How does the U.S. make an international agreement? Under the Constitution, the President of the United States is in charge of negotiating international treaties. Treaties, however, cannot go into effect without ratification—vote in support of the agreement by two-thirds of the Senate. Free trade agreements are a type of treaty.
The President... shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.
Article II, Section 2, Clause 2
What is Trade Promotion Authority? According to a Congressional Research Service Report, “TPA is the process Congress has made available to the President to enable legislation to approve and implement certain international trade agreements to be considered under expedited legislative procedures for limited periods, provided the President observes certain statutory obligations. TPA defines how Congress has chosen to exercise its constitutional authority over a particular aspect of trade policy, while giving the President added leverage to negotiate trade agreements by effectively assuring U.S. trade partners that final agreements will be given timely and unamended consideration.”
Trade Agreements Promote Fair Markets
International trade agreements include provisions that deal with how nations exchange goods, services and labor, including provisions on intellectual property. Trade agreements are therefore much broader than treaties dealing only with copyright, such as those negotiated through the World Intellectual Property Organization.
Strong copyright laws alone are not sufficient for fair access to global markets, where taxes, censorship, quotas and other laws can undermine the openness of the market. The broad scope of business and legal provisions involved in trade agreements thus play an important role in promoting fair treatment of intellectual property-based goods and industries, including publishing.
The negotiation of international trade agreements, from multilateral to country-specific, has proven valuable in different ways to the overall U.S. and global economy. Recent agreements feature enforceable obligations for our trading partners to modernize their copyright law regimes and improve enforcement procedures, especially for online infringement. For example:
Multilateral Treaties: Over 160 countries are members of the World Trade Organization. To become a member, a country has to sign on to a number of foundational treaties that promote fair trade between member-nations. One of the foundational treaties directly addresses copyright protections—The Agreement on Trade Related Aspects of Intellectual Property Rights, commonly known as TRIPS.
Bi-lateral Free Trade Agreements: The U.S. has concluded a number of trade agreements with individual countries, most recently, South Korea, Australia, and Singapore.
These trade agreements have helped U.S. copyright industries to compete fairly in foreign markets, and for some trading partners, brought stronger protections for their domestic copyright industries, allowing these sectors to better compete on a more global scale. In turn, increased use of legitimate copyrighted works has benefited consumers by promoting a more open, vibrant market for creative products.
Foundations of Intellectual Property in Free Trade Agreements
TRIPS: The Agreement on Trade-Related Aspects of Intellectual Property Rights
The foundational treaty establishing a baseline for intellectual property protection and enforcement among international trading partners is TRIPS: The Agreement on Trade-Related Aspects of Intellectual Property Rights. Negotiated in 1994 by and for members of the World Trade Organization, the TRIPS agreement establishes minimum standards for copyright protection, enforcement procedures, remedies and dispute resolution that a state must provide within its legislative and enforcement framework.
Importantly, TRIPS also cemented the application of the Berne Convention’s three-step test, i.e., criteria for ensuring the appropriately narrow scope of exceptions and limitations to copyright in national laws, as an obligation for WTO member countries.
“Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.” TRIPS Art. 13
Under TRIPS Art. 13, national exceptions and limitations to copyright protection for any type of work, not just literary or artistic, must meet the criteria of the three-step test. Publishers are owners and users of copyrighted works and thus appreciate the need for copyright protections balanced with reasonable exceptions and limitations. The TRIPS three-step test reflects the agreement among trading partners that exceptions and limitations should promote creativity without undermining national and international markets for copyrighted works.
All WTO members have agreed to use TRIPS as their baseline for national IP laws. In addition, where WTO members dispute whether another member’s law in fact complies with TRIPS, such disputes must be settled through the WTO. For example, the publishing industry actively supported two cases brought by the U.S. government (via USTR) against China in 2007. These cases challenged various aspects of China’s Copyright, Publication and Customs laws, which put U.S. publishers at a disadvantage compared to local Chinese publishers.
