Thursday, October 7, 2010

Intellectual Property Rights and Non-Violation Nullification or Impairment of Benefit

Allen Z. Hertz was senior advisor in Canada's Privy Council Office serving the Prime Minister and the federal cabinet. Earlier he was in the Foreign Affairs Department where he advised on intellectual property rights. He participated in treaty negotiations, including for the North American Free Trade Agreement (NAFTA), and represented Canada at the World Trade Organization (WTO)  and the World Intellectual Property Organization (WIPO). He wrote the 1987 federal Green Paper on "Semiconductor Chip Protection in Canada" and was founding editor of "Computer Law: A Report for Business and the Professions." He taught history and law at universities in New York, Montreal, Toronto and Hong Kong. As an undergraduate he was at McGill University, and then did graduate work at Columbia University where he received an M.A. and a Ph.D., in history. Dr. Hertz also has international law degrees from Cambridge University and the University of Toronto.

This posting contains Part III of "Shaping the Trident: Intellectual Property Rights under NAFTA, Investment Protection Agreements and at the WTO," which first appeared in 1997 in Volume 23 of the Canada-United States Law Journal, 261. The article was part of the Proceedings of the Canada-United States Law Institute Conference on NAFTA Revisited. The views expressed were those of the author in his personal capacity, not those of the Government of Canada. This article is current up to May 1996. Part VI: Conclusion is posted together with Part I. Parts II and IV-V appear in separate postings on this website.


The possibility of a complaint alleging "non-violation nullification or impairment of benefit" first arose in connection with dispute settlement under the 1947 General Agreement on Tariffs and Trade (GATT)[118]  The term describes a right of legal action arising out of circumstances in which there has been no inconsistency or breach of a legal obligation.[119]  Rather, the non-violation complaint's rationale is to protect the overall balance of concessions that had been reasonably expected when the agreement was negotiated.[120]  The non-violation complaint is designed to deal with the contingency that the standard legal commitments in a trade agreement may fail to preserve the balance of benefits that initially led a country to become Party to the agreement. Because inconsistency is not alleged, the aim is not to get the defendant to withdraw the new measure,[121] but rather to give the successful complainant a compensatory adjustment to restore the balance of interests.[122]  To make good his claim, the complainant must furnish the panel with detailed proof that the defendant's new measure has nullified or impaired benefits which had been reasonably anticipated when the negotiations were concluded.[123]

A 1950 case between Chile and Australia provides a good example of the non-violation complaint.[124]  In GATT 1947, Australia had given Chile a trade concession abolishing customs duties on sodium nitrate which Australian manufacturers commonly used in fertilizer production. In 1947, Australia was subsidizing fertilizers produced with either sodium nitrate or ammonium sulphate. After 1947, Australia terminated its domestic subsidy on fertilizers produced with sodium nitrate, but retained its subsidy for fertilizers produced with ammonium sulphate. This measure radically diminished Australian demand for sodium nitrate and upset the competitive relationship between sodium nitrate and ammonium sulphate. Therefore, Chile brought a successful non-violation complaint under GATT. Australia's unanticipated abolition of the subsidy for fertilizer made from sodium nitrate was held to be a non-violation impairment of the benefit which Chile had reasonably expected to receive from the GATT 1947 sodium nitrate tariff concession.[125]

Non-Violation Applied to NAFTA Intellectual Property

Intellectual property rights (IPRs) lawyers ought to be especially interested in the phenomenon of the non-violation complaint, because a NAFTA annex on Nullification and Impairment specifically applies this GATT concept to the treaty's Intellectual Property Chapter.[126]  Subject to some exceptions,[127]  a Party may have recourse to NAFTA's State-to-State dispute-settlement procedure, if it considers that any benefit that it could reasonably have expected to get under any provision of the Intellectual Property Chapter is being nullified or impaired as a result of another Party's application of an unanticipated new measure, not inconsistent with NAFTA.[128]

Non-Violation Complaint Available for TRIPS?

