The Office of the US Trade Representative has announced a review of South Africa’s eligibility for Generalised System of Preferences benefits. The office took the step after it was petitioned by the International Intellectual Property Alliance, a private sector coalition representing large US entertainment companies. At issue is South Africa’s Copyright Amendment Bill, which has been waiting for the South African president’s signature for eight months. Charl Blignaut asked Professor Sean Flynn and lawyer Jonathan Band to explain the issues.
What is the Generalised System of Preferences and how does it work?
These programmes give extra tariff reductions to developing countries as a development tool.
The US programme eliminates duties on 3,500 products when imported from one of 119 designated beneficiary countries and territories, including South Africa.
What normally happens in situations like this?
The trade representative has announced that its next Generalised System of Preferences benefits review hearing will take place on 30 January 2020.
Normally the formal process is a small part of what happens diplomatically.
South Africa’s trade, industry and competition minister, Ebrahim Patel, met the US trade representative recently in Washington DC. The US has also called for a delegation to visit South Africa before the benefits decision is made.
Behind the scenes, the trade representative is likely to threaten South Africa’s benefits if the president doesn’t agree to send the copyright bill back to parliament and adopt changes that the US entertainment industry is demanding.
The primary complaint about the bill involves its fair use clause – which is modelled on US law. That and rights to use excerpts in education – which exist in nearly every developing country. The complaints also involve the proposed extensions of protections for local creators. This includes rights to royalties, limitations on unfair contracts, and reversion of all copyright assignments to creators after 25 years.
Is this unfair bullying on the part of the US?
Sanctioning South Africa by removing benefits because it doesn’t make changes to the bill would likely violate the World Trade Organisation rules. The organisation’s Generalised System of Preferences enabling clause requires that programme criteria be “generalised”, “non-reciprocal” and based on the development interests of the grantee, not the grantor. The World Trade Organisation requires all disputes under its agreements to be resolved under its own dispute settlement understanding.
If the US removed benefits from South Africa to meet its own industry interests, and not based on criteria reflected in multilateral standards, South Africa could challenge the action. Likewise, the US would violate the World Trade Organisation rules by claiming a violation of the organisation’s rules on intellectual property without bringing those complaints to the organisation itself.
Has South Africa been reviewed before? What happened?
In 2015 the Office of the US Trade Representative reviewed South Africa’s quota on imports of US poultry. It threatened to end Generalised System of Preferences benefits if the quota wasn’t lifted. South Africa entered negotiations and agreed to change the quota.
What happened in the fight to secure cheaper generic drugs? And it is related?
The last time the US threatened to remove these benefits from South Africa for an intellectual property issue was in the midst of the AIDS crisis.
South Africa moved to allow “parallel importation” of cheaper versions of medicines from other countries and US pharmaceutical companies complained. The US government applied pressure on South Africa to change its law. It used the kinds of private meetings and threats to benefits that are being used now.
Treatment access advocates mobilised protests that pressured the US to back down. The result was an executive order, which is still in effect, that bans the use of trade pressure on African countries to restrict access to AIDS medications.
In both cases, US trade pressure followed South Africa taking advantage of flexibility in international treaties to adopt intellectual property policies to promote local production and access to essential goods and services. Then the issue was medicine. Now the issue is knowledge and creativity.
What can South Africa do to prevent being taken off the preferential list?
We understand that in the past the US government has given the South African government detailed lists of the changes it wants made in the Copyright Amendment Bill. To foster analysis and debate, the demands of the US should be publicly released.
Has this happened to other countries over their intellectual property regimes?
In 2012, the trade representative initiated a Generalised System of Preferences review of Ukraine for its regulation of collective management organisations – an issue not governed by the World Trade Organisation or any multilateral treaty. Ukraine passed new legislation on the issue and this year benefits were partially restored.
The US also sanctioned China for its intellectual property policies, including technology transfer requirements.
In each case, the US actions appear to be World Trade Organisation violations because the policies at issue either did not violate any international norm or, to the extent they did, were not challenged in the organisation.
Can this cause the South African president to send the bill back to parliament?
The US complaints in themselves are not a constitutional basis for returning the bill to parliament, as described in one legal opinion sent to the president.
According to section 79 of South Africa’s constitution, the president
must either assent to and sign a Bill, … or, if the President has reservations about the constitutionality of the Bill, refer it back to the National Assembly for reconsideration.
This means that he can only send the bill back to parliament for reservations about its constitutionality. None of the complaints by the International Intellectual Property Alliance involve a constitutional issue.
Sean Flynn is Director, Program on Information Justice and Intellectual Property, American University Washington College of Law. Jonathan Band is counsel to the Library Copyright Alliance and an adjunct professor at the Georgetown University Law Center