International Regulation: Lessons from the IP Experience for the Internet

Transcription

1 International Regulation: Lessons from the IP Experience for the Internet THE MARKET FOR REGULATION IN THE INTERNET OF THINGS January 11, 2019 Judith Goldstein Department of Political Science

2 Can there be international regulation of the internet? Two schools of thought Yes, but expect thin regulation because of divergent preferences, esp. between the North and Southern nations No, because the internet is akin to a non-state actor. Low transaction costs of communication leads to private coordination and undermines governments capacity to force compliance I am going to argue for the former--the interests of the large powers are still central and it is their preferences that determine the form and extent of cooperation. To get cooperation, nations need to solve two problems. First, they need to agree on a set of regulations Second, they need to commit to follow them- commitment problem is severe because of the number and autonomy of private actors. The agreements needs to be self-enforcing.

3 Will there be international regulation of the internet? REST OF WORLD Interests Diverge Interest Converge Interest Diverge QUAD Interest Converge SHAM STANDARDS (censorship) CLUB deal (IPR) REGIONAL DIFFERENTIATION (consumer privacy) Harmonization (technical standards)

4 International cooperation on economic policy is difficult, even more so under Trump. Why? US declared preferences have moved away from those of the Quad US is less interested in collective agreements or collective goods New focus on bilateral relationships and often unilateral actions Why is this problematic? Bilateral deals decrease the menu of potential tradeoffs More driven by powerful private interests

5 Illustrate some of these issues, using IP agreements IP case illuminates the problems of both multilateral and unilateral responses to IP issues. The multilateral case illustrates the difficulty of creating rules but suggests that dispute resolution system or arbitration can work. Why? Governments and not interest groups have standing More divorced from power i.e.., decisions can be rendered apart from more general foreign policy issues Unilateral actions by the US are closer to US preferences but are more prone to capture and not independent of more general issues of US market and political power.

6 What are the institutional structures that now protect US IP? International Agreements Trips WIPO Set of agreements in PTAs Domestic Remedies Congressional protections Section 301 and Special 301s

7 Look at the international institutional framework and how we got there

8 Many attempts to create international agreement on IP Paris Convention (1883) for the Protection of Industrial Property (patents, industrial design, etc.) Berne Convention (1886) for the Protection of Literary and Artistic Works (copyright) Washington Treaty (1989) on Intellectual Property in Respect of Integrated Circuits (IPIC Treaty) Rome Convention (1964) for the Protection of Performers, Producers of Phonograms, and Broadcasting Organizations

9 Two brick and mortar organizations for IP World Intellectual Property Organization (WIPO) Established in 1967 (became a UN agency in 1974) 26 WIPO-administered treaties It is a registration and not an enforcement organization WIPO negotiated two treaties-one on copyrights and one on performances and phonograms-to cover online IPR These were greased because of a threat by American and European leaders to apply economic sanctions against countries with lax IPR regimes

10 WTO TRIPS Agreement More encompassing than WIPO but great together Part of the WTO and not the GATT Obtained a set of commitments for all WTO members Mandated a dispute settlement process

11 TRIPS is an odd fit with the WTO Intellectual property rights were peripheral to the original GATT and not part of the original conception of the agreement Article IX:6 : protection of distinctive regional or geographical names But trade issues evolved from border issues to issues of production and in particular counterfeiting Tokyo Round: In 1978 the US submits a proposal to address trade in counterfeit goods (supported only by the EC and the US) Post-Tokyo Round: Canada, the EC, Japan, and the US support a revised proposed code, but no agreement reached 1982 Ministerial Declaration includes an instruction to examine trade aspects of counterfeiting; sets up an expert group

12 Intellectual Property comes to the Uruguay Round 1986: IP agreement becomes one of 13 subjects for negotiation 1989: Quad agrees but the developing world objects Offer is IPRs in exchange for benefits in agriculture and textiles 1990: Five comprehensive draft legal texts by 1) the EC, 2) US, 3) 14 developing countries, 4) Switzerland, 5) Japan + 6) Australia on geographical indications Still have opposition from Latin American agricultural industry Difficult issues defining public purposes and limiting the scope of disputes Problem sectors: Compulsory licensing in semiconductor technology Pharmaceuticals

13 WTO forces all members to sign onto the Agreement Annex 1C of the WTO Agreement Covers five broad areas: Basic principles: national treatment, MFN, balanced protection Minimum standards of protection Domestic procedures for the enforcement of IP rights Dispute settlement under Art. XXII and XXIII of GATT 1994 Special arrangements for the implementation of TRIPS agreement Transfer of technology to least-developed members Transitional arrangements: Allows transition periods and exemptions

14 How well did it work? Club agreement with some areas of harmonization Esp. in drugs, two track system Analytically, the most interesting aspect of the arrangement is how the system monitored and then punished those who broke the rules Nations have successful arbitrated disputes 40 out of 571 WTO cases ( 7 percent) involved some aspect of IP 14 panel reports circulated 3 Appellate Body reports written Difficult cases to adjudicate Although the Southern nations were the most reticent in signing on, they were not the most likely subject of a dispute

15 Who complained about whom? WTO Panel Findings on TRIPS Violations Complainant Respondent Issue Violation of TRIPS Patent, Pharmaceutical & US India Agricultural Chemical Yes US Indonesia Autos No Patent, Pharmaceutical & EC India Agricultural Chemical Yes EC Canada Patent, Pharmaceutical Partial Section 110(5) EC US Copyright Act Partial US Canada Patent Term Yes US EC Trademarks & Geographical Indications Partial EC US Section 211 Appropriations Act Partial Australia EC Trademarks & Geographical Indications Partial US China IPRs Partial Honduras Australia Tobacco Plain Packaging No Dominican Republic Australia Tobacco Plain Packaging No Cuba Australia Tobacco Plain Packaging No Indonesia Australia Tobacco Plain Packaging No