Despite its origins in GATT 1947, the complaint for non-violation nullification or impairment of benefit was not immediately available with respect to obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  Such non-violation complaints will not be possible under TRIPS before January 1, 2000.[129]  Prior to that date, the TRIPS Council must examine the possible scope and modalities of such non-violation complaints under TRIPS and is required to submit relevant recommendations to the WTO Ministerial Conference. The latter may, by consensus, approve recommendations to be effective for all WTO Members without further acceptance procedures. Alternatively, the Ministerial Conference consensus may reject the TRIPS Council's recommendations and extend the moratorium to study further whether non-violation complaints should apply to TRIPS disputes.[130]  If no consensus is reached, non-violation complaints will become available with respect to the Dispute Settlement Body's handling of TRIPS disputes on January 1, 2000.[131]

During the negotiations leading to TRIPs, Canada was among those countries opposing the application to IPRs of the possibility of non-violation complaints. This was one of the last TRIPS questions discussed before the December 15, 1993 conclusion of the Uruguay Round. In August 1992, Canada had agreed to apply the possibility of non-violation complaints to NAFTA's Intellectual Property Chapter. However, that decision was made only after the cultural industries had been carved out from Canada's NAFTA obligations by the exception set out in NAFTA, Annex 2106 (discussed on this website in a separate posting on the NAFTA Cultural Industries Exception).

What is the "Benefit" of an Intellectual Property Right?

For trade in goods, there has not been too much difficulty in understanding the nature of a "benefit," e.g., a benefit conferred by a tariff concession. However, defining the meaning of benefit has always been the principal difficulty in thinking about the application of non-violation complaints to IPRs. NAFTA sidesteps the question by refraining from explicitly defining benefit. This is left to be handled as a matter of interpretation, within the context of the various obligations that are specifically subject to NAFTA, Annex 2004: Nullification and Impairment.

Consistently, the Canadian government view has been that the IPRs area cannot tolerate an understanding of "benefit" seen as all the economic consequences that might normally be expected to flow from the use of a given IPR. During the Uruguay Round and the NAFTA negotiations, Canadian negotiators explained that IPRs are normally articulated not as an affirmative "right to use" but rather as a negative "right to prevent unauthorized use." This point was emphasized as the launching pad for the argument that, in the normal course of events, many factors might legitimately intervene to limit or prevent the right holder's use of his protected subject matter or to influence the economic results of such use.

For example, an inventor may get a patent for his pharmaceutical, but may be refused marketing permission because of considerations of safety and efficacy. Similarly, a country's consumer protection and health-services policy might urgently require the introduction of price controls for pharmaceuticals.

Similarly, Canadian TRIPS negotiators were always uncomfortable with the idea that the patent owner's right to prevent unauthorized third parties from using his invention could be extended into a State-to-State guarantee of non-interference with the market share or profit which the patent holder might normally expect from the commercialization of his invention.

In NAFTA and the Uruguay Round, Canadian negotiators argued that an IPR's "benefit" is nothing more than the enjoyment of the specific right conferred on the IPR owner. For example, the benefit of NAFTA's exclusive rental right for sound recordings[132] would be properly described as the record producer's ability to enjoy the right to authorize or prohibit third parties with respect to commercial rental of his sound recording.

John Gero
Canada's Chief Negotiator for NAFTA's Intellectual Property Chapter

USA view of "Benefit" of an Intellectual Property Right

By contrast, the United States government's understanding of "benefit" tends to be much broader. The United States consistently contends that benefit covers the aspect of commercial exploitation. During the NAFTA negotiations, the United States delegation argued that -- on the one side -- there is the Intellectual Property Chapter to deal with the acquisition, maintenance, and enforcement of IPRs, and -- on the other side -- Annex 2004: Nullification and Impairment to deal with the question of the use of IPRs.

