Editor’s Note: Stephen Moore is an economic adviser to FreedomWorks, a conservative advocacy group, and a CNN economic analyst. He was a senior economic adviser to the Trump campaign. Phil Kerpen is president of American Commitment, a conservative nonprofit backed by the Koch donor network. The opinions expressed in this commentary are theirs. View more opinion articles on CNN.
The newly announced preliminary trade deal with Mexico is a welcome breakthrough in the Trump administration’s trade strategy. It should benefit workers and consumers in both countries and should provide needed stability to the Mexican economy.
But where is our ally, Canada, in all these negotiations? Will Canadian Prime Minister Justin Trudeau be the odd man out?
It’s a somewhat shocking turn of events that the Trump administration is closer to finalizing a trade deal with Mexico than with Canada. The newly elected Mexican president, Andres Manuel Lopez Obrador has leftist leanings, but he wanted this deal confirmed. Ostensibly, he understands that Mexico needs access to the American consumer market for the economy to grow and for wages to rise as promised.
North of the border, trade negotiations with Canada have stalled over issues like tariffs on dairy products, steel and automobiles. The Canadians have also delayed progress by bringing up issues of climate change, labor safeguards, gender equity issues and so on. These issues are political nonstarters with the Trump administration and shouldn’t be part of trade deals that are meant to facilitate the free flow of goods and services across the border.
We hope these get resolved quickly and in ways that lead to less encumbered North American trade. But one issue that US trade negotiators shouldn’t sweep under the rug is Ottawa’s disregard for American intellectual property – our computer software, drugs, movies and other patented or copyrighted products.
This is a big deal because the technological breakthroughs, the creativity and invention that create intellectual property support 45.5 million American jobs – one-third of the workforce – and contribute $6.6 trillion to our GDP.
Most Americans know that China is engaged in egregious thievery of American IP. For the 14th consecutive year, the United States Trade Representative’s report on IP identifies far-reaching abuses in China, including forced technology transfers, trade secret theft, online piracy and counterfeiting, offline counterfeit manufacturing and export, and localization requirements that force companies to locate research and development facilities in China. The cost to American companies is in the hundreds of billions of dollars a year. But China is not a country that has a long history of respecting the rule of law.
Canada is the surprise new addition to this year’s Priority Watch List for IP abuses. The United States Trade Representative’s report has placed Canada on the list because of concerns including, “poor border and law enforcement with respect to counterfeit or pirated goods, weak patent and pricing environment for innovative pharmaceuticals, deficient copyright protection, and inadequate transparency and due process regarding geographical indications.”
Canada is not letting our customs officials stop pirated and counterfeit goods that flow through Canada into the United States – serving as an enabler to Chinese companies and other high-volume counterfeiters, according to a 2018 report released by the USTR. And there were no criminal prosecutions for counterfeiting by Canada in 2017, indicating it isn’t doing its own enforcing either.
USTR also criticizes Canada for an ill-defined educational exception for copyrighted material, for denying remuneration to US creators and performers and for proposed changes that would further ratchet down the country’s prescription drug price controls.
It’s a sad state of affairs when our relatively poor neighbor, Mexico, respects American property rights and patents more than our relatively rich one: Canada.
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All this is happening while Trudeau and Foreign Minister Chrystia Freeland accuse the United States of unfair trade practices and tariffs. As hypocritical as it sounds, the Canadians do have legitimate complaints about the new aluminum and steel tariffs imposed by the Trump administration, and in a new North American Free Trade Agreement with Canada, those tariffs should be eliminated.
We desperately want to see a North American free trade zone with little or no tariffs across our borders, but that can’t happen if Canada continues to blatantly violate our IP protections. Canada must be held to American standards on intellectual property, which in the medium and long run would advance investment, innovation and global technological prowess in both nations over the decades to come.
USTR Robert Lighthizer understands how critical IP protections are, noting that this year’s report on intellectual property rights “sends a clear signal to our trading partners that the protection of Americans’ intellectual property rights is a priority of the Trump administration.”
It should be. On trade, no one wants Canada left out in the cold – but we can’t have a 21st century NAFTA trade deal if Canada keeps skimming off the top from our highest value-added industries.