NAFTA 2.0 and Digital Rights: The Good, The Bad and The Worst

Last week Canada signed a rebranded NAFTA deal after months of suspense and secretive negotiations. But what does the deal mean for the Internet? Here’s the lowdown.

If you’ve been biting your nails while reading the daily alarming and ever-changing headlines on the North American Free Trade Agreement (NAFTA) over the past couple months or simply scratching your head with frustration and wondering “what the heck is going on?”, you are not alone.

The renegotiation of the former North American Free Trade Agreement (NAFTA), now called the United States–Mexico–Canada Agreement (USMCA), kickstarted in September of last year and unfolded in a long, opaque and tumultuous process.

Between President Trump’s threats to kill the deal altogether and slapping controversial ‘national security’ tariffs on aluminum and steel (in addition to publicly insulting the Canadian Prime Minister and trashing the Minister of Foreign Affairs), and the constant diplomatic talk by Canadian counterparts trying to keep it cool by claiming progress was underway to reach a good deal — the public was left behind a smokescreen until the very last minute (well, what’s new with that?).

But late on September 30th, a deal was finally struck, to the relief and shock of many of us. Now, what does this NAFTA 2.0 mean for digital rights? Let’s walk through through the good, the bad and the worst.

The Good

Investor-State Dispute Settlement (ISDS)

The USMCA eliminated the controversial Investor-State Dispute Settlement (ISDS) mechanism (Chapter 11-B) between the U.S. and Canada, which allows big corporations to sue governments in unaccountable tribunals when environmental and public policies don’t align with their corporate agenda, costing taxpayers millions of dollars. This toxic provision is one that multiple consumer advocacy groups, including OpenMedia, have long fought against, not only in NAFTA but also in the Trans-Pacific Partnership (TPP). So this comes as welcome step forward.

Safe Harbours and Intermediary Liability

The new deal spells out that Internet Service Providers (ISPs) are not liable for third party content posted by their users. This is good news for online free speech in Canada, which was lacking safe harbour rules prior to the agreement. As professor Michael Geist points out, “safe harbour provisions have been characterized as the single most important legal protection for free speech on the Internet.”

The Bad

Notice and notice

Canada was able to keep its notice and notice legal system for identifying and dealing with hosted content that is allegedly infringing copyright online, which is a good thing (for now). This system allows rights holders to file complaints to ISPs or platforms for alleged copyright infringement and users are then notified, but there is no takedown procedure to remove the content. It operates using the normal principles of justice: innocent until proven guilty and leaves judgement and punishment to the courts, not businesses. It also ensures legitimate speech is not unnecessarily taken down due to copyright infringement allegations and respects users’ privacy.

However, there is a catch — the USMCA outlines that if we are to change Canada’s copyright notice regime at any point in the future, our only option is to adopt the U.S.’ notice and takedown system, which is extremely overreaching and often results in legitimate content being censored. (Learn more about the “notice and notice trio” here).

The Worst

Copyright Term Extensions

Copyright term extensions are meant to compensate authors for their work. Canada’s previous life of the author + 50 years (consistent with the international standards of the Berne Convention) already provided ample compensation for two generations after the author’s death.

Adding 20 years to these already lengthy copyright terms under the USMCA will cost taxpayers millions of dollars and will lock down works that would have otherwise entered the public domain for decades (until at least 2040). This implies a significantly reduced access to Canadian heritage, which will have a major impact on Canadian culture. This move also has the potential to increase educational costs by millions.

These restrictive copyright provisions are very similar to those that we fought so hard to keep out of the TPP. But most importantly, Canada is currently reviewing its own copyright laws and consulting the public. Yet, by adopting these provisions in the new NAFTA, the government has allowed a secretive international trade agreement to kneecap a democratic domestic process and set the agenda instead.

But why are copyright term extensions not so great for creators?

At a first glance, copyright term extensions may seem like a bonus for creators, but the reality is different. Most copyrighted works are only viable for a short time period and an extension of 20 years is unlikely to yield significant benefits for the rights holders and their heirs. Additionally, research from Industry Canada shows extending copyright terms does not create additional incentives for innovation (as new works are often inspired on previous ones), and it would come at a high cost to society. Similarly, research on copyright balance in trade highlights that there is no evidence to suggest that the private benefits of copyright term extensions ever outweigh the costs to the public.

Just so you get an idea in the numbers, a coalition of over 30 users of copyrighted materials (including the Electronic Frontier Foundation and the Canadian Library Association) pointed out in a fact sheet regarding similar term extensions in the TPP that:

Work by an eminent group of US economists, including Milton Friedman, on the US Copyright Term Extension Act of 1998 showed that the profit for the creator in the extended term was, at the most, a few cents and often a percentage of a cent. Conversely, it was calculated that  72% of the benefits of the most recent European term extension on sound recordings would accrue to record companies, not artists.

Most recently, the Canadian Association of Research Libraries (CARL) has reaffirmed its position against copyright term extensions from 50 years to 70 years after the author’s death and also noted that:

Unfortunately, although the USMCA exports more restrictive elements of U.S. Copyright Laws to Canada, it does not balance this by importing more permissive elements of U.S. law that protect the public interest, such as the more open-ended concept of fair use, or the exemption of government works from copyright.

Simply put, copyright in general is a balancing exercise involving incentives, rights holders interests, users rights and cost to society. In this case, the overly lengthy term extensions appear to tilt the balance in favour of rights holders; however, when looking at the numbers and previous research, it becomes evident that it is very unlikely that these extensions are going to award significant benefits to rights holders — instead, they are guaranteed to rob the public domain and cost the public millions of dollars.

Biologics

Patent protections have been extended to 10 years (an extension that’s even worse than the one proposed under the TPP), which means generic drugs won’t be able to enter the market for longer, costing us millions in healthcare and make life-saving drugs inaccessible to many people. This will also be a major obstacle in Canada’s path toward a sustainable universal pharmacare.

Privacy

The new NAFTA restricts Canada’s ability to impose data localization rules (meaning yielding control over where we can store our data). This removes our sovereignty over Canadians’ data and future domestic privacy reforms. Not an ideal trade-off to make in a world of rising government surveillance and recurring mass data breaches that comprise the security of millions of people.

Where do we go next?

The agreement still needs to be ratified by Parliament and until then, we will be pushing the government to continue to consult with Canadians and incorporate their voices before the deal becomes set in stone. In the meantime, our best shot is to make our voices heard loud and clear at Canada’s Copyright Act review for the next few months and let the government know that we won’t stand for policies that trade away our Internet and surrender our sovereignty over our digital rights.

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