- Case 1: DS362 Measures Affecting the Protection and Enforcement of Intellectual Property Rights. In this case, the U.S. complained that China’s Copyright Law included impermissible thresholds for applying criminal procedures and penalties for copyright infringement, and thereby failed to criminalize certain instances of commercial scale copyright piracy. However, the WTO found that the U.S. did not establish “that the criminal thresholds [were] inconsistent with China's obligations under the first sentence of Article 61 of the TRIPS Agreement (requiring that “Members shall provide for criminal procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright piracy on a commercial scale.”).
- Case 2: DS363 Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products. Among other issues, this case involved U.S. government complaints that various Chinese laws restricted importation, distribution, and wholesaling of books and journals as well as investments by U.S. publishers in local distribution operations. The WTO agreed with the U.S. complaint and ordered China to remedy such trade restrictions, which China agreed to do by March 2011.
While publishers and other copyright owners still face commercial scale piracy, unresolved market access barriers, and other trade restrictions in China, the WTO dispute resolution process led to changes in Chinese laws and policies governing distribution and importation rights.
Building upon TRIPS
The foundation for copyright protection laid in TRIPS is continually built upon by the U.S. through bilateral trade agreements. Bilateral agreements provide an opportunity to establish higher standards of copyright protection and enforcement to promote fair and open markets for creative works abroad. For instance, the Korea-United States Free Trade Agreement (KORUS FTA) of 2011 established a higher level of copyright protection, including specific obligations to address Internet piracy, prevent circumvention of technological protection measures, and to take effective action to decrease book piracy at universities through educational programs to raise awareness about copyright.
Proof of the positive impact trade agreements can have on opening and improving creative markets is clearly shown by the KORUS FTA. Korea was previously a problematic market for copyright infringement, but is now a leading force in IP and innovation, enhanced by improvements in its copyright protection and enforcement regimes, an outcome in part resulting from its FTA with the U.S.. Given the high standards of IP protection achieved through the KORUS FTA, publishers support U.S. efforts to seek KORUS-level IP protections with all of our trading partners to ensure opportunities for growth of U.S. and local creative industries.
Newly Proposed Free Trade Agreements
The Office of the U.S. Trade Representative is currently negotiating two large regional free trade agreements: the Trans-Pacific Partnership (TPP) Agreement and the Transatlantic Trade and Investment Partnership (TTIP).
Trans-Pacific Partnership Agreement: Nearing conclusion, the TPP is a proposed trade agreement between the U.S. and eleven other countries, in the Asia-Pacific region: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. For publishers, the TPP will expand the benefits of existing FTAs, which require high standards of copyright protection and enforcement, to a number of markets with potential for growth.
Transatlantic Trade and Investment Partnership Agreement: In June 2013, the U.S. and EU announced an ambitious plan to conclude a comprehensive new trade agreement, TTIP, to facilitate more seamless trade between our economies by reducing tariffs, harmonizing regulations, and maintaining high-levels of IP protection. A few of the key objectives relevant to publishers include:
- Ensuring that digital books and journals can be sold to the EU’s more than 500 million consumers without tariffs or other fees simply because of their delivery via the Internet.
- Securing “appropriate commitments that reflect the shared U.S.-EU objective of high-level IPR protection and enforcement, and to sustain and enhance joint leadership on IPR issues.”
As the U.S. Trade Representative has stated, the TPP and TTIP agreements present unprecedented opportunities to “advance and defend the interests of U.S. creators, innovators, businesses…and workers with respect to strong protection and effective enforcement of intellectual property rights, including their ability to compete in foreign markets.” AAP supports U.S. efforts to promote the creative industries through strong IP protections and fair market practices. The passage of the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (H.R. 2146) paves the way for concluding both agreements, with TPP in the near term.
Trade Enforcement Advocacy With the U.S. Government
AAP works closely with various agencies within the U.S. government to help publishers compete on a level playing field when bringing quality books and journals to global markets.
We provide the industry’s perspectives on key issues to the Office of the U.S. Trade Representative (USTR), Department of State, the International Trade Administration within the Department of Commerce, and other relevant offices within the federal government, ensuring that the industry’s views on whether trading partner economies provide adequate and effective IP protection, and fair access to their markets. AAP also briefs Members of Congress about the importance of copyright protection and enforcement abroad and how the U.S. copyright system compares with similar laws of other countries.
