Among the plethora of plurilateral trade agreements covering the Asia Pacific region and beyond—the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the Regional Comprehensive Economic Partnership (RCEP), and the Pacific Alliance—there is yet another— one you may not have heard of. The DEPA. (Digital Economy Partnership Agreement). What is the DEPA, and who is in it? And how does it relate to those interested or invested in copyright and intellectual property issues? Let’s take a “DEPA dive” (groan) and find out.
DEPA’s current membership includes just Chile, Singapore and New Zealand, the founding members. These are the same three countries that came together to create the forerunner to the Trans-Pacific Partnership (TPP), now the CPTPP. It came into force on January 7, 2021. South Korea, Canada and China have indicated interest in joining and in May of this year, Canada formally requested to become a DEPA Party, following public consultations in the spring of 2021. There were calls from think-tanks for Canada to take the initiative to join the Agreement, an application now in process . There have also been calls in the United States for the US to join DEPA.
DEPA is not the sole “digital only” trade agreement in existence; Singapore has signed digital agreements with several countries and the US and Japan reached a Digital Trade Agreement (DTA) in 2019. Much of what is in the DEPA, and the US-Japan DTA, is based on the ecommerce and digital trade chapters of the CPTPP but it goes further in some areas, and not as far in others. Notably, the DEPA departs from the standard text of most trade agreements, and from the US-Japan DTA, when it comes to intellectual property, a potential problem for content industries.
There are some important elements to the DEPA, outlined in detail by two researchers at Canada’s Centre for International Governance Innovation (CIGI), Dan Cuiriak and Robert Fay. The agreement is different from most traditional trade agreements in that it does not include a long list of items on which tariffs will be reduced or removed. It is a sectoral agreement including just 16 “modules” (chapters) and 4 annexes. It is designed to be a framework that can be built on and added to. It covers a range of digital issues, from paperless trading, electronic invoicing, and electronic payments to treatment of digital products (where it entrenches the WTO moratorium on customs duties on electronic transmissions and content transmitted electronically) and provides for the non-discriminatory treatment of digital products, with a specific exception for “broadcasting”. There are also other general exceptions such as national security, public health and safety. It provides for privacy of personal information, cross-border data flows and agreement not to require data localization as a condition of doing business. In addition, the agreement has provisions for cybersecurity cooperation, building consumer trust (controlling unsolicited electronic messages directed at consumers) and protecting consumers from fraudulent activities. It ventures into new ground in terms of outlining principles for cooperation in emerging trends and technologies, identifying fintech, and artificial intelligence (AI) in particular as areas for further work and collaboration. The digital economy’s impact on competition policy and government procurement is also recognized, but in all these emerging areas, there are no binding commitments, simply “best efforts” language to promote cooperation.
Where the DEPA falls short, and takes an odd diversion, is in the area of intellectual property. First, unlike most digital trade chapters in broader agreements and the US-Japan sectoral DTA, there is no mention of prohibiting the forced disclosure of source code as a condition for the import, distribution, sale, or use of software, or of products containing software, a key IP issue. In Module 9 (Innovation and the Digital Economy), there a provision, Article 9.3, titled Public Domain;
”1. The Parties recognise the importance of a rich and accessible public domain.
2. The Parties also acknowledge the importance of informational materials, such as publicly accessible databases of registered intellectual property rights that assist in the identification of subject matter that has fallen into the public domain.”
While the objectives of this module “affirm the importance of technological innovation, creativity, and the transfer and dissemination of technology, being for the mutual advantage of producers and users of knowledge, as a means to achieve social and economic welfare” (emphasis added), the text of the Agreement focuses on only one element of intellectual property, the existence of the public domain once IP rights are exhausted.
Is the public domain under threat? Not to my knowledge. While the public domain is important, so too is protection for rights-holders, but you would not know it given the language of the DEPA. Access to data for development of AI is a key component of innovation but that doesn’t mean that the rights of those holding the data are to be trampled and ignored. Proprietary data is not “free for the taking” in the name of the development of AI.
Another problem arises from this Public Domain Article. The wording in Article 9.3.2 stresses the importance of publicly accessible databases to assist in identification of subject matter that is in the public domain. However, at least with respect to copyright, to my knowledge no such databases exist, at, or if they exist, they exist in a very incomplete form. A cardinal principle of the Berne Convention is that copyright is established, if all conditions are met, without any registration formalities. For copyright, Article 9.3.2 makes no sense. The intent of the Article seems to be to stand IP protection on its head and focus instead on what is not protected. (However, perhaps the intent is to suggest that only public domain materials should be used to feed the need for “open data” for the purposes of innovation?)
This article is drawn from the original text of the TPP (Article 18.15), which was I suppose inserted to “balance” the rest of the IP chapter, but standing alone as it does in the DEPA, it seems to stick out like a sore thumb.
While protection of intellectual property, or lack of it, is a failing of the DEPA, even the US-Japan DTA gives short shrift to IP concerns, other than inclusion of commitments not to force disclosure of source codes, and exclusion of IP rights from the infamous “interactive computer services” provision, language that is also incorporated into the USMCA with Canada and Mexico. This “interactive computer services” provision, Article 18.2 of the US-Japan DTA, is based on Section 230 of the 1996 US Communications Decency Act, the legislation that has been used by internet platforms to avoid any civil liability for material distributed by them on their platforms, unless they have directly created it. It has been misused by the platforms, enabling them to evade any responsibility for content moderation, notwithstanding clear precedents that exist in the offline world. Silicon Valley has tried (unsuccessfully to this point) to export this legislation through trade agreements signed by the US.
