TRIPS is the most significant agreement on intellectual property of the 20th century. More than a 100 ministers signed it on behalf of their nations in the magnificent Salle Royale of the Palais des Congrès in Marrakesh on 15 April 1994.
TRIPS is one of 28 agreements that make up the Final Act of the Uruguay Round of Multilateral Trade Negotiations, the negotiations that had begun in Punta del Este in 1986. Another of those agreements established the WTO, and it is the WTO that administers TRIPS.
TRIPS was the first stage in the global recognition of an investment morality that sees knowledge as a private, rather than public, good. The intellectual property standards contained in TRIPS, obligatory on all members of the WTO, would help them to enforce that morality around the world.
In India, generics industry warned of dramatic price increases in essential drugs that would follow from the obligation in TRIPS to grant 20-year patents on pharmaceuticals.
TRIPS is about more than patents. It sets minimum standards in copyright, trade marks, geographical indications, industrial designs and layout-designs of integrated circuits. TRIPS effectively globalizes the set of intellectual property principles it contains, because most states of the world are members of, or are seeking membership of, the WTO. It also has a crucial harmonizing impact on intellectual property regulation because it sets, in some cases, quite detailed standards of intellectual property law. Every member, for example, has to have a copyright law that protects computer programs as a literary work, as well as a patent law that does not exclude microorganisms and microbiological processes from patentability. The standards in TRIPS will profoundly affect the ownership of the 21st century’s two great technologies – digital technology and biotechnology. Copyright, patents and protection for layout-designs are all used to protect digital technology, whereas patents and trade secrets are the principal means by which biotech knowledge is being enclosed. TRIPS also obliges states to provide effective enforcement procedures against the infringement of intellectual property rights.
No one disagrees that TRIPS has conferred massive benefits on the US economy, the world’s biggest net intellectual property exporter, or that is has strengthened the hand of those corporations with large intellectual property portfolios. It was the US and the European Community that between them had the world’s dominant software, pharmaceutical, chemical and entertainment industries, as well as the world’s most important trade marks.
The rest of the developed countries and all developing countries were in the position of being importers with nothing really to gain by agreeing to terms of trade for intellectual property that would offer so much protection to the comparative advantage the US enjoyed in intellectual property-related goods.
For instance, an Australian study of copyright royalty flows during the 1990s showed that Australia paid out to overseas copyright owners around Aus$1.2 bln more than it received. Another Australian study showed that the cost to Australia of the TRIPS provision which extended the patent term of 20 years to patents already in existence could be as high as Aus$3.8 bln.
In Australia, as is the case in all small- to medium-sized developed country economies and developing country economies, the vast bulk of patents is in foreign ownership.
Sometimes we were told that ‘we will be eventual winners from intellectual property’. While it is good to be optimistic about one’s distant destiny, it does not explain why normally hard-nosed trade negotiators would take the highly dangerous route of agreeing to the globalization of property rules over knowledge that had brought their countries so few gains in the past. Of the 3.5 million patents in existence in the 1970s, the decade before the TRIPS negotiations, nationals of developing countries held about 1%.
Developing countries such as South Korea, Singapore, Brazil and India, that were industrializing, were doing so in the absence of a globalized intellectual property regime.
More disturbing for developing countries is the development cost of an intellectual property regime. The basis of competition lies in the development of skills. The acquisition of skills by newcomers disturbs roles and hierarchies.
After India built a national drug industry, it began exporting bulk drugs and formulations to places such as Canada. A developing country which had acquired skills threatened those at the top of an international hierarchy of pharmaceutical production – the US, Japan, Germany and the UK.
Australia has shown in the field of wine-making that the acquisition of skills can upset a European-led hierarchy of wine quality and production. The French have responded, in part, by insisting on protection for geographical indications, a form of intellectual property protection allowing them to claim, for example, exclusive use of the ‘Burgundy’ and ‘Champagne’ labels.
Underneath the ideology of intellectual property there lies an agenda of underdevelopment. It is all about protecting the knowledge and skills of the leaders of the pack.
The answer to the question about why developing countries signed TRIPS has much to do with democracy – or rather, its failure. Put starkly, the intellectual property rights regime we have today largely represents the failure of democratic processes, both nationally and internationally. A small quantity of US companies, which were established players in the knowledge game, captured the US trade-agenda-setting process and in partnership with European and Japanese multinationals drafted intellectual property principles that became the blueprint for TRIPS. The resistance of developing countries was crushed through trade power.
One answer to this might be that corporations are entitled to lobby, and, in any case, developing countries agreed to TRIPS through a process of bargaining among sovereigns. It is indeed true that big corporations are entitled to lobby. It is important that big business makes its views and policy preferences known to government since around the globe it represents hundreds of millions of jobs and investors. However, that lobbying in relation to property rights should take place under conditions of democratic bargaining.
Democratic bargaining matters crucially to the definition of property rights because of the consequences of property rules for all individuals within a society. Property rights confer authority over resources. When authority is granted to the few over resources on which the many depend, the few gain power over the goals of the many. This has consequences for both political and economic freedom within a society.
The stakes are high in the case of IP rights. Intellectual property rights are a source of authority and power over informational resources on which the many depend – information in the form of chemical formulae, the DNA in animals, the algorithms that underpin digital technologies and the knowledge in books and electronic databases. These resources matter to communities, to regions and to the development of states.
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