TRIPS-Plus and the Ever Increasing Tightening of IPR

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This is the second part of a two part series on the Trade Related Intellectual Property System (TRIPS) and Intellectual Property Rights (IPR) and the international treaties negotiated through the World Trade Organisation by economies of the Northern Hemisphere (North) and those of the Southern Hemisphere or South.

TRIPS-Plus

Despite the initial euphoria of the business community and their lobbying groups, as outlined in Part 1 of this piece, due to the successful incorporation of TRIPS into the WTO and the increased business and revenue prospects it appeared to promise, the honeymoon was short lived. Almost immediately an increasing level of grumbling could be heard belching forth from the bowels of some of the globe’s largest technological corporations that TRIPS had failed to adequately respond to their needs. This is because it failed to deliver

…the highest standards of IP protection needed to promote global trade and to respond to the requirements of the digital age. (Roffe 2004: 49)

Soon, these transnational companies were lobbying, as actively as they had been during the creation of TRIPS, for the introduction of even more stringent IPR. As was the case with TRIPS, the US led the way. Just as it had pressurised those countries reluctant to accept TRIPS during the GATT Uruguay Round of trade talks that led to the founding of the WTO.

The USA… pressured some developing countries to accept TRIPS-plus rules as part of the concessions required of countries newly acceding to the WTO. … [using] a variety of unilateral pressures to push for higher IP protection – including trade sanctions, reduction in foreign assistance, withdrawal of trade preferences, and the use of technical assistance programmes. (Malpani 2007: 4)

However, whereas previously efforts to obtain agreement had consisted almost exclusively of the threat of trade sanctions or the refusal to activate trade concessions, as had occurred during the TRIPS negotiations, the North now frequently resorted to obtaining increased IPR through bilateral or regional Free Trade Agreements (FTA) and investment agreements.

Nor was the US alone in compelling countries in the South to accept increased IPR protection. From the start, the EU amply demonstrated its keenness to get in on the act:

Since the mid 1980s the US and EU have used a combination of unilateral pressure and forum shifting from bilateral agreements to multilateral standard setting and then back to bilaterals again as a way of securing trade concessions from developing countries, including stronger intellectual property (IP) protection for exported knowledge-goods. (Mayne 2005: 1)

For many commentators this reversion to using bilateral FTA as a means of obtaining increased IPR was a puzzling one, particularly from an economic point of view, as the transaction costs involved would be higher than doing so through a multilateral forum such as the WTO. However, the reversion to bilateral or multilateral trade agreements on the part of the US, EU and other ‘developed’ states had more to do with their willingness to adopt whichever approach they believed most suited their strategic aims. Therefore, while these countries saw the incorporation of TRIPS into the WTO as a means of establishing a baseline for IPR they believed that FTA and multilateral trade agreements would enable them obtain ever greater levels of IPR protection.

The turn on the part of the North to bilateral FTA and multilateral trade agreements also occurred against the backdrop of a greater assertion on the part of the South at the WTO, which had made it more difficult for the North to achieve greater concessions in areas such as TRIPS there.

Through FTA and similar agreements the North has worked to ensure that those countries signing up to these accords adopt TRIPS-Plus provisions, which include:

Extending patents and copyright to new kinds of subject matter; eliminating or narrowing permitted exceptions including those still provided in US and European IPR laws; extending protection terms; introducing new TRIPS-mandated IPR rules earlier than the transition periods allowed by TRIPS; and ratifying new World Intellectual Property Organization (WIPO) treaties containing TRIPS plus measures. (Dutfield 2005: 535)

In the case of the US, the North American Free Trade Agreement (NAFTA) together with the existing rules in US legislations has been used as a template for the development of its FTA with other states. Despite these agreements being in principle the products of open negotiation, there is a striking similarity between all the FTA entered into by the US, as only minor deviations from the preferred model and structure are permitted. In this manner, the US has placed itself in a position to achieve the

“…neoliberal economic goals of deregulation and privatisation more thoroughly and faster than can be achieved through multilateral negotiations, including through changes in domestic regulation [with] The template… [being] provided by the Canada-US FTA that was expanded to include Mexico and became the North American Free Trade agreement (NAFTA) from 1994.” (Ranald 2006: 34)

As the ex-EU Commission Trade Commissioner candidly admitted, albeit with reference to the EU approach to FTA:

We always use bilateral free trade agreements to move things beyond WTO standards. By definition, a bilateral trade agreement is “WTO plus”. Whether it is about investment, intellectual property rights, tariff structure, or trade instrument, in each bilateral free trade agreement we have the “WTO plus” provision. (Jakarta Post 2004)

At the same time, the EU has also used trade agreements to draw countries that are not members to the WTO and thence non-signatories to the TRIPS Agreement into agreeing to accede to all relevant international IPR conventions on IP, as indicated in Part I of the TRIPS Agreement.

Through such an approach, the EU had already succeeded by early 2003 in obtaining TRIPS-plus IPR commitments on life forms in nearly 90 developing countries.

