People's Democracy

OF all the Uruguay Round agreements, the TRIPS agreement is possibly the one in greatest need of revision. The TRIPS Agreement protects intellectual property rights in all WTO member countries and constrains the production of imitation products. It is estimated that the number of patents granted worldwide in 1995 was about 710,000 and that at the end of 1995 about 3.7 million patents were in force in the world. Since then, there has been an increase in patenting activity, dominantly by large companies based in the North. Thus, it has been estimated that industrial countries hold 97 per cent of all patents, and that 90 per cent of all technology and product patents are held by MNCs. Privately, negotiators acknowledge that the TRIPS Agreement was to a great extent driven by MNC interests rather than the requirements of citizens across the world. The developing country case for revision has many grounds:

• It has been stressed by the representatives of several developing countries in the WTO that the objective of fostering the transfer and dissemination of technology, which is already explicitly stated in Article 7 of the TRIPS Agreement, should be made operational through special provisions. This is because, after a period in the early 1990s when technology access constraints were relaxed somewhat, there has been a tightening up after TRIPS was signed. Also, the stronger protection to invention which has been granted under TRIPS makes it more difficult for industries in developing countries to adapt and use, through reverse engineering and other devices, developed elsewhere. This reduces one of the more obvious means of "catching up" by late industrialisers, and closes one of the more important sources of technology particularly for small and medium enterprises across the world.
• Much technological progress in the recent past has been in the field of biotechnology and genetic engineering, which in turn has been based on generic resources which are often available only in the tropics (that is, mainly developing countries). Increasingly, while research organised by private corporations into genetic resources has drawn on the traditional knowledge of indigenous communities, these communities and peoples themselves do not benefit from the patents or even from the resulting inventions. Reconciling the TRIPS agreement with the Convention on Biological Diversity and accommodating "farmers’ rights", defined by the FAO as the "rights arising from the past, present and future contribution of farmers in conserving, improving and making available plant genetic resources" must become one of the focal points of renegotiation.
• Article 27.3 (b) of TRIPS says that members may also exclude from patentability plants and animals other than micro-organisms, and essentially biological processes for the production of plants and animals other than non-biological and micro-biological processes. However, members shall provide for the protection of plant varieties either by patents or an effective sui generis system or by any combination thereof. These provisions were to be reviewed after four years, but no systematic review has been put into place at the WTO. In this context, a recent proposal of the African Group of WTO members is significant, as it questions the TRIPS Agreement’s requirement for mandatory patenting of some life forms and some natural processes. It calls for a clarification that plants, animals and micro-organisms should not be patentable, and that natural processes that produce plants, animals and other living organisms should also not be patentable. The paper also puts forward the view that by stipulating compulsory patenting of micro-organisms (which are natural living things) and micro-biological processes (which are natural processes), Article 27.3(b) contravenes the basic tenets of patent laws: that substances and processes that exist in nature are a discovery and not an invention and thus are not patentable. The African countries have thus proposed a review of TRIPS which would : (a) clarify that developing countries can opt for a national sui generis law that protects innovations of indigenous and local farming communities; (b) allow the continuation of traditional farming practices, including the right to save and exchange seeds and sell their harvests; (C) prevent anti-competitive rights or practices that threatens food sovereignty of people in developing countries; (d) harmonise Article 27.3(b) with the provisions of the CBD and the FAO’s International Undertaking, which take into account the conservation and sustainable use of biological diversity, the protection of the rights and knowledge of indigenous and local communities, and the promotion of farmers rights. These proposals have been supported by many other developing countries.

It has also been pointed out that the implementation of public health policies may be restrained by the implementation of TRIPS. It forces all countries ­ rich and poor ­ to adopt the same, strict guidelines on respecting corporate patents, trademarks and copyrights. The TRIPS guarantees monopoly ownership over, among other things, pharmaceutical patents; thus a WTO member may not be able to suspend intellectual property rights even to address critical public health issues. Once an approach focused on public health is accepted, several articles may require revision, for instance, Article 27.1 in order to exclude the patentability of "essential medicines" listed by WHO; Article 30 so as to incorporate an explicit recognition of an "early working" exception for the approval of generic products before the expiration of a patent; and, Article 31 in order to clarify the right to grant and the scope of compulsory licenses for public health reasons. One of the most important areas of public concern relates to the availability and prices of life-saving drugs. The move from process patents to product patents dramatically reduces the ability of companies in developing countries to produce cheaper versions of important life-saving drugs, especially those relating to cancer and HIV/AIDS. The extent to which this can make a difference is apparent in the very wide differences in drug prices that can be observed in India, where product patents are not in force and other developing countries in Asia where such patents were allowed in the 1990s.

