The polemics of intellectual property rights
By Rajendra Rampersaud
Stabroek News
May 18, 2007
Life is never a simple process and one has to be cautious when certain grandiose ideas such as the Trade Related Aspect of Intellectual Property Rights or TRIP is presented as an absolute model that would radically transform societies for the better in less developed countries.
TRIP was negotiated during the Uruguay Trade Round (1986-94) and became an issue of immense controversy as the World Trade Organization (WTO) met to start discussions on a new Trade Round in the late nineties. Even though the TRIP agreement has been at the center of an intense debate at International forums, and in academic and scientific journals, this very important policy issue has not been subjected to the same type of analysis in Guyana. In this regard, I welcome the article by US Ambassador David M. Robinson entitled "It's everyone's problem -Protecting Intellectual Property" in the Chronicle (26/04/07). However, I argue in this article that there are more sides to the story on TRIP. and conclude that despite the differences an equitable balance can be found between flexibility and discipline and TRIP can be made to work for everyone rather than being everyone's problem.
The Uruguay Trade Round was considered a hallmark because for the first time agriculture was placed on the agenda for negotiations, previous attempts were blocked by the US and EU. The Uruguay Round therefore represented a '"grand bargain" that in exchange for a concession on TRIP, industrialized countries agreed to liberalize their agricultural, textiles, and clothing markets so as to grant increased access to the exports of developing countries that had a comparative advantage on the production of labour intensive goods. The current impasse at the WTO negotiations is driven in part by the fact that developing countries feel that they were shortchanged in past trade rounds and are committed not to let it happen again.
It is against this background that I begin to analyze TRIP that became a contentious issue at the close of the last millennium as the HIV/AIDS issue hit the headlines in the world media. The World Health Organization (WHO) announced in1999 that HIV/AIDS would have killed more than 2.7 million people globally with the largest share in Africa. Pharmaceutical Companies in rich countries had developed a treatment for HIV/AIDS that permits patients to function well before the onset of the disease. Pharmaceutical companies in India, South Africa, Brazil and Thailand have all authorized the production of the patented HIV/AID drugs so as to make it available at affordable prices to their communities. However, they found TRIP a binding constraint. "Patents Kill" was the cry of the AIDS activists around the world. Then, the South African court in a landmark decision ruled that access to public health in the case of an emergency is a right that takes precedence over any agreement. These events would have helped to transform the landscape on TRIP that was now being scrutinized under the microscope.
The advent of the Global AIDS crises that wreaked havoc on the territorial economies forced researchers, scholars and policymakers to analyze Intellectual property rights with greater depth. Arvinda Subramanian (2004), an erstwhile trade economist at the IMF pointed out that studies have shown that the net economic welfare losses to developing countries of higher patent protection for pharmaceuticals could be substantial. He pointed out that analytical models predict that the price of drugs could increase by 25-50 % if patent protection is introduced. This is a mark up on the already high price of patented drugs in a world where three quarters of the global population have to survive on less than US $1 a day.
In his article, Ambassador David Robinson (26-04-07) made a compelling case for strong intellectual property rights by citing interesting statistics on Niger. He pointed out that more than 50,000 people were inoculated with fake vaccines during a meningitis epidemic resulting in 2,500 deaths. I will accept his assumption that these fake vaccines caused the 2,500 deaths and that these findings were based on a scientific conclusion. However, nothing is said on the other 47,500 persons that took the vaccines and survived. This hypothesis was left untouched and begs the question could any of those 47,500 persons have survived in Niger without the fake vaccines. The intuition I can draw from analyzing the data is that the possibility exists that the 47,500 persons could have survived mainly because they took the so called fake vaccine since the only alternative was death. This data can be further analyzed to come with different assumptions that can be both subjective and objective but should not be cast in stone. One can even ponder on the millions of donor's resources spent on white elephant projects commissioned by the Jacket and Tie elite while a pittance could not be set aside to provide critical vaccines in the case of an emergency.
