No trade agreement is necessary for a government to adopt this ideal policy [true free trade]. And because real-world trade agreements universally fail to achieve complete free trade, real-world trade agreements are universally less than ideal. Each such agreement can and should be criticized for failing to achieve an ideal that is economically not only possible, but easily economically possible and immensely beneficial.
But political realities being unavoidable – and freer trade being superior to not-freer trade – freer trade is an acceptable real-world outcome. In my assessment (as in the assessment of many others), most so-called free-trade agreements make trade freer. (A more-accurate name for them would be “freer-trade agreements.”) And for this reason such agreements deserve the support of proponents of free markets if the only plausible option is the status quo of not-freer trade.
For free-market proponents to oppose freer trade because it isn’t fully free trade is akin to opposing cuts in marginal tax rates because the proposed cuts don’t eliminate taxes altogether. It’s akin to opposing legalization of marijuana if not all drugs are legalized. Or akin to a refusal to join with, or to support, those who oppose raising the minimum wage on the grounds that those opponents aren’t actively working for a complete abolition of minimum wages.
It is true that NAFTA, WTO agreements, TPP, and other such bilateral and multilateral freer-trade agreements leave in place many trade barriers and specify the always-too-slow timing of tariff reductions. But these arrangements are no more instruments of “managed trade” than are government policies that prohibit the sale of some drugs, sex, and body organs – and impose taxes on the sales of all other goods, – instruments of “managed consumption.” While I argue for eliminating all of these promotions and taxes, if such elimination isn’t politically feasible, then any move to reduce the number of prohibitions and the rate of taxation will make market freer and, hence, worthy of the support of proponents of free markets.
Don Boudreaux, “Bonus Quotation of the Day…”, Café Hayek, 2016-11-22.
April 20, 2017
QotD: Free trade versus freer trade
April 14, 2016
Why there’s very little “free trade” involved in the TPP
ESR explains why the Trans-Pacific Partnership is such a huge monstrosity of regulations, crony capitalist favours to big business, anti-consumer intellectual property rules, and other mercantilist interventions in trade:
Today there’s a great deal of angst going on in the tech community about the Trans-Pacific Partnership. Its detractors charge that a “free-trade” agreement has been hijacked by big-business interests that are using it to impose draconian intellectual-property rules on the entire world, criminalize fair use, obstruct open-source software, and rent-seek at the expense of developing countries.
These charges are, of course, entirely correct. So here’s my question: What the hell else did you expect to happen? Where were you idiots when the environmentalists and the unions were corrupting the process and the entire concept of “free trade”?
The TPP is a horrible agreement. It’s toxic. It’s a dog’s breakfast. But if you stood meekly by while the precedents were being set, or – worse – actually approved of imposing rich-world regulation on poor countries, you are partly to blame.
The thing about creating political machinery to fuck with free markets is this: you never get to be the last person to control it. No matter how worthy you think your cause is, part of the cost of your behavior is what will be done with it by the next pressure group. And the one after that. And after that.
The equilibrium is that political regulatory capability is hijacked by for the use of the pressure group with the strongest incentives to exploit it. Which generally means, in Theodore Roosevelt’s timeless phrase, “malefactors of great wealth”. The abuses in the TPP were on rails, completely foreseeable, from the first time “environmental standards” got written into a trade agreement.
That’s why it will get you nowhere to object to the specifics of the TPP unless you recognize that the entire context in which it evolved is corrupt. If you want trade agreements to stop being about regulatory carve-outs, you have to stop tolerating that corruption and get back to genuinely free trade. No exemptions, no exceptions, no sweeteners for favored constituencies, no sops to putatively noble causes.
December 13, 2015
The TPP is pretty far from being a genuine “free trade” deal
Last week, Kevin Williamson attempted to explain why the Trans Pacific Partnership isn’t all that similar to an actual “free trade” agreement (and why that’s so):
Prominent among the reasons to look askance at TPP is that its text calls for the incorporation — sight unseen — of whatever global-warming deal is negotiated at the conference currently under way in Paris. It is one thing for a trade deal to incorporate changes to environmental practices — regulatory differences are an inhibitor of truly liberal trade — but there is a world of difference between incorporating specific environmental policies and incorporating environmental policies to be named later.
