Issues and Resources | Action For Trade
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BACKGROUND

Trade is changing. Historically, international trade agreements focused on market access for goods, like grain and steel.

But today, the United States exports billions of dollars annually in “intangible assets,” from digital content like movies, video games, and music to cutting-edge creations like cancer medicines and vaccines.

Domestically, these assets are safeguarded by copyrights, patents, trademarks, and other IP protections.

Internationally, though, American innovation is routinely undervalued or even stolen, with many markets forcing U.S. companies to compete on an unlevel playing field. This must change.

Innovation and creativity drives the U.S. economy. In 2015, copyright-intensive industries contributed $1.2 trillion to America’s GDP — and this number is growing at nearly 5 percent annually. Industries that depend on other types of IP protections, like patents and data exclusivity, boost that number significantly. The U.S. biopharmaceutical sector alone produced over $1.3 trillion in economic output for the United States in 2016.

Innovative and creative industries drive job creation, as well. IP-intensive manufacturing industries — biopharmaceuticals, semiconductors, aerospace, and transportation, to name just a few — support nearly 60 million American jobs.

Innovative and creative industries are also major exporters, so strengthening them would reduce trade deficits.

America’s dominant position in these industries provides an opportunity for U.S. negotiators to ensure that the global economy rewards innovation and protects creative assets. This begins with the ongoing NAFTA modernization talks, as the final outcome may set the standard for future trade agreements.

CRITICAL ISSUES FOR TRADE NEGOTIATIONS

Regulatory Transparency and Due Process

In many countries, IP rules and regulations are altered without consulting industry stakeholders; approval and administrative processes are delayed without explanation; and decisions are applied inconsistently in a non-transparent manner. The lack of predictability acts deters U.S. businesses from entering foreign markets, thereby depressing export-dependent U.S. job growth.

Transparency and the rule of law are inextricably linked, and this is no different in the digital environment. The legislative and regulatory processes that impact digital trade should be transparent — and offer ample opportunities for meaningful engagement with industry stakeholders.

IPR Protection and Enforcement

America’s innovation economy depends on strong trademark, copyright, and patent protections. That’s why strong enforcement mechanisms — including injunctive relief and civil and criminal sanctions — are critical to ensuring the effectiveness of such protections.

Counterfeiting and Piracy

Counterfeiting causes a significant drain on the U.S. and global economy. It leads to lost sales for legitimate manufacturers, lost tax revenues and duties for governments, decreased U.S. employment, and diminished investment in capital improvements and research and development.

Today, counterfeiters are not simply producing fake luxury goods and bootleg albums; they’re producing fake foods and beverages, pharmaceuticals, and even defense-related goods like airplane parts. Consequently, counterfeiters present a clear threat to the health and well-being of consumers everywhere — and to the integrity of our national security infrastructure.

Supply Chain Management

The growth of sophisticated logistics networks and information sharing has created significant challenges for rights holders in managing and protecting against infringements. It is therefore important to establish practices and principles to enable both policymakers and rights holders to identify the intermediaries involved in the supply chain, understand how these supply chains can be infiltrated, and develop steps to curb abuse.

New Challenges in Enforcement Efforts

Even the strongest protective measures are not effective without the political will and the legal authority to enforce these protections. In many countries, seizures of counterfeit goods at the border remain unacceptably low. And there is often a lack of political will to pursue criminal prosecution of infringers, even in the countries where criminal sanctions are in place. In other cases, customs authorities simply do not have adequate authority to take effective action against infringing goods. Countries everywhere must get serious about the trade of illicit goods.

Online Enforcement

In many countries, law enforcement agencies are reluctant — or even unable — to devote the time and resources needed to block the sale of illicit goods online.

Market Access

Digital trade is particularly hampered by trade barriers. These barriers include duties on, and discriminatory treatment of, digital products; data flow restrictions; limitations on cross-border services and payment systems; and more.

Local Content Requirements

IP-intensive industries are particularly susceptible to acts, policies, and practices abroad that benefit local producers at the expense of U.S. workers. These anti-IP actions have become so pervasive that they are now a routine part of many transactions between business leaders and government officials. Localization barriers include local manufacturing conditions, technology transfer requirements, local testing and certification requirements, and de facto bans on imports, such as licensing requirements that virtually prevent market entry.

Security Concerns

Where the internet is not secure, digital trade cannot thrive. Protecting the digital environment against cybercrime does not — and should not — prevent policymakers from safeguarding privacy, promoting trust, and fostering creativity.

The Use of Antitrust as a Price Control Mechanism

Some governments are launching sham antitrust investigations to undermine the rights of U.S. patent holders and enrich local companies, whether through technology transfer, barriers to competition, or direct price controls. These investigations, which are particularly prevalent in Asia, are problematic because U.S. manufacturers often lack due process protections.

These investigations not only undermine U.S. patent rights, suppress innovation, and put U.S. competitiveness at risk, but they also potentially violate the terms of certain U.S. trade agreements. It is imperative for U.S. policymakers to seek international remedies provided under trade agreements to protect U.S. companies from discriminatory practices.

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