16 Most Cases Settle Current Status # of Cases Percentage Settled or terminated (withdrawn, mutually agreed solution) 14 35% Mutually satisfactory temporary arrangement 1 2.5% Panel Report Circulated Report adopted, with recommendation to bring measure into conformity 1 2.5% Report adopted, no further action required 2 5% Implementation notified by respondent 8 20% Panel report under appeal 2 5% Authority for panel lapsed 1 2.5% Panel composed 1 2.5% Panel established, but not yet composed 1 2.5% In consultations % TOTAL %

17 Over time changes? 7 WTO Disputes on Intellectual Property - By Year 6 5 Count Year

18 Who Brought the Cases? WTO Disputes on Intellectual Property - By Complainant Count United States European Communities Qatar Brazil Australia Canada Cuba Dominican Republic Complainant European Union Honduras India Indonesia Ukraine

19 Who was breaking the law? WTO Disputes on Intellectual Property - By Respondent Count Australia European Communities China United States Argentina Canada European Union; Netherlands India Japan Saudi Arabia Bahrain Brazil Denmark Greece Indonesia Ireland Pakistan Portugal Sweden United Arab Emirates Respondent

20 Bilateral agreements have increasingly copied TRIPS rules into their agreements: Companies that adjust to TRIPS are more likely to support IP in PTAs 120 Number of Bilateral PTAs That Mention TRIPS (WTO Data) Yes (69%) No (31%)

21 Unilateral Protections

22 Under the Trump Administration, Section 301 of the Trade Act of 1974 has become the lever of choice Two 301 Statutes: Regular 301s, authorize the USTR to investigate and take action against unreasonable, unjustifiable, or discriminatory foreign trade practices This was very new type of legislation US had CVD and AD laws that controlled the US border and protected the US market These were oriented toward policies that influenced FDI Since 1974, the USTR has initiated 125 Section 301 investigations, retaliating in 17 cases Of 125 investigations, 18 ( 14 percent) are related to intellectual property Special 301s are reports: annual review of intellectual property rights protection and enforcement in foreign countries Three categories: Priority Foreign Countries (worst violators) Priority Watch List Watch List

23 Initiation of Section 301 Cases - By Year Count Year

24 30 Initiation of Section 301 Cases - By Country Count EC Japan Canada Korea Brazil Argentina Taiwan India China Thailand Country EU Indonesia Portugal Australia Austria Belgium Belgium + 10 Brazil, China, Korea Colombia Costa Rica EC, Japan France Guatemala Honduras Italy Mexico Norway Pakistan Paraguay Spain Sweden Switzerland Turkey UK Ukraine USSR

25 Special 301 Cases Title Country Year Thailand Pharmaceuticals Thailand 1991 India Intellectual Property Protection India 1991 People's Republic of China Intellectual Property Protection China 1991 Taiwan Intellectual Property Taiwan 1992 Brazil Intellectual Property Rights Brazil 1993 China Intellectual Property Rights China 1994 Paraguay Intellectual Property Laws and Practices Paraguay 1998 Ukraine IPR laws and practices Ukraine 2001 China s Technology Transfer China 2017 Source: USTR Archives; Benavente (2014)

26 Who is on the watch list today? 2018 Special 301 Report PRIORITY WATCH LIST China Ukraine Indonesia Argentina India Canada Algeria Chile Kuwait Colombia Russia Venezuela WATCH LIST Thailand Egypt Switzerland Barbados Vietnam Lebanon Turkey Jamaica Pakistan Saudi Arabia Mexico Bolivia Tajikistan United Arab Emirates Costa Rica Turkmenistan Greece Dominican Republic Brazil Ecuador Uzbekistan Romania Guatemala Peru

27 On China: Trump Administration is conducting both a 301 case and a WTO case In August 2017, USTR initiated an investigation under Section 301 of the Trade Act of 1974 into China s intellectual property and technology transfer policies Findings Joint venture requirements, foreign investment restrictions, and administrative review and licensing processes force or pressure technology transfers from US companies Discriminatory licensing processes lead to transfer technologies from US companies to Chinese companies Investments and acquisitions seek to generate large-scale technology transfer Cyber intrusions into U.S. computer networks provide access to business information March 2018 initiated DS542: China Certain Measures Concerning the Protection of Intellectual Property Rights at the WTO Complaint: China s discriminates against foreign patent holders and fails to ensure patent rights for foreign patent holders to transfer technologies from US companies to Chinese companies In violation of Articles 3, 28.1(a) and (b) and 28.2 of the TRIPS Agreement Current Status: Panel established, but not yet composed

28 What does this all mean? Some argue that globalization has increased networks among private actors and this is what makes internet and often IPR regulation difficult This is overstated: nations interests matter (states are still the central actor in international arena)as does their relative power. Global governance is not going to be between or among private actors but rather, as in most areas, it will be between nations who themselves represent the interests of those private groups. Having said that, internet regulation is a case in which aspects of what nations would ordinarily do can be substituted for by private coordination. It is not an either or situation but both private and national coordination is occurring simultaneously. Issue is the balance between public and private. Recent 232 exemptions are a shot across the bow Reported that Trump will ask for more authority to deal with unfair trade issues in the State of the Union address Worry is that executive power could lead to trade policy being increasingly capricious and captured by private interests