Peter Gallagher

In com­pany with some indus­try groups, such as the Aus­tralian Dig­i­tal Alliance (com­pris­ing national and state and uni­ver­sity libraries and senior Aus­tralian jurists—ADA’s sub­mis­sion on ACTA is here), I urged the Aus­tralian gov­ern­ment not to join these nego­ti­a­tions in a sub­mis­sion to the Depart­ment of For­eign Affairs and Trade (DFAT).

Although there has been min­i­mal press cov­er­age of this pro­posed treaty, highly-credentialed copy­right experts are also express­ing their con­cern. William Patry—an expert on US copy­right leg­is­la­tion, for­mer copy­right coun­sel to the US House Judi­ciary Com­mit­tee and now Senior Copy­right Coun­sel to Google—has attacked the objec­tives and lack of trans­parency of the negotiations.

I agree with Patry’s crit­i­cisms. I believe that this nego­ti­a­tion has other detri­ments, too, for the WTO’s open and consensus-based frame­work that I out­lined in an email I sent to the Aus­tralian nego­tia­tors in Feburary:

I agree with jurists and librar­i­ans in the Aus­tralian Dig­i­tal Alliance (not to men­tion the mem­bers of the government’s for­mer Copy­right Law Reform com­mit­tee) who say that our own copy­right leg­is­la­tion is already imbal­anced in favor of rights hold­ers. But my objec­tions to this pro­posed negotiation/treaty are made from a trade-analysis perspective.

Two rea­sons for concern:

1. This will be one of the first (if not the only) trade nego­ti­a­tion con­cern­ing an oblig­a­tion specif­i­cally cov­ered by an exist­ing WTO Agree­ment to be launched out­side WTO with­out any prior attempt to address the sup­posed prob­lems first in the exist­ing mul­ti­lat­eral frame­work (e.g. in the Doha agenda). There may be noth­ing objec­tion­able in the nego­ti­a­tion of a trade agree­ment out­side WTO even when the domain (TRIPS) is already cov­ered in WTO. But to do so with­out first attempt­ing to address the sup­posed issues in WTO first is a cyn­i­cal act that shows very lit­tle con­cern for the cred­i­bil­ity of the system.
2. The implau­si­bil­ity of the “$200 bil­lion” prob­lem as stated in e.g. the Minister’s press release. This is what the OECD doc­u­ments say is the basis for this par­tic­u­larly shoddy claim:

24. A model was devel­oped using cus­toms inter­cep­tion data (adjusted for known biases) to estab­lish an indi­rect esti­ma­tion frame­work. Run­ning the model resulted in the devel­op­ment of two sets of data which estab­lished (i) the prod­uct cat­e­gories in inter­na­tional trade that were most likely to be coun­ter­feit or pirated and (ii) the economies that were most likely to be sources of such goods.

25. The two sets of data were then com­bined to develop a matrix indi­cat­ing the rel­a­tive like­li­hoods that imports of spe­cific prod­ucts from spe­cific economies would be coun­ter­feit or pirated. Fur­ther analy­sis based on a com­bi­na­tion of this matrix and inter­na­tional trade data (landed cus­toms value basis) led to the con­clu­sion that up to USD 200 bil­lion of that trade could be in coun­ter­feit or pirated prod­ucts. This amount is larger than the national GDPs of about 150 economies around the world. The value of actual cus­toms inter­cep­tions is far below this, which means that cus­toms author­i­ties are only inter­cept­ing a small frac­tion of the actual trade in coun­ter­feit and pirated products…

As a trade ana­lyst¹, I have to say that this looks like a manip­u­la­tive model. Who knows what ‘cus­toms inter­cep­tion’ data reflect (sus­pi­cions? alle­ga­tions? ran­dom checks? checks for other, or for mul­ti­ple, infringe­ments?) or what the ‘adjust­ments’ made by the mod­el­ers were. But to apply this un-verified set to global direction-of-trade data to come up with a sup­posed ‘poten­tial’ coun­ter­feit trade (as if the inter­sec­tion of the matri­ces showed ‘hard’ num­bers) and then to pub­lish the alarm­ing sup­po­si­tion ($200billion) in the first sen­tence of the paper is just spin.

I’m not sure what the motives of the Aus­tralian gov­ern­ment are in join­ing this ‘nego­ti­a­tion’ (With WHOM, inci­den­tally, are we ‘nego­ti­at­ing’?). But I can more con­fi­dent in assess­ing the motives of the other proponents.

1. The US espe­cially, but also the EC, got a huge wind­fall out of TRIPS and are look­ing to repeat it (at the cost of devel­op­ing coun­tries, mostly). Here (attached image) is some World Bank data from much more rep­utable trade ana­lysts (a paper by Mike Fin­ger for the ADB [See Tables 3 and 4]) that shows the rela­tion­ship between the UR gains from patents rents and the UR gains from tar­iff reduc­tions. China’s oblig­a­tions (mea­sured as trans­fers of the eco­nomic rent) are esti­mated to be 5 times greater in TRIPS than in tar­iffs. Copy­right oblig­a­tions alone were almost the same size as its tar­iff obligations.
2. The pro­po­nents of this overblown idea know that they have zero prospects of get­ting con­sen­sus on their objec­tives in WTO (or in WIPO).

I urge you to get out of these talks or to sit on your hands. This ACTA ‘coali­tion’ is bad for us (espe­cially since it can­not lead to a con­sen­sus), bad for the sys­tem and bad for our ambi­tions in our bilat­eral trade nego­ti­a­tions, too.

I am told that the Aus­tralian Gov­ern­ment has not yet made a deci­sion to join an ACTA treaty, but is par­tic­i­pat­ing in the “nego­ti­a­tions” in order to be informed of its content.

1. I was the DFAT nego­tia­tor respon­si­ble, among other things, Australia’s par­tic­i­pa­tion in the TRIPS nego­ti­a­tions dur­ing the first half of the Uruguay Round from 1986 to 1990.