Intellectual Property, Trade, and Development: Can Foes Be Friends?

By Shadlen, Kenneth C. | Global Governance, April-June 2007 | Go to article overview

Intellectual Property, Trade, and Development: Can Foes Be Friends?


Shadlen, Kenneth C., Global Governance


Global governance in intellectual property (IP) has changed dramatically since the 1980s. What was once principally an instrument of national policy, where countries could tailor their IP regimes in accordance with national economic and social conditions, is now increasingly a policy area subject to international disciplines, where countries that fail to conform to new global standards risk retaliation in the form of losing trade privileges. The centerpiece of the new international regime is the inclusion of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) in the new World Trade Organization (WTO).

Is TRIPs a "friend or a foe" of international development? Observers from across the ideological and methodological spectrum tend to criticize TRIPs, assail its implications for development, and regret the inclusion of IP in the WTO. The World Bank and the United Nations Development Programme (organizations that are not frequently in agreement on development issues) express concern that full implementation of TRIPs will generate significant resource transfers from poorer countries that primarily use IP to wealthier countries where most IP owners are based. Development economists argue that TRIPs encourages poorer and middle-income countries to adopt IP systems that are inappropriate for their levels of scientific and technological development. Liberal trade economists complain that TRIPs introduces protectionism into an institution geared toward dismantling barriers to the flow of goods and services, and that contentious debates over IP clutter the multilateral negotiating agenda and the WTO's dispute settlement system.

That scholars who disagree on so much agree on this issue suggests that trade and TRIPs and development are indeed foes, and it is difficult to argue otherwise. But in this brief essay, I explore the possibilities that TRIPs, for all its warts, may become a positive asset for the WTO, which in turn could benefit developing countries. I do so by emphasizing how conflicts over IP and TRIPs can have system-strengthening effects. Global conflicts over IP that occur outside the WTO can spark countries' enthusiasm for improving the multilateral trading regime. And rather than muddle the agenda and divert attention, difficulties with TRIPs can help developing and developed countries gain sharper focus on the workings of the WTO and potentially contribute to measures to improve the procedural mechanisms of the institution.

Before discussing the contemporary politics of IP and the possibilities of system strengthening, a brief remark on the IP-trade relationship and the origins of TRIPs is in order. IP may be "trade related" in the sense that changes in trade flows correspond to changes in how countries regulate IP, (1) but the decision to embed IP in the international trade regime is separate and distinct from the technical, economic rationale for or against doing so. That is, it was the intense activism and immense power of the biotech, chemical, pharmaceutical, seed, software, and entertainment industries in the 1980s and 1990s that created the link between IP and trade, and thus made IP "trade related." (2) These sectors shared a common interest in fortifying the protection of intellectual property rights (IPRs) worldwide, because they depend for their profits on the economic rents that accrue from copyright and patent protection, and they had the political muscle to place IP prominently on the international trade agenda. Hence, IPRs are not part of the trade regime for the sake of trade (i.e., because weak IPRs were a fetter on global commerce), but, to the contrary, IPRs are part of the trade regime for the sake of IPRs. Making countries' ability to access export markets conditional on changing national practices in IPRs was regarded by key business constituents and policymakers as an effective mechanism for ratcheting up standards across the board. Indeed, the name of the subsequent agreement is misleading, for TRIPs does not limit itself to "trade related" aspects of countries' IP regimes, such as how state regulations affect importing or exporting firms, but rather is a broad-based agreement that affects virtually all aspects of how countries go about establishing and protecting IP. …

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