FTA disastrous for Australian computer industry and users

Dr Andrew Tridgell
Linux Australia
July 2004
The Free Trade Agreement between Australia and the United States is a disaster for many sections of the Australian computer industry, and for Australian computer users. While the media focus has been largely on the farming and PBS aspects of the FTA, the real area of interest for computer users and computing professionals in Australia should be Chapter 17 which covers intellectual property, including copyright and patents[1].

In this paper I will concentrate on the impact on the Australian software and computer industry, although it is also clear that Chapter 17 of the Free Trade Agreement negatively impacts on other areas of Australian society which rely heavily on using copyright material, such as students, libraries and educational institutions.

Chapter 17 requires Australia to adopt laws as draconian as the Digital Millennium Copyright Act (DMCA) which US citizens have been forced to suffer under for 6 years, but without the fair use exceptions that are so important to establish a balance[2].

Just as the United States is starting to realise how harmful these laws are - as shown by the proposed Digital Media Consumers Rights Act in the United States[2] - the FTA has the potential to mutually lock both countries into adopting these laws for the long term[3].

Harming Trade

The free trade agreement has been presented as promoting trade and breaking down trade barriers, but Chapter 17 is more about restrictions and constraints on Australians. For Australian computer users what Chapter 17 really does is erect a one-way gate, preventing Australian consumers from having access to the same software and media that are enjoyed in other countries.

For instance, Australia is a small market in world terms, so it is not uncommon to find that a piece of software or a DVD is only available overseas. While we might all try to buy from an Australian supplier when we can, it just isn't always possible. In that case it is nice to know that we can buy from an overseas supplier and play the DVD here in Australia.

When the laws resulting from Chapter 17 come into effect we will be in a very different position regarding DVD zoning. It could become illegal to own a DVD player that can play a DVD from Britain or the United States. It could become a criminal act to supply somebody with a DVD player modified to play foreign DVDs[4].

The Australian government has made statements that they will ensure that the legislation resulting from the FTA will allow for foreign DVDs to be played in Australia, but given that this is clearly opposed to the FTA terms it begs the question as to why we are considering agreeing to a Free Trade Agreement that we do not intend to honor.

The FTA terms, like the DMCA in the United States, gives companies unprecedented powers to enforce their strange pricing schemes with criminal sanctions. The quest by these companies to charge vastly different prices for the same thing in different parts of the world has the effect of not just raising prices for Australian consumers, but also of making a wide range of material completely unavailable.

In the media and software markets, as in so many things, the United States is Zone One. The huge market of the United States means that consumers are largely unaffected by the censor-like consequences of these laws. In Australia we don't have that sort of market power.

This is just one example of a common theme in Chapter 17 where the obligations to make changes and the negative consequences of the agreement only affect Australia. This parallels the consequences of the changes to the Pharmaceutical Benefits Scheme, where an arguably better system is being replaced with a worse system, merely because the worse system happens to be the one currently in use in the United States.

Doublespeak

Reading Chapter 17 of the Free Trade Agreement can be like venturing into an Orwellian world of doublespeak. Words which everyday consumers might think have their normal dictionary meanings end up having quite a different meaning.

For instance, much of the increasingly important open source software world operates on a basis of cooperation with no financial transaction. During the 17th May senate committee hearings on the FTA Senator O'Brien pointed out that the FTA states that:[5]

  "... provide for criminal procedures and penalties against persons
   circumventing for commercial gain or profit technological
   protection measures"
This was in response to testimony from Paul Russell that Chapter 17 would greatly harm the Open Source software movement in Australia, which is historically non-commercial in nature.

What Senator O'Brien didn't realise is that Chapter 17 defines "commercial" to include activities that:

  "... have no direct or indirect motivation of financial gain"
So the FTA defines commercial to include non-commercial! Like a number of other aspects of Chapter 17, this spreads the net of criminal sanctions much wider than it first appears.

Jail Time

One might be excused for thinking that laws this bizarre would not be used by companies to target legitimate computer professionals. None of us really care if those involved in real crimes are hit by laws like these, but unfortunately the experience of the DMCA in the United States shows that some companies are quite willing to invoke the harsh criminal sanctions associated with these laws for actions which by normal moral and ethical standards would be reasonable and legitimate.

For instance, in 2001 a Russian programmer named Dimitry Skylarov spent several months in a United States jail after Adobe asked the FBI to arrest him for writing software that allowed books in the Adobe e-books format to be used by blind people[6]. Dimitry, who wrote the software in his home country, was visiting the United States to give a paper at an international conference.

Since then a number of key technical conferences have had to be moved away from the United States as organisers fear that some of their speakers could suffer a similar fate. It is notable that the three major technical Linux conferences are now in Canada, Germany and Australia, which all lack DMCA-like laws.

Harming Small Business

An illustration of just how much DMCA type laws can harm competition, and in particular small and medium businesses was provided recently by StorageTek in the United States. StorageTek makes large storage systems, and recently used the DMCA to block another company from servicing its equipment. It did this by arguing that a "key" used during servicing was a "Technological Protection Measure" under the DMCA. The consequences for the professional computer industry of these sorts of rulings could be disastrous.

The United States intellectual property laws, biased as they are towards the large players that Australia lacks, leave small and medium businesses at the mercy of their larger overseas competitors.

Harming Open Source

The best hope for putting real competition back into the software industry in Australia is the increasingly popular Linux operating system and associated Open Source software based upon work started by the GNU project in 1984[7][8]. There is growing fear within with the Australian Linux community that the advent of the DMCA, and the increased use of dubious software patents in Australia will provide legal opportunities for the opponents of Linux to stifle competition.

We have already seen the DMCA used in this way in the United States, with the DMCA used to prevent Linux from providing the same set of media-playing applications as Microsoft based PCs, which makes Linux a significantly less attractive desktop alternative. It would be a tragedy to allow the same mistake to be made here.

Conclusion

Chapter 17 of the Free Trade Agreement with the United States could be a disaster for the Australian computer industry. At present Australia has an enviable competitive advantage in the important emerging area of open source software. If we want our country to achieve its potential in this industry then we must not accept this agreement.

The Australian government appears to be gambling the Australian computer industry in its desire to rush through this ill-considered agreement and associated legislation. Given the complexity of the issues[9] and the problems outlined above, it is hard to see how the incredible haste that has been shown in dealing with this legislation can be justified before the upcoming election.

About the Author

Dr Andrew Tridgell is the author of numerous pieces of Open Source software, including the Samba software suite. Samba is a key component of the Linux operating system which allows Microsoft and non-Microsoft systems to work together.

References

[1] http://www.bakercyberlawcentre.org/fta/

[2] http://www.eff.org/IP/DMCA/unintended_consequences.php

[3] http://www.house.gov/boucher/docs/dmcrahandout.htm

[4] http://www.linux.org.au/papers/fta-paper.html

[5] http://www.aph.gov.au/hansard/senate/commttee/S7663.pdf

[6] http://www.freesklyarov.org/

[7] http://www.gnu.org/

[8] http://www.linux.org.au/

[9] http://www.aph.gov.au/Senate/committee/freetrade_ctte/submissions/sub297.pdf