Pirates of the Caribbean
So how is that Antigua and Barbuda get to play Napster? While TRIPs has generally worked as intended (at least for the U.S.), one of the problems with the dispute settlement system is that it works great when big states win. But how can a small state effectively retaliate against a big state? “Suspending obligations” by raising tariffs is, as any economist will tell you, like shooting yourself in the foot – higher tariffs just raise the prices of goods and take money out of consumers’ wallets. But the problem is much worse when you are a tiny economy and you are trying to inflict pain on a giant one. The tariffs imposed by a country with a small economy don’t cover enough trade to sting, so it just doesn’t work.
Back in 2007, the tiny islands prevailed in trade court against the U.S., successfully arguing that U.S. laws restricting Internet gambling violated the trade in services provisions of the WTO. But then they faced a conundrum. What could they do to punish the U.S.? Antigua’s proposed solution was to “suspend obligations” in the area of TRIPs. In other words, it would start ignoring certain copyright and patent rules.
Years of negotiations to avoid this outcome ensued. But on Monday, in Geneva, the WTO gave Antigua and Barbuda the right to start retaliating via TRIPs, to the tune of $21 million annually. Cue chaos in Hollywood.
For its part, the U.S. government called the planned withdrawal of obligations under TRIPs “theft” and “government-authorized piracy.” But the headline in Monday’s Deadline Hollywood gets at the mounting fear among media firms: “Copyright Nightmare on Horizon as WTO-Approved Legal Piracy Advances.”
So how is that Antigua and Barbuda get to play Napster? While TRIPs has generally worked as intended (at least for the U.S.), one of the problems with the dispute settlement system is that it works great when big states win. But how can a small state effectively retaliate against a big state? “Suspending obligations” by raising tariffs is, as any economist will tell you, like shooting yourself in the foot – higher tariffs just raise the prices of goods and take money out of consumers’ wallets. But the problem is much worse when you are a tiny economy and you are trying to inflict pain on a giant one. The tariffs imposed by a country with a small economy don’t cover enough trade to sting, so it just doesn’t work.
Back in 2007, the tiny islands prevailed in trade court against the U.S., successfully arguing that U.S. laws restricting Internet gambling violated the trade in services provisions of the WTO. But then they faced a conundrum. What could they do to punish the U.S.? Antigua’s proposed solution was to “suspend obligations” in the area of TRIPs. In other words, it would start ignoring certain copyright and patent rules.
Years of negotiations to avoid this outcome ensued. But on Monday, in Geneva, the WTO gave Antigua and Barbuda the right to start retaliating via TRIPs, to the tune of $21 million annually. Cue chaos in Hollywood.
For its part, the U.S. government called the planned withdrawal of obligations under TRIPs “theft” and “government-authorized piracy.” But the headline in Monday’s Deadline Hollywood gets at the mounting fear among media firms: “Copyright Nightmare on Horizon as WTO-Approved Legal Piracy Advances.”