Monday, April 7, 2014

TTIP’s IP Chapter: Nothing to be Gained (Part 1)

President Obama announced in his 2013 State of the Union address that negotiations for the Transatlantic Trade and Investment Partnership (TTIP), a United States-European Union free trade agreement, were on. There is something silly about calling a trade agreement a 'partnership;' the on-going Trans-Pacific Partnership uses this same label. But the folks in Washington are more clever than you and me: they know that the older style ‘free trade agreement’ (FTA) would be DOA in Congress.

TTIP’s central features follow the FTA model. Little thought seems to have been applied to fixing the provisional TTIP agenda: TTIP would provide for zero-level tariffs for U.S.-EU trade, an address various non-tariff barriers between the United States and the EU, introduce a misbegotten investor-state arbitration mechanism, and include an intellectual property chapter. It appears now that little positive can be achieved from inserting an IP chapter into TTIP. It is at best a waste of time -- and could undercut U.S. and EU IP efforts in other fora. What were they thinking?

In this first post, I examine the constraints faced by European Union negotiators. The EU has precious little room for maneuver on the IP front; IP provisions can only attract and intensify opposition to the entire TTIP package. These political limits are clear to the Europeans; they are perhaps underappreciated by the U.S. proponents of TTIP's IP coverage.

The most startling setback involving a recent global IP initiative was the European Parliament's rejection of the Anti-Counterfeiting Trade Agreement (ACTA). Recall that ACTA was jointly promoted by the United States and the EU; the EU Commission negotiated and approved the terms of ACTA (as did the EU member states). Clearly, Brussels underestimated the popular resistance to ACTA. The directly-elected Parliamentarians did read the public mood, and quashed ACTA. In launching the TTIP negotiations, EU officials are hobbled by the ACTA debacle. Very early on, the EU sent out "no new ACTA" assurances, countering speculation by ACTA critics that rejected ACTA provisions might return in the body of TTIP's IP chapter.

ACTA did constitute some of the United States' and EU's 'best thinking' on a TRIPS-plus approach to international IP rights. Which is to say, ACTA presented a 'wish list' of reforms desired by the IP lobbies, bolstering the value and effectiveness of IP rights. The European public, at least, had different ideas as to where IP policy should be directed. By making the "no new ACTA" pledge, the EU has removed many potential provisions from TTIP's IP chapter. The challenge for TTIP is to identify positive IP reforms that do not bear the ACTA taint.

There is a large area that could have been addressed in TTIP: harmonizing the considerable differences that remain between U.S. and European intellectual property law. But this too is a non-starter. In the United States, there is little appetite to conform IP law to European notions (recall how many decades it took to convince the United States to move to a first-to-file patent system, and even here the U.S. reform is reluctant and overly complex). And IP harmonization has come very slowly within the European Union, outside of trademark law.

Moreover, these are not the best days to undertake the making of 'concessions' to the U.S. IP sector, giving the disturbing revelations of U.S. monitoring of European communications. Now it is true that Silicon Valley includes some of the fiercest critics of U.S. government surveillance programs; those same firms are often the unwitting conduits of surveillance. The Europeans, from the heads of government down to the voters, have soured on the U.S.-backed cyberworld. And the Europeans demand much more robust privacy protections than prevail in the United States.

And more dark clouds: striking down ACTA was a historical assertion of the European Parliament’s participation in EU international trade policy. The Parliament will examine TTIP for substance and process. ACTA was pilloried for its secretive process; TTIP so far promises the same.

In other words, TTIP might not be a very promising package for new IP undertakings. So again, what were they thinking? I suspect not much. IP has been a feature of "free trade agreements" since NAFTA. The WTO secured IP's place on the international trade agenda. It has become hard to imagine a 'real' trade agreement -- or 'partnership,' if you will -- without an IP chapter. But given EU political constraints, the auto pilot needs to be disengaged, and an IP chapter of TTIP might helpfully be abandoned.

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