August 28, 2015

Can TTIP Protect European Creativity?

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On 4 June 2015 the European Liberal Forum (ELF) organised a discussion on TTIP and the creative industries: Can TTIP Protect European Creativity? [1] TTIP is the trade agreement with the US under negotiation.

ELF now posted some pictures on Facebook summing up the discussion: one, two, three, four, five.

This of course can not capture the richness of the debate. To add some context, here are my talking points:

Patents and copyrights are monopolistic rights. The owner of the right can ask whatever price he wants to ask. This is a problem for access to essential knowledge.

I will give an example. In the 1990’s 17 million people in Africa died of AIDS. Pharmaceutical companies then sold AIDS medicine in Africa for prices higher than in the United States. Almost no patient in Africa could afford his or her medicine. Patents contributed to a humanitarian disaster. Even today, access to medicine still is a problem. Patents are often not an effective instrument for innovation.

There are also serious issues with copyright. It does not work well in the Internet age. We have good reasons to reform copyright and patent law.

We need policy space for that. We have to avoid international rules that would lock us in any further. Local flexibility is a public interest.

The industry does not want local flexibility. It wants stronger and stronger international rules. An industry gold standard would cause preventable suffering and death, force Internet service providers to police the Internet, harm the remix culture and strengthen patent trolls.

Besides strict international rules there is a second threat to our policy space: expansionist interpretation of these rules.

The European Union wants to add investor-to-state dispute settlement, or ISDS, to our trade agreements. Three for-profit arbitrators would then decide over conflicts between foreign investors and the EU. Only foreign investors would have access to ISDS.

The ISDS system has expansionist tendencies: it lacks institutional safeguards for independence and it creates perverse incentives.

Two essential instruments to correct expansionist interpretations are missing. First, ISDS does not have a general supreme court on top. Second, the system does not have a legislative feedback loop: the possibility to change laws that do not work out well. In other words, there is no democratic context to correct expansionist interpretations.

On top of that, investor-to-state dispute settlement gives the United States unfair procedural advantages.

I will give an example. In 73 annulment cases the president of the World Bank appointed all three the arbitrators. The president of the World Bank is an executive official, he should not have a role in appointing arbitrators. Moreover, the president of the World Bank has always been the candidate of the United States. This is only one example of unfair procedural advantages for the US. The United States never lost an ISDS case.

Accepting a system which has expansionist tendencies and is rigged to the advantage of the United States would, in my opinion, be a strategic blunder.

ISDS is antithetical to the rule of law, to the rechtsstaat, and is a serious threat to the policy space we need to make creativity work for both artists and citizens.

[1] Welcome by Roel Martens, Member of the Board, ELF; Xenia Iwaszko, Head of International Trade, International Federation of the Phonographic Industry (IFPI), Francine Cunningham, Executive director, European Newspaper Publishers’ Association, and me discussed TTIP and creative industries. Marietje Schaake MEP, Member of the European Parliament Committee on International Trade, unfortunately had other last minute obligations, she had recorded a video message for the debate. Christoph Schmidt, Brussels Correspondent for ‘Trouw’ moderated.