Distinguishing between trade agreements like NAFTA and pure IPRs treaties like the Paris Convention for the Protection of Industrial Property or the Berne Convention for the Protection of Literary and Artistic Works, the United States delegation contended that under trade agreements "palpably unfair trade distortions should find their remedy, notwithstanding the lack of an outright inconsistency." Following are two scenarios to explore the possible operation of such an expansive understanding of "benefit".

Plain-Packaging Requirement for Cigarettes

Consider the hypothesis of a NAFTA Party seeking to reduce smoking by an unprecedented new measure requiring the plain packaging of both domestic and imported tobacco products. Just such a plain-packaging proposal was suggested to the Canadian government by private-sector health groups trying to make cigarettes less attractive to adolescents.[133]  In its most extreme form, the proposed plain-packaging requirement would mean that tobacco companies would be unable to use some or all of their existing trademarks. They would have to use, as an indication of source, rudimentary trademarks consisting of nothing more than their company or brand names. It has been alleged that such a plain-packaging requirement could also destroy the rationale for indirect tobacco advertising (e.g., via sports and arts sponsorship) by breaking the link between many established tobacco trademarks and cigarette packages.[134]

The suggested cigarette plain-packaging measure would respect NAFTA's national treatment requirement by applying equally to the trademark rights of both nationals and foreigners. Although the issue is debatable, a requirement of thoroughgoing plain-packaging might not violate the NAFTA Intellectual Property Chapter's substantive trademark provisions. Arguably, NAFTA's Intellectual Property Chapter does not require Parties to give owners an affirmative "right to use" their trademarks. Rather, NAFTA may be understood to require the owner to receive nothing more than the negative "right to prevent" unauthorized third parties from using his trademark.[135]

Furthermore, the NAFTA ban on "encumbering" a trademark's use in commerce arguably does not extend to discipline a Party enacting an outright prohibition of use.[136]  Rather, the reference to "encumbering" probably points to an intention to prohibit domestic requirements for the linking or coupling of marks.[137]  Coupling aims at gradually shifting goodwill from a trademark of foreign origin to a trademark of domestic origin by requiring the two to be used together. A non-national is presumed to be the owner of the trademark of foreign origin and his domestic licensee to be a national owning the linked trademark of domestic origin.[138]

To counter a new cigarette plain-packaging requirement, a NAFTA Party might, therefore, be unable to mount a successful challenge alleging outright violation of NAFTA's trademark provisions. But, there would always remain the legal possibility of using NAFTA, Annex 2004, to lodge a State-to-State non-violation complaint alleging nullification or impairment of the benefit which the complainant had (in 1992) reasonably expected to accrue to its nationals under the Intellectual Property Chapter's trademark provisions. In this regard, some would allege that "benefit" means the economic return which the owner would normally expect from his trademark's use in commerce. NAFTA's general exception for health-related measures might not excuse such a plain-packaging requirement because, for IPRs-related non-violation complaints, the general health exception seems to apply only to cases involving trade in goods originating in another NAFTA Party or technical barriers to trade in goods between NAFTA Parties.[139]

To be sure, there would be many good arguments to counter such a non-violation complaint against a domestic measure requiring cigarette plain packaging. A heavy onus would be on the complainant to provide "a detailed justification"[140] proving that its nationals suffered harm linked to denial of a benefit that in 1992 was reasonably expected to flow from ownership of the relevant IPR. "As every contract lawyer knows, judgments about the 'reasonableness' of one party's expectations are, at bottom, judgments about the reasonableness of the other party's behaviour."[141]  During the NAFTA negotiations, cigarette smoking's health hazards were well-known and the possibility of a cigarette plain-packaging requirement was already being discussed in some anti-smoking and trademark circles.[142]  In assessing whether such a plain-packaging measure could have been reasonably anticipated in 1992, some weight would also have to be given to NAFTA's provisions for health-related measures. Specifically, NAFTA permits the Parties the possibility of protecting human life and health via the adoption of sanitary measures under Article 712(1)[143] and standards-related measures under Article 904(1).[144]   Because these provisions probably do not override the Intellectual Property Chapter, they might not serve as a defence in a violation case. Nonetheless, they remain directly relevant to the issue of reasonable expectations in a non-violation case.[145]

