U.S. NAFTA consult targets CanCon, copyright, data rules

American companies and organizations took aim at Canadian cultural protections, the country’s copyright regime and expressed concern over any potential rules requiring domestic storage of data, when given the chance to provide feedback to their government on priorities to tackle in a renegotiated North American Free Trade Agreement (NAFTA). The U.S. Trade Representative received 12,453 comments before its June 14 deadline as part of its public consultation into the modernization of the free trade agreement between the U.S., Canada and Mexico, which came into force in 1994. The department also began a three-day public hearing Tuesday for those who wished to provide oral testimony for the renegotiation the U.S. triggered in May. “The U.S. and our NAFTA partners could benefit from modernizing the NAFTA intellectual property provisions, incorporating digital trade rules into the NAFTA, and building on the market access achieved in 1994,” the Motion Picture Association of America (MPAA) said in its submission, adding that the agreement, “in its current form, is not equipped to effectively tackle the challenges of today’s online marketplace nor harness the opportunities.” Standing in the way of those opportunities would be rules requiring data to be stored locally in the country a business is operating in, according to numerous commenters. There aren’t any federal rules in Canada, but the provinces of British Columbia and Nova Scotia both have rules that require public bodies to store information in Canada. “While U.S. internet companies have significant footprints in Mexico and Canada, American digital and e-commerce exporters still face considerable barriers in these markets,” said a submission from the Internet Association, which represents more than 40 Internet companies, such as Amazon.com Inc., Facebook Inc., Netflix Inc., Snap Inc., Twitter Inc., and Alphabet Inc.’s Google. “Various market access, regulatory, liability, licensing, and operational barriers continue to limit the growth of these companies.” The Internet Association said it wanted to see a new digital economy chapter in NAFTA that prohibits “governments from restricting the movement of information across the internet,” or from requiring that “data be stored or processed locally.” A renegotiated NAFTA should address localization requirements for licensing, which “impose unnecessary costs by requiring US satellite service providers to have additional facilities and personnel at times above what is required by the business for only administrative reasons” for “establishing and maintaining data centers, primary or secondary facilities, gateways, and control centers,” according to EchoStar Corp., which operates geostationary satellites and provides broadband satellite service. The Entertainment Software Association (ESA) also said that “well-intentioned laws that nevertheless promote localization, protectionism and other restrictions on data flows under the guise of privacy and data security, are counterproductive and impose unnecessary burdens on the industry.” The association, which represents “nearly all of the major video game publishers and video gaming platforms” in the U.S. added that “forcing video game companies to store data within each country where they do business is not financially viable and ultimately interferes with the ability of companies to expand and hire more American workers or to reach consumers in new markets.” Small and medium-sized businesses are also at risk with data-localization policies, said an association that represents more than 5,000 app makers and connected device companies. These companies “do not have the resources to build or maintain unique infrastructure in every country in which they may do business, and such requirements effectively exclude them from commerce,” ACT- The App Association said. Canada’s notice-and-notice copyright regime, which requires Internet Service Providers (ISPs) to pass along letters from copyright holders to users allegedly engaging in infringing activities, was also flagged as a sore point for Americans. ESA’s submission said Canada’s notice-and-notice regime has, “in ESA’s experience, proven to be largely unhelpful in deterring online infringement, in part because of its very nature. For example, an appreciable number of web sites that provide access to infringing game files are now using ISPs in Canada for hosting services,” since the regime doesn't include any provisions for taking down content. The Directors Guild of America (DGA) said that “impact of digital theft cannot be overstated — it has literally changed the nature of the motion picture and television business.” Unlike the Internet Association, which called for codified safe-harbour rules to protect third parties like ISPs from liability, the directors called for NAFTA to go in the opposite direction. The rules found in American copyright legislation worked when introduced in 1998, but have since “become debilitating for our creators due to two decades of ill-advised court decisions.” Namely, that “courts have found that ISPs whose entire business involves the downloading or streaming of copyrighted movies and TV shows qualify for