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May 30, 2018

NAFTA Negotiators Must Protect U.S. Intellectual Property

  Dallas Morning News

When the North American Free Trade Agreement came into effect, the U.S. economy was already more dependent on innovation than upon traditional manufacturing. And in the 30 years since, that trend has only continued. Today, the U.S. is a creators' economy; we patent new inventions, copyright new creative works, and trademark strong new brands.

These industries, identified as the intellectual property-intensive industries by the Commerce Department, are responsible for nearly one-third of all U.S. jobs and for more than 38 percent of U.S. gross domestic product. So there's a good chance you or someone close to you works in these industries, which include software, music and book publishing, movies and entertainment, pharmaceuticals, chemicals and enzymes, patented and hybridized plants and seeds, microchip design or aircraft manufacturing.

In any given year, the intellectual property-intensive industries are responsible for around 60 percent of all U.S. exports. In other words, the majority of what the rest of the world wants from the U.S. is our creative output.

That's why it's a huge problem that many of our past trade agreements gave short shrift to the creative industries. This was trade malpractice, and the result is that some of our trading partners take advantage of us in the area of creative goods.

Because of the significance of our IP output to our economy and especially to our exports, any new or improved trade agreement must include strong protections for U.S. creative goods and must insist that our trading partners pay for and not erect barriers against our creative goods. If a new NAFTA doesn't improve intellectual property protection, it's not a better deal.

NAFTA has been much better for the U.S. than President Donald Trump has claimed, but revisiting NAFTA provides an opportunity to materially improve the agreement for all parties involved. Unfortunately, time is running out for this Congress to approve a revision to the agreement, and much-needed improvements to intellectual property protection don't seem to have happened.

In the pharmaceutical area, for example, almost all of our trading partners around the world have price controls on prescription drugs, which means those countries don't bear an appropriate share of funding pharmaceutical innovation. That leaves Americans stuck with the bill, and that's one reason why drugs are more expensive in the U.S. than in other countries. The only way to reduce the cost of drugs to Americans without stifling innovation is to reduce our trading partners' free-riding on American innovation.

Similarly, while cutting-edge biologic drugs are protected for 12 years in the U.S., Canada only protects them for eight years, and Mexico hardly protects biologics at all. Because Canada has been weakening its patent and copyright protections, NAFTA is the opportunity to push Canada to reverse that trend. A new NAFTA should also insist on stronger protections against intellectual property theft and against policies that discourage trade in digital goods and data.

Unfortunately, our trading partners have been resistent to this aspect of NAFTA negotiations. Reports suggest that negotiators haven't even bothered with a revised intellectual property chapter, which should have been a U.S. imperative from the very beginning.

Trump is not wrong that NAFTA can and should be improved, and that those improvements would benefit U.S. workers and consumers. But U.S. negotiators must insist on stronger IP protections, or what is likely to happen is some tweaks around the edges of NAFTA without dramatic improvements in the IP chapter. Such a new NAFTA will be a missed opportunity and a failure to deliver on a key campaign promise.


 

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