Chris Barton: Great deal of unease justified

COMMENT

Free-trade agreements always have devils in the details. Two fiends emerged last week that could have significant effects on New Zealand.

Australia's just-signed agreement with the United States carries the extraordinary requirement to adopt American copyright law - something that will no doubt be on the agenda should New Zealand ever get to negotiate its FTA with Uncle Sam.

The requirements - referred to as "closer harmonisation of our already strong intellectual property regime with that of the largest intellectual property market in the world" - are designed primarily to protect the US recording and movie industry. Which delivers a delicious triple whammy - a free-trade agreement with the land of the free to stop free trade.

For those who have been asleep for a long time, I'm talking about the free trade of music and movies via so-called fileswapping services such as KaZaA and Grokster - a practice carried out by millions of Americans and quite a few people Downunder. As far as the music and movie industry is concerned, it's akin to theft. Which is why stronger criminal copyright provisions - in line with the US Digital Millennium Copyright Act - are on the FTA agenda.

Specifically, it means an extension of copyright from 50 to 70 years - dubbed the Mickey Mouse clause when US Congress amended the law to prevent the Disney character from passing into the public domain. It also means internet providers can be held liable for user infringements of copyright material, and copyright owners can force removal of content by serving take-down notices on providers.

Then there are provisions against circumventing copy protection and avenues for content owners to subpoena internet providers for information about users who are suspected of downloading songs. In short, the long arm of American law will soon to be reaching into Australian soil. Hollywood has got a sheriff in the Outback.

Were New Zealand to get to the FTA table, there's little doubt our Government would quickly bend over to such a request. Look how quickly we pushed through legislation to prohibit parallel importation of movies until nine months after their international release - a law with no purpose other than to protect US movie distributors.

But you have to ask, as indeed a growing number of Australians are asking, whether capitulation to the American entertainment industry cartels would be in the best interests of the country.

As we import more copyrighted material than we export, the extension to 70 years will only drive costs up, not to mention restrict further literature, music and film from passing into the public domain. In the face of such widespread civil disobedience of copyrights, we should also be asking whether we want the American music industry's solution - in essence, "track down the perpetrators and sue their asses off".

And do we really want "harmonisation" of New Zealand patent law with the United States'? We've already seen how spurious "business methods" and "software" patents have been abused in the United States to intimidate and suppress competition and innovation. And how such patent litigation has become a lucrative business.

Interestingly, free-trade agreements can also work to defend competition. The second devilish detail to emerge last week was used by TelstraClear in its submission to Minister of Communications Paul Swain regarding the unbundling debate.

TelstraClear argues the decision by the telecommunications commissioner not to unbundle (open up Telecom's lines monopoly to competition) would be "contrary to New Zealand's existing international trade obligations and is likely to be an impediment to the negotiation of free-trade agreements with other countries given their strong support for unbundling, particularly the United States".

As TelstraClear points out, New Zealand is a signatory to the World Trade Organisation's Basic Telecommunications Agreement which means it signed on to implement the regulatory principles set out in the Reference Paper on Basic Telecommunications Services. In short, that means unbundling.

TelstraClear gets support for its case from CompTel/Ascent - an alliance of two leading trade associations in the US - which criticises the Commerce Commission's decision as "harmful to competitive carriers and protective of the incumbent [Telecom]".

It will be illuminating to see how the Government responds to this development, given its support for free trade. One possibility is that the free-trade argument may be just the face-saving excuse Swain needs to send the commissioner's report back for revision.

Call me cynical if you like, but I can't see this happening. As evidenced by Australia's example, free-trade agreements, no matter how well-intentioned, always end up weighted towards cartels and monopolists. Combine that thought with the might of America at the bargaining table - plus the fact that Telecom is largely an American-owned company - and an outcome for the devil we know is awfully predictable.

* Email Chris Barton