The intellectual property rights issue has created a lot of distrust because of its past. The Economist magazine (14-09-2002) stated that for most of the nineteenth century the US provided no copyright protection for foreign authors, arguing that it needed the freedom to copy in order to educate the new nation. The Economist further stated that parts of Europe built their industrial base by copying the inventions of others. More recently, there is the case of the stolen Trade mark of Demerara Sugar, a brand name used by foreign companies in Asia and Florida that has no link to sugar in Guyana but is popularly displayed on the shelves of the supermarkets in industrialised countries. These are just a few of the contentious issues that created a non level playing field on TRIP.
While patent protection might be limited in less developed countries it is not by choice. Professor Keith Maskus of Colorado University, an expert on TRIPS, pointed out that it will cost a poor country roughly US$1.5M - 2M just to build the bare bone infrastructure to implement TRIP. This is in mark contrast to the US that has a Patent and Trademark office with an annual budget of US $1 billion and a staff of more than 3,000 highly trained scientists, engineers and legal experts to examine claims and highly trained judges to examine disputes. (Economist, 23-06-2000). This mismatch and anomaly cannot be resolved by quick fixes. Developing countries have maintained that the standard of patent protection should rise naturally over time as countries develop rather than being forced up prematurely.
Professor John Barton of Stanford University sees some hope, he argued that both rich and poor countries should start thinking of Intellectual Property Rights (IPR) as a development tool. Professor Barton chaired the expert Commission on IPR convened by Britain's Department for International Development. The Commission report (12-09-2002) made detailed recommendations on how developing countries should craft IPR to fit their own domestic circumstances. The Report advised that poor countries should avoid committing themselves to rich countries' systems of IPR protection unless such systems are beneficial to their needs.
The dispute over patented drugs has certainly lifted the bar in the debate on TRIPS and forced the WTO to issue a Declaration on the TRIP Agreement and Public Health. The WTO Declaration (2002) stated that TRIP should not prevent members from taking measures to protect public health - and should be implemented in a manner supportive of WTO members' rights to promote access to medicine for all. Furthermore, the WTO has extended the timeframe, for the implementation of TRIP for the least developed countries to 2016.
The public outburst on TRIPS has forced Pharmaceutical Companies in rich countries to provide the drugs at marginal production cost to Less Developed Countries. For instance, Merk & Co announced it would reduce the price of two AIDS controlling drugs in Africa by 40 to 55% adding to an earlier sharp price cut. (Wall Street Journal 2001). Ganslandt, Maskus, and Wong (2005) pointed out that these actions were a competitive response to offers by two Indian producers of generic AIDS drugs, Cipla Ltd and Metro Drugs Ltd to provide the medicine at even lower prices.
Ambassador Robinson quoted statistics from the World Economic Forum (2004) which stated that the 20 countries perceived as having the most stringent IPR were among the top 27 countries in terms of economic growth competitiveness. This might be true, but the simple correlation between two variables as in this case, intellectual property rights and economic growth competitiveness do not necessarily mean causation. Econometric studies are still ambiguous on the relationship between strong intellectual property rights and economic growth. Moreover, experience has shown that countries that had developed strong IRP did so only after their economies had developed and had industries to protect and not the other way around. In the circumstances, developing countries have to trade off static efficiency gain against the welfare loss from the implementation of TRIP.
Let me conclude by stating that I have no doubt that TRIP is a useful tool for developing countries. However, it is the means to an end rather than the end itself that matters. Empirical studies and data series on TRIP are still evolving and can be considered inconclusive. TRIP is a very diverse topic. I attempted to limit the discussion to mainly the HIV/AIDS issue. Fink and Maskus pointed out that although "existing economic literature on IRP provides some useful guidance to policy makers in developing counties there is still a lot we do not know". (Intellectual Property and Development, Oxford University Press 2005). Finally, if TRIP is to become a true development tool it cannot be a zero sum game.