How the TRIPS Was Incorporated Into the WTO and What It Means for Economies of the “South”

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This article is the first of a two part examination of the Trade Related Intellectual Property System (TRIPS) and how it operates to the advantage of the economies in the Northern hemisphere (or “North”), principally the US and the EU, and to the disadvantage of those in the Southern hemisphere (or “South”). Part one below explores the origins of TRIPS, and the consequences of the negotiations on the South, while the second will concentrate on what has happened since and the efforts to obtain a ‘TRIPS-Plus’ scenario for Intellectual Property Rights by the North.

Launching TRIPS

Towards the end of the 1970s, major commercial interests in the US started to campaign for the responsibility of Intellectual Property Rights (IPR) protection to be removed from the World Intellectual Property Organisation (WIPO). Corporations, in several high-end technological sectors such as computer software and microelectronics, entertainment, chemicals, pharmaceuticals, and biotechnology complained of serious economic losses due to the absence of adequate global protection for their intellectual property. They argued that their IPR were not being adequately protected by WIPO, given its lack of an effective dispute settlement or enforcement mechanism.

Their efforts were ratcheted up in the 1980s with increasing pressure being placed upon the United States Trade Representative (USTR) to more vigorously protect and promote tighter IPR internationally. At the same time, several US business associations began to synchronise their lobbying efforts to press for changes in US intellectual property trade policy.

Through the lobbying of US business associations and bodies, OECD member nations were encouraged to see the protection of IPR as an issue of importance, given the potential economic benefits they too could reap from the ‘economic rents’ of intellectual property. Therefore, the OECD supported the US campaign to promote strengthened IPR during the General Agreement on Tariffs and Trade (GATT) Uruguay Round, which led to the creation of the World Trade Organization (WTO).

At the same time, major multinational corporations such as Monsanto, Pfizer and IBM played central roles in mobilising executives in other multinationals to play a greater role in supporting an expanded, effective IPR implementation system globally.

The South and the TRIPS Negotiations

The initial stages of the TRIPS preparatory negotiations were dominated by the technology-exporting members, most particularly the US, EC and Japan, as the South was barely involved at this stage, given its overall lack of IPR expertise. As the negotiations progressed and the involvement of the South increased, its general opposition to TRIPS soon became clear.

For the South, the US appeared intent on promoting IPR for the benefit of its technological industries with scant consideration of its potential impact upon the economic welfare of the South. Another area of concern was the differing ethical standards as to what exactly should be protected by an intellectual property agreement under the WTO. India, for instance…

did not allow product patents for pharmaceuticals, foods, or agrochemicals because such patents would deny people access to what they needed for food and health. (Marlin-Bennett, 2004: 64)

The Indian patent system was instead based on sui generis ownership, which permitted community patenting of the biodiversity of each community. It was hardly surprising, therefore, that India proved to be one of the strongest opponents to the awarding of patents in several of the technological fields, including pharmaceuticals, chemicals and micro-organisms.

Similarly, prior to TRIPS countries such as China and Egypt granted patents on pharmaceutical processes, rather than on the final products, thus enabling the local manufacture of generic medicines at considerably reduced prices.

Although, the North did dangle the carrots of potentially improved trading arrangements for the South in areas such as agriculture and textiles, if they were to agree to improved IPR protection, intensive pressure on the part of the US and its’ allies were required to ensure that the South as a whole agreed to negotiate on a wide-rule based framework for IPRs.

A major weapon in the North’s arsenal was the application by the United States Trade Representative (USTR) of the ‘Special 301′ provision. This provision stipulates that the USTR is required to take note of countries that fail to provide an adequate level of IPR protection and if necessary impose trade sanctions. The first use of the ‘Special 301′ provision came in 1985 when the US pharmaceutical industry protested that Korea’s IPR laws were insufficient to protect their rights in this area. After two years of negotiations, Korea was obliged to amend its IP laws as demanded by the US. Through the threatened application of this provision against a range of counties together with its actual application against Brazil with the imposition of tariffs on its paper products, non-benzenoid drugs and consumer electronic items, the US was able to place intense pressure on countries in the South, thus greatly neutralising their opposition to TRIPS.

The debt crisis and ensuing intervention of the International Financial Institutions (IFIs), who strongly supported the North’s IPR demands, in many ‘developing’ countries also placed extra pressure on the South to accede to TRIPS. The debt crisis…

effectively put a large number of countries, including some of the more powerful developing countries, into receivership. International Monetary Fund and World Bank conditionalities were based upon an export dependent strategy, and many of these countries were “advised” to participate constructively in the Uruguay Round negotiations as part of the strategy for recovery… The cumulative effect of these developments was to erode developing country solidarity, isolate them [Indian negotiators] intellectually, and weaken them tactically. (Sen, 2001: 8-9)

By the conclusion of the Uruguay Round negotiations, the South was a spent force with most of its members experiencing ‘negotiation fatigue’

…with only about ten countries actually sending intellectual property experts to the TRIPs negotiations. In the majority of cases, the heads of delegations to the TRIPs negotiations were from national trade ministries or directorates… In the absence of the necessary legal expertise within their national administrations, developing countries simply did not have the knowledge necessary to negotiate effectively on the content of the TRIPs Agreement. (Matthews, 2005: 44)

On the other hand, delegations from the North had access to the best business advice and counsel available with individuals from the private sector such as Pfizer CEO Ed Pratt acting as unofficial advisors to the US official delegation. When India and Brazil formulated counter-proposals to TRIPS they…

were evaluated by Counsel from US industry, who were able to advise the US government negotiating team in Geneva and allow them to ‘pull rank’ in terms of technical expertise. (Matthews 2005: 45)

The TRIPS Agreement that came into force instituted…

minimum global standards of IPRS protection as well as rules on enforcement, and most importantly, brought the domestic IPRS regimes of WTO Members under the jurisdiction of the WTO dispute settlement system. (Lanoszka 2003: 182)

Furthermore, the standards that were put in place were modelled on ‘western’ legal practice and established at a level analogous to those in the North.