Were a NAFTA Party to enact such a plain-packaging requirement for cigarettes, for policy reasons the United States government would perhaps be unlikely to institute a State-to-State non-violation complaint to defend the foreign trademark rights of United States tobacco companies. For example, while he was United States Trade Representative (USTR), Commerce Secretary Mickey Kantor explained that the Clinton administration wants to avoid using trade law to stop countries that are trying to reduce smoking via bonafide health measures.[146]

Local-Content Quota for Domestic Broadcasting

As a second hypothesis to illustrate the potential operation of non-violation nullification or impairment of benefit, consider a current or future NAFTA Party, without the protection of the cultural industries exception. The NAFTA Party requires all the country's television broadcasters to be domestically incorporated with eighty percent ownership by nationals. In 1999, a new licensing requirement stipulates that all television stations must broadcast only audiovisual works first-fixed domestically. This scenario can be distinguished from a trade-in-goods situation because an audiovisual work first-fixed abroad may nonetheless be manufactured at home. Another NAFTA Party brings a non-violation complaint alleging that the new 100% local-content rule impairs the benefit which was expected to flow to its film producers from NAFTA rights in the copyright of cinematographic works.[147]  This copyright line of argument would be all the more likely under NAFTA, because GATT precedents suggest that it is very difficult to make much headway characterizing television programming as a trade-in-goods issue.[148]

The defendant Party would be unable to rely on the Annex 2004 exception from non-violation complaints with respect to IPRs.[149]  The exception does not apply because the hypothetical programming requirement does not qualify for an exception under NAFTA, Article 2101(1), which incorporates, for NAFTA disciplines with respect to international trade in goods and technical barriers to international trade, the general exceptions for public morals, health, etc., in GATT, Article XX. Nor would the hypothetical programming requirement be sheltered from the possibility of a non-violation complaint by the combination of NAFTA, Annex 2004(2)(b) and Article 2101(2).[150] 

Non-Violation as Remedy for "Market Access" Failure?

The foregoing scenario clearly demonstrates that a non-violation complaint can be applied to IPRs to address what is essentially a market-access problem. The conjunction is significant because the United States government consistently raises market access in connection with IPRs.[151]  This link is already familiar from "Section 301" of the U.S. Trade Act of 1974, as amended by the 1994 Uruguay Round Agreements Act. The "Section 301" procedures not only target foreign countries failing to protect IPRs, but also deal with:
the denial of fair and equitable nondiscriminatory market access opportunities [including] restrictions on market access related to the use, exploitation, or enjoyment of commercial benefits derived from exercising intellectual property rights in protected works or fixations or products embodying protected works.[152]

Road Ahead under NAFTA and TRIPS

The application to IPRs of complaints alleging non-violation nullification or impairment of benefit will eventually be clarified by NAFTA panels. Exactly what kind of IPRs complaints may be brought to NAFTA panels under Annex 2004 cannot be predicted with certainty. Similarly, we know neither how NAFTA panels will understand an IPR's "benefit" nor whether they will follow narrow or broad interpretations of the provisions dealing with non-violation nullification or impairment of benefit.

