Good morning, everyone. Welcome.
It's been a hard week for many of us here. We have friends, relatives, and acquaintances in Fort McMurray, and Fort McMurray is going through a rough patch. Our thoughts are with them as we continue. We hope everything works out as best it can for them out there.
We are going to continue with our international trade committee study on the TPP. Our committee has been quite busy since this Parliament started. We had the European trade agreement that we're finishing up. We did a study on softwood lumber, and we have other various issues, but TPP is our main one. This committee is reaching out to stakeholders and the community at large to find out how much impact this trade agreement is going to have, not only on business and companies, but on average Canadians. It's going to affect everybody, one way or another, and so that's what we're doing.
We've had many meetings here in Ottawa but we also embarked on a trip out west. We did four provinces. We're going to two cities in Quebec and two cities in Ontario next week, then we're going to the Atlantic provinces and we'll go to the territories.
That being said, this morning we're going to have some witnesses here who will give us their opinions, and then we'll have an opportunity for MPs to ask questions and get more dialogue.
This morning, as individuals, we have Jim Balsillie, CEO of Research in Motion. We all love our BlackBerrys.
It's good to see you here, sir.
We have Michael Geist, Canada research chair and professor of law, Internet, and e-commerce law at the University of Ottawa.
Welcome, gentlemen. Try to keep to five minutes each, if you can, and that will give us lots of time for cross-examination—it's not that, but that's what the MPs do.
Go ahead, sir.
Thank you very much, Mr. Chairman, vice-chairs, members of the committee, and fellow Canadians. Good morning. Thank you for the invitation to meet with the committee and present my views on the Trans-Pacific Partnership. It is an honour and a pleasure to be here.
I am a self-made capitalist, and I believe in free trade and open markets. I've commercialized Canadian intellectual property in 135 countries to a level never done before or since. My global business experience is unique in Canada.
I would like to echo the words of Jared Bernstein, former chief economist to Vice-President Biden, who called for a third category of trade critics: people who believe in free trade and globalization but who don't like what TPP does to our countries, our working classes, and our environment.
TPP is not a traditional free trade agreement. It's deliberately called a partnership because it describes an economic framework for 21st century prosperity. TPP is not principally about reducing tariffs at our borders, but rather about rules that govern how we run our currently sovereign economy and how these new partnership rules get enforced. In the 21st century, making and exporting tangible goods has given way to a global economy where wealth is made by making and exporting intangible goods: intellectual property.
The chart you will see at the back of the papers illustrates this as well. In 1975 intangible goods were one-sixth of the value of the S and P 500 companies. By 2015 intangibles were five-sixths of the value of that same index.
The economy of intangible goods, unlike traditional trade, is governed by rules and restrictions that govern ownership of intellectual property. The intangible economy is the opposite of free trade. It is about rules and restrictions that grant temporary monopolies to those who own valuable intellectual property. When a country ratifies a bilateral or multilateral agreement that governs intellectual property, it makes the commitment to enact those rules inside our domestic marketplace. These are very different kinds of commitments from traditional trade agreements, because they are about how we commit, to other countries, how Canada will operate its economy internally.
Canada is not a large exporter of intellectual property, so we import a disproportionately large amount. Canada owns and exports very little intellectual property, because we've never had a national innovation strategy.
The other part that you will see here illustrates that we have had zero growth in innovation outputs over the past 30 years. Canada never developed capacity for the 21st century global economy, where wealth is generated by commercializing intellectual property.
The most recent modelling of TPP shows that the agreement delivers negligible results in the realm of traditional free trade. What's even more relevant is that all TPP models do not account for the two most important parts: intellectual property and investor-state dispute settlement. ISDS is a tribunal that supersedes sovereign law in a system that allows no appeals.
Below the charts, you will see a few critical statements from the smartest trade economist I have met in Canada, Dan Ciuriak. Not calculating the economic effects of IP and ISDS is like doing a budget for your family where you don't take rent or food bills into account.
