Wall Street Journal | November 16, 2001 | International Commentary
By Geralyn Ritter and Alain Strowel. Ms. Ritter, formerly associate general counsel at the Office of the U.S. Trade Representative, is trade counsel in Covington & Burling's Washington office, and Mr. Strowel heads the firm's intellectual-property practice in Brussels.
The trade negotiations that collapsed amid chaos and tear gas in Seattle two years ago are now poised to move forward. In the wake of this week's marathon negotiations in Doha of trade ministers from the 142 member countries of the World Trade Organization, it is worth reflecting on the results of their deliberations in the important area of intellectual property.
Seven years ago, developed and developing countries alike hailed the outcome of the Uruguay Round of WTO trade negotiations. One of the pathbreaking elements of that massive deal was the inclusion of new international rules on the protection of intellectual property -- copyright, patents, and trademarks. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) marked the first time that inadequate intellectual property protection was recognized as a barrier to trade and economic development. WTO members not only affirmed substantive standards of intellectual property embodied in previous accords. They agreed to actually enforce those rules, thus addressing for the first time the pervasive problem of lax or nonexistent enforcement in many countries.
The environment today could hardly be more different. One sometimes has the impression that the whole TRIPS Agreement is under attack. But in fact, only a few provisions concerning the scope of patent protection in the pharmaceutical sector are being challenged by some less developed countries. Amid intense press coverage, intellectual property owners nonetheless are being put on the defensive and the United States -- once the strongest proponent of high standards of international protection -- has been in a damage-control mode for months.
Critics of patent rights for food, chemical, and pharmaceutical products charge that they hinder development and impede efforts to promote public health. Unfortunately, WTO members appear to have accepted the truth of this broad accusation rather uncritically in Doha. The documents agreed by negotiators this week could be read to emphasize the flexibility of WTO members to break patents and interpret the agreement in a manner favorable to public-health and development goals -- as if such goals would otherwise be threatened.
The proposition that intellectual-property protection is at odds with growth and development (including public health) does not bode well for future progress. More to the point, it is simply wrong. Intellectual-property protection provides the essential incentives to investment and innovation, in turn fostering economic growth and higher standards of living.
No less a development authority than the World Bank has emphasized this link on several occasions. A World Bank study found that the strength or weakness of a country's system of intellectual-property protection has a substantial effect on both the level of foreign direct investment, as well as the kinds of technology that firms are willing to transfer. And these studies have been borne out in practice. When Brazil enacted patent law reform in the mid-'90s, it was greeted with a wave of foreign investment expected to total more than $2 billion.
The World Bank has also emphasized the importance of intellectual-property rights in stimulating the domestic creation of technology and creative works in developing countries. When Korea enacted stronger patent protections in 1987, the market share of local pharmaceutical firms rose, and today Korea exports its technology in this area. By contrast, the Economist reports, local musicians in Mexico are finding it increasingly hard to sign contracts with international record companies, since nearly two-thirds of the cassettes and CDs sold in the country are pirated.
Against this background, it is difficult to make sense of the attacks on intellectual-property rights in the WTO. Paradoxically, many of the most vocal detractors of the TRIPS Agreement argue that the WTO must do more to promote the transfer of technology to poor countries. Yet they seek to diminish the very mechanism most likely to promote such transfers.
So what is the real issue behind the attack on TRIPS? At least sometimes, it is old-fashioned protectionism. For example, when the U.S. challenged a Brazilian law last year that mandates local manufacture of patented pharmaceuticals, it was criticized severely for allegedly hampering Brazil's anti-AIDS campaign. Lost in the rhetoric was a simple fact: The Brazilian law had nothing to do with the prices of patented medicines, but only with the location of the manufacturing facility that produced them. It was a straightforward domestic employment bill, cynically (but successfully) defended in the name of public health.
That said, there remains the vitally important issue of access to life-saving drugs in less prosperous countries. And there is no doubt that the hideous toll of AIDS in the developing world presents a genuine crisis. But this challenge does not have its roots in the TRIPS accord, and "clarification" of that agreement is not the solution. The TRIPS Agreement already provided sufficient flexibility for patent holders and public-health authorities to find a solution, but the issue became politicized.
The challenge now is to ensure that the Doha declaration is applied as intended to the specific issue of essential drugs in impoverished countries. The Ministerial Declaration does contain provisions in which WTO members "reaffirm their commitment" to the agreement. American and Swiss negotiators fought hard to ensure that language in the declaration did not become an open-ended exception leading to a more general weakening of intellectual-property rights. One hopes the WTO membership will remain faithful to that negotiated result.
Now, WTO members must move forward with the business of encouraging trade. The WTO should focus on how to make the international intellectual-property regime function more smoothly. It should concentrate on helping countries to implement the TRIPS Agreement, especially those that continue to neglect their commitments to enforce intellectual-property rights in areas that have nothing to do with public health.
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