AAP coordinates its advocacy with other copyright industries, including film, television, music and video games, through the International Intellectual Property Alliance (IIPA). Through the IIPA, AAP provides input on a number of annual trade-related inquiries from USTR, including: the Special 301 Report and the ongoing U.S.-China Joint Commission on Commerce and Trade dialogue.
Annual Special 301 Report
Each year, USTR requests public comment from intellectual property (IP) industries, consumer protection groups, and other interested members of the public to identify policies and practices of U.S. trading partners that result in inadequate and ineffective IP enforcement or barriers to fair market-access. USTR also seeks public responses from interested foreign governments, affording such governments the opportunity to inform the process of actions being taken that may address U.S. government and industry concerns.
USTR analyzes these comments and publishes its Special 301 Report every April, identifying remaining concerns and opportunities for our trading partners to improve market access and IP protection. The stated goal of the Special 301 Report is to promote a level of IP protection and market access that will benefit U.S. and local creative industries through “job creation, economic development and many other benefits that effective IPR protection and enforcement support.”
Special 301 helps to open foreign markets to U.S. intellectual property holders and ensure a fair and level playing field to sell U.S. IP-based works and goods in those countries. –USTR
USTR ranks the countries included in the Special 301 Report as follows (see Annex 1 in Special 301 Report):
- Priority Foreign Country: A designation that is reserved only for “countries that have the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products.”
- Priority Watch List: Identifies a country in which the U.S. has serious concerns regarding IP protection, enforcement, or market access related to IP. USTR notes that “countries placed on the Priority Watch List are the focus of increased bilateral attention concerning the specific problem areas.”
- Watch List: Identifies a country in which the U.S. has significant IP protection, enforcement, or market access concerns, but which will receive less bilateral engagement from the U.S. than Priority Watch List countries.
- Out-of-Cycle Review: When countries have made commitments to implement an improved law or enforcement process, USTR may remove them from “the List” (PWL or WL) and institute an Out-of-Cycle Review (OCR) instead. USTR increases engagement with the country to monitor implementation, with the option of placing the country back on “the List” if IP or market access concerns are not resolved as anticipated. An OCR can also be used to encourage countries to take effective actions to avoid being listed.
AAP, through the IIPA, contributes to the Special 301 Report each year by providing updates on copyright enforcement issues or improvements in countries with important or growing markets for U.S. books and journals. AAP uses the IIPA Special 301 Report to highlight unauthorized sharing and photocopying of textbooks, journals, and professional books on a commercial scale that remains rampant in many Asian markets.
Raising copyright concerns through the Special 301 process can also lead to positive change. For example, USTR’s recognition of AAP’s concerns regarding unauthorized photocopying in the Philippines and Indonesia helped increase engagement between those governments and AAP. With the increased engagement, the Intellectual Property Office of the Philippines has become a strong partner on IP enforcement, responding positively to the industry’s requests for assistance in tackling book piracy.
U.S.-China Joint Commission on Commerce and Trade
The U.S.-China Joint Commission on Commerce and Trade (JCCT) is a forum for high-level dialogue on bilateral trade issues between the United States and China. Co-chaired by the U.S. Secretary of Commerce and U.S. Trade Representative for the U.S. and the Vice Premier of foreign trade and Minister of Commerce for China, the JCCT also includes 16 working groups, one of which directly concerns intellectual property rights (IPR Working Group) and is of particular importance to publishers.
Over the past few years, AAP has provided USTR and Commerce with the book and journal publishing industry’s copyright concerns and recommendations for the JCCT process. Most recently, publishers emphasized that follow-through on the outstanding obligations below, were our most important objectives:
-2009 commitment to “strengthen library protection of copyright,” particularly for academic journals, which remain heavily pirated. China agreed to develop and send a notice to libraries providing information about protecting copyrighted works, but has yet to implement effective measures to ensure libraries adopt and comply with policies that respect copyright.
