Poor Canadian IP Protection Poses Risk for North American Growth, Say Hearing Witnesses
The U.S. should recommit resources to border infrastructure in order to increase efficiency in cross border commerce with Canada and Mexico, said House Committee on Foreign Affairs Subcommittee on the Western Hemisphere Chairman Matt Salmon, R-Ariz., at a Jan. 15 hearing titled “NAFTA at Twenty: Accomplishments, Challenges, and the Way Forward on Intellectual Property.” North American economies are poised for continued growth but insecure Mexican border regions and weak Canadian Intellectual Property (IP) rights protection, among other concerns, are impeding the achievement of maximum commercial potential, said Salmon.
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“While NAFTA certainly improved our commercial relationship with both Canada and Mexico, the treaty needs to be able to address 21st century trade challenges,” said Salmon in an opening statement prepared for delivery. “One of these challenges is intellectual property rights protection issues that persist with our Canadian neighbors.” The Canadian government is failing to enforce IP protection and has also opted to decline membership and ratification of international IP treaties, said witness Mark Elliot, Executive Vice President, Global Intellectual Property Center, U.S. Chamber of Commerce.
“Canada is the largest trading partner for the United States -- the bilateral trade totaled $582.4 billion a year, the equivalent of $1.6 billion a day in goods. U.S. exports to Canada totaled $277 billion per year, and as mentioned earlier, IP-industries account for 60 percent of U.S. exports. This makes it all the more bewildering to the business community at how substandard Canada’s IP system is,” said Elliot in written testimony. “Counterfeiting and piracy in Canada are worth approximately $20 to 30 billion annually. These include sporting goods, medicines and personal care products, consumer electronics, pharmaceuticals, automotive parts, apparel, the list goes on. These goods may or may not be safe; they are clearly not regulated and not taxed.”
The Mexican government, in turn, is making impressive strides towards enforcing IP rights, said Elliot. The Trans-Pacific Partnership (TPP) provides an opportunity to address Canadian IP protection insufficiency, said Elliot. “The TPP provides the U.S., Canada, and Mexico the opportunity to stand shoulder-to-shoulder in support of strong IP protections, innovation, and access to the creations and inventions of the 21st century,” said Elliot. “A TPP agreement that includes a high-standard IP chapter is good for jobs and good for international trade. The TPP will also allow Canada to raise its IP standards, promote innovation, and bolster its growing economy.”
Regardless of IP concerns, the total North American GDP will likely rise from $19 trillion today to over $50 trillion by 2050, due in part to integrated production, said Duncan Wood, Director, Mexico Institute. “Today the integration of the manufacturing systems across the North American region has meant that imports from NAFTA partners into the United States in fact involve the repatriation of value that originated in the United States,” said Wood in written testimony. “In the case of Canadian imports into the U.S., 25% of their value, on average, originated in America; in the case of Mexican imports, that figure is 40%. Compare this with only 4% in goods imported from China.”