As Nobel Prize economist and trade expert Paul Krugman has noted, most of the tangible goods already move tariff-free. The same is true for intangible goods, where 97% of the world in information technology products already move tariff-free under the WTO's information technology agreement.
So what is TPP if not about free trade? TPP is about expanding freedom to operate for the winners in the innovation economy and restricting it for the rest. Freedom to operate is a core strategic and risk management factor for businesses in the ideas economy. Sophisticated ideas businesses use freedom to operate strategies from the onset of their R and D all the way to commercializing and distribution cycles.
As CEO of a Canadian technology company that scaled globally from an idea to $20 billion, my principal focus for two decades was to expand our freedom to operate and constrain our competitors' freedom to operate. I look at TPP's impacts on scaling Canadian companies from this unique perspective.
Canada went into TPP negotiations without ever consulting a single Canadian innovator and without a strategy for this critical aspect of an innovation economy. None of the aspects that constitute an effective freedom to operate strategy are present in Canada today. We don't have an innovation office; prior art libraries; sovereign patent pools; bilateral or multilateral negotiation sophistication; federal, provincial, or global judicial strategies; sophisticated standards and regulation strategies; or collaboration frameworks designed to commercialize Canadian ideas globally. It's inexcusable.
We couldn't have negotiated for our prosperity because you can't negotiate a trade strategy without an innovation strategy, let alone talking to the very companies that such agreements are supposed to advance. If Canada wants to build capacity for the 21st century global economy, then we will need all of these sophisticated capacities.
What we need in Canada, and what I hope this committee will ultimately advance, is a more sophisticated discourse on trade and prosperity. It's not enough to peddle old-fashioned trade liberalization theories when our own best trade economists told us we don't even have models to account for the most impactful aspects of 21st century trade. It's not enough to have lawyers looking at TPP through the lens of elegant wordsmithing. Like all global tech CEOs, I've hired and fired dozens of IP lawyers around the world, and, I can tell you, lawyers don't commercialize ideas. They reduce their clients' instructions to legal wording.
I would like to conclude by saying that it's gratifying to share this session with Professor Geist, not only because he does a great job of educating the public about TPP, but because in his recent blog post, Professor Geist brought to light perhaps the most important fact that Canadians have to consider, which is the fact that our own civil servants know that TPP runs counter to our preferred national strategies. In a briefing prepared for Minister Freeland, which I hope you will all read, it's clear that our civil servants understand that Canada prefers to create its own IP policy through multilateral forums rather than being jackhammered by large owners of IP into a set of rigid new rules.
In reading the document that Professor Geist made public, I would characterize our approach to these trade deals as palliative. We know we're going to lose, so we focus on slowing the inevitable erosion.
Let met summarize my concern with TPP with this. We signed an agreement that our civil servants told the minister runs counter to Canadian preferences after concluding negotiations in secret without consulting a single Canadian innovator. Now that the deal is done, we're doing an economic study to assess its benefits, which doesn't include the most impactful elements related to national prosperity. Then we do consultations with relevant stakeholders to assess their views. That is then followed by creating a decades overdue innovation strategy. This is all backwards. This is precisely opposite to how trade deals should be concluded, step by step.
Thank you very much.
I'll do my best. Thank you, Chair.
Good morning. As you've heard, my name is Michael Geist. I'm a law professor at the University of Ottawa, where I hold the Canada research chair in Internet and e-commerce law. I appear today in a personal capacity, representing my own views.
There is a lot to say about the TPP. I've written dozens of articles and posts on the agreement, and I'm currently working on a book on point, but I have limited time, as you heard, so I'll focus on four issues.
The first issue is Canada's price of admission and weakness during the negotiations. As I'm sure you know, Canada was not an initial participant in the TPP talks. U.S. lobby groups urged the U.S. government to keep Canada out of the negotiations until a copyright bill was passed that satisfied its demands. Those demands had a significant impact on the contents of the 2012 Canadian copyright bill, particularly the retention of restrictive digital lock rules that were at the very top of the U.S. policy priority list.
