The debate

Last week's review of the Trade Related Intellectual Property Rights agreement (TRIPS) highlighted the tension in international trade debates, between those who are net importers of intellectual property and those who are net exporters. The former are mainly the poor countries that use technology but do not own it, while the latter are the rich countries, which both own and use it. In that article we also stressed that the patent concessions which the rich countries were making to the poor ones for health emergencies like AIDS, were carefully crafted to be treated as exceptions. The intention behind this is to protect the overriding concern of the rich countries, which is not to weaken the strong intellectual property protection language already enshrined in the WTO Agreement. Their fear is that, if this language is weakened, poor countries will not only act as if they have a right or entitlement under the WTO to produce cheap generic drugs for their population because of public health priorities, but may do so for other patents and even copyrights.

From the poor countries' perspective, the concern is that they face the scourge of pandemic illnesses, ranging from AIDS to resurgent malaria. Public health is, therefore, as much a matter of national priority, as are the national security objectives after September 11, which led the US and Canadian authorities to threaten Bayer Corporation over the high prices at which they were selling vaccines.

The 1970s origin

This conflict between rich and poor countries over intellectual property rights goes back to the 1970s, more than two decades before the establishment of the WTO. The two main foci of those debates were the same as today, pharmaceutical patents and the related issue of generic drugs, and computer software and film copyright. The rich countries had mounted a serious propaganda offensive in the 1970s against what they considered to be "counterfeiting" and "piracy" of their intellectual products and processes in poor countries. This was in reaction to the militant stand of many poor countries, which then portrayed patent and copyright payments as "theft."

Conformity

At the inauguration of the WTO Agreement in 1995, the rich developed economies undertook to bring their domestic laws and practices in conformity with the TRIPS agreement within a year. Developing countries were, however, given five years to comply. And, in the case of the least developed countries, they were given eleven years.

The TRIPS agreement provides that if the commitment sought is an area of technology where a developing country did not already provide product patent protection when the WTO agreement came into force, then that country had 10 years to introduce such protection. The general obligation however, is that all obligations in the TRIPS agreement apply to intellectual property rights that existed at the end of a country's transition period plus any new ones.

Monitoring TRIPS

The workings of the TRIPS agreement and government compliance with it are monitored by a Council for Trade Related Property Rights. This reflects the general observation made earlier that the WTO is a rules based organisation with powers to secure compliance with those rules. It is interesting to note that the penalties for infringement of the TRIPS rules are felt by the WTO itself, to be tough enough to deter further violations, while at the same time the process of arriving at penalties are considered to be "fair, equitable, uncomplicated, and low cost". It should also be pointed out that actions like willful trademark counterfeiting or copyright piracy on a commercial scale, carries the sanction of criminal offences.

We had advanced the view earlier that the central issue of the TRIPS agreement is how to balance the interests of owners of intellectual property (net exporters of technology) and users of it (net importers of technology). This is a particularly difficult task, but not only because these interests often diverge, but because this trade related issue has never been regulated in a central body of rules before and it is intrinsically difficult to do this.

Basic principles

As the WTO Secretariat is fond of pointing out, the TRIPS agreement embodies five major sets of complex issues. One is clearly how the "basic principles" of freer trade and minimum government intervention, as embodied in the WTO and the TRIPS agreements, should be applied. Then, after having been applied, the second issue which arises is how to ensure that these principles give "adequate protection" to intellectual property rights. As pointed out, this protection is considered indispensable for securing profits for innovators. Without suitable profit incentives, it is claimed, such inventiveness will dry up and thereby slow down economic growth and development.

The third issue is to ensure that the rights enshrined in the TRIPS do not remain on the statute books, but are instead actively enforced. Since such enforcement takes place at the national level, effective monitoring and surveillance of national actions by the WTO Authorities are essential for making the system work effectively.

Fourth, since a rules based system will never remain dispute free, the issue of dispute settlement is crucial. This relates to the workings of the Council for Trade Related Aspects of Intellectual Property Rights referred to earlier.

Finally, in order to cope with the issue surrounding the asymmetry between the rich and poor countries, special arrangements have had to be put in place to facilitate a slower rate of transition for the poor into acceptance of the TRIPS.