It would be preferable if we could simply enact a series of bilateral “Goldberg treaties,” so called in honor of my colleague Jonah Goldberg, who argued that an ideal free-trade pact would consist of one sentence: “There shall be free trade between …” But the unhappy reality is that the snouts of the nations’ sundry regulatory apparatuses are so far up the backsides of various industries and economic sectors that sorting them out requires thousands of pages of text. Consider, for example, the problem of defense-acquisition practices. Some countries have rules mandating that defense procurement be restricted to domestic firms, and some countries don’t. Coming up with a harmonized, one-size-fits-all approach is difficult; we Americans, accustomed as we are to operating in an economy that produces the best of almost everything in the world, sometimes forget that there are countries with no domestic aerospace industry or sophisticated manufacturers of military materiel. Of course Kuwait goes abroad for military gear; if memory serves, at one point their air force uniforms were made by Armani.
[…]
All of which is to say, we should expect trade deals, especially multi-lateral trade deals, to be complex, and we should expect environmental and labor standards, along with government procurement procedures and the like, to be part of the accord. There’s no getting around it. And, again, there is nothing wrong in principle with using trade accords, which have real economic bite, as a critical instrument for enforcing environmental rules and other regulatory reforms that are incorporated into trade relationships. But using TPP to commit the United States to whatever is cooked up in Paris, without an additional vote in Congress, is a poor tradeoff. It’s not often that I will turn up my nose at a trade deal — even far-from-perfect trade pacts are generally desirable — but here we should draw the line. TPP was negotiated, Congress and the public have had a chance to review the text, and Congress should reject it. That’s the system working, not the system failing to work. It’s why we have votes.
December 2, 2015
What did the ministry officials tell new minister Mélanie Joly about copyright?
Michael Geist commends the federal government for transparency when they published the briefing information provided to new Heritage minister Mélanie Joly, but points out that the information isn’t complete:
Last week, Canadian Heritage posted the Ministerial briefing book that officials used to bring new minister Mélanie Joly up-to-speed on the issues in her portfolio. The proactive release is a great step toward further transparency. While the mandate letter from the Prime Minister provides insight into government policy priorities, the briefing book sheds light on what department officials view as priorities and how they frame key issues.
The copyright presentation is particularly revealing since it presents Minister Joly with a version of Canadian copyright lacking in balance in which “exceptions are always subject to certain conditions” but references to similar limitations on rights themselves are hard to find. Department officials present a frightening vision of emerging copyright issues, pointing to mandated Internet provider blocking, targeting copyright infringement that occurs on virtual private networks, and “hybrid” legal/illegal services that may be a reference to Canadians accessing U.S. Netflix. The suggestion that Canadian Heritage officials have identified site blocking or legal prohibitions on VPN or U.S. Netflix usage as emerging copyright issues should set off alarm bells well in advance of the 2017 copyright reform process.
So what didn’t officials tell Minister Joly? The reality is that the Minister would benefit from a second presentation that discusses issues such as:
- the emergence of technological neutrality as a principle of copyright law
- how Canada may be at a disadvantage relative to the U.S. given the absence of a full fair use provision
- the growth of alternate licensing systems such as Creative Commons
- how term extension for sound recordings was passed even though the issue was scarcely raised during the 2012 reform process
- why extending the term of copyright (as proposed by the TPP) would do enormous harm to Canadian heritage.
Yet none of these issues are discussed in the briefing.
November 20, 2015
Canada’s dubious gains from the TPP
Michael Geist gives an overview of the pretty much complete failure of Canadian negotiators to salvage anything from the Trans-Pacific Partnership agreement:
The official release of the Trans Pacific Partnership (TPP), a global trade agreement between 12 countries including Canada, the United States, and Japan, has sparked a heated public debate over the merits of the deal. Leading the opposition is Research in Motion founder Jim Balsillie, who has described the TPP as one of Canada’s worst-ever policy moves that could cost the country billions of dollars.