Once the U.S. was convinced that Canada would meet its IP and anti-counterfeiting demands, it set further conditions for entry, including a commitment that Canada could not hold up any chapter if it was the lone opponent. That concession became important in the IP chapter, where there were some issues where Canada ultimately did stand alone and on which it was forced to cave.
As the negotiations neared a conclusion, senior Canadian officials were advised that Canada was at a disadvantage in the negotiations, given the lack of coordination and transparency between government negotiators and interested stakeholders. We went ahead anyway and agreed to the deal.
Second, what did we agree to?
I'll start first with the changes to intellectual property law. One of the best-known examples of this is the term of copyright, where in Canada the present term is the life of the author plus an additional 50 years, which is consistent with the international standards set by the Berne convention. It's also the standard that you find in half of the TPP, including countries such as Japan, Malaysia, New Zealand, Brunei, and Vietnam. The TPP requires an extension by an additional 20 years, which represents a major windfall for the United States and a net loss for Canada.
In fact, New Zealand, which faces a similar requirement, conducted its study on the cost of the extension alone, which it estimated at $55 million New Zealand per year. Some have taken issue with that study, but just last week a draft report from the Australian government's productivity commission pointed to estimates of their term extension, which occurred several years ago, and pegged it at $88 million Australian per year. The Canadian cost could even be higher.
The IP changes don't stop there. The TPP includes changes to digital lock rules, longer patent protections, criminalization of trade secret law, changes to trademark law, new border measures, and requirements for ratification by all TPP countries of as many as nine international IP treaties.
Third, it's not just about IP. In fact, the TPP of course goes far beyond that. It touches, for example, on culture, restricting the ability to expand CanCon contribution policies. This means, despite the fact of Canadian Minister of Heritage 's recent promise to review cultural policies, that contributions to support the creation of Canadian content may be effectively locked into place, with the TPP blocking new policies aimed at new services and technologies.
The agreement also leaves behind a complex array of regulations for service industries that is almost certain to result in unintended consequences. Hot button issues such as the regulation of online gambling, or ride-sharing services such as Uber, in the news just yesterday and today, may be decided by the TPP, not by Canadian governments, whether at the municipal or provincial levels.
On the Internet, it reverses our long-standing hands-off approach on Internet governance, and it fails to meet our standards on issues such as net neutrality. It even touches on privacy, restricting the ability for governments to implement restrictions on data transfers or data localizations while setting a very low threshold for privacy protection and anti-spam rules. This could place Canada between the proverbial rock and a hard place on privacy, sitting on the one hand between European demands and, on the other, TPP requirements.
Health is also directly affected, with increases for pharmaceutical pricing likely, locking in protections for biologics, and even sketching out rules for a national pharmacare program if Canada were to adopt one.
Fourth, the risks and potential costs of getting implementation wrong are enormous. The TPP was negotiated behind closed doors and presented to the public on a take-it-or-leave-it basis.
I've read references from some MPs claiming that Canada has already consulted on the deal, but I know few experts, if any, who were consulted during the negotiations. In fact, when I appeared before this committee in June 2013, I was told by government MPs that concerns related to the TPP were premature and that I and others should wait until the negotiations were complete.
Now that they are complete, I hear some saying that we've had enough consultation, yet we must recognize that the risks of getting implementation wrong are enormous. The investor-state dispute settlement provisions in the TPP point to the possibility of significant liability from corporate claims.
has described the ISDS rules that are found in the Canada-EU trade agreement as the gold standard, but the TPP does not meet that standard. Moreover, even crafting our own rules within the TPP may be a non-starter since the U.S. maintains that it gets to decide for Canada how to ratify the agreement through its certification process. In sum, Canada was at a distinct disadvantage in the TPP negotiations, and it shows, with major losses on intellectual property, digital and cultural policies, as well as the prospect of significant liability through ISDS and U.S. certification into how we implement the deal. The issue isn't about being pro- or anti-free trade. In my estimation, it's about a bad deal that should be renegotiated or rejected and other trade alternatives pursued.