These concerns of the developing countries would be completely ignored if the US drive for a new round of trade negotiations is accepted. Unfortunately, the US is supported by the Cairns group of agricultural exporters, which includes Australia and Argentina, which wants a substantial reduction in barriers to trade in agricultural goods. This has made the EU, supported by Japan, which want to maintain the protection afforded to their agricultural sectors, the real stumbling block at the top.

As a filibustering measure, the EU and Japan have decided to bring in other issues into the picture. The new round, they argue, should be a comprehensive one that includes issues such as multilateral investment rules, competition policy and the environment. An earlier effort to push through a multilateral agreement on investment, that sought to tie the hand of nations when dealing with foreign investors investing in their soil, had led to such an acrimonious debate that it had to be shelved. Advocating the inclusion of investment as one of the subjects that must enter the agenda for a new round, is to rake up an issue that will necessarily be very controversial.

A similar controversial issue is the environment, with the focus of attention now on genetically modified (GM) foods. Partly under pressure from consumers, the EU has come up with proposals for labelling of GM foods. The proposals would introduce a system for tracing genetically modified organisms (GMOs) from the farm to the supermarket; a requirement to label all foods derived from GM ingredients; and a 1 per cent limit on the amount of GM material that finds its way accidentally into food or feed. This has already angered American farmers who currently grow GM foods like corn varieties, which are currently not authorised in the EU. Others, like the Cairns group countries are worried about the impact this can have on agricultural trade in the future. And developing countries as a group are concerned that the environment issue is being raised by the EU as a means of using environmental regulations as protectionist devices.

Despite these divisions, there is growing optimism that a deal can be struck between the EU and the US brokered by two friends, Pascal Lamy, the EU trade commissioner, and Robert Zoellick, the US trade representative, who are working overtime to convince the governments they represent that concessions leading to agreement are a must. In their effort they are being backed by arguments that a new round is the best medicine to combat the recession that looms large over the developed world. Even the "narrow agenda" being advocated by the US would deliver hugely positive results argue some. One study by Drusilla Brown of Tufts University and Alan Deardorff and Robert Stern of the University of Michigan estimates that a reduction in tariffs on agricultural and industrial products and services by 33 per cent would deliver a one-off increase in global welfare of over 600 billion dollars, as compared with a 75 billion dollars increase garnered from the Uruguay Round.

Developing countries are unlikely to be taken in by such rosy estimates of the welfare benefits of a new round. There were similar optimistic projections made during the Uruguay Round, all of which have been completely belied. In fact, the evidence seems to indicate that developing countries have been major losers.

This makes the position, taken by the "like-minded group" of developing countries, led by India, Pakistan, Egypt and Malaysia, that implementation issues and a review of impact are crucial, extremely strong. But dissensions between the 142 members in general and the developing countries themselves in particular, makes their case weak in practice, even if not in theory. There are reportedly 30-40 members, including the US, which are willing to go along with the EU on including investment in the agenda. This provides a major weapon for working a compromise, even if at the expense of the developing countries. And within the developing countries, there are some who have reportedly expressed their willingness to divide implementation issues into those that need to be addressed before a new round and those that can be considered as part of the round. This could help postpone discussion of the most controversial issues like textiles and agricultural support.

Once the developing camp is divided, pressure exerted by using mechanisms outside the terrain of the WTO can force developing countries fall in line. This is precisely what happened in the Uruguay Round, where the original negotiating position of countries like India had little to do with what they settled for finally. It is therefore ominous that the Financial Times reported that besides Brazil, Mexico and South Africa, "that favour a round, as does China, which is poised to enter the WTO", "even India, which has long led the opposition to new global negotiations, seems to be wavering."

If this tendency is visible so early in the negotiations, the likelihood is that the developing countries would be forced to go along with any agreement on the agenda for a new round thrashed out between the US, on the one hand, and the EU and Japan on the other. If, therefore, any equity has to be introduced into the system of world trade that is being institutionalised through repeated trade negotiations, those joining the growing opposition to globalisation within civil society must deliver it. It is absolutely crucial for the Indian government to recognise the interests of the vast majority of the population and join the forces opposing the new Round as well as the way in which the current regime is being run.

Click here for Part I of the article