My weekly technology law column […] notes that as Canadians assess the 6,000 page agreement, the implications for digital policies such as copyright and privacy should command considerable attention. On those fronts, the agreement appears to be a major failure. Canadian negotiators adopted a defensive strategy by seeking to maintain existing national laws and doing little to extend Canadian policies to other countries. The result is a deal that the U.S. has rightly promoted as “Made in America.” [a video of my recent talk on this issue can be found here].
In fact, even the attempts to preserve Canadian law were unsuccessful. The TPP will require several important changes to domestic copyright rules including an extension in the term of copyright that will keep works out of the public domain for an additional 20 years. New Zealand, which faces a similar requirement, has estimated that the extension alone will cost its economy NZ$55 million per year. The Canadian cost is undoubtedly far higher.
In addition to term extension, Canada is required to add new criminal provisions to its digital lock rules and to provide the U.S. with confidential reports every six months on efforts to stop the entry of counterfeit products into the country.
November 19, 2015
“Changing Canada’s copyright term … means two decades where zero historical work enters the public domain”
There may be good parts of the Trans-Pacific Partnership deal, but there are emphatically bad parts, as Jesse Schooff describes in the particular case of the arbitrary extension of copyright in Canada from fifty years to seventy years:
One of the TPP areas of scope which is critical to discuss is the section on copyright. At this point, several notable bloggers* have covered the TPP’s copyright extension provisions in great detail. But what do those provisions mean for you? Let’s bring it down to the ground. For example: folks in my demographic seem to love seeing old-timey photos of their city. Here in Vancouver, exploring our retro-downtown through old photographs of various eras is practically an official pastime.
A quality source of such photo collections is a city’s municipal archives. Traditionally, an archives’ mandate is to store physical objects and documents, which include the physical “analog” photos taken during most of the 20th century. “Great!” someone might say, “the archives can just digitize those photos and put them up on their website, right?”
Let’s ignore the fact that the solution my strawperson proposes has a host of logistical issues attached, not the least of which is the thousands of work-hours required to digitize physical materials. Our focus is copyright — just because the archives has the original, physical photo in their collection doesn’t mean that they own the rights to it.
You have to remember that our newfangled, internet-enabled society is relatively new. When I was a child, if a person wanted to see a historical photo from a city archives, they would actually have to physically GO to said archives and ask an archivist to retrieve the appropriate fonds containing the photo. Journalists and other professionals likely did this regularly, but for the most part, the public at large didn’t usually head down to a municipal building and ask an archivist to search through their collection just to look at a few old photos.
Today, things are much different. If a municipal archives has digitized a significant portion of, say, their collection of 19th and 20th century historical photos, then those photos can be curated online; made accessible to the public at large for everyone to access, learn from, and enjoy!
[…]
Some of the photos, we’ll call them “Group A”, were explicitly released into the public domain by the photographer, so those are okay to use. Another bunch, “Group B”, are photos whose photographer died more than fifty years ago (1965 and before); any copyright on these photos is expired. Some “Group C” photos were commissioned by a businesses, or the rights were specifically sold to a corporation, which means that the archives will have to get permission or pay a fee to make them available online. Most frustrating is the big “Group D”, whose authorship/ownership is sadly ambiguous, for various reasons**. It would be risky for the archives to include the Group D photos in their collection, since they might be violating the copyright of the original author.
So already, knowing and managing the tangle of copyright laws is a huge part of curating these event photos. Hang on, because the TPP is here to make it even worse.
It’s been long-known that the United States is very set on a worldwide-standard copyright term of seventy years from the death of the author. Sadly, such a provision made it into the TPP. Worse still, a release by New Zealand’s government indicates that this change could be retroactive, meaning that those photos in my hypothetical “Group B” would be yanked out of the public domain and put back under copyright.
