Patents, Copyright and Competition: Assessing the Impact of Trade Deals on Canada

Abstract

The intellectual property (IP) provisions of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, and of the Trans-Pacific Partnership (TPP), were among their most controversial features. Critics focused notably on strengthened protection for pharmaceutical patents in the CETA, and on the extended term of copyright in the TPP. While the TPP as negotiated may have been sunk by the withdrawal in January of the United States’ signature, its IP provisions will very likely resurface in the context of the re-opening of the North American Free Trade Agreement demanded by the new US administration. In this paper, we review in detail the claims that strengthened protection for pharmaceutical patents would result in an increase in health care costs, and provide some estimates of our own. We also examine claims about the cost to Canadians of copyright term extension. In both cases, we find that the cost of these changes is likely to be well under what their critics have claimed, and considerably lower than the net gains for Canada otherwise offered by agreements like CETA and the TPP. Furthermore, we note that some changes to Canadian law under CETA actually support competition in the pharmaceutical industry. The cost of the IP provisions examined here could be reduced or offset by a variety of government policies: speeding up patent approval, promoting competition in the pharmaceutical industry, negotiating lower prices for drugs or, in the case of copyright, promoting the public domain or the accessibility of copyrighted material. There is little, in other words, suggesting insuperable costs to Canada from these provisions. Meanwhile, harmonizing basic IP rules with those of our trade partners and increasing our access to these large markets, is expected to have a positive effect on domestic innovators and copyright holders. Canada is a net importer of intellectual property, and in that sense, will incur some short-term costs as a result of higher net payments to patents and rights holders abroad. Yet Canada is also a net exporter of research and, increasingly, of culture. This indicates the potential for Canadians in the long term to become more active exporters of IP, and in that sense benefit from stronger IP protection themselves.