Why We Should Care About Trade Agreements


The best trade agreements strengthen relationships with nations and regions vital to United States foreign and economic policy. When it comes to the secretive discussions around the Trans-Atlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP), however, any benefits might also come with now-unseen costs to startups and the tech industry as a whole if negotiators do not consider unintended consequences.

Trade agreements are no longer simply about physical goods crossing borders. A central concern is that both the TTIP and the TPP could impose harsh data privacy laws, and global intellectual property regulations akin to SOPA and PIPA, without Congressional, consumer, and startup oversight. As negotiations move forward this month, it’s imperative that the individuals working on these agreements consider all possible effects in the context of our growing, global economy. Given that backdrop, let’s take a look at what we know about these agreements, what we don’t know, and why it’s time for the startup community to take notice.

Trans-Atlantic Trade and Investment Partnership (TTIP)

Last week, the United States entered into discussions over the proposed Trans-Atlantic Trade and Investment Partnership that would strengthen our relationship with the European Union in the face of the rising economic and political powers of China and India. Trade between the U.S. and the EU is worth nearly $1 trillion a year, and bilateral investment amounts to almost $4 trillion. Eliminating the already low tariffs and removing the non-tariff barriers could boost trade by $180 billion a year, and therefore the economies of both economic regions.

Though this is still early stages, there has already been considerable speculation about the content of this treaty. Covered topics range from agricultural policy to financial regulation, and major players include airlines and the film industry. Two areas of debate that could have a significant impact on startups specifically are the regulation and security of data, and intellectual property.

On the whole, Europe has much stricter data regulations than the United States; considering the extensive EU Data Protection Directive and Europe’s movement toward stricter privacy laws, finding a balance might prove difficult. Europe might need to relax standards, while American business might see more regulation -- one result of which might be longer and even more complicated privacy policies that startups will have to comply with.

With respect to intellectual property regulations, the European Parliament rejected the Anti-Counterfeiting Trade Agreement (ACTA) after protests from citizens, and concerns that the treaty’s vagueness could jeopardize civil liberties. The US and EU must work hard to negotiate clear and understandable intellectual property regulations, so vague laws do not encourage unnecessary and expensive litigation that could drive startups out of the market.

Trans-Pacific Partnership (TPP)

With the stated aim of further liberalizing the economies of the Asia-Pacific region, TPP discussions cover intellectual property, competition and State-owned enterprises, environmental policy, services and investment, and government procurement, among other issues. Negotiations began in December 2012 between Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. With Japan’s entry, poised for July 23, 2013, these nations are responsible for 40 percent of global production and one third of worldwide trade.

In February 2012, a draft version of the trade agreement was leaked by Representative Darrell Issa (R-CA) -- including the entire 80-page Intellectual Property section. Digging into the language of this draft -- the only version we’ve yet to see -- participating nations would be made to impose criminal penalties for “willful infringement” of copyrighted material, irrespective of financial gain. On its face this addition is troubling, and with no clear definition of “willful infringement,” questions remain about whether downloading a copyrighted movie, or owning a site that hosts user-posted copyrighted movies, would be considered a criminal offense. Going further still, even temporary files downloaded to a computer without proper authorization could be labeled as copyright infringement.

Almost one year on, we have no idea how much of what was leaked is still on the table, but Representative Jared Polis (D-CO) has said that tech activists should still be “extremely concerned.” Fundamentally, any copyright and patent law changes will rewrite the national laws of sovereign states, interfering with, and restricting, the democratic process of rewriting our own laws in the future.

As round 18 of negotiations began this week in Malaysia, the government commented that 14 of the 29 chapters are “substantially closed”, though sensitive issues will require discussion at a later stage of negotiations. Despite assurances of continued momentum from the United States Trade Representative, talks seem to have stalled. That said, it’s important to keep the pressure on those purported to be negotiating, and make it clear that the damaging effects of this treaty are mounting for IP regulations -- and possibly also in areas we don’t yet know much about.


Unlike under the Bush Administration, the current administration has conducted these trade negotiations behind closed doors. Though there have been stakeholders meetings -- TPP negotiators are currently participating in stakeholder meetings -- interested parties must express their views without knowledge of the full content of the treaties. A number of activist groups have expressed concern about the lack of transparency in the negotiation process, with EFF calling the TPP the biggest global threat to the Internet since ACTA:

"The Trans-Pacific Partnership (TPP) is a secretive, multi-national trade agreement that threatens to extend restrictive intellectual property (IP) laws across the globe and rewrite international rules on its enforcement."

Congress also expressed similar concerns. After the leak in February, last Summer some Senators sent an open letter to the White House last summer asking for greater transparency: “the copyright language in the TPP may not mirror the approach of SOPA and PIPA, but due to the secrecy surrounding the TPP there is no guarantee that it will not. “

While international treaties might not appear obviously relevant to a startup as it grows, we should understand that these negotiations will set the stage for future regulation that could prove critical to how startups operate. As an integral part of the global economy, startups should be among the many sides who have a seat at this table, and we hope that by shining a light on the ongoing process, we can help create a situation where our businesses can flourish in a global marketplace, and contribute to the global economy.

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