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So what's really in the TPP for Tech?

Paul Matthews, IITP Chief Executive. 19 August 2015, 12:23 pm
So what's really in the TPP for Tech?

Last week IITP President Ian Taylor raised concerns with Trade Minister Tim Groser about several aspects of the Trans Pacific Partnership negotiations in relation to tech, and especially whether New Zealand's current position banning software patents would be traded away. You can read that letter here

This week IITP and others in the tech sector met with New Zealand's TPP negotiators and discussed this and related matters in detail. The negotiators were very open and candid (as much as they could be anyway), and it's fair to say that, all things being said, we felt a little more positive about the implications of the agreement for the tech sector.

 

TL;DR? The short version

There's a whole heap of detail below outlining what the negotiators have said, and we strongly encourage you to read it to more fully understand where the officials are coming from. But if you don't have the time or inclination, here's a summary:

  • At our request, we met with the key IP-related TPP negotiators and other senior officials to discuss the implications of TPP on the tech sector. We also invited the leaders of the other key tech sector representative bodies.
  • We've only looked at it from the tech sector's perspective, not weighing up the broader pros and cons of the potential agreement. That's outside our scope.
  • We're still pretty grumpy about the secrecy surrounding negotiations and the fact that the draft text can't be shared. We believe a better outcome could be reached if it was a more transparent process.
  • We've received absolute assurances that nothing in the TPP will impact New Zealand's current legal and policy position in relation to software patents. Hooray!
  • There is pressure to increase Copyright terms by 20 years, to 70 years after death. Some other copyright changes are currently proposed, but no restriction of copyright exceptions (eg fair use provisions), and parallel importing won't be affected.
  • There could be some significant changes around Technological Protection Measures (TPMs), including criminalising circumvention of TPMs, however circumvention to access legitimate content won't be criminalised. Global Mode-type services won't be impacted (if they are legal under NZ law currently, which is still a little grey).
  • There won't be any changes in New Zealand in relation to ISP liability for copyright infringement, and TPP won't require disconnection of copyright infringer's internet.
  • Investor-State Dispute Settlement (ISDS) provisions remain, however are only intended to be used for major issues such as asset nationalisation or similarly serious government actions. However there is certainly broader debate about this and we remain concerned, given the text hasn't been released.
  • Nothing in TPP should impact negatively on tech sector government procurement in New Zealand, however it should open up government procurement in countries like Malaysia, Vietnam, Mexico and Peru (i.e. to tech-sector exporters selling into the public service).
  • More work needs to be done to understand the impact of the e-Commerce and Services Chapters. We'll do that work and report back. However, negotiators did make it clear that the services provisions would reflect New Zealand's open market, and that market access commitments under discussion should make it easier to export from New Zealand without needing to establish a presence offshore.
  • Overall, if the assurances are borne out in the detail and no other fish-hooks found, we're cautiously optimistic about the impact of TPP on the tech sector. But we're still pretty grumpy about the secrecy aspects and want to see this changed for future negotiations.
  • You should go read the letter from IITP President Ian Taylor to Trade Minister Tim Groser here to more fully understand some of our concern.

Gee, that was the short version. And now, the detail…

 

What is TPP?

TPP, or the Trans Pacific Partnership Agreement, is a trade agreement being negotiated between New Zealand and Australia, the United States, Vietnam, Peru, Chile, Brunei, Singapore, Malaysia, Mexico, Canada and Japan. A number of other countries are interested in joining if it's successfully concluded.

By and large, we believe free trade agreements are good for our industry. As an export-driven sector that underpins most industries in New Zealand, any reduction in barriers to export are welcome - unless they come at great cost domestically of course.

What makes TPP a little different is that it covers a number of areas of domestic policy that most previous agreements haven't gone into; certainly at this level of detail. There's an extensive Intellectual Property chapter for example, as well as countries signing up for things like Investor-State Dispute Settlement (ISDS) provisions, meaning that in some cases investors can sue governments that they consider have breached the TPP investment obligations causing loss or damage to their investment. There is ongoing and considerable debate about the extent to which these would apply.

