The following op-ed was co-authored by R Street Associate Fellow Bill Watson. 

The good news about the North American Free Trade Agreement is that it has fostered economic growth in Canada, Mexico and the United States for 23 years. The bad news is that when NAFTA was negotiated, many of the essential elements of today’s digital economy were still just the subject of science fiction.

Consumers today are almost constantly engaged in commercial and social interaction using pocket-sized super computers connected to a global internet, in ways that were nearly inconceivable in 1994. This digital revolution was made possible, in large part, by key elements of the U.S. copyright system that protect the rights of individuals and businesses to share, manipulate and create new copyrighted content in innovative ways.

As U.S. negotiators seek to update NAFTA for the 21st century, it’s vitally important they recognize the role of copyright balance and flexibility in fostering economic growth and trade in digital goods.

Unfortunately, “balance” has not always been U.S. trade negotiators’ top priority in the past. In the numerous trade agreements the United States has negotiated since NAFTA, U.S. representatives have sought ever-stronger provisions setting ever-higher minimum levels of copyright protection. At the behest of music and movie studios, U.S. trade negotiators have crafted international law that mandates longer copyright terms and stricter penalties for infringement.

Those same interests are hoping to move the needle even further in a new NAFTA. They want to use NAFTA to lengthen Canadian copyrights from their current level (ridiculously long) to the U.S. standard (really, really ridiculously long). The Mexican copyright term length is so ridiculously long that even the thought of the United States and Canada moving to this model is too terrifying for words. Furthermore, they want to force website operators to police users who might post potentially infringing content. They also want to make it illegal for consumers to tinker with software contained in the products they buy.

Those rules undoubtedly would help companies that own a lot of copyrights, some of whom are American. But they would also impose significant costs on the rest of us.

For example, current U.S. law carefully balances the rights of copyright owners with the rights of legitimate website operators. The Digital Millennium Copyright Act shields internet companies from liability so long as they remove infringing content upon a request by the rights holder. This “notice and takedown” system allows websites like Facebook and YouTube to host user-generated content and lets media companies police that content by sending notices to the websites. The system isn’t perfect; for instance, it has been abused by parties seeking to remove content from the internet that doesn’t infringe anyone’s copyright. But all in all, it works fairly well.

Ideally, an updated NAFTA would include broad rules that establish protections for responsible websites but leave the details to national legislatures. This would give Congress leeway to improve U.S. rules, while allowing Canada and Mexico to pursue slightly different approaches. Most importantly, strict rules that treat all websites like degenerate copyright pirates could stymie the growth of internet services at the forefront of the 21st century economy.

Likewise, trade rules should also be careful in how they handle digital rights management. Commonly referred to as “DRM,” these digital locks act as safeguards to protect rights holders from getting their works pirated. Current U.S. law requires anyone seeking to unlock DRM for security, research or repair to petition the U.S. Copyright Office for an exemption. While this system is time-consuming and often burdensome on the petitioner, it also mostly works. A more restrictive system of DRM that does not allow for unlocking would prevent security researchers from finding vulnerabilities and block consumers from repairing goods they legitimately own.

Unfortunately, recent U.S. trade agreements have mandated civil and criminal penalties for those who circumvent technological protection measures, even in cases where there is no infringement. The U.S.–Korea Free Trade Agreement, for example, includes a strong mandate to prohibit circumvention, while permitting only limited exceptions. But those exceptions are vital to keep the restrictions from causing serious harm to the legitimate rights of users.

Indeed, the biggest problem with including intellectual property rules in past trade agreements is that they’ve been used one-sidedly to spread and solidify only the restrictive parts of U.S. copyright law. Exceptions to those restrictions typically have been only grudgingly permitted in very specific situations. In other words, the United States has been exporting only half of its copyright system — the half that benefits rights holders — at the expense of users and the industries that disseminate content.

A new NAFTA should make clear that limitations and exceptions to exclusive rights are essential and desirable components of a balanced copyright system. A groundbreaking provision to that effect was included in the Trans-Pacific Partnership, which the United States exited in January 2017, but to which Canada and Mexico remain parties. A renegotiated NAFTA that includes stronger copyright protections should include a similar provision.

It’s no accident that most of the world’s largest internet companies were born in the United States. One reason for that is our well-established and broad exceptions to copyright liability, such as the doctrine of fair use. U.S. negotiators shouldn’t jeopardize our status as a leader in the digital revolution by undermining the legally permissive environment that has fostered our success. A truly updated NAFTA must recognize how important copyright balance is for the 21st century economy.

Image by John Kehly

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