Don’t trade away our digital future

I read an article in the Herald the other day – High-quality Pacific trade deal vital, says Key – that gave me cause for concern. I read it somewhere en route from Wellington to Dallas for the 12th round of Trans Pacific Partnership agreement (TPP) negotiations.

The reason why I am here, in Dallas, is to advocate for an open Internet under the TPP.

The reason why the article bothered me was because of the trade-off it outlined: if NZ gets better access to US dairy and meat markets, the US gets to change NZ’s intellectual property (IP) laws to suit, namely, the film and music industries. NZ is then effectively stripped of its sovereignty when it comes to shaping aspects of its own IP policy.

(For more on Trade Minister Tim Groser's pro-agriculture, ambivalent-about-technology stance, read Paul Matthews' Groser trades away tech to save agriculture - Editor.)

There are aspects of IP policy – namely digital copyright policy – that are inextricably intertwined with Internet policy, and the film and music industries have considerable influence on digital copyright policy. Plainly speaking, these industries have traditionally enjoyed significant power in shaping Internet policy around the globe.

For example, the laws they lobby for at home and abroad dictate when websites are taken down, or when someone’s Internet is shut off without full due process. Without getting into why these industries have had such power, or even why their power appears to be on the wane (take for example the resistance to SOPA and ACTA), I’d like to touch on what the real repercussions could be for New Zealand if it accepts the US copyright proposals in the TPP that are inspired by these industries (and not other industries - say search engine industries).

In the above article, the US Ambassador to New Zealand was quoted as saying that “guaranteed commercial exclusivity of appropriate duration is what seeds innovation”. With all due respect to the Ambassador, let’s unpack that statement a bit. While I can agree with him in principle, I don’t agree with what the US believes is “appropriate duration”. A lot of economists don’t either.

The US wants New Zealand to extend copyright terms beyond the international standard by 20 years – from the life of the creator plus 50 to the life of the creator plus 70. In other cases, for example sound recordings or films, the US would practically double the duration of protection. Note that Australia agreed to the same copyright extension in its free trade agreement with the US and pays for it dearly. One scholar estimated that the copyright extension has resulted in Australians sending an extra $88 million per year in royalties overseas.*

And another facet of exclusivity – the US wants New Zealand to limit parallel importing, giving copyright owners greater power to segment their markets. New Zealanders are already all too familiar with this idea – try to find a way to purchase Game of Thrones online. You can't, because it's not available for purchase in New Zealand. If I am correct, most TV shows are unavailable for purchase. These types of restrictions could manifest in offline markets as well, or raise the prices of books and DVDs when they are already over-priced. (On a related note, I just visited the Walmart near my hotel and was tempted to buy DVDs to bring back to Wellington. Note that under the US proposals, if I circumvented the region coding to watch my DVDs at home, I could be committing a criminal offence!).

Is a period of exclusivity that lasts two generations an “appropriate duration”? Did Walt Disney create Mickey Mouse based on the expectation that his character would be lucrative for the company long after his death? How many books are sold more than 10 years after first being published? Do we really think that innovation depends on making copyright longer? I’m not convinced. Ironically, these copyright demands could stifle innovation by further restricting access to cultural artifacts that people can use in creating new works. Extending copyright terms and restricting parallel importation is not seeding innovation, it’s extracting rent.

As for the open Internet, the true threat comes in a suite of proposals dealing with Internet intermediaries. New Zealand would be constrained considerably in how it makes law in this area, and constraint in an ever-evolving digital landscape is anathema to innovation. For example, we would be prohibited from creating new and different “safe harbours” for intermediaries, even if future circumstances necessitated it. The US seeks affirmation from all parties that they will adopt the DMCA-style safe harbour scheme that New Zealand has already partially implemented. The US scheme would lock us into only four safe harbours. But what if cloud providers require certain practical exceptions and limitations that will only become apparent to us in a few years time? We won’t be able to legislate for that, nor will we be able to legislate to give New Zealanders a fair use defence that people in the US enjoy. Hardly a level playing field.

Finally, another innovation-killing US proposal worth mentioning eludes the understanding of some of the brightest people I have ever met – people who have a rigorous knowledge of the Internet and how it works. This is the proposal that would give copyright owners an exclusive right over temporary electronic copies.

But the Internet fundamentally depends on making temporary copies.

My heart doesn’t ask why it has to pump blood, or whether it should pump one blood cell and not the other. It just pumps blood. Similarly, as Internet traffic flows around the globe, intermediaries may make temporary copies of data packets in order to distribute them efficiently. The intermediary doesn’t ask what’s in the packet, it just transmits it. If the TPP requires us to give copyright owners exclusive rights over temporary copies, how would intermediaries be able to say that they comply with the law? What would be the cost and other impacts (privacy, for one) of looking at every bit of cached, streamed or buffered data to know if it is authorised? It's unimaginable, just like having your heart vet every blood cell before it sends it on its way.

The article indicates that the Prime Minister believes that the TPP should be negotiated well, not just quickly. The terms of the agreement must make sense for New Zealand before we sign on. I concur, but I also believe that it is crucial that New Zealand’s TPP goals aren’t simply reduced to meat and dairy. These industries are obviously very dear to New Zealand, but the country's burgeoning weightless economies - software companies, IT services, those that depend on the Internet to reach their markets - shouldn’t be marginalised. New Zealand is geographically remote, and the Internet is today's refrigerated shipping. It should be promoted under the TPP, not hobbled by overbearing IP policy.

 Susan Chalmers is policy lead with InternetNZ

*Dr Philippa Dee The Australia-US Free Trade Agreement: An Assessment (Australian National University, 2004)