Top negotiators from Canada, the United States, Japan and nine other nations gathered in Ottawa from July 3 to 12 to resume talks on the Trans Pacific Partnership (TPP), a major free-trade agreement that will incorporate over 40 per cent of global trade when completed. It is a deal that could have a transformative effect on the economies of the participating countries. Canada is particularly well-placed to gain through this agreement long-term success in the global marketplace of the 21st century.
Prime Minister Stephen Harper deserves credit for recognizing the significant economic value of an ambitious trade agenda. Last year, the Canadian government launched the Global Markets Action Plan, a comprehensive strategy to secure Canada's ability to compete in both established and emerging markets.
In addition to the TPP, Canada recently concluded an investment agreement with China and the framework for a free-trade agreement with the European Union (known as CETA). The Canadian program of trade and investment agreements can open new markets for Canadian companies and lead to major job opportunities for Canadian citizens, particularly in high technology industries that will provide the jobs for future generations.
However, all is not well. Not in Canada's negotiations with Europe, not with Canada in the TPP and not between Canada and the United States.
Recent reports hint that intellectual property (IP) protections, such as those for biopharmaceutical products, are among the major stumbling blocks in finalizing CETA negotiations between Canada and the European community.
Despite several years of negotiations, intellectual property rights continue to present a hurdle for the TPP as well.
For Canada, one would think this would be an easy issue to resolve. IP forms the foundation of innovative industries and advanced economies like Canada's. IP rights work as a productivity amplifier to help a nation with a smaller population compete on a par with much larger economies such as the United States and Japan while obtaining major market access in middle-income and developing countries.
Technology sectors, especially clean-energy and biotech, are not only particularly vibrant parts of the Canadian economy, but also provide important contributions to society. For these reasons, Canada should be doing everything in its power to provide incentives for growth in these value-added industries which can deliver high-paying jobs to Canadian workers.
Yet recent actions taken by the Canadian government could put future innovation at risk.
Canada's patent laws, especially those relating to pharmaceutical patents, are out of sync with international norms and discriminate against foreign companies trying to do business here.
Canadian courts have invalidated or denied nearly 20 patents for new, innovative medicines over the past several years under something called the "promise doctrine." This law essentially forces companies to prove a drug works before granting a patent, and can invalidate a patent years after it has been granted.
This is a standard that is not applied anywhere in the developed world and is virtually impossible to meet given the long and complex pharmaceutical research and development process. And while American and other research-based pharmaceutical companies have made it clear they would like to be investing more in Canada, these policies are holding Canada back from reaping the full benefits of a true innovation economy.
The efforts of Mr. Harper's government to lure businesses and talent to Canada include such innovative initiatives as the well-received Start-Up Visa program, launched last year and intended primarily for entrepreneurs in the tech sector to launch their businesses in Canada. IP rights are central to the success of this endeavour.
But Canada's administration of its patent laws is a major reason why it's been listed on the United States' so-called "watch list" of IP violators. This distinction must make U.S. high-tech companies skittish about doing business in Canada and hampers Canada's ability to attract IP-intensive investment. This is counterproductive, flying in the face of the Harper government's efforts to attract high value investment.
IP is also one of the issues that complicates the bilateral U.S.-Canada relationship and prevents us from having a full partnership in trade negotiations. While Canada and the United States are very close in many respects – we have very substantial north-south trade and the volume and value of that trade have been growing every year – nevertheless, each does not listen very well to the concerns of the other. On a number of trade and investment issues, where the policies of the one have an adverse impact on the other, our governments are each facing inward. This is no way to make progress.
The good news is that it's not too late to reverse course and adopt new, sensible policies that provide incentives for the type of high-value, R&D-based industries that will be critical to Canada's future economic success. The TPP is a prime opportunity to demonstrate the leadership and foresight needed to shepherd an agreement of this magnitude across the finish line and for Canada to bring its regulatory system, especially IP-related policies, into line with widely accepted norms.
It's time Canada rejoined the ranks of its most important trading partners, including the United States, the EU and Japan in providing fertile ground for the world's future inventions.
With a highly educated work force and a generally favourable environment for doing business, Canada is perfectly situated to be on the leading edge of new-economy industries like clean energy, biomedical development and information technology. What is yet to be determined is whether the political will exists to do what is required to help usher in this new era with ambitious agreements like the TPP, and help Canada reach its full potential on the world economic stage.
Alan Wm. Wolff is chairman of the National Foreign Trade Council, a U.S. organization advocating for an open, rules-based world economy, and is a former senior American trade official.