Nonetheless, enough has been said to identify the issue of non-violation complaints as one of the pressing new questions of the contemporary international IPRs regime. This is pertinent, because before January 1, 2000, there is still enough time for WTO Members to explore the implications thoroughly. In this regard, concerned countries should be diligent to ensure that the question of non-violation complaints figures prominently in the TRIPS Council's work plan. Because nothing short of consensus could block the non-violation complaint's application to IPRs, efforts should perhaps be concentrated on examining the "scope and modalities" as provided for by TRIPS, Article 64(3). For example, a useful approach might be to seek international agreement on an appropriate definition of "benefit" which urgently requires "further clarification especially in cases of non-violation complaints outside the area of tariff benefits and tariff negotiations."[153]


118. See Petersmann, supra note 53, at 175-229.

119. GATT, Article XXIII(1)(b), specifically provides for the possibility of a complaint of nullification or impairment with respect to the application by another Contracting Party of any measure "whether or not it conflicts" with GATT provisions. See John H. Jackson, World Trade and the Law of GATT: A Legal Analysis of the General Agreement on Tariffs and Trade 179 (1969).

120. Idem, at 170, 177-78, 181-82; Jackson, supra note 9, at 94-95. For "reasonable expectation" at the time of negotiation, see 2 GATT Index, supra note 55, at 658.

121. GATT violation cases focus on getting the defendant to withdraw the inconsistent measure. But, the Contracting Parties have no authority to require withdrawal of a measure which is found to be not inconsistent with GATT. See Petersmann, supra note 53, at 215. WTO Understanding on Rules and Procedures Governing the Settlement of Disputes, Article 26(1)(b): "Where a measure has been found to nullify or impair benefits under, or to impede the attainment of objectives, of the relevant covered agreement [e.g., TRIPS] without violation thereof, there is no obligation to withdraw the measure. However, in such cases, the panel or the Appellate Body shall recommend that the Member concerned make a mutually satisfactory adjustment."

122. GATT, art. XXIII(2), deals with compensatory suspension of concessions or other obligations. See 2 GATT Index, supra note 55, at 680-84.

123. Idem, vol. 2, at 661, 667.

124. 1950 Report of the Working Party on The Australian Subsidy on Ammonium Sulphate, GATT/CP.4/39, adopted by the Contracting Parties on Apr. 3, 1950, GATT. Basic Instruments and Selected Documents II/188 (1952).

125. See 2 GATT Index, supra note 55, at 657-58.

126. NAFTA, Annex 2004(1)(d).

127. For any measure subject to an exception under NAFTA, Article 2101: General Exceptions, a Party may not bring a non-violation complaint alleging nullification or impairment of any provision of the IP Chapter. See NAFTA, Annex 2004(2)(b), which creates a disjunction between the availability of the traditional GATT, article 20, exceptions and the possibility of a NAFTA non-violation complaint alleging nullification or impairment of an IPR. A NAFTA non-violation complaint is therefore unavailable for a domestic measure with respect to international trade in goods or technical barriers to international trade, which qualifies for an exception under NAFTA, article 2101(1), incorporating GATT, article 20, and the interpretative notes thereto. In an appropriate case, a measure subject to an exception under NAFTA, article 2101(2), would also be removed from the scope of non-violation complaints alleging nullification or impairment of any provision of the IP Chapter. However, article 2101(2) is exceedingly opaque and therefore the interaction with Annex 2004(2)(b) is very much harder to assess.

128. NAFTA, art. 2004: Recourse to Dispute Settlement Procedures, and Annex 2004: Nullification and Impairment.

129. TRIPS, art. 64(2).

130. TRIPS, art. 64(3).

131. This conclusion flows from TRIPS, article 64(1), applying non-violation complaints to TRIPS disputes, and article 64(2) postponing, for five years following January 1, 1995, the application of non-violation complaints to TRIPS disputes.

132. NAFTA, art. 1706(1)(d).

133. Plain or generic packaging's efficacy is examined in an expert panel report prepared for Canada's Health Minister. See "When Packages Can't Speak: Possible Impacts of Plain and Generic Packaging of Tobacco Products" (1995). The possibility of packaging and labelling requirements is discussed in a consultative paper which the Health Minister released on December 11, 1995. See "Tobacco Control: A Blueprint to Protect the Health of Canadians," § 5.6, at 33-34.

