U.S.-Mexico talks on a revamped North American Free Trade Agreement appear close to resolving the thorniest outstanding issues, mostly related to the auto industry. But when we re-engage with Canada, the focus must shift to intellectual property, an area where Canada has quietly become an egregious abuser of Americans’ rights.
United States Trade Representative Robert Lighthizer understands how critical IP protections are, and notes that his latest report should send “a clear signal to our trading partners that the protection of Americans’ intellectual property rights is a top priority of the Trump administration.”
IP protections are a bedrock of our system of government, enshrined in Article I, Section 8 of the Constitution. American leadership in IP-intensive industries, which support 45.5 million American jobs and contribute $6.6 trillion to our GDP, have our strong system of IP protections, woven into the American DNA, to thank.
Some of our strongest industries depend heavily on robust IP protections, including the creative industries (film, television, music, etc.) that depend on strong copyright law, and the biopharmaceutical industry, which depends on robust patent protections and data exclusivity to secure the returns needed to justify its billions of dollars in costs to develop new cures.
Countries that tolerate or encourage piracy and counterfeiting are picking the pockets of Americans. And countries like Canada, which impose prescription drug price controls and use other regulatory means to undermine the value of drug patents, force Americans to shoulder the full costs of research and development.
For the fourteenth consecutive year, China landed on the USTR’s Priority Watch List for far-reaching abuses, including forced technology transfers, trade secret theft, online piracy and counterfeiting, offline counterfeit manufacturing and export on a massive scale, and localization requirements that force companies to locate research and development facilities in China. None of that is surprising, and much of the escalating tariff brinksmanship with China is being used by the Trump administration for leverage on IP priorities.
But Canada’s sudden appearance alongside China on the list of the worst IP abusers is more of a surprise. The report finds that “significant concerns include poor border and law enforcement with respect to counterfeit or pirated goods, weak patent and pricing environment for innovative pharmaceuticals, deficient copyright protection, and inadequate transparency and due process regarding geographical indications.”
In other words, Canada is not letting our customs officials stop pirated and counterfeit goods that flow through Canada into the United States. Nor are the Canadians enforcing the laws themselves — they conducted exactly zero criminal prosecutions for counterfeiting in 2017. Thus they have been serving as an enabler to Chinese companies and other high-volume counterfeiters.
Other Canadian IP violations include an ill-defined educational exception for copyrighted material, denying proper remuneration to U.S. creators and performers, and proposing changes that will ratchet down their prescription drug price controls even further.
These problems must be a top priority in the new NAFTA, which cannot be judged a success unless it holds Canada to American standards for IP protection. A NAFTA that only includes the weak language on intellectual property that President Barack Obama negotiated in the failed Trans-Pacific Partnership agreement is simply not good enough.
Strong legal protections are critical to encouraging big investments that drive content creation and innovation. Canada should not be allowed to take a free ride while Americans shoulder those costs.
Phil Kerpen is president of American Commitment.
