large and processed a lot of wool from a wide area. With an integrated North American market, the cost of transportation was minimal compared to the efficiency savings. There were no tariff impediments to crossing the border. Once processed, some of the processed Canadian wool came back to be feedstock for knitters in Canada (some of whom then produced products for the US market). It is a classic example of how international trade is supposed to work. But with the imposition of US tariffs on raw wool, Canada’s wool industry is now realizing the need to be more self sufficient. In the interim, Canadian raw wool is being sent to Europe or China for processing. Who wins? China. Who loses? US mills that formerly were processing Canadian wool and then exporting it back to Canada. And this is the tariff that is supposed to be punishing Canada! Talk about woolly thinking.

When governments start untangling supply chains, combing through protectionist options and ramming through changes, things begin to unravel. Having had the wool pulled over their eyes by the seductive siren of protectionism, they should have every reason to feel sheepish when they see the result of their actions. OK, enough puns. This is serious business. Not only is knitting a creative industry, sometimes on an industrial scale but also at an artisanal level, it is also related to copyright because of the intellectual property behind the patterns. In fact, I wrote an entire blog post on knitting patterns and copyright theft a few years ago.

The Trump administration has based its trade policy on forcing repatriation of production back to the US through the imposition of tariffs on imports. I don’t need to repeat the judgment of just about every economist in the world, except for Peter Navarro, who argue this is self defeating. The cost of import tariffs will be borne by US consumers, as is becoming increasingly evident. The disruption of efficient supply chains will hurt US manufacturing and US workers. This is an argument put forward by the auto industry where North American supply chains have become increasingly integrated as a result of NAFTA and its successor, the USMCA/CUSMA. But even in an industry like wool processing, the impact of impeding mutually beneficial supply chains is revealing.

The only result of the US policy will be to force Canada to become more self reliant and to redevelop its own wool processing industry. This will cause job losses in the US and probably increase the price of processed wool in Canada. It may result in the effective transfer of some jobs from the US to the new (less efficient) processing plants in Canada, but Canada will have gained some jobs and at least Canadian knitters will have a reliable supply of raw product, not subject to the whims of whoever happens to be in the White House. This is the sovereignty or security argument for protecting home-grown industries in contrast to the comparative advantage/greater efficiency rationale for open markets. The former seems more important these days as a result of the US underming the global trading system through its unilateral actions.

In a sense, the example of the negative impact on the US wool processing industry from ill-conceived tariffs on Canadian raw wool is very similar to the position that Canada created when it announced retaliatory tariffs on Canadian imports of US seafood. The immediate effect would have been to put out of work a lot of people in the New Brunswick riding of US-Canada Trade Minister Dominic Leblanc. New Brunswick and Maine have long had a close trading relationship. Maine lobsters are harvested earlier because they mature faster, having grown in slightly warmer waters. When lobsters are ready to be processed, there is a glut of them. Processing capacity is stretched. The solution devised over many years is to ship many Maine lobsters to New Brunswick for processing because there is excess processing capacity at that time of year. The processed US lobster then comes back to US markets. Everybody wins. The Canadian government, in its zeal to send a message to US exporters that tariffs are a two-way street–and that consequently they should start putting pressure on the Trump administration to repeal tariffs on Canada–almost shot itself in the foot. The Canadian tariff, devised by bureaucrats behind a desk in Ottawa who had apparently not bothered to consult people on the front lines of the Atlantic seafood industry, was rescinded a day after it was announced. Both sides need to lower the temperature as people, including artists, knitters, crocheters, lobster processors and many others, are getting hurt.

There is another example of backtracking on retaliatory tariffs that I cannot help but mention. After threatening Canada with Section 338 tariff punishment, the Trump administration quietly rescinded the additional tariff it imposed on imports of Canadian toilet paper. Who says Canada has nothing that the US needs! If Canada is looking at ways to strike back, putting an embargo on the export of this crucial commodity would rub a lot of US consumers the wrong way. But would it wipe away the damage?

The first shot in this trade war was fired from Washington. So far, the Trump administration has managed to hit just about every US consumer, US workers in car assembly and parts plants in the US that rely on an integrated North American industry, and now apparently workers in US mills processing raw wool. Of course, it has also hurt Canadian workers and producers, which was the intention. The inevitable Canadian reaction has also inflicted its share of economic pain on Canadian consumers, and US workers. Under current leadership in the US, it is hard to be optimistic that this is going to change anytime soon. In the meantime, “frogging” (look it up) an industry that has been knitted together for decades is yet another example of the self-defeating economic policies coming out of the current US administration.