 

Secrecy aspect

Despite some of the potentially positive matters outlined below, we still hold concerns about the detail - or rather, lack of it. As the negotiations are being held in private, the actual wording being negotiated is restricted to negotiators and other government officials only. This means we and others can't undertake independent analysis of the impact of what is being agreed until negotiations are complete.

To put that in context, the agreement as a whole is over a thousand pages long. If this were a law, it would go through an extensive public select committee process where side effects and implications could be raised by experts. However only individual laws enacting various components of the Agreement will go through a Select Committee process in New Zealand, and by then the agreement as a whole will have been signed. We (and many others) have raised this with Minister Groser and negotiators and hope it changes for future negotiations.

Thus, we can't be absolutely certain on any of this until the agreement text is released. And, of course, even though most of this appears to be settled and we're led to believe is unlikely to change, anything could change in the final rounds.

We've also purposefully restricted comment here to matters that impact on the tech sector specifically. There are many other reasons to like or dislike TPP, but we're not in a position to provide expert commentary on those.

 

The meeting with TPP negotiators 

IITP requested the meeting with TPP negotiators during discussions last week, immediately prior to and after the letter raising concerns was sent to Minister Groser from IITP President Ian Taylor. You can read that letter here.

We also felt there would be more value out of the meeting if it was a sector-wide meeting, thus sought agreement to invite other representatives from the tech sector. Attending the meeting were the CEs and senior representatives from IITP, NZTech, NZRise, InternetNZ, TUANZ and the Health IT Cluster. 

On the government side, representatives included the lead and deputy lead TPP negotiators for Intellectual Property, as well as other senior officials and experts from MBIE (Ministry of Business, Innovation and Employment) and MFAT (Ministry of Foreign Affairs and Trade).

This was the first broad tech sector TPP briefing since around 2013 (despite comments from the Minister in NBR to the contrary). To be fair, this was primarily because of the view across industry and government that the level of concern had diminished. We also hadn't requested a briefing in recent times either, and officials immediately said yes last week when we requested it - so we really can't be too critical on that point.

Overall officials were as open as they could be about where things stood with TPP, both the positives and the negatives. They were unable to share the text of course, which is a major impediment to independent analysis, but they didn't shy away from anything (even if they all took a gulp of water when we mentioned Investor-State Dispute Settlement provisions! :) 

Some matters outlined were discussed in confidence and we've maintained that confidentiality below. But it's fair to say that this was primarily around negotiating positions than anything of material substance or concern to our sector. However it's our view that the sector needs to be informed and where confidentiality wasn't specifically requested, we've opted to outline it openly here.

 

Position on software patents

As you can imagine, software patents were discussed at length. The long and short of it is, based on the current and likely final version of the agreement, officials provided an absolute assurance that: 

  • Nothing in the current draft would change the exclusion for patents for computer programs as currently defined in the Patents Act. This is great news.
  • There will be no different recognition of patents awarded in other jurisdictions than is currently the case. This could have been a way of getting software patents back into NZ by a "back door" and we're happy to have that confirmation.
  • There will be no amendment to the Patents Act that would impact on the patentability of software, or recognition of other patents, as a result of TPP. 

There are current discussions around pharmaceutical patents, but that's obviously out of scope for us and the negotiators have provided an assurance that this work won't impact our sector.

Given the importance of this matter to our sector, we're still seeking assurance and confirmation from Trade Minister Tim Groser, however we are led to believe that this is forthcoming.

 

Copyright terms 

Copyright was also discussed in great detail. One issue currently being negotiated is the length of copyright. This is currently death + 50 years (i.e. if you copyright material, it remains copyrighted until 50 years after you've died), however it's possible this will increase to death + 70 years. Although some won't like this in other sectors, this is unlikely to impact our industry significantly. 

TPP is also unlikely to create additional restrictions for countries recognising exceptions to copyright, which is good given the upcoming review of the Copyright Act and potential need for fair-use exceptions. We were also assured that nothing in the current version of TPP would impact parallel importing.

 

Copyright Act Reform

While not directly related to TPP, we took the opportunity to discuss the upcoming Copyright Act Review. The full Copyright Act was reviewed back in 2003 (with subsequent components reviewed, such as file sharing) and is well overdue for another look given how much the digital environment has changed over the last decade.