I welcome your questions.
There's this notion that somehow the TPP and NAFTA are all the same. They are dramatically different. Certainly in a scope perspective, TPP addresses a far broader range of issues than NAFTA does.
Even beyond that, its approach on services is quite different from some of our traditional trade agreements. Many trade agreements look at services, and you identify specific service areas and say that you'd like to liberalize or open those up. TPP flips that on its head by saying we going to open everything and then we're going to seek to identify certain things that we ought to exclude.
As smart as the negotiators may have been, they were not possibly going to be able to identify every kind of service that we might say ought to be excluded from the process, especially when we see newer ones emerging. In the context of ride-sharing services like Uber, we have rules in place that effectively lock in the rules as they stand now, either at a municipal level, so it's exempted as of now but not for the future, or similarly at a provincial level.
B.C. actually has ride-sharing legislation at a provincial level, which is unusual within the country. Usually, it's just at the municipal level. It's actually shared both provincially and municipally. Once the TPP is in place, it will become more difficult for those legislatures to change their existing rules and frameworks.
That applies for Uber, but even more fundamentally—and this speaks to Mr. Balsillie's concerns about innovation—as new innovators come into the space in other areas, we start thinking about rules that are already locked into place due to the TPP.
Thank you so much for your presentations.
It's been highlighted to this committee many times that this deal is about far more than just trade in the traditional way that we think about it. I think it's clear that only certain groups were included in the consultations that took place under the previous government.
I have to respectfully disagree with my colleague, because this deal began in 2008. There was more than enough time prepare for it before we found ourselves in a position that we are now signed on, and it's yes or no at our current juncture.
Mr. Balsillie, I appreciate that you would indeed make money under the TPP, but you recognize that it's so inherently flawed that it would be bad for Canadians and for our sovereignty.
I wonder if you can speak specifically to the reference you made to the study by Dan Ciuriak from the C.D. Howe Institute basically about the GDP impact...not ratifying the TPP would be negligible. I think there is an idea out there that if we don't sign, we're going to lose.
Global Affairs has no economic impact study. We know that. The studies we've see from Tufts University and out of the Peterson Institute in the States show .2% and 0% growth by 2030. There's no economic modelling that supports us signing on to the TPP.
I wonder if you can speak to that.
I have a very sophisticated set of networks, globally and domestically, and very smart people in my office who support me in what I do. I have six Nobel Prize winners whom I work with in the Institute for New Economic Thinking that I founded with George Soros.
Canada has the most superficial innovation discourse that I've seen in the world. We take these articles of faith that more intellectual property enforcement is good. Free trade is always good. We have these false myths and orthodoxies that we just take on, unchallenged.
To answer Dan Ciuriak, quite frankly, the benefits of trade under TPP—modelled, peer-reviewed, nobody has challenged—are a rounding error. The costs of being out of TPP are a rounding error.
He also says, and you have it in the notes I put here, that the two most important things aren't even modelled. It's like buying a house or buying a business or entering into a marriage with absolutely no facts whatsoever about what you're getting into, because houses are good and businesses are good and marriages are good. No, they're not good any way, any time, any how. It's a function of understanding what somebody is looking for and making sure that it works.
Sure. The reference to the document, and Mr. Balsillie referenced it as well, is found in documents obtained under access to information from the briefing notes that were provided to .
What is speaks to is that Canada, I think, has long recognized—and it is still the case today—that we are most effective when developing rules around digital policies and intellectual property policies in international fora. We make significant contributions. We did, for example, on the Marrakesh treaty, and we've just seen a bill tabled to try to implement that, and the Conservatives tried to do the same. Canada played an integral role at the World Intellectual Property Organization, where it worked with other countries in multilateral open fora.