134. Canada, House of Commons Standing Committee on Health, "Towards Zero Consumption: Generic Packaging of Tobacco Products," Standing Committee Report (June 21, 1994), at 4. However, this particular rationale for plain packaging is weakened because, at that time, the Tobacco Products Control Act, Section 8, subject to certain exceptions, already prohibited the use of tobacco trademarks in connection with non-tobacco goods, services, events and activities. On September 21, 1995, the Supreme Court of Canada in RJR MacDonald Inc. v. Attorney General of Canada found constitutional grounds to strike down Section 8 along with some other provisions of the Tobacco Products Control Act.

135. NAFTA, art. 1708(2). The Paris Convention also does not specifically require the owner to be given an affirmative right to use his trademark. See Gunnar W. G. Karnell, 8 Eur. Intell. Prop. Reps. 305 (1990), where inferring such a Paris Convention right of use is rejected by the author. But see Annette Kur, "Restrictions Under Trademark Law as Flanking Maneuvers to Support Advertising Bans: Convention Law Aspects," 23 Int'l Rev. Indus. Prop. & Copyright L. 43-44 (1992). See also Ulf Bernitz, "Logo Licensing of Tobacco Products: Can It Be Prohibited?" 4 Eur. Intell. Prop. Reps. 137-39 (1990).

136. In NAFTA's three authentic languages (English, French, and Spanish), the primary meaning of encumber/entraver/dificultar clearly connotes something less than an outright prohibition of use. This understanding is consistent with interpreting NAFTA, Article 1708(10), as addressing requirements with respect to the trademark's use. Nothing in Article 1708(10) raises the question of the trademark's non-use which is an aspect separately considered in Article 1708(8). Although a prohibition of use may reduce "the trademark's function as an indication of source", Article 1708(10) does not deal with this contingency. Instead, Article 1708(10) binds the NAFTA Parties with respect to another situation, i.e. a rule against the imposition of special requirements with respect to use, "such as a use that reduces the trademark's function as an indication of source".

137. NAFTA, art. 1708(10), addresses the mischief described by the U.S. International Trade Commission. Foreign Protection of Intellectual Property Rights and the Effect on U.S. Industry and Trade: Report to USTR (Jan. 1988), Investigation No. 332-245, under Section 332(g) of the Tariff Act of 1930: "Inadequate Intellectual Property Protection, p. 1-8; Trademarks: 6. Circumscribed usage or 'linking' -- The value of a trademark is diminished because the trademark must be used in a specified form or manner or used in conjunction with another trademark. Regime Inadequacies, p. 3-7; Trademarks: 5. Circumscribed usage or 'linking' -- Reported for 28 countries, led by Mexico (33 firms), Brazil (32), Korea (22), India (18), Venezuela (16), and Taiwan (15)."

138. See Justo Nava Negrete, Derecho de las Marcas (Mexico, 1985), at 537-52 (providing a detailed treatment of the linking of marks, vinculacion de marcas).

139. See NAFTA, Annex 2004(2)(b) and art. 2101(1). The suggested cigarette plain-packaging measure is also not of a kind subject to an exception under NAFTA, Article 2101(2), which focuses on telecommunications and international trade in services. Therefore, Article 2101(2) could not help to remove a possible plain-packaging measure from the scope of non-violation complaints under Annex 2004.

140. Relevant to such a non-violation complaint under NAFTA would be the GATT experience in this area. The WTO Understanding on Rules and Procedures Governing the Settlement of Disputes, art. 26(1)(a), requires the complaining party to present "a detailed justification in support of any complaint relating to a measure which does not conflict with the relevant covered agreement." For non-violation complaints, such a "detailed justification" was also required by the GATT Understanding on Notification, Consultation, Dispute Settlement and Surveillance of November 28, 1979 (26S/210), Annex: Agreed Description of the Customary Practice of the GATT in the Field of Dispute Settlement (Article XXIII:2), §5. See 2 GATT Index, supra note 55, at 635, 661, 667.