the Section 512 safe harbor and, as a result, creators cannot prevent these companies from exploiting and monetizing their works.” NAFTA should obligate the Canadian government to modify the ISP liability framework so that they have to “take action when they become aware of infringing activity on their services, and confine limitations on liability to ISPs that meet certain conditions and do not control, initiate or direct infringements,” according to the International Intellectual Property Alliance, which also said the new agreement should make the federal government bring copyright terms in line with “minimum global standards” — i.e., extending the term to from 50 years to 70. Copyright was also raised by the National Football League (NFL), which used the consultation to further press its case against the CRTC’s prohibition of simultaneous substitution of Canadian ads for American ones during the broadcast of the Super Bowl on Canadian channels. The NFL said that “Canada has a long history of discriminating against U.S. copyright interests and has consistently appeared on the ‘Watch List’ or ‘Priority Watch List’ produced annually by the U.S. Trade Representative to identify countries neglecting their trade and intellectual property obligations,” and that “Canada’s discrimination against the NFL bears similarities to two prior efforts by Canada to discriminate against U.S. television programming and sports-related advertising.” These were separate actions in the mid 1990s, the NFL said, pointing to when Canada “threatened to block Country Music Television from Canada, and to restrict the access of Sports Illustrated and other U.S. magazines to local Canadian advertising.” Both of these were abandoned when the U.S. “responded firmly to enforce U.S. rights under NAFTA,” the NFL said, adding that it was urging the U.S. administration to again “use all means available to respond to Canada’s costly discrimination against a U.S. copyright holder.” The MPAA noted it “supports Canada’s simultaneous substitution of advertising to broadcasts, including special events,” in its submission. “Simultaneous substitution provides the Canadian broadcaster an independent source of revenue, increasing the value of broadcasts for Canadian broadcasters. NAFTA should affirm that simultaneous substitution is permitted without exception.” Canadian exclusions in the existing agreement for culture also raised hackles among many who submitted comments to the U.S. Trade Representative. Canada’s cultural exemptions enable it to “establish quotas, subsidies, and taxes that disadvantage U.S. publishers of books, magazines, newspapers, and video and audio recordings. This policy also restricts consumer choice by reducing availability of content to consumers,” said the Interactive Advertising Bureau. “Where cultural exemptions are effectuated through the tax treatment of advertising services, these policies raise additional legal uncertainties and technical challenges in the digital advertising context.” The U.S. film and TV industry “do not benefit from the market opening disciplines of NAFTA with regard to the Canadian market, while Canadian industries have full access to the U.S. market,” the MPAA noted, saying the Canadian “cultural carveout” is “inconsistent with the principles of free and fair trade.” It said that “cultural promotion and open markets are compatible and complementary,” and that the association is “committed to the promotion and protection of cultural diversity,” which has been one of Heritage Minister Mélanie Joly’s buzz phrases over the past few months. “Canada should provide full national treatment to U.S. copyright holders,” the Recording Industry Association of America (RIAA) said in its submission, adding that “in some important respects, Canada fails to provide U.S. artists and record labels national treatment under the Canadian Copyright Act, which raises serious questions regarding Canada compliance with its NAFTA commitments.” RIAA said this is in “stark contrast” to the situation in the U.S. where “Canadian labels and performers enjoy full national treatment, even with respect to rights that go beyond U.S. international obligations and the protections to be found in Canadian law.” The Information Technology Industry Council said a new services chapter in NAFTA should “prevent the parties from discriminating against new services — in other words, services yet to be conceived,” along with ensuring that “companies can distribute audiovisual and media content digitally, without government-mandated local content requirements, national treatment restrictions, and market access restrictions.” NDP Heritage critic Pierre Nantel had previously raised the alarm about the future of Canadian culture following NAFTA negotiations, saying that Quebec culture especially could be at risk if cultural protections are removed. Canadian consultation on a renegotiated NAFTA continues, with the government accepting comments via an online portal or through written submissions until July 18. — With reporting by Charelle Evelyn at cevelyn@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

U.S. NAFTA consult targets CanCon, copyright, data rules

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