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Issue Analysis

NAFTA Reform Must Better Protect Intellectual Property

As the Trump administration seeks to renegotiate the North American Free Trade Agreement with Canada and Mexico, a key issue for U.S. trade negotiators is better and more enforceable protections of intellectual property (IP) rights. This must include more legally binding protections of patents, copyrights, trademarks, trade secrets, and other engines of invention and creation, which face a growing array of threats in foreign markets, including even our closest North American trade partners.

While NAFTA has clearly been a net plus to the economies of Mexico, Canada and the U.S., inadequate protections of IP cost American companies – producers of drugs, vaccines, computer software, movies and music, manufacturing designs, and so on – tens of billions of dollars a year. This reduces the value of these companies, thus hurting American workers, consumers, and shareholders.

The International Chamber of Commerce and International Trademark Association estimates the total value of the global trade in pirated and counterfeit goods as high as $1.7 trillion in 2016.1 Pirating, counterfeiting and ignoring patent protections is a growing problem in trade and for leading American innovators in advanced manufacturing, pharmaceuticals, software, music, and video.

Some of NAFTA’s IP provisions are out-of-date and ripe for reform, while others are technically adequate but under-enforced, or simply ignored. In all cases, American companies are losing out in profits and competitiveness because of a general failure to recognize the value of IP and safeguarding these assets, which are increasingly the high value-added products of the U.S. and global economies.

NAFTA renegotiation offers an invaluable opportunity to set precedent and correct for these inadequate safeguards of IP. This is especially important because getting it right under NAFTA should become a model for all future trade deals and treaties for years to come.