141. Robert E. Hudec, The GATT Legal System and World Trade Diplomacy 167 (2d ed. 1990).

142. See supra note 135.

143. NAFTA, art. 724: Definitions, says sanitary measure includes a measure to protect human life or health "from risks arising from the presence of an additive, contaminant, toxin or diseasecausing organism in a food, beverage or feedstuff."

144. NAFTA, art. 915: Definitions, says a standard "may also include or deal exclusively with . . . symbols, packaging, marking or labelling requirements as they apply to a good . . . ."

145. Similarly, a WTO panel hearing a non-violation complaint against plain packaging would have to assess reasonable expectations as of December 15, 1993, in the light of TRIPS, Article 8(1), which specifically allows WTO Members to adopt or maintain TRIPS-consistent measures necessary to protect public health. However, a contrary precedent is the 1990 Oilseeds Panel Report. See 2 GATT Index, supra note 55, at 659-60.

146. Stan Stesser, "Opium War Redux," 69 New Yorker Sept. 13, 1993, at 89.

147. NAFTA, art. 1705(2)(c).

148. Clint N. Smith, "International Trade in Television Programming and GATT: An Analysis of Why the European Community's Local Program Requirement Violates the General Agreement on Tariffs and Trade," 10 Int'l Tax & Bus. Law. 97-137 (1993). See also World Trade Organization, 1 GATT, Analytical Index: Guide to GATT Law and Practice 210 (6th ed. 1995) [hereinafter 1 GATT Index]: "In discussions in the early 1960s, the United States stated that restrictions against showing foreign television programmes were technically a violation of Article III:4 [national treatment], but that some of the principles of Article IV might apply to them. A Working Party was unable to come up with any agreement on the subject . . . . In 1991, the United States requested consultations under Article XXII:1 concerning certain measures restricting the showing of non-European films on television. The EEC stated that the question of broadcasting, whether by television or by any other means, belonged essentially to the area of services."

149. With respect to any measure qualifying for an exception under NAFTA, Article 2101: General Exceptions, a Party may not bring a complaint alleging non-violation nullification or impairment of any provision of NAFTA's IP Chapter. See NAFTA, Annex 2004(2)(b).

150. Qualifying for an exception under Article 2101(2) is one of the ways of cancelling the possibility of a non-violation complaint under Annex 2004. The domestic local-content rule would need to benefit from an excuse from NAFTA disciplines with respect to the application to services of NAFTA: Part Two (Trade in Goods) or Part Three (Technical Barriers to Trade) or with respect to Chapter Twelve (Cross-Border Trade in Services) or Chapter Thirteen (Telecommunications). International trade in goods and technical barriers to international trade are clearly not pertinent. NAFTA's Chapter on Cross-Border Trade in Services is irrelevant to NAFTA obligations for television stations in a country requiring all broadcasters to be domestically incorporated and principally owned by nationals. Finally, NAFTA, Article 1301(2), says the Telecommunications Chapter does not apply to any measure relating to cable or broadcast distribution of radio or television programming.

151. For example, "market access" figures prominently in the China-U.S. IPRs Agreement [Feb. 26, 1995] 34 I. L. M. 881. USTR discussed "market access" in a 1995 paper, Economic Development in the Americas: The Role of Copyright, Patent, and Trademark Protection in the Free Trade Area of the Americas, 3 Inside NAFTA, no. 1, Jan. 10, 1996, at 18. On December 5, 1995, the United States proposed inter alia that the FTAA "Working Group on Intellectual Property will identify measures to eliminate possible restrictions on the market access of intellectual property-related products and services throughout the Hemisphere, including through their electronic transmission." See U.S. Proposal for FTAA IPR Work Group Terms of Reference, 3 Inside NAFTA, no. 1, Jan. 10, 1996, at 7.

152. See Actions by United States Trade Representative, 19 U.S.C. 2411(d)(3)(F)(ii).

153. See Petersmann, supra note 53, at 224-25.

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