In a TPP environment it's a completely different environment, and especially when you're negotiating in large measure on some of these issues directly with the United States. They're not shy about making demands that are in their national interest, and we've already heard from Mr. Balsillie about why that is. As a major exporter, whether it's Hollywood interests or some of the other IP or pharma interests, those don't align necessarily with ours.
What I think the minister was being advised, and what I believe is well known within the government, and frankly, well known by most experts, is that obtaining a made-in-Canada solution, or at least a solution that best reflects our national interests, happens in international fora. That's not what happens in the TPP, particularly in a closed-door negotiation of this kind.
I want to pick up on this issue that somehow the CETA is the model. I think CETA has some things that are better in it, not the least of which is an improved ISDS and the fact that it grants us access to a market with which we don't have trade agreements in place right now of the scale that we have elsewhere.
One of the things about the TPP, one of the reasons why you're finding economic modelling that suggests that the gains are negligible, is that we already have trade agreements with half the TPP countries. We already have it with the United States, with Mexico, and with a range of other countries.
I'd actually submit that the best model for a trade agreement isn't CETA, it's actually the South Korea trade agreement, which does point to the fact that there is the possibility of an alternate trade strategy that takes us into Asia and looks at the most innovative Asian economies. We can conclude trade agreements with those countries because we have one with South Korea, but what we recognize there is that the negotiations and the kind of result that we get don't venture into some of the areas that the TPP does. What it does is try to identify where our respective interests lie, and we try to reach an agreement.
So when people talk about what we can do if we're outside of the TPP, we can do those kinds of things. We can pursue China, as the government has talked about. We can restart the Japan trade negotiations. We can continue what we've been doing with India and, in fact, come away at the end of the day with a far more strategic and effective trade framework in that region with some of the largest economies and fastest growing economies, one that actually puts us at an advantage even as against some of the other TPP countries.
Corporations look at tax strategies, stable banking, and things like that. Definitely, they are factors for investment, for what I would call a “jobs strategy”.
However, when it comes to getting money for Canadian ideas, that is called “innovation outputs”. There is a very big difference between jobs strategy and innovation outputs.
When a multinational corporation invests in Canada, it is creating what you would call “labour productivity”. If you see that chart I showed you at the back—and this is extraordinarily important—Canada's labour productivity over the past 30 years has outperformed the U.S. Our capital productivity has outperformed the U.S. The U.S. has averaged 1% growth a year over the past 35 years in multifactor innovation productivity. We have had zero.
If you look at it through that lens, that explains all of our productivity gaps with the U.S. I have no doubt that we will get investments for jobs and for different things, because Canada is a very good country. Will this lead to innovation outputs of Canadian ideas that bring the wealth from that globally? That is the gap we are looking for in Canada's prosperity.
I am not saying that everything is bad. I am saying that this is shockingly bad for innovation outputs in Canada. That is very different from somebody opening up a plant in Canada, which is a jobs strategy.
The agreement doesn't do 12 or seven, it does eight, or five plus three.
The U.S., or at least the Obama administration, has recognized that it got it wrong, I would argue, given that it has tried to push forward with a reduction.
In fact, it's not so much that it's a disadvantage. There are studies in the United States coming from the U.S. government that argue that there is no need for additional protection for biologics, that the market already has enough incentives to create, and that it is so difficult to create the generic equivalent to biologics—referred to as biosimilars—that they already have that effective protection. So establishing additional terms of protection, whatever the length, may not even be necessary.
When you have cutting-edge innovation, the idea that you're going to essentially be driven by either lobby groups or unknown policies that haven't been developed yet, and lock yourself into those choices, is a mistake from my perspective. In fact, we see it playing out even within the United States. We also see it playing out in Australia. One of their most contentious issues is around this very question, because they can draw a direct correlation between the kind of term of protection that they offer and the cost of health care.