The timeframe for this review is not yet determined, but we've received an absolute assurance that the tech sector will be heavily involved in that process.

 

Technological Protection Measures (TPMs)

We were concerned about the impact of TPP on laws regarding the circumvention of TPMs, which are technologies used to protect copyrighted material. Some examples include DVD region codes and encryption, and geo-blocking technologies.

The issue with TPMs is that they can essentially enforce monopolies. They are also a big cause for concern in the Free and Open Source Software (FOSS) world, as they can mean that content is only viewable on particular commercial platforms - or, for example, certain word processing software.

Current NZ law provides criminal and civil sanctions for those selling tools to circumvent TPMs, however its proposed that as a result of TPP, New Zealand will need to enact tighter restrictions around the circumvention of TPMs itself (i.e. rather than just the sale of tools to do so).

The negotiators did confirm that New Zealand's position remains, and will continue to remain, that unlocking TPMs for legitimate purposes won't be criminalised. In other words, if you have legal rights to view the content then it's not going to be an offence to circumvent TPMs to view it. As an example of why this is important, the blind community routinely have to circumvent TPMs to use text-to-speech converters and thus listen to e-books they've legally purchased.

We also asked specifically about the impact on Global Mode and other geo-blocking circumvention technologies. The officials noted that if you are able to access content legally now, this approach won't need to change as a result of TPP. They did however point out that the big issue is their legality hasn't been tested in court.

 

ISP Liability

The issue of ISP liability for copyright infringement by customers has been raised a number of times during TPP negotiations. The officials were able to confirm that, as it currently stands, there will be no changes to New Zealand legislation.

Specifically, there will be no requirement for termination of the internet account of accused copyright infringers. This is again good news.

 

Presumption of copyright infringement guilt

New Zealand's current position around presumption of copyright ownership will be maintained - i.e. if someone submits a statement of claim of ownership of material, they are presumed to be the owner until such time as that is overturned.

However, it's important to note that negotiators have confirmed that this doesn't and won't extend to a presumption of guilt if a claim of infringement is made. There has been some confusion around this point in the industry and while there is already (arguably) a presumption of guilt around unlawful file sharing, this is not impacted (positively or negatively) in the TPP.

 

Investor-State Dispute Settlement (ISDS)

We raised this in the context of matters that impact the tech sector, not the more general concerns with ISDS raised by other people and organisations.

Our concern was chiefly around, for example, whether a multinational could sue the Government if they didn't like procurement process decisions, such as a requirement to have a proven understanding of the New Zealand market (which might preclude some offshore companies from submitting tender responses).

The negotiators assured us that TPP wouldn't give rise to this situation.  On the whole, access to government procurement was governed by separate provisions in TPP (the government procurement chapter), and ISDS only applies to obligations in the investment section.  Provisions that protected investors and suppliers once they were in market were for when countries made far more significant decisions - such as nationalising assets or similarly serious government actions.  Breaching existing contracts for services without sound reasons could be covered, but was equally an issue under domestic law.  Negotiators noted that like existing New Zealand FTAs, the investment obligations were also qualified by public policy exceptions.

This sounded positive on the face of it, however obviously without the text to confirm the extent ISDS applied, it's a relatively subjective discussion. We'll certainly be looking at it when the text is eventually made public.

 

Government Procurement

At a general level, the negotiators confirmed that nothing in the Government Procurement chapter is likely to greatly impact on New Zealand, as we already have a fairly open procurement process. MBIE has already re-written to the Rules of Procurement with a view to complying with TPP and other international agreements.

However it will mean that governments such as those in Malaysia, Vietnam, Mexico and Peru will need to ensure that offshore companies (e.g. those from New Zealand) can compete for government projects on more even footing, including not requiring a local presence, which should be good for our export sectors.

 

e-Commerce and Services Chapters

These two areas were also discussed, however further discussion will be needed with the negotiators and experts within Government across these areas. IITP and others are planning follow-up meetings with the relevant officials from these areas to understand the impact on our sector.

We'll include updates on these once we've had these discussions.

 

Next steps

As widely reported, there had been a hope that most issues would have been resolved in Hawaii, so there is now considerable pressure on governments to either resolve the outstanding issues, or not.

