May, 2018

Without US in TPP, IP protection falls by wayside

Original article: Lexology

President Donald Trump withdrew the U.S. from the Trans-Pacific Partnership (TPP) right after taking office, upsetting the free-trade applecart from Washington to Tokyo. Without the U.S. in the pact, the remaining 11 signatories have set aside the stringent intellectual-property provisions for which Washington had fought. The revised version of the agreement lacks the ability to offset China's more controversial trade practices.  


President Trump signaled in April that he would consider rejoining the TPP. We don't know what prompted The Donald's change of heart, and we won't venture to guess. But Washington could struggle to give the agreement its teeth back. As it stands, the revised pact lacks the robust IP protection of the original. That's not just a loss for signatories such as Japan, Australia and Singapore. It also means that the TPP no longer can check Beijing's disruption of global trade norms. 

Because of structural problems in its economy and the nature of its political system, China won't embrace full-throated free trade anytime soon. Mercantilism will continue to undergird its trade and investment policies. The Chinese state will remain a preeminent actor in the economy, directing the grand strategies of firms both public and private. China's trading partners, smaller nations in particular, will struggle to push against Beijing. 

The original TPP, with two of the world's three largest economies as signatories, would have offered an alternative to the Beijing Consensus. "TPP imposes disciplines on state-owned enterprises, government procurement, anti-competitive business practices, and corruption," Richard Stewart, a New York University law professor, wrote in a report published last week in The Diplomat. "U.S. President Donald Trump’s withdrawal from TPP will encourage China to push back strongly against the TPP model of regulatory capitalism," he added. 

In a May report, law firm Baker McKenzie notes some of the key IP provisions that Washington would want reinstated in the agreement: "request for civil and criminal liability for circumventing Technological Protection Measures (TPMs) and Rights Management Information (RMI); protection of encrypted programs carrying satellite and cable signals; legal remedies against internet services providers and provision of safe harbors; increase of duration of copyright protection, and stronger patent protection." 

The provisions have been suspended rather than eliminated "to allow the US to easily re-enter the partnership should it change its mind at a later date," Baker McKenzie says. 

That could be easier said than done, especially with President Trump pressing for the U.S. to "get a better deal" if it rejoins TPP. Last month, Australian Trade Minister Steven Ciobo told CNN Money that the 11 signatories' focus is implementing the deal they signed, not revising it to accommodate Washington. "There isn't an appetite for any substantial renegotiation in any material way of the TPP," he said.