August 6, 2015
Michael Geist on the latest TPP leaks
As you’d expect from a set of negotiations — secret negotiations, at that — what the politicians say about it doesn’t necessarily have much to do with reality:
KEI this morning released the May 2015 draft of the copyright provisions in the Trans Pacific Partnership (copyright, ISP annex, enforcement). The leak appears to be the same version that was covered by the EFF and other media outlets earlier this summer. As such, the concerns remain the same: anti-circumvention rules that extend beyond the WIPO Internet treaties, additional criminal rules, the extension of copyright term, increased border measures, mandatory statutory damages, and expanding ISP liability rules, including the prospect of website blocking for Canada.
Beyond the substantive concerns highlighted below, there are two key takeaways. First, the amount of disagreement within the chapter is striking. As of just a few months ago, there were still many critical unresolved issues with widespread opposition to (predominantly) U.S. proposals. Government ministers may continue to claim that the TPP is nearly done, but the parties still have not resolved longstanding copyright issues.
Second, from a Canadian perspective, the TPP could require a significant overhaul of current Canadian law. If Canada caves on copyright, changes would include extending the term of copyright, implementing new criminal provisions, creating new restrictions on Internet retransmission, and adding the prospect of website blocking for Internet providers. There is also the possibility of further border measures requirements just months after Bill C-8 (the anti-counterfeiting bill) received royal assent.
Given the extensive debate on copyright during the 2012 reforms, the TPP upsets the balance the Canadian government struck, mandating reforms without public consultation or debate. The government has granted itself the power to continue to negotiate the TPP during the election period, but all the major parties should publicly declare where they stand on these issues.
March 22, 2015
July 7, 2014
What is the Canadian government hiding over TPP negotiations? Everything.
Michael Geist on the federal government’s secret dealings on the TPP docket:
The next major agreement on the government’s docket is the Trans Pacific Partnership, a massive proposed trade deal that includes the United States, Australia, Mexico, Malaysia, Singapore, New Zealand, Vietnam, Japan, Peru, and Chile. While other trade talks occupy a prominent place in the government’s promotional plans, the TPP remains largely hidden from view. Indeed, most Canadians would be surprised to learn that Canada is hosting the latest round of TPP negotiations this week in Ottawa.
My weekly technology law column (Toronto Star version, homepage version) argues the secrecy associated with the TPP – the draft text of the treaty has still not been formally released, the precise location of the Ottawa negotiations has not been disclosed, and even the existence of talks was only confirmed after media leaks – suggests that the Canadian government has something to hide when it comes to the TPP.
Since this is the first major TPP negotiation round to be held in Canada, there was an opportunity to build public support for the agreement. Yet instead, the Canadian government approach stands as one of the most secretive in TPP history. Why the secrecy?
The answer may lie in the substance of the proposed agreement, which leaked documents indicate often stands in stark contrast to current Canadian policy. The agricultural provision may attract the lion share of TPP attention, but it is the digital issues that are particularly problematic from a Canadian perspective.
For example, late last month the government announced that new copyright rules associated with Internet providers would take effect starting in 2015. The Canadian system, referred to as a “notice-and-notice” approach, is widely viewed as among the most balanced in the world, providing rights holders with the ability to raise concerns about alleged infringements, while simultaneously safeguarding the privacy and free speech rights of users.
January 14, 2014
November 14, 2013
If you like DRM in your computer, you’ll love it in your car
The Electronic Frontier Foundation thinks that extending the DRM regime to cars (as in the latest vehicle from Renault) will drive consumers crazy:
Forget extra cupholders or power windows: the new Renault Zoe comes with a “feature” that absolutely nobody wants. Instead of selling consumers a complete car that they can use, repair, and upgrade as they see fit, Renault has opted to lock purchasers into a rental contract with a battery manufacturer and enforce that contract with digital rights management (DRM) restrictions that can remotely prevent the battery from charging at all.