© Hugh Stephens, 2026. All Rights Reserved.

[i] For clarification, the term “excluding unimproved” means that the tariff line includes wool from “improved”, i.e. bred sheep (like Merino or crossbreeds) whose wool is used for textiles. “Unimproved” in terms of tariff definition means wool that comes from wild or native sheep breeds that have very coarse, rough, and uneven coats. The increased tariff targets wool from live sheep that has not been processed, i.e. washed, carded or combed.

AI Training and Copyright: It’s a Global Issue—and There is a Global Solution

Infographic titled 'AI Training & Copyright: How Jurisdictions Approach AI Training and Copyrighted Works' detailing various jurisdictions including the USA, European Union, Japan, South Korea, China, United Kingdom, Canada, and Australia. It summarizes their legal frameworks, approaches to AI training with copyrighted works, and key points regarding copyright considerations.

Image: Used with permission (Maryna Hryhorieva)

This striking graphic, created by IP lawyer Maryna Hryhorieva, is a great summation of the current state of play regarding the still very fluid issue of AI training and copyright. It compares how eight different regimes, the US, EU, Japan, South Korea, China, the UK, Canada and Australia, are addressing this thorny issue, and highlights the different frameworks used to determine what is legal and what’s not. Each is different with its own peculiarities. Navigating through them is not easy. What may apply in one jurisdiction will not apply in another. A use that is acceptable in Country A may result in an unfavourable court ruling in Country B. An AI company can decide to base its content use practices on the most AI-friendly regime in which it operates, staying onside in that jurisdiction, but then can still be found to be infringing elsewhere. Cross-border jeopardy is almost certain where an AI company wants to scoop up local cultural content, pitting it against determined rightsholders who will, among other things, invoke cultural sovereignty.

The essence of the issue goes back to the way in which international copyright law is structured. Each country sets its own rules, regulations and interpretations within a broad commonly agreed framework. That framework, based on the Berne Convention, results in common basic standards centred on some fundamental principles, incarnated in the famous “three step test”.[i] The result is a generally consistent pattern of protection for rightsholders but with some significant differences by jurisdiction, like duration of copyright protection for example. The same inconsistencies apply to data mining (or what I would call unauthorized content reproduction) for AI training. So, what is a poor little ol’ trillion-dollar AI developer to do? Guess what? There is a universally applicable solution. Can you guess what it is? I reveal all in the final paragraph.

First, let’s briefly summarize the chart.

The US approach is based squarely on litigation, letting the courts decide the parameters of fair use regarding the unauthorized taking of protected content for AI training. This case-by-case approach will provide case-by-case answers, depending on the circumstances, the judge in question and even the circuit within the US federal justice system in which the case is heard. A legal approach inevitably leads to risk and uncertainty. That is not to say that in the end, the US will not resort to legislation. Thee US Justice Department recently submitted a “Statement of Interest” in the OpenAI v New York Times case, stating that a ruling in favour of the Times and other news industry plaintiffs would “threaten US national security, give a competitive advantage to foreign adversaries”, and thwart “creative and scientific progress while hindering American prosperity”. The Statement of Interest tries to put its thumb on the scale of justice, weighing in in support of the OpenAI argument that its use of NYT content was “transformational”, and thus constituted fair use. The Court is under no obligation to accept this interpretation; its duty is to interpret the law as it stands. But if the DOJ statement represents the Trump Administration’s interpretation of the law, and that interpretation is not upheld by the courts, that potentially opens to door to legislative change, assuming that Congress can be convinced to act in the name of big tech. Either way, there is continued uncertainty.

The EU approach is based on a narrow text and data mining exception embedded in the Copyright Directive. Resort to the exception is limited in two ways; if rightsholders cannot opt-out, the exception is limited to scientific organizations and cultural heritage institutions for research purposes only. There is also a general exception that allows for commercial use but in this case, rightsholders can reserve their rights by opting out.

Japan is considered by many to have a very AI-friendly regime in terms of allowing copying for training purposes, but it is not as wide as many have claimed, as I pointed out in this blog posting a couple of years ago. South Korea is struggling with the issue, being whipsawed between AI developers promising the moon and its vibrant cultural industry. China likewise is still trying to determine which way to go. It does not have a text and data mining (TDM) in its law, nor does it apply a fair use doctrine. However, it has announced plans to deal with AI training rules through its copyright development plan covering the period 2026-30.