I'd like to thank you for giving me the opportunity to address the committee today.
It's a pleasure to be here to provide my views on the TPP.
I'm a lawyer. I deal with international trade and policy. I was many years ago, in the 1970s, a Canadian diplomat. I represented Canada in many international organizations and international negotiations, including at the GATT, at the OECD at the UN Conference on the Law of the Sea, at the OECD at IMCO, and it goes on and on. I have for many years, after leaving the government, practised international trade and policy, and that's where my work has taken me.
Let me address some major points in my introductory comments, and then I'll be pleased to answer questions. I should say that the real expert here this morning, certainly on IP, is Barry Sookman, who's one of Canada's leading experts in this area.
The TPP is part of an evolution of international trade rules inspired by the General Agreement on Tariffs and Trade and furthered by the World Trade Organization. It's part of the progressive development of the rules of law that bind countries together. It evolves from the NAFTA and a range of other trade agreements, multilateral and otherwise, that Canada is a party to. When you look at the TPP, you have to see it in that context. The pillars in the TPP are derived from the multilateral system enshrined in the WTO agreement.
All of this is good. When I was in the government, we were striving to develop rules of international law so that Canada as a middle power would have the certainty of rules of the road—legal rules—and not be subject to power plays by larger nations. Rules are good. It's everything that Canada's foreign and trade policy is about: developing rules. Those have to be good rules, and they have to be rules that comport with Canadian interests, but the whole trend in international trade diplomacy is the quest for legally binding rules between states.
In the domestic context, there have been some negative comments about the TPP. We heard them earlier. I don't intend to join issue with some of those comments, but I would like to give you a more general and, I think, more balanced perspective.
The objective of this committee is to look at the TPP and reach an overall balanced conclusion. It has to be assessed in terms of the balance provided for in the agreement. The agreement is about much more than intellectual property. IP is part of it, an important part of it, but it's only a part of it. A lot of other things in the TPP have to be factored into any assessment.
I might say that in typical Canadian fashion, when we look at international trade agreements, I think we unfortunately tend to look at the defensive aspects, at what we have to give up or where we have to compromise in a negotiated outcome. What we don't do effectively enough is articulate our offensive interests, where we gain by having rules that benefit Canadian suppliers of goods, of services, and of capital in foreign markets. What the TPP does, in short, is provide the certainty for Canadian companies that want to export their intellectual property, their goods, their services, and their capital into foreign markets.
Thank you, Mr. Chairman.
I am a senior partner with the law firm of McCarthy Tétrault, and the former chair of its intellectual property group. I'm an adjunct professor of intellectual property law at Osgoode Hall Law School, where I teach IP.
I'm here today in my personal capacity, not representing any clients.
The TPP has been heralded as a 21st century trade agreement. In my view, both the e-commerce and the IP chapters reflect that.
The e-commerce chapter is truly innovative in that it reduces non-tariff barriers to the use of the Internet and other networks to conduct trade. This gives Canadian businesses the opportunity to do business in the 11 other TPP countries from Canada, and to maintain jobs here in Canada.
Some of the highlights of the e-commerce chapter are as follows:
There are no customs duties on electronic transactions, although taxes can still be imposed.
There are provisions that remove the impediments to the recognition of electronic documents and signatures, something that Canada has already adopted. This is very important for Canadian businesses that want to transact electronically from Canada at a distance.
There are provisions that prevent blocking of market access with respect to trans-border data flows, which in my view again are very important.
These provisions, some of which are related to privacy, have been criticized. In my view, there is flexibility in the TPP to pursue legitimate public policy objectives. The exceptions that are permitted in GATT have been preserved in the TPP. The parties are required to have minimum standards for protection of personal information and anti-spam. Some have claimed that the treaty doesn't go far enough, but this is not a privacy treaty and not an anti-spam treaty, so where the parties landed is what you would expect in a treaty of this sort.
