Last Thursday, Senators Hatch and Wyden and Representative Ryan introduced the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, commonly referred to as Trade Promotion Authority, or TPA. The bill provides a mechanism for Congress to establish negotiating objectives for US trade negotiators and is considered essential to concluding major agreements in the works such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). A hearing was held Tuesday by the Senate Finance Committee, and a markup is scheduled for today.

The US Constitution splits authority for entering into trade agreements between Congress and the Executive Branch. 1Article I accords the President the “Power, by and with the Advice and Consent of the Senate, to make Treaties” and Congress the power “To regulate Commerce with foreign Nations.” TPA enables both to exercise their power in an efficient and effective manner.

For decades, US trade agreements have included provisions concerning copyright and other forms of intellectual property. Through the proposed TPA, Congress would provide, in part, that

The principal negotiating objectives of the United States regarding trade-related intellectual property are … to further promote adequate and effective protection of intellectual property rights, including through …

  • ensuring that the provisions of any trade agreement governing intellectual property rights that is entered into by the United States reflect a standard of protection similar to that found in United States law;
  • providing strong protection for new and emerging technologies and new methods of transmitting and distributing products embodying intellectual property, including in a manner that facilitates legitimate digital trade;
  • preventing or eliminating discrimination with respect to matters affecting the availability, acquisition, scope, maintenance, use, and enforcement of intellectual property rights;
  • ensuring that standards of protection and enforcement keep pace with technological developments, and in particular ensuring that rightholders have the legal and technological means to control the use of their works through the Internet and other global communication media, and to prevent the unauthorized use of their works;
  • providing strong enforcement of intellectual property rights, including through accessible, expeditious, and effective civil, administrative, and criminal enforcement mechanisms;
  • and preventing or eliminating government involvement in the violation of intellectual property rights, including cyber theft and piracy.

Though copyright has been the subject of international agreements for well over a century, its presence in trade fora is more recent, dating back to the 1980s. Given the increased attention to trade related issues of copyright sure to come over the next several weeks, I thought it would be helpful to sketch a very brief overview of how copyright and other intellectual property rights became a part of the trade agenda.

A brief history of US trade policy

In the US, the issue of import duties was the very first order of business taken up by the First Congress. After establishing its own rules of operation, Virginia Representative James Madison on April 8, 1789, told the other members of the House that the subject “requires our first attention.” 2Annals of Congress, House of Representatives, 1st Congress, 1st Session, pg 107 (April 8, 1789). He added that he believed Congress should pursue regulation “as free as the policy of nations will permit.”

For nearly a century and a half, tariffs were the primary instruments of trade policy. 3Ian F. Fergusson, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy, Congressional Research Service (2015). During that time, the concept of “free trade” began to develop further, with the help of economists such as Adam Smith, David Ricardo, and James Mill. Essentially, the policy is premised on the prediction that when barriers to trade between two countries are reduced or eliminated, producers and consumers in both countries benefit.

However, following World War I, the pendulum swung back to protectionism. The US passed the Smoot-Hawley Tariff Act in 1930, setting high tariff rates that led to retaliatory measures by major trading partners, a drop in international trade and a prolonging of the Great Depression. 4Fergusson. Within four years, the US reversed course and set on a path of trade liberalization, which it continues to this day.

Internationally, the General Agreement on Trade and Tariffs, the first multilateral forum for trade negotiations, was established in 1947. The initial focus was on tariff reductions, but over time negotiations began to consider non-tariff trade barriers. 5Fergusson.

IP and trade

Beginning in the early 1980s, both the Executive and Legislative branches began to recognize trade-related aspects of intellectual property protection.

The private sector played a key role in getting the issue on the agenda. As a task force on intellectual property within the Advisory Committee for Trade Negotiations (a group made up of private sector representatives who provided input to US trade negotiators) noted in a 1986 report

The growing economic importance of intellectual property to all industries and the inadequacies of the present IP system—both at the international and national levels—have led the U.S. private sector to seek a trade-based response, as a supplementary tool to deal with the resultant distortion of international trade flows.

After detailing several specific problems that could be addressed through a trade-based approach, the task force urged that, at this point in time, “the basic concept of a trade approach to IP must be recognized and its legitimacy accepted by the IP community.”

In 1985, a Presidential Commission on Industrial Competition called for placing a higher priority on trade policy, including “a new round of GATT negotiations to achieve some coverage for trade in services and agriculture, foreign governments targeting and tax policies, countertrade, protection of intellectual property, and nontariff barriers.” 6Report of the President’s Commission on Industrial Competitiveness, hearing before the Subcommittee on Economic Stabilization of the Committee on Banking, Finance, and Urban Affairs, House of Representatives, Ninety-ninth Congress, first session, March 5, 1985.

