International Trade Committee on May 5th, 2016

[Barry Sookman]

I was commenting from the IP provisions. I wasn't commenting from the other section. I assumed that was the context of the question.

[Tracey Ramsey, NDP, Essex, ON]

Okay. It was more general.

[Barry Sookman]

I was focusing on that, so I'm sorry if that wasn't clear.

When you look at the position of the average Canadian, that's actually a complicated question, because the average Canadian is interested in jobs, in having many opportunities available to them, and in having a variety of goods and services at an economically competitive price. There are obviously in the TPP a number of factors that affect that, at both the micro level and the macro level.

At the macro level, what's important, at least from the IP provisions, is to have a robust framework that promotes innovation and promotes capital, because that promotes high-paying jobs and that promotes goods and services that are competitive. In my view, if that is successful for business, that's also successful for Canadians who work in businesses and also for Canadians who are consumers.

On the pharma side, I'm not an expert. There was a recent study that looked at the impact of drug prices associated with free trade agreements. It looked at the impact of drug prices in countries in which the United States entered into FTEs and actually found that there was no material increase in prices. The other thing I'd point out is that in other countries such as Europe they have more robust patent protection, and yet their prices are lower than Canada's, so there isn't a one-to-one relationship.

On the patent restoration, which is the major change and which we've already agreed to in CETA—so it's there in any event—there is a question about the extent to which there would actually be an increase in the prices of drugs. The reason is, it's meant to deal with delays in the approval of drugs that are caused by the regulatory process, and not caused—

[Tracey Ramsey, NDP, Essex, ON]

When we talk about this extension to patents, do you think that Canada requires greater protection of intellectual property for pharmaceutical products?

[Barry Sookman]

There's very little change overall to the patent framework; there are two. The first is the patent restoration that I was referring to.

To finish the comment I was making on that, Canada does have the wherewithal to speed up the approval of drugs. If that's the case, there is a question about whether there would be any significant extra costs if Canada has a more streamlined system. That's something we can control.

[Tracey Ramsey, NDP, Essex, ON]

Before my time runs out, I want to go back to my first question and my quote about the costs. I asked you whether or not you had an economic impact model that you were basing that on. The C.D. Howe, Tufts, and Peterson, all of these models show us that sometimes there will be zero per cent growth and large job loss. What is the basis for saying this is good for Canada? Is it strictly the IP?

[The Chair, Liberal, Mark Eyking]

They will have to be quick answers.

[Barry Sookman]

I'm going to turn this to Mr. Herman because I know he's chomping at the bit to answer this question.

[Lawrence Herman]

Mr. Chairman, I might address the auto side because it's very important not just for Ms. Ramsey, but for others.

[The Chair, Liberal, Mark Eyking]

I don't want to cut you off, but I think one of the other MPs will ask you that question and give you lots of time to answer. That will be better, because you're on a good roll and I wouldn't want you to have to shorten it. We'll get you back on that.

We're going to move to Mr. Peterson.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thanks, Mr. Chair.

Thank you, gentlemen, for being here today.

By way of disclosure, I articled with McCarthy Tétrault many years ago in Toronto, so it's nice to see you back here, Mr. Sookman.

[Lawrence Herman]

You have a long reach.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Absolutely.

Mr. Herman, you touched briefly on the ISDS, so I want to follow up on some of those questions. We're hearing from some witnesses there are grave concerns about how ISDS prejudices Canada, the Canadian government isn't going to be freely able to regulate in our country, and that there's a history, through NAFTA, of our being the losers in ISDS litigation.

I wonder if you agree with that and can elaborate briefly on how the ISDS system currently works.

[Lawrence Herman]

A couple of things in the TPP improve upon NAFTA. The NAFTA ISDS provisions have been interpreted by arbitration panels in a way that has largely favoured Canadian laws and regulations. We've won many important disputes under the NAFTA.

The TPP defines more precisely the basic concept of equitable treatment. Under the TPP, as under NAFTA, countries are required to provide fair and equitable treatment for all investors. The TPP narrows that very important concept and says that has to be a precise concept agreed to under international law, and not just a vague, open-ended concept that the arbitrators can apply.