It was a controversial provision when pushed by the US government in the NAFTA renegotiation. Congress finally objected at the last minute but by then, the deal was virtually done with the concrete hardening fast. As a result, the Section 230-like provision stayed in the USMCA (as Article 19.17) although Canada managed to negotiate a qualification to the commitment that an “interactive computer service” not be considered as an “information content provider”. The qualification, contained in a footnote to the Agreement, allows existing Canadian law and precedent to continue to apply and confirms that no change is required to Canadian law. In effect, this avoided the worst-case scenario of having a Section 230-type obligation crammed down Canada’s throat.
The Japanese were equally alert to the dangers of adopting Section 230-like obligations, which would have given platforms in Japan a free ride with respect to responsibility for the material they carry, distribute and monetize. Japan included the same caveat with respect to the application of existing Japanese law (Footnote 15) but went a step further and signed a side letter with the US. This side letter renders the commitment meaningless but such a provision should not have been included in a trade agreement in the first place.
Other topical digital issues in the DEPA relate to online safety and measures to implement cultural policies in the digital environment. The online safety module is weak, noting that Parties recognize the importance of taking a multi-stakeholder approach to addressing online safety and security issues, but requiring no more than efforts (“shall endeavour”) to cooperate to advance collaborative solutions.
Culture and the Arts in the Digital Environment
With respect to cultural carve outs, broadcasting is exempted from the commitments on non-discriminatory treatment of digital products, but no definition of broadcasting is provided. Canada is currently in the process of enacting legislation (Bill C-11, the Online Streaming Act) that will define online streaming services as broadcasting, an action that could be an issue during DEPA accession negotiations. When negotiating trade commitments, Canada also likes to seek a general “cultural exemption” as it did in the original Canada-US FTA, replicated in the NAFTA and its successor, USMCA/CUSMA. (The exemption of cultural industries from the disciplines of the USMCA/CUSMA is, however, subject to the right of the other Parties to take retaliatory measures of equivalent effect). In both its trade agreement with the EU and in the TPP (and its successor, the CPTPP) Canada was unable to achieve an overriding cultural carve out and instead took chapter-by-chapter exceptions. The DEPA contains a general exception for measures affecting culture, subject to the proviso that they do not constitute disguised restrictions on trade; (Article 15.1.4)
“subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between the Parties where like conditions prevail, or a disguised restriction on trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by a Party of measures necessary to protect national treasures or specific sites of historical or archaeological value, or to support creative arts of national value.”(emphasis added)
“Creative arts of national value” are defined as;
“the performing arts – including theatre, dance and music – visual arts and craft, literature, film and video, language arts, creative online content, indigenous traditional practice and contemporary cultural expression, and digital interactive media and hybrid art work, including those that use new technologies to transcend discrete art form divisions. The term encompasses those activities involved in the presentation, execution and interpretation of the arts; and the study and technical development of these art forms and activities.” (Footnote 21)
That is a broad exemption that would probably not rule out enactment of legislation like the Online Streaming Act, although whether the measures proposed by the legislation fall under the rubric of “support” (for creative arts) or “discrimination” (between the Parties) would keep trade lawyers busy. A Canadian cultural advocacy group, the Coalition for the Diversity of Cultural Expression (CDCE), submitted a brief to the DEPA consultation that, among other things, criticized the DEPA’s cultural exception clause as inadequate from a Canadian perspective.
Interestingly, having submitted its bid to join the DEPA in May of this year, several months later (July 15, 2022) the Canadian government launched public consultations on a model digital trade agreement. It seems to me it would have been more logical to take this step prior to throwing Canada’s hat into the DEPA ring rather than after, but given that the DEPA is subject to change and can be amended as new Parties join, it will still be useful to obtain input to help develop negotiating objectives.
The CDCE once again provided input, recommending not only that a model digital trade agreement contain a broad cultural exemption clause but also that;
“any Canadian model digital trade agreement…not create barriers to the implementation of digital rights management tools, or technological protection measures, that could block the free flow of digital products to protect copyright”,
“Canada should not make commitments under any Canadian model digital trade agreement that could adversely affect the remuneration of copyright holders”.
This is one area where the DEPA falls short and is one of its biggest failings. The drafters of the Agreement seem to have had a deliberate aversion to including any reference to “intellectual property”[i] in the text. In fact, they seem to have gone out of their way to avoid any recognition of the importance of IP–thus, the “standalone” article on the importance of the public domain–reflecting a bias seemingly and incorrectly seeing IP and copyright as antithetical to digital innovation.
Will the US Join DEPA?
It is unlikely that the US will join DEPA as it has already floated ideas for its own Indo-Pacific Digital Agreement as part of its proposed Indo-Pacific Economic Framework (IPEF). Since Canada is not included in the US definition of Indo-Pacific that may explain in part why Canada has stepped up its interest in DEPA. It is likely that a US-led digital initiative will put greater emphasis on IP rights within a digital environment and avoid the public domain focussed language of the DEPA. The Indo-Pacific Digital Agreement (if it ever gets off the ground) and the DEPA could even merge one day. One thing is certain; digital trade is here to stay, and it is important to forge international understandings governing this trade. The DEPA offers one path forward, albeit a path that could do more to respect IP rights. Just the same, it is a modest but useful beginning.
© Hugh Stephens 2022. All Rights Reserved.
[i] The only reference I could find to “intellectual property” in the entire agreement was with respect to Article 3.3.(1) relating to Non-Discriminatory Treatment of Digital Products. Article 3.3 (2) says,
“Paragraph 1 shall not apply to the extent of any inconsistency with a Party’s rights and obligations concerning intellectual property contained in another international agreement a Party is party to.”