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U.S. List Unfairly Tarnishes Canada's Digital Reputation

Each April, the U.S. releases the Special 301 Report, which examines the intellectual property laws of its main trading partners.  For the past fourteen years, Canada has been included on the list of countries the U.S. believes need reform.

Canada was typically placed on the low level "Watch List," but that changed last week, when it was elevated to the "Priority Watch List," joining Russia, China, Indonesia, and a host of other countries with sky-high piracy rates.  While the elevation will undoubtedly heighten pressure for reforms, it also points to the need for the Canadian government to reassess how it manages the Special 301 process and its bilateral relationship with the U.S. on this issue.

In previous years, Canadian officials have done little more than express disappointment with the U.S. findings.  According to documents obtained under the Access to Information Act, the Minister of Foreign Affairs has been repeatedly advised that "Canada does not recognize the Special 301 process due to its lacking of reliable and objective analysis, and we have raised this issue regularly with the U.S. in our bilateral discussions."

Raising the issue in bilateral discussions may have worked in the past, but this year's report sends a clear signal that more is needed.  This year's designation is so unsupportable that Industry Minister Tony Clement and Canadian Heritage Minister James Moore should not hesitate to challenge both the process and the substance of the findings.  

From a substantive perspective, it would be worth reminding U.S. officials that Canada is compliant with its international copyright obligations.  In recent years, it responded to U.S. pressure by becoming one of the few countries to enact anti-camcording legislation.  The RCMP has prioritized intellectual property cases and the law contains tough statutory damages provisions that are regularly used by rights holders to obtain significant judgments.  In fact, some of Canada's copyright rules are more restrictive than those found south of the border.

Moreover, grouping Canada together with high-piracy nations does not stand up to even mild scrutiny.  The Business Software Alliance's 2008 statistics show that among the eleven other countries on this year's Priority Watch List for which data is available, the lowest rate of software piracy is 66 percent.  By comparison, Canada stands at 32 percent, not remotely close to any other country on the list.  In fact, Canada's software piracy rate is lower than all 46 countries named in the Special 301 report.

Similarly, 2008 data from the U.S. Customs and Border Protection Agency on intellectual property seizures reports that Taiwan and South Korea rank fourth and fifth as sources of seized goods (China is number one), yet both were dropped this year from the Watch List.  By comparison, Canada does not even appear in the rankings.

Officials should not sit idly by as the U.S. unfairly tarnishes Canada's reputation.  This year twenty countries submitted briefs to the U.S. defending their laws and policies.  Some sought removal from the list, a few pointed to inaccuracies in the lobby group claims, and several provided detailed accounts of their anti-counterfeiting activities (Indonesia even included photos of police burning pirated discs).  Canada can no longer afford to miss the opportunity to set the record straight.

Moreover, in light of the Priority Watch List ranking, Canada should reconsider its consistent support for U.S. positions on the international intellectual property stage.  Canada was an original participant in negotiating the controversial Anti-Counterfeiting Trade Agreement and supported the U.S. in its World Trade Organization copyright complaint against China.  In both instances, officials had some misgivings, but decided to stand with the U.S. to strengthen the relationship with its largest trading partner.  

The U.S. has now sent a message that this support is not good enough.  Canadian law may be in need of reform, but new laws should come on our terms and in our national interest, not as a result of misleading and inaccurate bully tactics.