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How the TRIPS Was Incorporated Into the WTO and What It Means for

Economies in the “South” (first published by Irish Left Review)


Global Social Justice

Justin Frewen 29/Jan/2010

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‟ if 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.

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.
<http://www.organicconsumers.org/Patent/uspatsys.cfm>
UNCTAD (2006) Trade and Development Report 2006: Global partnership and national
policies for development. UNCTAD: Geneva