There are robust provisions that protect Canadian culture in the cultural exemption, contrary to what was suggested by Professor Geist.
The TPP prescribes minimum standards for intellectual property protection. Canada played an active role in those negotiations.
The IP chapter, as you heard today, has been subject to criticism. Those criticisms are that the TPP requires significant changes to Canadian law, and will lock Canada into an undesirable IP framework.
In assessing these claims, I submit that this committee should consider the following:
There really are minimal changes to the treaty that are required by Canadian law.
The impacts that had been publicly identified in the aggregate are not very significant, especially in relation to the overall context of the treaty and when you take into consideration the agreements we made in CETA.
Canada is already committed to many of the TPP's IP requirements, including through other international agreements. It seems unlikely that Canada would repudiate or unwind these obligations or need to materially change how they have been implemented here. It also seems unlikely that any particular change we might want to make would merit pulling Canada out of its existing treaty obligations or would merit Canada not joining the TPP.
Intellectual property laws promote innovation and commercialization of IP products. The 21st century, and the fourth industrial revolution, which we have to engage in, rely on intellectual property protection to raise capital, and to foster innovation and commercialization.
The Canadian market, by itself, is too small for Canadian businesses to succeed. Canadian businesses need to compete internationally, including with our largest trading partners, Japan and the United States. Accordingly, Canadian businesses will need to compete in foreign markets under those IP regimes in place in those foreign markets whether Canada joins the TPP or not, and whether a Canadian business moves to the United States or not; that's the regime under which they have to compete to be successful.
I was focusing on that, so I'm sorry if that wasn't clear.
When you look at the position of the average Canadian, that's actually a complicated question, because the average Canadian is interested in jobs, in having many opportunities available to them, and in having a variety of goods and services at an economically competitive price. There are obviously in the TPP a number of factors that affect that, at both the micro level and the macro level.
At the macro level, what's important, at least from the IP provisions, is to have a robust framework that promotes innovation and promotes capital, because that promotes high-paying jobs and that promotes goods and services that are competitive. In my view, if that is successful for business, that's also successful for Canadians who work in businesses and also for Canadians who are consumers.
On the pharma side, I'm not an expert. There was a recent study that looked at the impact of drug prices associated with free trade agreements. It looked at the impact of drug prices in countries in which the United States entered into FTEs and actually found that there was no material increase in prices. The other thing I'd point out is that in other countries such as Europe they have more robust patent protection, and yet their prices are lower than Canada's, so there isn't a one-to-one relationship.
On the patent restoration, which is the major change and which we've already agreed to in CETA—so it's there in any event—there is a question about the extent to which there would actually be an increase in the prices of drugs. The reason is, it's meant to deal with delays in the approval of drugs that are caused by the regulatory process, and not caused—
Thank you for the question, and thank you for getting Tétrault right previously. We have it all right.
There are changes in the copyright area, and several in the patent area. In the copyright area, the chief one that's been identified is the requirement to amend the term of copyright from 50 years to 70 years of the life of the author. In terms of that context, approximately 90 countries around the world already have protection at 70 years or more, so it's not like this is out of the blue and is reflecting some unique perspective of the United States. It's actually now becoming the international norm.
In terms of the costs of that, which Mr. Geist was referring to—that $55 million—there was a study that was just released by Professors Barker and Liebowitz that looked at the New Zealand study he cited and came to the conclusion that it was seriously flawed. In fact, when he looked at the costs and the benefits, it might actually be of some benefit to New Zealand. So there would be a change.
There are many policy reasons, which I won't get into because of the time—you only have five minutes—that would support the term extension. I dealt with that in a very lengthy blog.
There is another amendment that would be required with respect to rights management information. That has been exaggerated, in terms of what it is. It's actually a very narrow amendment that would create a criminal offence for removing rights management information for profit, in other words, a commercial entity that's facilitating piracy. It's hard to see why, from a public policy perspective, that would be a problem.