The UK has had several false starts. A TDM exception limited to non-commercial purposes only has been on the books for several years, but the Labour government tried to expand this by advocating for a regime that would allow AI developers to freely use copyrighted content for algorithm training unless rightsholders opted out. After a massive outcry and pressure from British cultural industries and prominent performers, the government retreated. Now Britain has gone back to the drawing board.

In the case of Canada, everything is up in the air. Canada has a fair dealing regime with no TDM exception. It has held several public consultations and is developing an AI strategy but has been very unclear about where the government comes down on the issue of freely using copyrighted material for AI training. Meanwhile several Canadian media outlets are suing OpenAI for copyright infringement. OpenAI lost its argument that Canadian courts had no jurisdiction in this case. Now the Canadian music collective SOCAN is suing AI music company Suno. While AI companies are arguing for a wide TDM exception in Canadian law, rightsholders are seeking to retain the current law and use it to protect their rights.

Australia on the other hand has spoken out strongly in defence of its cultural sector and has declared that it will not legislate a TDM exception. Australian Prime Minister Albanese has taken that a step further declaring that, “An artist’s creative endeavour is their work and their property. No company should use Australian books, music, art or news to build or train AI without the artist’s control. That includes the artist’s control of the price and value of their work.” What will happen next in Australia is unclear although some tech platforms continue to try to push various compulsory licensing regimes.

As you can see, the rules are diffuse and in flux. Frankly, it is all over the map. One thing seems to be clear. The push by the tech industry for widespread TDM exceptions seems to be stalling. The litigation route so favoured in the US is yielding uncertain results. Legal actions in fair dealing countries like Canada, the UK and Australia may bring varying results with complex rules governing applicability of judgements. All this leads to greater uncertainty, and costs. However, as mentioned above, there is one universal remedy, one that transcends all the jurisdictional issues and conflicting interpretations. It is called voluntary licensing.

Voluntary licensing between rightsholders and AI developers eliminates the jurisdictional problems, assuming the agreements are structured to provide wide coverage and indemnity. With a voluntary licence, it doesn’t matter if there is or isn’t a text and data mining exception, or if the use is for commercial purposes, or if the use is sufficiently transformational. It doesn’t matter whether the AI developer is truly “enjoying” (accessing the essence of the content), as in the case of Japan. Some jurisdictions have toyed with the idea of a compulsory licence, as in India, but not only has this been opposed by both rightsholders and the AI industry, it is jurisdictionally bound. Voluntary licences deal with this issue and, if properly structured, remove the hazard of conflicting jurisdictional rulings.

While it is not always easy to reach such deals, as the OpenAI v New York Times case illustrates, it is surely better and less costly than the alternative of endless litigation. This is why it is becoming the preferred solution. More and more licensing agreements are being negotiated across the full range of copyrighted content, including audio-visual, music and publishing industries for AI training and use. Voluntary licensing is a global solution–but it requires AI companies to recognize the value of the content they want for training, and to accept the right of creators to control the use of their content. If it requires a willing buyer, it also requires a willing seller and while not all rightsholders will be willing to sign a licensing agreement, the holdouts will be the exceptions if fair deals are offered. It is a far better solution for both sides, AI developers and rightsholders, than endless litigation or constant lobbying for (or pushing back against) legislative change. It’s a global solution to a global problem.

© Hugh Stephens, 2026. All Rights Reserved.

[i] Any exception must satisfy three requirements: (1) Limited to certain special cases:. i.e. the exception must be narrowly defined and clearly circumscribed, rather than acting as a broad or general exemption; (2) No conflict with normal exploitation: i.e.the use must not interfere with the ways the copyright owner routinely makes money or manages the market for their work; (3) No unreasonable prejudice to legitimate interests of rightsholders, i.e. the use must not cause unfair or excessive economic or legal harm to the author or right-holder

Slapping a Fifty Percent US Tariff on Original Canadian Art—and Renaming Bodies of Water: That’ll Teach Those “Nasty Canadians” a Lesson

A humorous and surreal image depicting a group of geese with cartoonish hairstyles resembling Donald Trump's, standing on a grassy area near a body of water, some holding guns.