It also provides that regulatory changes in themselves are not offensive of the treaty. In other words, you can't claim, as an investor, simply because there's been a change in regulations that might impact on your investment in some way or another. There are also a number of other off-ramps for public policy issues affecting the environment, public safety, public health, and other things.

There's an important narrowing of the scope of ISDS in the TPP.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

We have some concerns that it's a private dispute resolution mechanism that prejudices the Canadian government from being able to legislate. For those of us experienced in litigation, many private dispute mechanisms are employed throughout, in private contracts. I don't think it's necessarily a big change from what's already out there. Thank you for clarifying that.

[Lawrence Herman]

There are also enhanced provisions for transparency and public knowledge, public disclosure of the dispute process, which are an advance.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Okay, thank you.

I want to touch briefly on Mr. Sookman's comment that there's not going to be much legislative change if TPP comes into place in the world of IP and copyright. It is a complex legislative regime. That's why people like Mr. Sookman are able to make a living in helping to navigate it.

Can you elaborate on what those changes would be if TPP comes into place, and maybe highlight some of the differences between current American IP law and Canadian IP law and what effect that will have?

[Barry Sookman]

Sure.

Thank you for the question, and thank you for getting Tétrault right previously. We have it all right.

There are changes in the copyright area, and several in the patent area. In the copyright area, the chief one that's been identified is the requirement to amend the term of copyright from 50 years to 70 years of the life of the author. In terms of that context, approximately 90 countries around the world already have protection at 70 years or more, so it's not like this is out of the blue and is reflecting some unique perspective of the United States. It's actually now becoming the international norm.

In terms of the costs of that, which Mr. Geist was referring to—that $55 million—there was a study that was just released by Professors Barker and Liebowitz that looked at the New Zealand study he cited and came to the conclusion that it was seriously flawed. In fact, when he looked at the costs and the benefits, it might actually be of some benefit to New Zealand. So there would be a change.

There are many policy reasons, which I won't get into because of the time—you only have five minutes—that would support the term extension. I dealt with that in a very lengthy blog.

There is another amendment that would be required with respect to rights management information. That has been exaggerated, in terms of what it is. It's actually a very narrow amendment that would create a criminal offence for removing rights management information for profit, in other words, a commercial entity that's facilitating piracy. It's hard to see why, from a public policy perspective, that would be a problem.

[The Chair, Liberal, Mark Eyking]

We'll have to wrap it up there. Sorry, we're way over time.

That ends our first round.

We're going to move on to Madam Lapointe for a second round, five minutes.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

Thank you, gentlemen, for being with us today. Your presence is most appreciated.

Mr. Herman, you were interrupted and weren't able to finish your presentation. You were speaking about the export of intellectual property. You also wanted to talk about the workforce and the environment. What would you like to say about that?

[Lawrence Herman]

I was going to say that the Trans-Pacific Partnership, or TPP, includes provisions to encourage countries to implement solid environmental measures, not to replace the Paris agreement or the Kyoto accord, but to require all countries in the TPP to implement environmental protection laws. The provisions are fairly detailed.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

It's interesting, especially since we want to score points and improve our environmental standing.

Without necessarily getting into intellectual property, which we've spent a lot of time talking about since the start of the day, could you tell us what you would like changed in the Trans-Pacific Partnership agreement if the negotiations were reopened?

[Lawrence Herman]

Let me answer that by saying—

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

It's okay if you say it in English, but, for me, it's easier in French.

[Lawrence Herman]

I can answer in French.

Improving or changing the TPP is out of the question.

The TPP is not going to be renegotiated. If it doesn't get through the U.S. Congress, it's finished, in my humble view, and we will go back to where we were before. The gains, and there are many gains, and the advances in the TPP, will be lost. It is totally unreasonable to think that participating countries can come around the table once again and change the provisions of the TPP. Once you start opening one or more provisions, the whole thing will start coming apart, in my view. Others may feel differently, but that's my view.