Special Interests Co-opting Free Trade Agreement

Derek Khanna
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Posted: Dec 22, 2013 12:05 AM
Special Interests Co-opting Free Trade Agreement

Recently, Wikileaks published a portion of the Trans-Pacific Partnership (TPP) Treaty. The leaked chapter was on intellectual property, and it demonstrates how the US Trade Representative must fix this portion of this massive treaty before it is signed to protect the free market from cronyism, and to ensure that we are not locked into imprudent policies.

The treaty process is in flux, so provisions can still change, but as drafted, the treaty has numerous significant problems for anyone with basic concern for the free market and Constitution– three of them are addressed here.

1. The treaty locks in international copyright terms at an absurdly long term, limiting Congress’s ability to ever reassess copyright term lengths.

2. It makes any permanent solution on phone unlocking illegal.

3. And the treaty had been negotiated under unacceptable and perhaps unprecedented secrecy for a trade deal (specifically not including important stakeholders).

Economists and legal scholars have long complained about the current “life + 70” copyright term as being excessively long and causing economic harm; as a comparison, the Founders’ copyright term was 14 years.

A copyright term length of life + 70 is clearly excessive. While there have been many studies on the matter, there is no empirical data that life + 70 is an appropriate copyright term length. Richard Coase, Milton Friedman and 14 other free market economists filed a brief explaining this “lengthened copyright term . . . keeps additional materials out of new creators' hands.” Ultimately it results in “fewer new works” and “higher transaction costs in the creation of some works.” The brief explained that life +70 was both inefficient and that it also “reduces consumer welfare.”

Despite, or because, the conservative movement having been opposed to life + 70, now the White House is seeking to internationalize life + 70 copyright terms to ensure that we can never restore constitutionally consistent copyright.

Term lengths must be implemented, assessed and revised as is best for the economy; rather that locked in by special interest lobbyists through international treaty. Milton Friedman has referred to the specific terms of copyright as a matter of “expediency” to be determined by “practical considerations.” Friedrich Hayek, known for his defense of property rights, called for “drastic reforms.” Liberal interest groups goal is to usurp the policy making process so they never have to debate these issues in Congress.

Congress should deliberate this issues on its merits, and supporters must justify life +70 copyright terms. Currently Congress is reviewing copyright policies, and this is a top issue for them to consider for serious revision. And in 2018, when special interests lobby for life + 90 terms, Hollywood will have to justify that as well as it will be clearly inconsistent with the Constitution.

Effectively, the TPP treaty would ensure that Congress could never restore Constitutional copyright – as the Constitution requires copyright be for “Limited Times” to “promote” the “sciences and useful arts.” Incredibly, Mexico proposes that terms be extended to life +100, and as of August (last public data point) the US did not object to that proposal. For the special interests lobbyists pushing these policies for Hollywood, tying Congress’s hand is a feature not a bug. And it’s particularly egregious as Congress is currently investigating potential major overhauls to copyright law.

In January the Librarian of Congress made it a felony to unlock your phone, punishable by 5 years in prison and a $500,000 fine. Unlocking is altering software on your phone so it can be used on another carrier, and it’s an important part of how the mobile market functions. This ban on unlocking is a fundamental violation of property rights, essentially saying that consumers don’t their phones.

After we launched a national campaign on this issue, which included a White House petition with 114,000 signatures, the White House came out in favor of unlocking. The one bill which permanently legalized unlocking, H.R. 1892, has received widespread bipartisan support from outside groups. Many conservative and free market groups also came out in favor of unlocking including Generation Opportunity, FreedomWorks, R Street, Habour League, Let Freedom Ring, and scholars from Mercatus and the Competitive Enterprise Institute.

TPP, as drafted, would make any permanent legalization of beneficial technologies like unlocking and also accessibility technologies as impossible (including H.R. 1892). Again, TPP would make restoring the free market to phones as illegal and would essentially mean that consumers do not own their own phones. TPP would ensure that the Librarian of Congress would be continued to be delegated the authority to decide which technologies are legal in America.

Incredibly, while the White House publicly supports unlocking and the free market, it is then privately negotiating for a treaty that would rig the market and ban any potential permanent solution. Congress must permanently legalize beneficial technologies, rather than add additional bans on these technologies in treaty language making it even harder for Congress to restore the free market. Our 21st century economy needs an even playing field for innovation, not picking winners and losers and discouraging new market models. Overall, while TPP is being negotiated for free trade, these provisions are anything but free trade and are done at the behest of special interest groups rather than sound policy making.

Lastly, this treaty has been shrouded in unprecedented secrecy for a trade deal. As Congressman Jared Polis (D-CO) shared:


"While I have previously reviewed the secret text in a room with our negotiators, I was unable to share the contents even with my own staff. I am glad that at least some drafts are now public so others can comment on them and help me figure out what changes we should push for to protect internet freedom and the fair use economy."

While Congressional staff and the general public aren’t allowed to read this treaty (including myself as a previous Congressional staffer), industry representatives for particular industries are given special access to read and influence the treaty, and now we know why. The White House didn’t want the public to know what was being negotiated in our name. The White House didn’t want the public to know that when they claim to support policies like unlocking they are secretly negotiating to making them illegal through a treaty.

Recently Congressman Polis and Congressman Thomas Massie (R-KY) sent a letter to the US Trade Representative requesting transparency and expressing disappointment that businesses and academics “have not been able to meaningfully participate in the treaty process.” Important stakeholders were not allowed to participate and in particular emerging technologies companies were denied the ability to contribute or participate.

The letter expresses concern for the TPP Treaty by explaining that “Intellectual property is a dynamic policy area in which preserving Congress’ ability to adapt to the changing nature of technology is absolutely critical for the United States and our trading partners.” The letter called for the secret treaty to be publicly released before the agreement is signed.

Copyright is an important part of incentivizing content creation and needs to be protected, but copyright must be consistent with the Constitution’s explicit purpose. Tying Congress’s hand through international treaty to ensure that Congress can never restore conservative principles, or Constitutional principles, and using the banner of copyright to ban innovations and competition is not free market and it’s not fair to the American people.

This is a classic example of policy laundering, whereby corporate interests use secretive international forums to bypass the democratic process and the Constitution’s intended limitations. Free trade is good for the economy, so let’s hope that the USTR takes the opportunity to address these and other problems to promote real free trade instead of cronyism.