We’ve long joined makers and tinkerers in warning that, as software becomes a part of more and more everyday devices, DRM and the legal restrictions on circumventing it will create hurdles to standard repairs and even operation. In the U.S., a car manufacturer who had wrapped its onboard software in technical restrictions could argue that attempts to get around those are in violation of the Digital Millennium Copyright Act (DMCA) — specifically section 1201, the notorious “anti-circumvention” provisions. These provisions make it illegal for users to circumvent DRM or help others do so, even if the purpose is perfectly legal otherwise. Similar laws exist around the world, and are even written into some international trade agreements — including, according to a recently leaked draft, the Trans-Pacific Partnership Agreement.
Since the DMCA became law in 1998, Section 1201 has resulted in countless unintended consequences. It has chilled innovation, stifled the speech of legitimate security researchers, and interfered with consumer rights. Section 1201 came under particular fire this year because it may prevent consumers from unlocking their own phones to use with different carriers. After a broadly popular petition raised the issue, the White House acknowledged that the restriction is out of line with common sense.
WikiLeaks strikes again
This time it’s apparently a recent draft of the Trans-Pacific Partnership agreement. The Register‘s Richard Chirgwin assures us that it’s not as bad as we thought — it’s much worse:
The TPP is a document supposed to harmonise intellectual property protections in participating nations — America, Canada, Australia, New Zealand, Japan, Malaysia, Vietnam, Brunei, Singapore, Chile and Peru. Instead, it looks like a an Australia-US-Japan club force-marching the treaty into America’s favoured position on nearly everything, from criminalisation of copyright infringements through to a blank cheque for pharmaceutical companies.
The document, here, is huge, but some of the key items include:
- Criminalisation of copyright infringement by all signatories;
- Stronger DRM and “technological protection measure” regimes;
- ISPs to be made liable for copyright infringement on their networks;
- A “take it down first, argue later” DMCA-like process for notifying copyright infringements;
- Patentable plants and animals;
- The evergreening of patents — this has become particularly notorious in the pharmaceutical business, where the repackaging of an out-of-patent medication is used to keep common compounds out of the public domain.
America and Japan are opposing consumer protections proposed by the other nations (Australia excepted). These provisions, in Article QQ.A.9, would be designed to prevent the abuse of copyright processes, use of intellectual property rights as a restraint of trade or as the basis of anticompetitive practises.
[…]
America manages to put itself beyond the pale as the sole sponsor of Article QQ.E.1, pretty much a “Monsanto clause” by pushing for patent coverage of plants and animals, including “biological processes for the production of plants and animals.” New Zealand, Canada, Singapore, Chile and Mexico want to specifically exclude these, along with “diagnostic, therapeutic and surgical methods for the treatment of humans or animals”.
August 30, 2013
Trade negotiations are so secret that MPs are denied access to the information
Techdirt‘s Mike Masnick says that even congressmen have (limited) access to ongoing Trans-Pacific Partnership negotiation documents, but that even the NDP’s trade critic can’t get that level of information here:
Don Davies is a Canadian Member of Parliament who notes that he’s been denied access to information about the ongoing TPP negotiations, of which Canada is supposedly a member:
“The TPP is a sweeping agreement covering issues that affect many areas of Canada’s economy and society — including several areas of policy that have never been subject to trade agreements before,” said Davies. “By keeping Parliament completely in the dark on negotiations the Conservatives also leave Canadians in the dark and, for an agreement of this magnitude that is abnormal and unacceptable.
“If the US can allow its legislators to see the TPP text, there is no reason that Canada can’t,” Davies said.
In this case, it’s doubly ridiculous. Davies is a member of the NDP party, which is not in power, but his role is as the Official Opposition Critic for International Trade. In other words, he’s basically the trade policy expert for the NDP, and as such, you’d think he should at the very least be included in the details of ongoing negotiations. Yet again, though, it seems that the main negotiating parties involved in the TPP have realized that the best way to get across an agreement they like is to keep it as secretive and non-transparent as possible, especially from critics. This is the exact opposite of how democratic governments are supposed to work.