President Reagan gave a major policy speech that following September on trade. In it, Reagan laid out principles for his trade agenda, making specific note of intellectual property. For example, he observed, “Above all else, free trade is, by definition, fair trade. When domestic markets are closed to the exports of others, it is no longer free trade. When governments subsidize their manufacturers and farmers so that they can dump goods in other markets, it is no longer free trade. When governments permit counterfeiting or copying of American products, it is stealing our future, and it is no longer free trade.” He later explained, “I have instructed the United States Trade Representative to accelerate negotiations with any and all countries where the counterfeiting and piracy of U.S. goods has occurred to bring these practices to a quick end. And I look forward to working with the Congress to increase efforts to protect patents, copyrights, trademarks, and other intellectual property rights.”

The speech described the foundations of the Administration’s trade agenda. The Joint Economic Committee Subcommittee on Trade, Productivity and Economic Growth heard from Administration officials in March 1986 about Executive Branch efforts to address “International Piracy Involving Intellectual Property.” Alexander Good, Director General, US and Foreign Commercial Service, Department of Commerce, explained that, among these efforts, the Administration was looking at multilateral action through GATT, to “have a code across the board on patents, trademarks, copyrights, and unfair trading practices.”

Next month, the Administration released a statement on the protection of US intellectual property rights abroad. It said that foreign infringement “severely distort[s] international trade and deprive[s] innovators, creators and inventors of rewards and opportunities that are rightfully theirs.” 7Office of the United States Trade Representative, Administration Statement on the Protection of U.S. Intellectual Property Rights Abroad, April 7, 1986. It went on to note several reasons why IP protection was important not just to the US but also to its trading partners and the global economy as a whole:

  • Adequate and effective protection fosters creativity and know-how, encouraging investment in research and development and in new facilities.
  • Innovation stimulates economic growth, increases employment and improves the quality of life.
  • Technological progress is a critical aspect of US competitiveness as well as freer and fairer global trade.
  • In developing countries, improved intellectual property protection can foster domestic technologies and attract needed foreign know-how and investment.

Congress was also active during this period, with the Senate Committee on Finance and House Committee on Foreign Affairs holding hearings focusing on intellectual property rights aspects of trade during 1986. 8Intellectual Property Rights, S. Comm. Finance (May 14, 1986); Status of Intellectual Property Protection, H. Comm. on Foreign Affairs (July 31, 1986).

Proponents were successful in getting the issue on the radar of negotiators when the eighth round of GATT talks began in September 1986 in Uruguay. When they concluded in 1994, the contracting parties had negotiated the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), introducing IP rules into the multilateral trading system for the first time. TRIPs was built around several key principles, including “national treatment (treating one’s own nationals and foreigners equally), and most-favoured-nation treatment (equal treatment for nationals of all trading partners in the WTO).” The Agreement establishes minimum standards of protection and enforcement for signatories to adhere to. It also makes the settlement of disputes concerning the provisions of the Agreement subject to the WTO’s dispute settlement process. 9TRIPs Article 64.

Beginning with the 1994 North American Free Trade Agreement (NAFTA), the US has also sought IP provisions through bilateral and plurilateral free trade agreements. The latest was the US-Korea Free Trade Agreement, which entered into force in 2012. The US is seeking similar provisions as it negotiates TPP. The USTR says,

The provisions that the United States is seeking – guided by the careful balance achieved in existing U.S. law – will promote an open, innovative, and technologically-advanced Asia-Pacific region, accelerating invention and creation of new products and industries across TPP countries, while at the same time ensuring outcomes that enable all TPP countries to draw on the full benefits of scientific, technological, and medical innovation, and take part in development and enjoyment of new media, and the arts.

Given their increasing importance to economic growth and innovation, copyright and other IPRs will no doubt continue to play a vital role in trade policy.

References   [ + ]

1. Article I accords the President the “Power, by and with the Advice and Consent of the Senate, to make Treaties” and Congress the power “To regulate Commerce with foreign Nations.”
2. Annals of Congress, House of Representatives, 1st Congress, 1st Session, pg 107 (April 8, 1789).
3. Ian F. Fergusson, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy, Congressional Research Service (2015).
4. Fergusson.
5. Fergusson.
6. Report of the President’s Commission on Industrial Competitiveness, hearing before the Subcommittee on Economic Stabilization of the Committee on Banking, Finance, and Urban Affairs, House of Representatives, Ninety-ninth Congress, first session, March 5, 1985.
7. Office of the United States Trade Representative, Administration Statement on the Protection of U.S. Intellectual Property Rights Abroad, April 7, 1986.
8. Intellectual Property Rights, S. Comm. Finance (May 14, 1986); Status of Intellectual Property Protection, H. Comm. on Foreign Affairs (July 31, 1986).
9. TRIPs Article 64.