Image: Truth Social

Nova Scotia mixed media artist Chris Warburton Hulme, (whose motto is “Empowering Women Through Art”), produces prints, bookmarks, cards, stickers, notebooks etc. based on her original art. According to this CBC report, Warburton Hulme will no longer be selling to her US customers out of principle because she believes that works of creative expression should not be at the centre of a tariff war. Even if she didn’t have such scruples, her US market probably dried up in any case, as all her work just got 50 percent more expensive in the US as a result of the Trump administration’s imposition of retaliatory tariffs on a range of Canadian products. In the case of art, unless they are more than one hundred years old, the new tariff applies to paintings, drawings, collages, sculptures and statuary, original prints and lithographs and, for good measure, anything (art or otherwise) made from tortoise shell, whalebone, horns, antlers, hooves, nails, claws and beaks. That will stem the flood of deer hoof rattles flooding in from Canada! The tariff being applied is based on a legal measure that has never before been used, Section 338 of the US Tariff Act of 1930. That Act established what are commonly known as the infamous Smoot-Hawley tariffs that resulted in deepening the Depression and causing a severe rupture in international trade before the Second World War.

This US retaliation is in response to Canada’s retaliatory actions taken against the original imposition of US tariffs on a range of Canadian products entitled to tariff-free access under the trilateral trade pact, the USMCA (referred to as the CUSMA in Canada). The US overrode its market access commitments in the USMCA by invoking the pretext of “national security”, a self-judging loophole that is part of the agreement. As a result, the US imposed tariffs of up to 50% on Canadian steel, aluminum, and copper, 25% on cars and wood products including such key national security items as upholstered furniture, vanities and kitchen cabinets, and 10 percent on lumber on top of existing duties, bringing the total tariff on Canadian lumber to the range of 30 percent. Lumber exports to the US from Russia pay less duty. Canada had the temerity to retaliate against this treatment, leading to the present situation. The US position is that not only is it entitled to erect import barriers into its market, at the same time it is equally entitled to demand duty free access to other markets. If you don’t agree to this, the US will inflict pain on you targeting, among others, Canadian print makers and antler and bone carvers. Watch out! Worse is to come.

If that doesn’t bring those “nasty Canadians” to heel, Donald Trump has another ace up his sleeve. Renaming. For starters, he signed an executive order renaming Lake Ontario, the name by which it has been known for approximately 400 years, to Lake America. Where is Lake America? You’ll have to ask the President, but in case you are in any doubt he posted this bizarre video showing him replacing a Lake Ontario sign with one saying Lake America and then doing some sort of victory dance. It is truly distressing—and frankly sad—to see the President of the United States, enabled by the sycophantic clique surrounding him, behaving like a spoiled adolescent. Sorry, that’s unfair to spoiled adolescents who could be forgiven for not knowing any better. This puerile behaviour could be ignored if it wasn’t so dangerous and harmful for the longstanding economic and political relationship between the two countries that share the largest part of the North American landmass.

After the US began enforcing the Section 338 tariffs following the last-minute implosion of the trade talks that were taking place because of the 338 tariff threat, Canada announced yet another retaliation list. One wonders about its efficacy, although it is good domestic politics to be seen to be standing up to threats. While Canada can impose some selective pain on US exporters, it cannot really hurt the US economy. Trump’s widespread tariffs on imports, not only from Canada but from just about everywhere, are taking care of that. While designed to put some pressure on US exporters, the Canadian tariffs are also apparently intended to help Canadian producers–who now have their access to the US market impeded–by providing them with protection against directly competing US imports. Original art has in fact not been targeted by the Canadian tariffs; putting a reciprocal tariff on US deer hooves, lithographs or sculptures probably wouldn’t make much difference to Canadian artists anyway. One result of the Canadian countermeasures will be to increase the price of products imported from the US, so Canadian consumers will be the ones taking a hit. Mind you, the mood of consumers is already very much behind purchasing locally made products, but generally the retail end-user is unable to identify intermediate inputs. It is overly simplistic to slap a “Made in Canada” label on a product when in fact, there are relatively few products made exclusively in Canada. Perhaps Chris Warburton Hulme’s products qualify.

One result of the Canadian counter-action will inevitably be further US retaliation. Most Canadian provinces have in effect banned the import of US liquor and wine, not by imposing an import ban but by simply not placing orders for the product, and by not retailing it. Apparently, the US is mulling banning some Canadian products as a countermeasure. Maybe Canadian maple syrup will have to find new export markets.

Donald Trump could also up the ante on his renaming offensive, passing more executive orders to eliminate all those annoying references to Canada. Let’s get rid of “Canadian bacon”. (As a footnote to my US readers, no-one calls it Canadian bacon in Canada. It is simply just “back bacon”). Let’s rename the Canada goose. Trump seems to have a hate on for this noisy and annoying bird that tends to foul golf courses and playgrounds, judging by another inane post from the White House. Goose poo flown in from Canada. Almost as bad as wildfire smoke. Some have suggested renaming the Canada goose as the Donald Duck. Maybe the Daffy Duck would be more appropriate. Or, how about “Lame Duck”.

