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Digital Issues in NAFTA: Balanced Copyright

This is the first in a series of posts on digital issues in NAFTA.

Today is the final day to submit comments to the United States Trade Representative (USTR) on modernization of NAFTA — comments were extended by several days “due to high interest.”  The opportunity to comment on updating a key trade agreement, reflecting the significant change in the economy in the past two decades since it was enacted, has already attracted submissions from hundreds of organizations, companies, and individuals.

Digital trade issues may produce some of the most important updates to NAFTA.  Despite being one of the largest trade agreements in which the United States participates, it largely predates the transformation of the U.S. economy into a digital economy.  It therefore doesn’t fully address issues like balanced copyright, data localization, and online liability protections.  As a result, a large part of what the United States actually exports does not benefit from the agreement.  This is the first in a series of posts focusing on digital issues that will be relevant in the reexamination of NAFTA.

Balanced copyright, including limitations and exceptions like fair use, has been key to growing the U.S. digital economy, and is an important component of digital trade.

The U.S. economy benefits substantially from a balanced intellectual property regime.  In addition to copyright protection, limitations and exceptions like the fair use doctrine have been critical to U.S. success, and contribute substantially to the U.S. economy and U.S. exports.   Intermediary liability protections for Internet service providers, such as the copyright safe harbors found in Section 512 of the Digital Millennium Copyright Act, have also been essential to the U.S. Internet and technology industry by providing business certainty to investors and innovators.

Last week, CCIA released the 2017 edition of Fair Use in the U.S. Economy, which contains new research on the benefits of balanced copyright to the U.S. economy.  The study found that in 2014 fair use industries accounted for 16 percent of the economy, employed 1 in 8 workers, and contributed $2.8 trillion to the GDP.  Exports of goods and services related to fair use industries increased 21%, from $304 billion in 2010 to $368 billion in 2014.

As USTR indicated in its Digital 2 Dozen statement of priorities earlier this year, U.S. policy is to seek “the commitment of our free trade agreement partners to continuously seek to achieve an appropriate balance in their copyright systems, including through copyright exceptions and limitations.”  (Language proposed in the TPP would have represented a first step in this direction, stating that each party “shall endeavo[u]r to achieve an appropriate balance in its copyright and related rights system, among other things by means of limitations or exceptions.”)

Digital Trade

Companies rely on clear, predictable rules that facilitate digital trade to export their products and services around the world. These rules include balancing the competing interests between encouraging investment and enabling information access; promoting the free flow of information online; and maintaining balanced intermediary liability regimes.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.