Business

What startups need to know about TPP, the secret global trade agreement

Above: Air routes over the Pacific.

In the name of “individual rights and free expression,” WikiLeaks this week released the draft text of the Trans-Pacific Partnership (TPP) Agreement — an international trade agreement with the stated aim of liberalizing the economies of the Asia-Pacific region. Among other problems, this agreement may have an adverse impact on U.S. startups.

Negotiations over this trade agreement began in secret in December 2012 between Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, Japan, Vietnam, and the United States. Together, these nations are responsible for 40 percent of global production and one third of worldwide trade. Despite the secrecy, we know (from a previous leak) that discussions have covered intellectual property, competitive and State-owned enterprises, environmental policy, services and investment, and government procurement, among other issues.

Unlike under the Bush Administration, the current administration has conducted these trade negotiations behind closed doors, and though there have been some stakeholder meetings, the majority of interested parties have been forced to express their views without having seen the full text of the treaty. Access to this full draft, courtesy of WikiLeaks, could change everything.

Trade agreements are no longer simply about physical goods crossing borders, about how many automobiles should be traded with Korea. Since TPP invokes broad questions about what the Internet will be, broad public input, and oversight, is essential: It’s imperative that the individuals working on these agreements consider all possible effects in the context of our growing, global economy.

So far as we know, the negotiators have not considered the question of how this agreement could affect startups. Here are four ways TTP could have an unexpected impact:

  1. The current agreement is supported by more than 600 multi-national corporations and interests, including Nike, General Motors, Pfizer and Walmart. These companies alone have been given access to the text — but there has been no representation from the real economic value creators — new and young technology businesses, or startups.This might be the most important point. Here, startups have no voice.
  2. Increasing the term of patents and lowering global standards for patentability might be good for pharmaceuticals, but for startups already fighting against bad patents in the hands of bad actors (patent trolls), this could be a disaster.
  3. Aggressive copyright protection, of the kind that pursued Aaron Swartz, is a step backwards from the noble pursuit of free information and more universal access to knowledge. Young companies often cannot afford to pay for the latest research, and without it they are at a disadvantage based on their ability to pay, and not the merit of what many are trying to achieve. Aggressive protection of this kind is also something we have seen before in the SOPA and PIPA legislation — legislation the tech community came together to defeat in the name of Internet freedom. This kind of copyright legislation is a dream-come-true for Hollywood and major corporations, but it’s a major threat to internet businesses and content creators.
  4. The uncertainty and the possible “chilling effect” on innovation could impact the ability of startups to raise money. As startups face new compliance hurdles, investors might get nervous about their ability to keep up with the new laws and standards. In a similar fashion, larger companies might play it safe and back out of acquiring a startup that is seen to be riding the line.

There is little doubt that the proposals in this agreement have been designed to promote “economic and social development,” and “reduce impediments to trade and investment.” But protecting and enforcing new and existing intellectual property rights is only one side of the solution, and unsurprisingly, it’s the one favored by existing business models, not disruptive new startups.

When a process like TPP happens in secret and is governed solely by incumbents, the result is exactly what we see before us. TPP, in this form, will set our ability to innovate back and have the same “chilling effect” we spoke about so often during the SOPA debates. There is a serious argument to be made for the power of open exchanges of information, and we should get busy making it. Prepare to get involved.


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