When will this madness end, and artists like Chris Warburton Hulme can get back to creating art without getting caught in a political crossfire? Probably about the time that Lake America fades into history. Lake America is impossible to find on Google maps in Canada, although its name recognition surged briefly when some official Canadian websites found, to their embarrassment, that the underlying settings for Google maps in Canada were set to a US API (Application Programming Interface), making Lake America the default setting. That was hastily changed. To stir the embers, Canada’s own resident clown, Ontario Premier Doug Ford (who has an unfortunate and canny ability to get under Trump’s skin), unveiled a large sign proclaiming, bilingually, “Lake Ontario: Now and Always”, as if anyone really needed to do this. Don’t take the bait. About the time the moniker Lake America disappears, the true name of the Gulf of Mexico will also make a comeback, although this US website suggests that Trump is having a tough time making Gulf of America stick. Perhaps the lyrics of Johnny Horton’s song (“We fired once more and they began to runnin’, On down the Mississippi to the Gulf of Mexico”) will not need to be rewritten after all.

The most recent infantile outburst is this post on Truth Social showing Trump (who probably can’t even skate—those darn bone spurs again) knocking down Carney (who played on the Harvard hockey squad, admittedly as back up goalie) in a supposed ice-rink confrontation. Doesn’t he have better things to do? The sad spectacle of the most senior elected official, and many non-elected cabinet-level officials of the United States, making complete fools of themselves through childish, meaningless social media posts and comments makes one wonder who is really in charge. Have the inmates now finally taken over the asylum?

© Hugh Stephens 2026. All Rights Reserved.

AI Training and Copyright Licensing: The Changing Tide

Sunset over the ocean with golden reflections on the wet sand and gentle waves lapping at the shore.

Image: Author (Tofino, BC)

Australian Prime Minister Anthony Albanese caught global attention in mid-July with his speech at the University of Sydney, “AI in Australia’s Interests”. That address, which outlined the Australian government’s approach to AI, included important statements regarding the work of Australia’s creative community, which Albanese declared is “not up for grabs”. Having previously ruled out the creation of a copyright loophole for AI training, known in the trade as a “Text and Data Mining” (TDM) exception, Albanese went on to say that;

“Australian writers, musicians, artists and journalists must retain ownership and control of their work…No company should use Australian books, music, art or news to build or train AI without the artist’s control…of the price and value of their work. Anything less is theft.”

Bravo! Hopefully this means what it says, that rightsholders will retain control and receive compensation on their terms if their works are used for AI training, even though there is still strong pressure from segments of the AI world for Australia to loosen its terms of copyright protection. Anthropic is dangling a $20 billion carrot in the form of potential investment in AI data centres in Australia but only if there is a copyright carve-out for AI training. One Anthropic proposal was for the creation of a $350 million fund to compensate rightsholders, paid for by the AI industry, but it was unclear how this would operate or if rightsholders would be required to opt-out if they didn’t want their content used. For creators to be able to control their work within the accepted framework of copyright law, they must have the ability to accept or reject voluntary licensing and not be required to opt-out of a compulsory scheme where what they receive is decided by bureaucrats on the basis of limited contributions to a common fund. The commitments that Albanese made in his speech indicate that voluntary licensing is the preferred solution, but the issue remains under study (hopefully this will be done with full transparency, following suggestions earlier this year of secret dealings on this critical matter of public interest). Nonetheless, the bright line that Albanese has drawn with regard to creatives retaining control of their work is welcome and will hopefully encourage other governments who are developing AI policy to do the same.

As noted, the AI industry never gives up. Having been clearly told that creators should retain control over how their work is used, and be paid for that use, some companies are floating new objections based on the supposed “long tail” argument. “Long tail” is the term being used to describe the many small rightsholders who create and therefore (in theory but maybe not in practice) control use of their content, as opposed to larger rightsholders such as major publishers of books, journals and newspapers, music labels, film studios and so on with whom it is easier to engage in licensing discussions. The argument is that, even if the AI industry wanted to license the content that it uses in training (by no means a given with every company), it can’t possibly deal with the myriad of small rightsholders. Elsewhere, some AI developers have dealt with this problem by ignoring it, simply helping themselves to whatever content they wanted, without licence. In some cases, they even used pirate libraries as sources, almost daring rightsholders to bring legal challenges. Anthropic is a high-profile culprit that got caught doing this.

