USMCA: A 21st-Century Approach to Regional Trade

The North American Free Trade Agreement originally entered into force on Jan. 1, 1994. Since then, the global economy has witnessed significant breakthroughs and technological advancements that the original NAFTA negotiators could have hardly fathomed.

As discussed previously, it’s imperative for North America to adopt a trilateral agreement reflective of the vital role that strong intellectual property protections play in our current knowledge-based economic landscape. On Oct. 1, the Trump administration paved the way to modernizing NAFTA in the form of the United States-Mexico-Canada Agreement, the first agreement of its kind capable of effective and efficient protection of America’s number-one asset – intellectual property.

America’s IP is currently worth $5.8 trillion, accounting for 40 percent of the total U.S. annual economic output. Additionally, IP-intensive industries are responsible for over 40 million U.S. jobs that pay 45 percent higher wages than those of non-IP-intensive industries.

As an economic engine and job creator, IP must be protected and enforceable to ensure our nation’s economic growth. It is no small feat to protect America’s cutting-edge technology, life-saving medicines and creative works from online piracy, counterfeiting and theft in the digital age. Fortunately, USMCA would boast the strongest copyright, patent and trade secrets standards to date.

It is no question that the pharmaceutical industry is plagued by uncertainty and substantial risk with the estimated cost of drug development estimated between $1.5 billion and $2.5 billion, and only 12 percent of treatments in clinical trials ever reaching pharmacy shelves. One of the only safeguards that incentivizes our nation’s inventors to take on the lengthy task of drug development and incremental innovation is data exclusivity to secure their investment from potential infringers.

According to the U.S. Chamber of Commerce’s 2018 International IP index, which ranks 50 countries based on their national IP framework, the United States tops the list while Canada and Mexico fall much lower on the index at 18th and 24th respectively. Canada and Mexico’s historically weak IP protections make companies tasked with research and development especially wary of regional integration without the installation of proper safeguards from exploitation and IP theft.

Luckily, U.S. negotiators are taking steps to ensure our life sciences sector is respected and bolstered by our regional trading partners. For one, USMCA’s IP chapter includes a provision extending data protection for biologic drugs from eight years to 10, which secures market exclusivity. This provision ensures America’s innovators and researchers in the biopharmaceutical sector will receive much-needed protection in the form of strengthened patent and data exclusivity critical to the future effectiveness of our life sciences sector. Equally important to an industry dominated by small to medium enterprises, the IP chapter includes strengthened patent provisions including adjustable terms in the case of unreasonable patent issuance delays as well as solidifying a standard patent office set of “best practices.”

USMCA’s modernized provisions will also give a significant boost to America’s artistic innovators and producers. The original NAFTA was negotiated at a time when music and film were primarily bought and sold via CD and tape in the mid-1990s. Illicit theft and infringement in the form of bootleg CDs and pirated movies have all but been replaced by ever-evolving torrent websites and pirated software commonplace to the digital age. Article 20.H.7 of USMCA, which extends the term of copyright protection for the original author from 50 to 70 years, will provide a modernized standard for copyright holders faced with 21st-century challenges.

Let us rally around Congressional ratification of USMCA, an agreement that will drive our region’s global competitiveness and prosperity while providing a comprehensive framework for future trade agreements around the globe. The IP provisions found in the agreed-upon trilateral deal elevate America’s innovation economy and support our entrepreneurs and businesses large and small.


Dee Stewart is the president of the Center for Innovation and Free Enterprise.

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