Of course, the addition of Canada to the TPP has always been done in a way to keep our neighbor up north as a silent partner to the US’s position. You may recall that the US didn’t let Canada join until well into the negotiating process, and as part of the invite, Canada was told that it had to accept all negotiated text without question, even though it wasn’t allowed to see it yet. And, related to that, they had to agree to future texts during some meetings where they weren’t allowed to attend.
June 28, 2012
What did Canada give up to get “2nd class seating” in the TPP negotiations?
Michael Geist on the Canadian concessions to get a seat at the kiddy table for the Trans Pacific Partnership free trade negotiations:
…the benefits for Canada are hard to identify. The price of admission was very steep — Canada appears to have agreed to conditions that grant it second-tier status — and the economic benefits from improved access to TPP economies are likely to be relatively minor since we already have free trade agreements with four of the ten participants.
Given those conditions, why aggressively pursue entry into the negotiations?
[. . .]
Given Canada’s late entry into the TPP process, the U.S. was able to extract two onerous conditions that Prime Minister Stephen Harper downplayed as the “accession process.” First, Canada will not be able to reopen any chapters where agreement has already been reached among the current nine TPP partners. This means Canada has already agreed to be bound by TPP terms without having had any input. Since the TPP remains secret, the government can’t even tell us what has been agreed upon. [Scott Sinclair reports that the commitment is even broader, covering any chapter where provisions have been agreed upon]
Second, Canada has second-tier status in the negotiations as the U.S. has stipulated that Canada will not have “veto authority” over any chapter. This means that should the other nine countries agree on terms, Canada would be required to accept them.
This condition could be used to stop Canada from joining forces with another country on a tough issue during the late stages of the negotiation. For example, Canada and New Zealand both have copyright terms that last for the life of the author plus an additional 50 years. The U.S. has proposed that the TPP mandate a term of life plus 70 years. While Canada and New Zealand might be able to jointly block the extension, the U.S. could pressure New Zealand to cave on the issue and effectively force Canada to accept the change.
Getting rid of our government-mandated monopolies in the agricultural sector (a good thing) is not going to be worth the price of adopting American-style copyright legislation.
June 25, 2012
If NAFTA was real free trade “it wouldn’t contain 22 chapters of rules and regulations”
Free trade is the way to go, if you want to benefit the consumer. Producers don’t benefit as much: it increases their competition and means that bad producers are more likely to go out of business. Protectionists always rely on the visible “damage” that free trade does to these bad producers and minimize or completely ignore the (larger) benefits to consumers.
Jesse Kline explains why moving toward freer trade will benefit most Canadians, and the drawbacks will be to those who are least able or least willing to face real competition:
Prime Minister Stephen Harper announced this week that Canada will join the Trans-Pacific Partnership (TPP) talks, along with he United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, Mexico and, we hope, Japan. Some say this will be a historic free trade deal that will extend the NAFTA zone into emerging Asian markets; others believe the United States is using the process to impose its own draconian copyright regime on its trading partners, while protecting key industries, such as auto manufacturers. The truth is probably somewhere in the middle.
The problem is that the agreement is being negotiated under a veil of heavy secrecy. And if rumours that the negotiated sections of the agreement already contain over 1,000 pages prove to be correct, it is certain that the TPP will not give us anything resembling real free trade. Indeed, the Canadian public has little idea about what we are getting ourselves into, or how much the government knew about what it was agreeing to. Based on a leaked chapter of the agreement, it looks as though we just signed up for an entirely new copyright regime, a mere hours after the government passed its own made-in-Canada solution.
To the government’s credit, it is simultaneously pursuing trade deals with the European Union and China. But in these times of global economic uncertainty, we need to see the benefits of trade sooner, rather than later. Free trade leads to higher standards of living, and benefits society through lower prices and increased variety of consumer goods; it forces domestic industries to be more efficient. Fortunately, there is another way to achieve these benefits: The Canadian government could open our borders to the world by unilaterally removing all our trade barriers.