A number of bilateral discussions are occurring over the next couple of weeks around Dairy, Autos and Pharmaceutical Intellectual Property primarily and if these are successful, a further larger negotiating round will occur within the next couple of months.

While the negotiators wouldn't confirm this, if an agreement isn't wrapped up in the next two months it's unlikely to be anytime soon, given that US President Obama's term will end next year. US politics are such that a new President could well bring things back to square one.

There is also a discussion occurring around when the text would be released. The negotiators confirmed that no country has expressed a desire to not release the text in full, however the discussion is around exactly when this should occur.  Negotiators confirmed that New Zealand supports the release of the final text before an agreement is signed, and noted this position is outlined on MFAT's website.

 

In Summary

All in all, some potentially very good outcomes and if the assurances bear out, things do look like they'll fall on the positive side of the ledger for the tech sector.

However as outlined above, the big concern is at the detail level - the fact that we and others can't undertake independent evaluation of the impact and side effect of these and other points given the detail is still under wraps. Without the detail, the assurances are just that - assurances - and there may well be other fish-hooks that we, and in fact the negotiators, might have missed. Our concern is that the opportunity to address them will likely have passed by the time the detail is released.

While the level of secrecy around the text isn't going to change, negotiators have made a commitment to keep us in the loop on these and other matters related to the tech sector, including ongoing dialogue and future briefings. In turn, we'll ensure you know too.

So what do you think and what have we missed? We're happy to raise any further matters related to the tech sector directly with the negotiators - leave a comment below or drop me a note on other areas of concern and we'll ask the question and publish the answer.

And lastly, we have deliberately looked at this from the tech sector's perspective only and are simply reporting the outcome from this briefing. Others have raised many points for and against the TPP, and nothing here should imply we have taken a position for or against, or don't believe other viewpoints have merit - they do. But if the assurances given are borne out in the detail and there aren't other fishhooks, we're certainly cautiously optimistic about the outcomes for our industry.

 

Paul Matthews is CEO of the Institute of IT Professionals


Comments

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David Lane 19 August 2015, 1:01 pm

Many thanks for providing this, Paul. It gives the *impression* that our negotiators are more or less working on our behalf... That said, I'm deeply uncomfortable with the fact that our only basis for this impression is our trust in their assurances. I'm also very concerned that these are extremely technically nuanced discussions - as good and well intentioned as they might be, I can't imagine that the negotiators can see all the implications for NZ of any given concession they might accept...

I'm very pleased that you have made a strong statement regarding the undemocratic nature of the secrecy of these negotiations. We need to be very very conscious of the fact that the only reason we know what questions to ask is the fact that we got copies of the text from Wikileaks. That's not an acceptable basis of information dissemination for a functional democracy.

Eric Light 19 August 2015, 1:23 pm

I strongly echo Dave Lane's comments, especially the appreciation of your statement on the undemocratic nature, as well as the fact that Wikileaks is the only reason we knew what to even ask about. I'm happy with the way IITP is representing me in this.

I find their (apparent) side-step re TPM's very disconcerting. It seems like watching a geoblocked YouTube video through a VPN may be a criminal act if this happens -- did that come out at all during the meeting?

Ron Segal 19 August 2015, 6:46 pm

Paul, thanks, really appreciate the quick reporting back on this. So apart from avoiding negative impacts and potentially being able to compete for government business in additional countries, I wonder what if anything our negotiators have been pushing for to help NZ's positioning in what is effectively a global digital revolution. Do they even have a vision in that regard.

Christian Graffeuille 19 August 2015, 7:13 pm

>unlocking TPMs for legitimate purposes won't be criminalised

A list of known legitimate uses should be made as a starting point, like watching purchased movies from any region on any platform. Just to avoid frivolous law suits. And to see if the negotiators are ready to put their pen where their mouth is.

>such as nationalising assets or similarly serious government actions

Or changing the law on cigarette packaging. Caught red handed lying about the implications right there which doesn't bode well about their supposed openness.

It seems most of the agreement is about intellectual property rather than commerce, which means there is more to lose than to gain for NZ as we are not a heavy weight in IP ownership


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