Thank you very much for your question. I apologize for answering in English. I actually grew up in Montreal, but my French is so rusty I'd be worried about giving everybody in the room tetanus, so I'm going to answer in English.
The e-commerce provisions are one of the innovative features in the treaty. They're not in CETA; they're not in NAFTA; they're not in GATT. They recognize that trade in the 21st century is quite different from what it had been. We now have powerhouses in Silicon Valley—the Googles, the Facebooks, and others—which we hope we can develop in Canada. Those have made major, major inroads into foreign countries. They found in some of those countries that there were effectively attempts to block their market access. The goal of the e-commerce chapter was to take the GATT's framework, which not only dealt with tariff barriers but started to deal with non-tariff barriers, and to look at what were going to be the barriers in the 21st century, and to then try to deal with those in the same way that the GATT and others dealt with other non-tariff barriers. So when you look at e-commerce, some of the barriers related to recognition of signatures and documents, one out of the way, and they've done that in a very elegant manner by referring to two international documents. They've set out a whole set of rules as one provision, but it has very extensive implications and benefits for Canadian businesses.
It also has benefits with respect to transborder data flows. If you think about Canada, we actually have a very sophisticated IT sector that is very good with networks. There is the potential benefit that we could leverage all those technologies and do business in other countries. In fact, some of our major FIs today run their foreign affiliates from Canada, so we want to be sure they're able to continue to do that.
There are some exemptions for FIs in the commerce chapter, but in general it restricts non-tariff barriers that are specifically related to e-commerce.
On automotive, if we aren't part of the TPP, we'll be competing in the U.S. market with lower-cost suppliers like the Mexicans. Plants and investments will move to Mexico, because Mexico will be able to get duty-free entry for their automobiles into the U.S. market easier, or at a lower threshold, than we can. We will be stuck with our NAFTA requirements, which is 62.5% NAFTA content, in the TPP. If we're not there, the Mexicans will have a lower threshold. They will be able to source lower-cost inputs and compete with lower-cost automobiles that they manufacture in competition with our Canadian producers in the U.S. market.
I don't see why any automotive company would not want to be part of the TPP. Do they want to compete with higher-priced products in the U.S. market? We sell most of our automobiles in the U.S. market. It doesn't make sense to me. As well, we mustn't forget that parts suppliers, like Linamar and Linda Hasenfratz, for example, have said they agree that the TPP is of great benefit to Canadian parts suppliers.
On those two grounds, I think the TPP is of advantage to us and we have to think about the downside if we are not part of the TPP.
On labour mobility, what the TPP does—and I don't know if this is answering all of your questions, Mr. Van Kesteren—is to provide greater mobility to allow Canadian companies to send experts, workers, and technicians abroad to service contracts in foreign markets. That labour mobility part of the TPP is very important. It doesn't prevent Canada from maintaining some standards on labour mobility, but it allows our companies to transfer technicians, employees, experts, into foreign markets, which they can't do now. I think that's of great benefit to Canadian employees and a great boon for Canadian jobs, and I hope that would be taken into account by this committee.
There actually was a consultation that I did attend, but let me answer the question by reference to the actual provisions in the TPP.
When you look at them you can see the fingerprints of the Canadians all over them.
Now, to non-experts in IP, it's just 6,000 pages, and the TPP IP provisions are a portion of them. However, I'm very familiar with a number of the provisions, and when you look at those provisions and you look at those footnotes, and then you talk to the negotiators you will see that Canada had a very clear strategy of maintaining many of the flexibilities that we already have in our law. There are a lot of very unique provisions or exceptions in it.
I can't tell you about the consultations, but I can tell you in looking at the changes, which are minimal, and looking at how Canada got to the position where there were so few changes because of all of the exceptions and caveats, that our negotiators did a really good job.