TRIPS therefore not only defined the minimum protection levels that Member nations should enforce to protect patents in their countries but also laid out the measures and remedies intellectual property right-holders would be able to avail of to enforce their rights.

While at the multilateral trade negotiating level, this was ostensibly a success for the efforts of the North in convincing the South of the benefits of including TRIPS in WTO, it was really a success for its large-scale technological corporations. The gloating of the ex-head of Monsanto, James Enyart, regarding the ‘success’ of his lobbying group the Intellectual Property Committee (IPC) is extremely revealing:

Once created, the first task of the IPC was to repeat the missionary work we did in the US in the early days, this time with the industrial associations of Europe and Japan to convince them that a code was possible… We consulted many interest groups during the whole process. It was not an easy task but our Trilateral Group was able to distill from the laws of the more advanced countries the fundamental principles for protecting all forms of intellectual property…Besides selling our concepts at home, we went to Geneva where [we] presented [our] document to the staff of the GATT Secretariat. We also took the opportunity to present it to the Geneva based representatives of a large number of countries…What I have described to you is absolutely unprecedented in GATT. Industry has identified a major problem for international trade. It crafted a solution, reduced it to a concrete proposal and sold it to our own and other governments…The industries and traders of world commerce have played simultaneously the role of patients, the diagnosticians and the prescribing physicians.

Indeed, Enyart had reason to feel exultant at what he believed had been achieved by the IPC and other business lobbying efforts. The US approach to IPR as “[I]nstitutionalized in its domestic laws” had not only “gained a multilateral dimension when the United States succeeded in getting intellectual property protection on the agenda for the Uruguay Round of GATT trade talks beginning in 1986” (Sell 2003: 130) but had been widely accepted and was now being promoted, advanced and guarded by the principal multilateral trading system and its Dispute Settlement System.

What TRIPS meant for the South

For many in the South, on the other hand, TRIPS was anything but a positive development, as it facilitated the efforts of technologically advanced corporations in the North, operating in areas as diverse as biotechnology, lasers, electronic software and hardware, optic electronics and liquid technology, to maintain their lead in these sectors without any substantial benefits for the South in return. Indeed, reports carried out following TRIPS revealed that large technological corporations had benefited greatly from its incorporation into the WTP not only in guarding their IPR but also through their ability to extract greater license fees and royalties.

TRIPS also provided serious obstacles for technological latecomers in the South seeking to emulate the Japanese strategy of the “fast second” by reverse engineering and rapidly commercializing foreign technologies. The TRIPS Agreement therefore imposed a significant obstacle to industrial development, given that the procurement of…

proprietary knowledge has been among the key determinants of both early and late industrialization… [and the] history of intellectual property rights protection shows that countries with low levels of technological capacity have generally used weak standards until they reached a level of development at which their industries could benefit from intellectual property rights protection. (UNCTAD 2006: 172)

Furthermore, should a southern based company wish to innovate in information technology areas such as computer assembly, chip design or software development they are obliged to integrate a number of the patented processes and designs predominantly located with major US firms, such as Monsanto, Intel and Microsoft.

In an effort to allay these concerns, one of the major bargaining chips placed on the table by the North during the TRIPS negotiations of was the promise of increased technology transfer and potential greater investment flows from the more technologically advanced nations. However, as Donal O’Connor, an ex-president of the British and Ireland Licensing Executive Society (LES), candidly admitted in his evaluation of the TRIPS Agreement the hypothesis connecting greater IPR to the transfer of technology and flow of investment to the South…

… has not by any means been proven. It is one that we in LES wish to accept because it is one that we in LES find attractive.

Furthermore, the form in which IPR were defined in TRIPS has led to biopiracy – the patenting of indigenous biodiversity-related knowledge. As Vandana Shiva explains the consequences of biopiracy are extremely detrimental to the South:

Biopiracy and patenting of indigenous knowledge is a double theft because first it allows theft of creativity and innovation, and secondly, the exclusive rights established by patents on stolen knowledge and steal economic options of everyday survival on the basis of our indigenous biodiversity and indigenous knowledge. Overtime, the patents can be used to create monopolies and make everyday products highly priced.

In order for this biopiracy to be stopped, TRIPS would have to be overhauled completely so that it recognises the “collective, cumulative innovation embodied in indigenous knowledge systems”. Failure to do so will result in global corporate profits being subsidised through the appropriation of the knowledge rights of the poorest people on our planet, many of them too poor to even meet their own needs through the global market place.

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Bibliography

Lanoszka, A. (2003) ‘The Global Politics of Intellectual Property Rights and Pharmaceutical Drug Policies in Developing Countries’. International Political Science Review, 24(2), 181-197

Marlin-Bennett, R. (2004) Knowledge Power: Intellectual Property, Information and Privacy. Lynne Rienner Boulder: Colorado & London

Matthews, D. (2005) Globalising Intellectual Property Rights: The TRIPs Agreement. Routledge: London and New York

Sell, S. K. (2003) Private Power, Public Law: The Globalization of Intellectual Property Rights, Cambridge University Press: Cambridge

Sen, J. (2001) Negotiating the TRIPS Agreement: India’s Experience and Some Domestic Policy Issues. CUTS Centre for International Trade, Economics and Environment: Jaipur, India

Shiva, V. (1999) The US Patent System Legalizes Theft and Biopiracy.

UNCTAD (2006) Trade and Development Report 2006: Global partnership and national policies for development. UNCTAD: Geneva