How the TRIPS Was Incorporated Into the WTO and What It Means forEconomies in the “South” (first published byIrish Left Review)

Global Social Justice

Justin Frewen29/Jan/2010

Launching TRIPS

Towards the end of the 1970s, major commercial interests in the US started to campaignfor the responsibility of Intellectual Property Rights (IPR) protection to be removed fromthe World Intellectual Property Organisation (WIPO). Corporations, in several high-endtechnological sectors such as computer software and microelectronics, entertainment,chemicals, pharmaceuticals, and biotechnology complained of serious economic lossesdue to the absence of adequate global protection for their intellectual property. Theyargued that their IPR were not being adequately protected by WIPO, given its lack of aneffective dispute settlement or enforcement mechanism.Their efforts were ratcheted up in the 1980s with increasing pressure being placed uponthe United States Trade Representative (USTR) to more vigorously protect and promotetighter IPR internationally. At the same time, several US business associations began tosynchronise their lobbying efforts to press for changes in US intellectual property tradepolicy.Through the lobbying of US business associations and bodies, OECD member nationswere encouraged to see the protection of IPR as an issue of importance, given thepotential economic benefits they too could reap from the ‘economic rents’ if intellectualproperty. Therefore, the OECD supported the US campaign to promote strengthened IPRduring the General Agreement on Tariffs and Trade (GATT) Uruguay Round, which led tothe creation of the World Trade Organization (WTO).At the same time, major multinational corporations such as Monsanto, Pfizer and IBMplayed central roles in mobilising executives in other multinationals to play a greater rolein 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 thetechnology-exporting members, most particularly the US, EC and Japan, as the Southwas barely involved at this stage, given its overall lack of IPR expertise. As thenegotiations progressed and the involvement of the South increased, its generalopposition to TRIPS soon became clear.For the South, the US appeared intent on promoting IPR for the benefit of itstechnological industries with scant consideration of its potential impact upon theeconomic welfare of the South. Another area of concern was the differing ethicalstandards as to what exactly should be protected by an intellectual property agreementunder 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 permittedcommunity 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 andmicro-organisms.Similarly, prior to TRIPS countries such as China and Egypt granted patents onpharmaceutical processes, rather than on the final products, thus enabling the localmanufacture of generic medicines at considerably reduced prices.

Although, the North did dangle the carrots of potentially improved trading arrangementsfor the South in areas such as agriculture and textiles, if they were to agree to improvedIPR protection, intensive pressure on the part of the US and its’ allies were required toensure that the South as a whole agreed to negotiate on a wide-rule based frameworkfor IPRs.A major weapon in the North’s arsenal was the application by the United States TradeRepresentative (USTR) of the ‘Special 301’ provision. This provision stipulates that theUSTR is required to take note of countries that fail to provide an adequate level of IPRprotection 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 IPRlaws 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 threatenedapplication of this provision against a range of counties together with its actualapplication against Brazil with the imposition of tariffs on its paper products, non-benzenoid drugs and consumer electronic items, the US was able to place intensepressure 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 alsoplaced 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 thesecountries were “advised” to participate constructively in the Uruguay Round negotiationsas part of the strategy for recovery… The cumulative effect of these developments wasto 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 withmost of its members experiencing ‘negotiation fatigue’

…with only about ten countries actually sending intellectual property experts to theTRIPs negotiations. In the majority of cases, the heads of delegations to the TRIPsnegotiations were from national trade ministries or directorates… In the absence of thenecessary legal expertise within their national administrations, developing countriessimply 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 adviceand counsel available with individuals from the private sector such as Pfizer CEO Ed Prattacting as unofficial advisors to the US official delegation. When India and Brazilformulated counter-proposals to TRIPS they

were evaluated by Counsel from US industry, who were able to advise the USgovernment 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 jurisdictionof the WTO dispute settlement system

. (Lanoszka 2003: 182)

Furthermore, the standards that were put in place were modelled on ‘western’ legalpractice and established at a level analogous to those in the North.TRIPS therefore not only defined the minimum protection levels that Member nationsshould enforce to protect patents in their countries but also laid out the measures andremedies intellectual property right-holders would be able to avail of to enforce theirrights.While at the multilateral trade negotiating level, this was ostensibly a success for theefforts of the North in convincing the South of the benefits of including TRIPS in WTO, itwas 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 theIntellectual Property Committee (IPC) is extremely revealing:

Once created, the first task of the IPC was to repeat the missionary work we did in theUS in the early days, this time with the industrial associations of Europe and Japan toconvince them that a code was possible... We consulted many interest groups during thewhole process. It was not an easy task but our Trilateral Group was able to distill fromthe 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 Genevawhere [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 toa 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, thediagnosticians and the prescribing physicians.

Indeed, Enyart had reason to feel exultant at what he believed had been achieved by theIPC and other business lobbying efforts. The US approach to IPR as “[I]nstitutionalized inits domestic laws” had not only “gained a multilateral dimension when the United Statessucceeded in getting intellectual property protection on the agenda for the UruguayRound of GATT trade talks beginning in 1986” (Sell 2003: 130) but had been widelyaccepted and was now being promoted, advanced and guarded by the principalmultilateral 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 positivedevelopment, as it facilitated the efforts of technologically advanced corporations in theNorth, operating in areas as diverse as biotechnology, lasers, electronic software andhardware, optic electronics and liquid technology, to maintain their lead in these sectorswithout any substantial benefits for the South in return. Indeed, reports carried outfollowing TRIPS revealed that large technological corporations had benefited greatly fromits incorporation into the WTP not only in guarding their IPR but also through their abilityto extract greater license fees and royalties.TRIPS also provided serious obstacles for technological latecomers in the South seekingto emulate the Japanese strategy of the “fast second” by reverse engineering and rapidlycommercializing foreign technologies. The TRIPS Agreement therefore imposed asignificant obstacle to industrial development, given that the procurement of

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