At the same time, the North has also resorted to dangling the carrots in the form of specific incentives to entice states in the South into signing up to these agreements. In the same way as agriculture and textiles were put on the table during the GATT Uruguay Round negotiations to help the South swallow the pill of the tabling of TRIPS as an issue for discussion and its subsequent incorporation into the GATT 1994 Agreement,

…countries concluding a bilateral or regional treaty with the US… are required to provide more stringent IPRs regimes than any other countries, [receiving] in exchange… greater access for their exports to the US market. (Kuanpoth 2006: 2)

We have therefore, now arrived at a situation where

The intellectual property rules in TRIPS are considerably less stringent than the rules developing countries are increasingly adopting in free-trade agreements with the United States and other Western governments. The “TRIPS-plus” agreements place greater restrictions on the use of TRIPS flexibilities. For example, many free trade agreements make it much more difficult for generic drugs to enter the market upon patent expiration and extend patent period beyond twenty years. (Forman 2007: 342)

For many countries in the South this renewed drive by the North to further raise the level of IPR globally has come as a shock, as they had believed that their acceptance of TRIPS, while highly unpalatable for many of them, had drawn a line under the issue of global IPR regulation while also potentially entailing some ancillary trading benefits:

Many, if not most, developing countries accepted TRIPS (those that were not coerced into accepting it) with the expectation that it would be both easier to deal with developed countries demands on intellectual property rights in a multilateral forum like WTO and that in exchange developed countries would make concessions in agricultural subsides. (Barrio: 2006)

The reality, however, has been that for the North TRIPS has been treated as a stepping stone on the way to institutionalising progressively stringent IPR through other agreements. Ironically, the rapid proliferation of FTA including increasingly stricter TRIPS-plus conditions has even raised concerns that the work of the WTO might be undermined in the area of IPR.

In the South, the inclusion of more rigid TRIPS-plus IPR has led to widespread public opposition and demonstrations. This was the case in Thailand when large-scale protests, held in Chiang Mai to oppose US insistence on TRIPS-plus commitments in an FTA, eventually led to the collapse of the ongoing negotiations.

However, unified opposition on the part of the South remains, as it was during the TRIPS negotiations, compromised by the diversity of its members’ interests due to the wide disparities in their levels of economic development, political and economic structures, political and economic importance to the North and so on.

Pharmaceuticals

Arguably the major commercial sector that has come under sustained international scrutiny as to how they are affected by the new IPR is that of pharmaceuticals. One particularly controversial flashpoint was the 2001 ARV drugs case taken by 39 major multinational pharmaceutical corporations against South Africa for their enactment of a law that permitted the easy production and importation of generics to try and make these drugs affordable for HIV patients. The corporations soon dropped their case, following widespread international condemnation and negative media coverage.

Sustained pressure from the South, NGOs, civil society and other concerned parties together with the pharmaceutical industry’s own perceived need to tackle the ‘credibility gap’ created by this case, led to the Doha Declaration in November 2001. The Doha Declaration stated that the TRIPS Agreement should not prevent states enacting the required measures to ensure their citizens had access to necessary medicines and that it should be read as being ‘supportive of WTO Members’ right to protect public health and promote access to medicines for all.

While for some commentators, the Doha Declaration was a useful and positive clarification of elements of the TRIPS Agreement, for others it merely re-emphasized the general thrust of TRIPS itself that held up health emergencies as providing justification for the compulsory licensing of pharmaceuticals. Furthermore, it risked being rendered meaningless by TRIPS-plus components in FTA. As Correa writes:

A number of developing countries have agreed, or are in the course of negotiating FTAs in order to attain perceived commercial advantages. As a result, they have been bound to accept standards of protection of intellectual property rights for medicines that go well beyond what they had already consented to at the multilateral level. Although the FTAs… are too recent to be able to assess fully their effects on public health, their higher standards of protection will, by their very nature, delay or restrict generic competition

and thereby reduce access to medicines. Accepting those standards negates the letter and spirit of the Doha Declaration and will limit the capacity of States to progressively realize the human right to health. (Correa 2007: 402)

Conclusion

It would now appear that the North acting on behalf of its technologically advanced sectors has regarded the TRIPS Agreement, which in itself had introduced an historically unique framework for the enforcement of IPR, as only a first step – if an important one – in the creation and enforcement of more and more stringent and regulated IPRs through FTAs or any other means at its disposal. On the other hand, for those in the South who were hoping that TRIPS would be regarded as a ceiling with respect to IPR, the situation is bleak as once again they have been forced back onto the defensive.

One of the most important lessons from the campaigns to advance TRIPS and TRIPS-plus resides in the manner that they were pursued despite their anathema to many mainstream economists who felt that they were in fact a perversion of the ‘free trade’ mantra. By providing ‘economic rents’ and subtle monopoly rights for their holders, they prevent free and open competition in the marketplace. However, despite such concerns, it is hardly unsurprising that economic orthodoxy was disregarded by those major commercial interests and their representative states, which had and continue to have no intention of letting such a profit-making opportunity escape.

Bibliography

Correa, C. M. (2007) Trade Related Aspects of Intellectual Property Rights: A Commentary on the TRIPS Agreement. Oxford University Press: Oxford

Dutfield, G. (2005) ‘Turning knowledge into power: intellectual property and the world trade system’. Australian Journal of International Affairs, 59 (4). 533-547

Forman, L. (2007) ‘Trade Rules, Intellectual Property and the Right to Health’, Ethics & International Affairs, 21(3), 337-357

Jakarta Post (2004) ‘’Singapore issues’ part of EU’s trade agenda: Lamy‘. Jakarta Post: Business and Investment. 9 September 2004.

Kuanpoth, J. (2006) Negotiations toward a Free Trade Area: US Demands for greater IPR privileges.

Malpani, R. (2007) All costs, no benefits: How TRIPS-plus intellectual property rules in the US-Jordan FTA affect access to medicines.

Mayne, R. (2005) Regionalism, Bilateralism, and “TRIP Plus” Agreements: The Threat to Developing Countries. UNDP: New York

Ranald, P (2006) ‘The Australia-US Free Trade Agreement: A Contest of Interests’. Journal of Australian Political Economy. 30-56

Roffe, P. (2004) Bilateral agreements and a TRIPS-plus world: the Chile-USA Free Trade Agreement. Quaker International Affairs Programme: Ottawa.