One idea currently being promoted by Anthropic is to create a statutory licence that would be restricted just to Australian rightsholders, with funds directed only to them. It is hard to see how this is a viable solution. Not only would it violate international norms that Australia has committed to by discriminating against foreign rightsholders in the Australian market, if it is applied universally, it would lead to a stream of royalties flowing out of Australia while doing little to help local creators. Elsewhere, various non-statutory collective licensing schemes have been proposed to deal with the issue of small rightsholders, although to date none have emerged that provide true one-stop shopping for AI developers. But a compulsory licence cannot be the solution. These large companies with stratospheric valuations (especially those getting ready to launch an IPO!) surely have the wherewithal to find ways to license the content they use and will continue to use as they develop and refine their AI models.

For the past several years the tech community has followed the “better to ask for forgiveness after rather than permission before” approach when appropriating copyright protected content to develop AI platforms. The inevitable result has been a spate of lawsuits, most of which are still ongoing, with results varying from case to case and jurisdiction to jurisdiction. A second front opened by some AI platforms has been to attempt to weaken copyright protection through legislation, focussing particularly on the introduction of a broad TDM exception. As a result of this push, many countries began studying whether to bring in a TDM carve-out, or if they had a narrow TDM exception (e.g. for non-commercial research purposes) whether to widen it. From the perspective of rightsholders, it began to look like a race to the bottom. Now, the tide seems to be changing. Albanese’s speech is a good example of the shift, but Australia is not alone in taking a more considered and balanced approach.

Hong Kong is a case in point. Hong Kong has always had one of the stronger intellectual property regimes in the region, a source of competitive advantage. But under the pressure of blandishments from the tech community, it issued a consultation paper in 2024 that, among other things, proposed a TDM exception–including for commercial purposes. When the paper went out for public comment, the predictable suspects urged adoption of a TDM provision while rightsholder groups argued that existing law and voluntary licensing was suitably flexible to handle issues arising from new technologies. Now the Hong Kong Government has concluded there is no pressing need to pursue a TDM exception through legislation. The priority will be to issue best-practice guidelines grounded in the existing legal framework, providing reference for stakeholders on copyright protection and infringement liability relating to AI-generated works. Voluntary licensing arrangements between copyright owners and AI developers are seen as the answer.

I noted in a blog post last year that the TDM issue was under review in a number of Asian jurisdictions, including India, Malaysia and Korea. In India, a government-commissioned working group recommended a compulsory licence scheme that displeased just about everyone, from the tech gurus to India’s cultural creators, although to the working group’s credit, it also rejected a TDM exception for India. The lack of momentum for this idea means that current copyright legislation continues to apply, albeit with Indian courts starting to weigh in, (but unfortunately in ways that could potentially undermine India’s fair dealing balance). Malaysia continues to attract significant investment from the hi-tech sector despite not yet adopting a TDM exception, in stark contrast to neighbouring Singapore. In Thailand, which has one of the richest cultural traditions in Asia through its audiovisual and music sectors, the tech sector has been agitating for introduction of a TDM, as elsewhere. This would put at risk a content sector that is a significant contributor to national GDP as well as driver of the all-important tourist industry.

Korea is another country where the AI industry is bringing pressure to bear. Korea’s unique and thriving culture is one of its national assets, along with a domestic innovation and hi-tech industry that is second to none. To allow offshore tech companies to plunder Korea’s rich cultural tradition would be a shortsighted and shameful sellout. But neither Korea, nor Thailand, nor Malaysia, India or Australia are opposed to the development of AI, and all want their share of the benefits of this emerging if not already emergent industry. All recognize that AI development requires vast amounts of content, including the kind of high-quality content produced by their respective creative sectors.

There is a proven path for the AI industry to access this rich content. It is called voluntary licensing, and it already exists within the established four corners of copyright law. Moreover, it is increasingly becoming the solution as AI developers finally come to realize (a) that it is not worth risking the viability of the company on an unpredictable lawsuit that could result in crippling damages (or as in the case of India, years of court trials) and (b) equally important, their global push to get a legislated copyright loophole through TDM provisions in national law is going nowhere. In fact, the TDM tide is receding, as the examples of Australia and Hong Kong clearly show.

As the TDM tide goes out, the voluntary licensing tide flows in, floating the boats of both the creative and hi-tech sectors. Australia hoisted the first signal, but other jurisdictions in Asia seem ready to follow.

© Hugh Stephens, 2026. All Rights Reserved.