Bilateralism in Intellectual Property | Intellectual Property

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This paper examines the way in which bilateral trade negotiations (Bilateral Investment Treaties and Bilateral Intellectual Property Agreements) are being used by the USA and others to build more extensive protection for intellectual property than that set out in the WTO TRIPS Agreement. It uses examples of recent US/EU negotiations with countries such as Nicaragua, Jordan, and Mexico to illustrate how developing countries are being drawn into a highly complex multilateral/bilateral web of intellectual property standards over which they have little control.
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    Bilateralism in Intellectual Property 4 th  December 2001 A Paper Prepared for Oxfam by Peter Drahos 1 * *Herchel Smith Senior Fellow in Intellectual Property, Queen Mary College, University of London. This report was commissioned by Oxfam GB as part of its Cut the Cost of Medicines Campaign. The views expressed in the paper are those of the author, and do not necessarily reflect those of Oxfam. 1  The author would like to thank Julie Ayling without whose assistance, especially in the preparation of the Table, this paper would not have met its deadline. 1  SUMMARY This paper examines the way in which bilateral trade negotiations (Bilateral Investment Treaties and Bilateral Intellectual Property Agreements) are being used by the USA and others to build more extensive protection for intellectual property than that set out in the WTO TRIPS Agreement. It uses examples of recent US/EU negotiations with countries such as Nicaragua, Jordan, and Mexico to illustrate how developing countries are being drawn into a highly complex multilateral/bilateral web of intellectual property standards over which they have little control. In some cases, these bilateral negotiations are forcing developing countries into TRIPS-compliance ahead of the timetable agreed in 1995. In other cases, they are  being used to intervene in the detailed regulation of a developing country’s economy. Finally, the paper shows how the Most Favoured Nation principle within TRIPS combines with these bilateral agreements to spread and set new minimum standards of intellectual property faster than would have otherwise happened. The paper ends with a reminder of the benefits of multilateralism in trade and the dangers of bilateralism. It proposes that developing countries develop a veto coalition against further ratcheting up of IP standards, and that the TRIPS Council shift its  purpose from a body which secures a platform for IP regulation to one that polices a ceiling.   2  1. The Promise of Multilateralism in Intellectual Property Standard-Setting During the period that the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was being negotiated (1986-1993) there were suggestions that if developing countries agreed to TRIPS the US would ease off negotiating intellectual property standards bilaterally. The following statement in 1989 from the Director for Intellectual Property at the Office of the United States Trade Representative (USTR) makes the point: What happens if we fail [to obtain TRIPS]? I think there are a number of consequences to failure. First, will be an increase in bilateralism. For those of you who think bilateralism is a bad thing, a bad thing will come about. 2  It was always clear at all stages of the TRIPS negotiations that the principal players (US, EC and Japan) saw TRIPS as setting only minimum obligations. Nevertheless developing countries might reasonably have expected the World Trade Organization (WTO) or World Intellectual Property Organization in some cases to become the  principal fora for the negotiation of new intellectual property standards. TRIPS was concluded as part of the text of Final Act of Uruguay Round negotiations (the Round was concluded on December 15 1993 and the Final Act signed on 15 April 1994) and came into operation on 1 January 1995. There has been no apparent decline in US bilateral activity on intellectual property since the signing of TRIPS. Table 1 at the end of this paper shows that the level of bilateral activity by the US has increased. This is consistent with a broader trend identified by John Jackson in US trade policy in which the US has moved away from its earlier support for multilateralism and MFN (most-favoured-nation) to “a more ‘pragmatic’ – some might say ‘ad hoc’ approach – of dealing with trading partners on a bilateral basis and ‘rewarding friends’”. 3   2. The role of section 301 in bilateralism Section 301 is the section of the US Trade Act which is used by the USTR to address foreign unfair trading practices, including unfair practices on intellectual property rights. A 301 investigation may culminate in a bilateral agreement between the US and the target state, or failing that, the imposition of trade sanctions by the US (the latter is a rare occurrence). US 301 bilateralism has increased since the 1980s. Many more countries are the subject of 301 surveillance and the section has been amended to increase the number of reviews that take place (so-called out-of-cycle reviews). The USTR announced in the 2000 Special 301 Report that the adequacy of intellectual property protection in more than 70 countries had been reviewed. In 1994 the USTR announced that Section 301 “should be an even more effective tool as a result of the Uruguay Round agreements”. 4   2  Emory Simon, ‘Remarks of Mr Emory Simon’, Symposium:Trade-Related Aspects Of Intellectual Property, 22 (1989), Vanderbilt Journal of Transnational Law , 370. 3  J. Jackson, The World Trading System, The MIT Press, Cambridge, Mass., London, 1997, 173. 4  See USTR, 1994 Annual Report, Section 301, http://www.ustr.gov/reports. 3   Not all trade negotiations that the USTR carries out with other countries involve the  process under 301. Nevertheless section 301 is a constant presence whether in the foreground or background in US bilateralism on intellectual property. Section 301 might produce a ‘TRIPS plus’ (defined in the next Section) consequence without there being a formal agreement between the US and the relevant developing country. The developing country may simply decide to adopt a ‘TRIPS plus’ measure in order to avoid further action by the US under the 301 process. On the effectiveness of section 301 it is worth noting the following remark by a USTR official: One fascinating aspect of the Special 301 process occurs just before we make our annual determinations, when there is often a flurry of activity in those countries desiring not to be listed or to be moved to a lower list. IP laws are suddenly passed or amended, and enforcement activities increase significantly. 5   3. Definition of ‘TRIPS plus’ The term ‘TRIPS plus’ is used to cover two different types of consequences in this  paper. TRIPS confers on its Members a discretion to implement “more extensive  protection” than is conferred by TRIPS standards (see Article 1.1). TRIPS also allows members to qualify the operation of some standards, to choose amongst standards or to choose when to adopt standards (‘option-creating standards’). So, for example, Article 27.3 allows Members to qualify the standard of patentability in Article 27.1 by excluding some subject-matter from patentability and Article 27.3(b) gives Members a choice as to how to protect plant varieties. The transitional  provisions in Articles 65 and 66 create entitlements for developing countries, former centrally planned economies and least-developed country members as to the timing of the adoption of TRIPS standards. A bilateral agreement that (a) requires a Member to implement a more extensive standard; or (b) which eliminates an option for a Member under a TRIPS standard, is for the purposes of this paper a TRIPS plus standard. Bilateral treaties also set standards on issues that TRIPS does not deal with (eg. whether reproduction in copyright law includes temporary copies) and which are therefore not strictly TRIPS  plus. 4. Background - the ‘old bilateralism’ US bilateralism on intellectual property was largely a response to its failure to obtain an agreement on trade in counterfeit goods at the end of the Tokyo Round (1979) and the resistance of developing countries in the first half of the 1980s to including intellectual property as a negotiating item in a new GATT round. Led by India and 5  ‘Technological Progress And American Rights: Trade Policy And Intellectual Property Protection’, Testimony of Ambassador Richard W. Fisher, Deputy U.S. Trade Representative, Subcommittee on International Economic Policy and Trade House Committee on International Relations, Washington DC, October 13th, 1999, 3. 4
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