During the past year, the Trump administration has been engaged in renegotiating the North American Free Trade Agreement with Mexico and Canada. On Aug. 27, 2018, the administration announced it had reached a deal with Mexico on the “United States-Mexico Trade Agreement.”
According to a fact sheet released by the Office of the U.S. Trade Representative, the agreement includes protection of intellectual property rights and trade secrets, and a new digital trade chapter. The agreement will allow law enforcement to stop suspected counterfeit or pirated goods at all exit and entry points between the countries; imposes meaningful criminal procedures and penalties for camcording of movies as well as satellite and cable signal theft; and provides broad protections against trade secret theft, even by state-owned enterprises.
When NAFTA went into effect on January 1, 1994, IP rights and digital goods were not exactly on the front burner for trade among the U.S., Canada, and Mexico. The treaty contained a few provisions to preserve rights like strict measures against industrial theft, but copyright and protection against counterfeit goods were not as stringently protected.
Digital goods and services were not even mentioned, because e-commerce had not yet evolved. According to the Bureau of Economic Analysis, digital goods and services accounted for 6.5 percent of the U.S. economy, or $1.2 trillion in 2016, supporting 5.9 million jobs.
With the increased sale and use of digital goods and services, including cloud services, protecting these new innovations from discriminatory practices is critical to maintaining fair trade. The new digital trade chapter prevents discriminatory customs duties and other measures from being applied to digital products distributed electronically. It also permits cross-border data flow and minimizes limits on where data can be stored and processed.
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The Global Innovation Policy Center 2018 Index ranks Mexico and Canada 24th and 18th respectively out of the 51 countries included in its annual study on IP rights protection. Among the areas of weakness found by the GIPC Index were Mexico’s ambiguous protection of IP in life sciences, an insufficient framework to protect against online piracy, gaps in application of remedies, and inadequate border protection for trade-related infringement of IP rights. Canada was cited for its amendments to the Patent Act, which includes patent term restoration with restrictive eligibility requirements as well as an export claw-out, effectively undermining pharmaceutical exclusivity; and a lack of border measures for in-transit goods and transparency by Canadian Customs on seizure practices. The NAFTA renegotiations should provide the opportunity for these countries to improve their IP protection standings.
The United States-Mexico Trade Agreement will sunset 16 years after date of ratification and requires a six-year review to ensure the provisions remain up-to-date. This will allow the countries to modernize the agreement and adapt to new technological breakthroughs.
As negotiations continue to add Canada to the agreement to restructure NAFTA, it is critical to keep or strengthen the protection of IP rights, so that citizens of all three nations will obtain the greatest possible benefits from this vital sector of the economy.
Deborah Collier is the director of tech and telecom policy for Citizens Against Government Waste.
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