The U.S. Trade Representative released its annual Special 301 Report yesterday, unsurprisingly including Canada on the Priority Watch list. While inclusion on the list is designed to generate embarrassment in target countries, this year’s report should elicit outrage. Not only is the report lacking in objective analysis, it targets some of the world’s poorest countries with no evidence of legal inadequacies and picks fights with any country that dare adopt a contrary view on intellectual property issues.

The inclusion of Canada on the priority watch list is so lacking in objective analysis as to completely undermine the credibility of the report. The Canadian “analysis” amounts to 173 words that hits on the usual dubious complaints (and given criticism of countries such as Chile for their notice-and-notice system, Israel for their statutory damages rules, and many countries on border enforcement, the Canadian criticism will clearly not end with the enactment of Bill C-11). By comparison, China is treated as equivalent to Canada on the priority watch list, yet garners over 4,600 words.

Earlier this year, I completed a submission with Public Knowledge to the USTR Special 301 process that examined current Canadian law as well as Bill C-11. It concluded:

the USTR should be guided by U.S. law in evaluating the laws of other countries. Viewed from a U.S. law perspective, Canadian copyright laws provide adequate and effective protection to US IP rights owners. Limitations and exceptions in current Canadian law as well as proposed limitations and exceptions do not derogate from the effectiveness of these protections. Furthermore, Canadian authorities effectively enforce copyright laws. Consequently, rates of infringement in Canada are low and the markets for creative works are expanding. Placement of Canada on the Special 301 Watch List or Priority Watch List in the face of this evidence would be unjustified. It would only lead to undermining the legitimacy of the Special 301 process.

The USTR report also confirms the Canadian government’s view that the Special 301 exercise produces little more than a lobbying document on behalf of U.S. industry. The Canadian position, as described to a House of Commons committee in 2007 (and repeated regularly in internal government documents):

In regard to the watch list, Canada does not recognize the 301 watch list process. It basically lacks reliable and objective analysis. It’s driven entirely by U.S. industry. We have repeatedly raised this issue of the lack of objective analysis in the 301 watch list process with our U.S. counterparts.

This year, the International Intellectual Property Alliance recommended ten countries for inclusion on the priority watch list. The USTR included all ten.

The problems with the report extend well beyond the inclusion of Canada. The report targets countries for expressing contrary views of intellectual property. For example, last year the Swiss government completed a major study on online copyright infringement, concluding that no new legislative action was needed. That wasn’t enough to get the country on the list, but did lead to the following comments:



Regarding Switzerland in particular, the United States has serious concerns regarding the inability of rights holders to secure legal redress involving copyright piracy over the Internet. The United States strongly encourages Switzerland to combat online piracy vigorously and to ensure that rights holders can protect their rights on the Internet.

Perhaps the most shameful inclusion in this year’s report are a series of countries whose primarily fault is being poor. For example, the list includes Guatemala, a small country the size of Tennessee with a per capita GDP of just over $5,000. It is coming out of an economic depression that had a severe impact on rural income. The IIPA did not ask for it to be included on the Special 301 Report. In response to past pressures and the conclusion of a trade agreement, Guatemala amended its copyright laws, toughened penalties, created a special IP prosecutor, and increased IP enforcement within the government. Yet the USTR included it with the following comment:

Guatemala remains on the Watch List in 2012. Guatemala continued to make progress in 2011 by enacting legislation to strengthen penalties for the production and distribution of counterfeit medications. In addition, Guatemala’s IPR prosecutor remained active in the past year, despite a lack of resources, and enforcement efforts resulted in a sustained level of seizures and an increase in convictions. The interagency IPR working group also remained active in working to improve coordination among IPR-related agencies, and Guatemala participated actively in training efforts. However, pirated and counterfeit goods continue to be widely available in Guatemala, and enforcement efforts are hampered by limited resources and the need for better coordination among all enforcement agencies. The United States encourages Guatemala to continue its enforcement efforts against the manufacture of pirated and counterfeit goods, and to take steps to improve its judicial system. The United States looks forward to continuing to work with Guatemala to address these and other matters.

Note that the USTR is not criticizing Guatemala’s laws nor enforcement efforts as the government has complied with repeated U.S. demands to shift resources toward IP enforcement. Indeed, there is no obvious reason for inclusion on the Special 301 list other than an attempt to lobby a country that ranks 123rd worldwide in per capita GDP to spend even more money enforcing US intellectual property rights rather than on education, health care or infrastructure, the sorts of expenditures that might improve the country’s overall economy and ultimately lead to reduced rates of infringement.

The same tactic is employed against countries such as Costa Rica (81st per capita GDP with complaints that more resources should be allocated to enforcement) or Romania (77th per capita GDP with complaints about more resources on enforcement). Moreover, with repeated complaints against countries seeking to ensure adequate access to medicines for their citizens or access to books in schools, this year’s report hits a new low. It demonstrates the failure of the enforcement agenda and stands as an embarrassment for one of the world’s richest countries to prioritize its IP rights over human and economic rights in the developing world.