Intellectual Property Rights and International Trade

By Edmund T. Pratt, Jr.

During his tenure as Chairman and CEO of Pfizer Inc., Mr. Pratt helped to lead the US private sector's campaign to have intellectual property included in the Uruguay Round (1986-93) of the GATT (General Agreement on Tariffs and Trade) negotiations; and to have it integrated into US trade law and other international agreements such as NAFTA. In an excerpt from a recent speech given to the US Council for International Business, Mr. Pratt offers a private sector perspective on what was achieved through close government-industry co-operation.

Intellectual property rights are extremely important to the competitiveness of the US and other post-industrial economies. The completion of the most recent round of GATT negotiations is significant for many reasons, not least because "TRIPS" (Trade Related Intellectual Property Rights) – such as patents, copyrights, trademarks, trade secrets – have been accepted as an area to which internationally-recognized rules and disciplines apply. Protection and enforcement of these rights are critical to many global industries, including research based pharmaceuticals, whose livelihood and ability to contribute to the world depend upon innovation.

The effort to secure intellectual property rights demonstrated the importance of industry government co-operation and of consensus building among the business communities of the developed world. It was a long and complex process.

By the early 1970's, it became clear that tougher global competition lay ahead for US business. Industry needed to be more vocal in letting government know when international regulations were unfairly tilted against us, particularly in the areas of investment and intellectual property protection. The necessary progress on these issues could not come without strong support from the US government.

The industry became more active in the policy arena and by the next decade, our efforts began to bear fruit. Both the White House and the Congress enacted policies and legislation which enhanced the visibility of intellectual property and bolstered our negotiating positions both in bilateral and multilateral fora. Having been successful in getting "TRIPS" on the GATT agenda, government asked the US private sector to provide specific proposals for an agreement, and to form an international private sector consensus to achieve it.

In conjunction with more than a dozen companies from all the relevant sectors of US business, Pfizer and IBM co-founded the Intellectual Property Committee or IPC. The US Trade Representative was impressed and suggested that we increase our effectiveness internationally by joining forces with UNICE, the principal pan-European business group, and its counterpart in Japan, Keidanren. Working together, we were able to draft intellectual property standards that would be supported by dispute resolution and enforcement mechanisms. Our combined strength enabled us to establish a global private sector government network which lay the groundwork for what became "TRIPS".

Standards and enforcement procedures incorporated in the GATT agreement on TRIPS have been extended and strengthened in other international agreements, such as NAFTA (North American Free Trade Agreement).

Yet, there is more to be done. The GATT standards, while good, are still inadequate. The need for new investment rules, which we had attempted to introduce into the Uruguay Round, were not fully integrated into the final agreement. The need for effective enforcement is essential. Treaties, agreements and laws made without the ability to enforce them are worse than none at all.

Meanwhile, businesses based upon copying and "counterfeiting" intellectual property are thriving in some countries, notably India, Brazil, Argentina, Egypt and Turkey. Their influence has sometimes made it difficult for those countries to reform their laws. In the publishing, fashion, film-making and music sectors, this has led to substantial lost revenue. In the pharmaceutical industry, this sometimes leads to human, as well as economic costs.

When governments protect the rights of individuals and companies to enjoy the fruits of products of the mind, they've done a lot more than just protecting profits or satisfying some narrow self-interest.

In country after country, the governments which have taken steps to improve intellectual property protection have also enacted broader "pro-growth" economic policies such as market liberalization. Many have also moved toward greater freedom and democracy.

This correlation is no accident. As US political philosopher Michael Novak recently said, "what is distinctive about the capitalist economy is the original discovery that the primary cause of economic development is mind. The cause of wealth is invention, discovery, and enterprise."

Edmund T. Pratt, Jr. is Chairman Emeritus of Pfizer Inc., having served as Chairman from 1972-92, and as CEO from 1972-91. He has attended numerous GATT negotiations, many in the capacity of an official advisor to the US Trade Representative.