Jim Balsillie is former Chair and co-CEO of Research In Motion and a co-founder of the Institute for New Economic Thinking
The Trans-Pacific Partnership (TPP) trade deal roared back into the headlines earlier this month, with Prime Minister Justin Trudeau being accused of scuttling a deal brokered at the Asia-Pacific Economic Co-operation forum in Vietnam.
Less attention was given to International Trade Minister François-Philippe Champagne and his team, which succeeded in sending the original TPP12 automotive and cultural sections back to the negotiating table and in suspending many of its controversial intellectual-property (IP) provisions. Without these steps, our economy could have been substantially and permanently damaged.
By designing a trade strategy that benefits Canada's current and future wealth drivers, Canadian negotiators focused on securing market access for traditional businesses and policy flexibility for our digital businesses to create new markets. This outcome is all the more significant because it was done against the backdrop of foreign corporate interests in Canada that dominate face time with our government, and also influence Canadian business associations.
The original TPP12 was excessive in ways that no previous economic partnership ever contemplated. A sweeping, constitution-style document, it dramatically raised IP owners' protections beyond global standards. It extended and enforced the U.S. IP regime and interests into all TPP12 countries and provided unprecedented, aggressive and permanent advantages to current large holders of IP, who are predominantly American.
The United States openly boasted that TPP12 was a "Made in America" deal designed to entrench and extend U.S. economic interests globally, particularly for its IP-intensive industries, which contribute $6.6-trillion (U.S.) annually to the U.S. economy.
TPP12 received widespread criticism from innovation experts around the world who argued the deal presented the opposite of a flexible IP regime needed to allow new innovators to emerge. Nobel laureate Paul Krugman opposed the way in which TPP12 strengthened IP monopolies and dispute-settlement mechanisms. Médecins sans frontières (Doctors Without Borders) condemned the effects that extended IP standards would have on access to medicines for the world's most vulnerable. Another Nobel laureate and pioneer of innovation economics, Joseph Stiglitz, called it "the worst trade deal ever." Innovation and digital policy experts similarly warned it would make Canada a permanent underclass in the global knowledge economy.
By contrast, a parade of U.S. lobbyists and Canadian business associations urged the Canadian government to join TPP12 in earnest. Some business leaders publicly called for Canada's commitment to TPP12 without analysis to show its costs to our economy. Instead, they made dubious claims that it would open up markets for Canadian entrepreneurs to 800 million new customers.
Predictably, TPP12 economic studies showed a trivial 0.07-per-cent gain from new Canadian exports over the next 18 years because most tariff barriers have already been removed by long-standing WTO commitments or existing Canadian trade agreements with TPP countries. The Canadian government's own trade modellers expressly stated that their TPP12 studies did not account for the agreement's adverse effects on our innovation economy.
Modern trade deals are "Asset Valuation Protection Agreements" for the global knowledge-based economy and only minimally deal with open-border issues. They entrench structural inequalities between owners of IP and their buyers, because this is where the money lies in the 21st century.
Innovation has emerged as cause célèbre in Canadian economic-policy discourse, but the pundits who dominate discussions treat IP as a niche purview for high-tech companies. IP, and increasingly data, are the wealth drivers for all industries in the 21st century, because every business today is a technology business. Those who own IP and data are those that continue to enjoy economic growth. That's why smart countries around the world are rapidly increasing their stocks of IP through their domestic companies, maintaining control of their data systems and then turning these intangible assets into national wealth drivers.
Successful technology companies never reveal how they shrewdly generate and commercialize knowledge. Instead, they use high-minded language to describe what they do, using words such as "open," "inclusive," "connected," "sharing" and "diverse." Their lobbyists say Canadians will get even more of these benevolent outcomes if we simply "modernize" all trade agreements, including NAFTA. In practice, companies commercialize knowledge not through open borders but through restrictions supported by the legal system. The way you create markets and value in the new global economy is by generating (owning) IP and data, and restricting everyone else from using it unless they pay you. Stronger and longer IP protections and mandated harmonization systems extend the right of existing IP owners to make more money.
Canadian businesses own trivial amounts of IP because of decades of failed innovation policies that completely ignored the fundamentals of innovation economics and how an economy prospers in the global marketplace, where ownership of ideas are wealth drivers. Those failures are exacerbated by the absence of a national data strategy. As a result, the most valuable Canadian ideas where we have been pioneers, such as artificial intelligence, are owned by foreign organizations.
Canadian academics and entrepreneurs are uniquely ill-equipped to generate and own IP from publicly-funded research. Recently, the head of Google thanked Canadian taxpayers for putting untold billions of dollars of Canadian developed IP into this foreign company. The effect of these flawed approaches since 2000 continues to cost our economy well over $100-billion (Canadian) annually in lost revenue, according to Statistics Canada and OECD data. There is some hope that upcoming national IP and data strategies will curtail current practices, so that Canadian taxpayers will no longer enrich the wealthiest foreign corporations.
Canada's policy makers deal not only with foreign governments advancing their own interests across the negotiating table but with co-opted domestic voices also pushing the interests of foreign entities to the detriment of Canada. This makes Mr. Champagne's and our negotiating team's TPP11 achievement especially commendable.
By expressly preserving the policy flexibility to allow our government to legislate in the interests of our economy, they stood up to corporate bullies at home and abroad, and showed that Canadians have the capacity to advance both traditional and knowledge-based sectors of our economy. If Canadians want to enjoy a prosperous future, we will need more of this kind of strategic, sovereign and bold leadership.