-2012 commitment to hold joint government-industry “roundtables in China to discuss online copyright protection and enforcement, including library copyright protection.” The first of many needed roundtables addressing such protection was held in 2015.
The JCCT process has been immensely helpful in keeping a long standing online journal piracy case on the Chinese government’s agenda. The dialogue between U.S. and Chinese government officials regarding AAP’s case helps sustain cooperation from Chinese prosecutors and investigators as the criminal investigation against the operators continues.
International Trade Commission
The ITC is an independent federal agency with broad authority to investigate and adjudicate disputes between private parties regarding the importation of goods into the U.S. The ITC is also charged with providing independent analysis of international trade issues to the President and Congress to help inform trade policy.
Of particular importance for publishers is the ITC’s authority to adjudicate cases involving imports that infringe intellectual property rights under Section 337 of the Tariff Act. The ITC plays a critical role in enforcing fair trade obligations by keeping out pirated goods and those that are made through unfair practices that would undermine U.S. IP-based industries that invest in the creation and dissemination of creative works. AAP monitors and participates in relevant ITC studies and cases, including the following.
ITC Study on Digital Trade
Recently, the U.S. Senate Committee on Finance asked the ITC to investigate digital trade in the U.S. and global economies in recognition of the exponential growth of Internet-based commerce in the last decade. The ITC solicited comments from stakeholders and published its results in two parts:
Digital Trade in the U.S. and Global Economies: Part 1, which reported on current trends in U.S. digital trade as well as barriers and impediments to such trade. AAP submitted comments explaining that copyright piracy poses the most significant barrier to growth of digital trade in books and journals. AAP also expressed its support for the study, which will help Congress make more informed decisions about addressing digital piracy and trade concerns.
Digital Trade in the U.S. and Global Economies: Part 2, which addressed the value of U.S. digital trade, its potential growth, and its contributions to the U.S. economy. AAP contributed to IIPA’s comments that provided further information about the considerable “size and scope of copyright-intensive goods and services within the overall valuation of digital trade.”
ITC Case Regarding Importation of Infringing Goods via Electronic Transmission
Under Section 337 of the Tariff Act, the ITC has broad jurisdiction to ban importation of “articles” (goods, products, etc.) that infringe U.S. IP (patents, copyrights, trademarks, etc.). Congress deliberately chose not to define the term “articles” so that the ITC would have the authority necessary to remedy unfair trade practices as trade evolved.
Recently, a foreign-based producer of unauthorized dental appliances sought to limit the ITC’s jurisdiction to physical articles so that it can unfairly compete with the U.S. IP-holder by electronically transmitting patented designs for appliances to a three-dimensional (3D) printer in the U.S. (ITC Inv. No. 337-TA-833).
In February 2014, AAP filed comments in support of the U.S. IP-holder’s argument that the ITC has jurisdiction to block the electronic transmission of articles that infringe IP (patents, copyrights, etc.).Though this case concerns patents, it is relevant to publishers and authors because regardless of whether a consumer in the U.S. obtains a pirated book in physical or electronic copy, the harm of the potential lost sale remains the same. Congress intended the ITC to take action to remedy acts of unfair trade, which, today, include digital trade.
In April 2014, the ITC ruled in favor of the U.S. IP-holder and issued a cease and desist order against the foreign entity to prohibit further unfair trade. The foreign entity then appealed the decision to the Court of Appeals for the Federal Circuit. The appeal was supported by amicus briefs from groups ascribing an overly-broad interpretation to the ITC’s April 2014 ruling, which led to unjustified fears that the ITC has jurisdiction over all digital data and can impose unreasonable filtering burdens on Internet and cloud computing companies.
In February 2015, AAP and other IP-based industries filed amicus briefs supporting the narrow and necessary conclusions reached in the ITC’s April 2014 ruling—that Section 337 provides jurisdiction to remedy instances where electronic transmissions infringe valid and enforceable U.S. patents and copyrights. The Federal Circuit has yet to rule on the case (ClearCorrect Operating, LLC v. ITC, Fed. Cir. 14-1527).
Additional AAP Resources
Amicus Brief in ClearCorrect Operating LLC v. ITC