A Fragmented Landscape of Regulation

Shaping intellectual property rights norms through trade agreements.

Administering piecemeal approaches to wholesale problems might seriously undermine the potential to negotiate landmark agreements on IPRs in the future.

With ACTA lying dead on European parliament floors, WTO’s Doha development rounds stuck in a perpetual gridlock with only a partial victory won in Bali last year, and WIPO’s Intergovernmental Committees resembling debating societies more than real negotiations it is safe to say that the now teenaged new millennium has failed to promote IPRs through multinational forums as the success of previous years would have allowed us to expect.

Even worse, many of the previous successes, such as the ground laying TRIPS agreement, are now facing unforeseen headwinds – and even outright hostility among both the civil society and some government offices in developing countries claiming that IPRs do little to promote their economic development.

At the same time, many developed countries feel the pressure to revise international intellectual property rights norms to the needs of their knowledge and innovation economies. Some of these countries such as the US and Japan have for some time explored other ways of releasing this pressure and addressing main issues of concern of their IPRs driven industries.
Key among these novel methods are free trade agreements, which in the past belonged exclusively to the sphere of economists but which are now used with increasing frequency to introduce norms on topics such as IPRs, competition law and government procurement. Continuing on this path might provide short-run results while seriously undermining the potential for long-term consensus based agreements and the impacts they would bring. 

The Asia-Pacific experience

This change of forum for advancing internationally applicable IPRs norms has caught many developing countries, in particular in the Asia-Pacific region, off guard and unprepared. Part of the reason why developing countries are struggling to cope is due to lack of home-grown capacity to assess the impacts – and ultimately the benefits of IPRs legislation. Another part is the sheer pace of the developments.

Before 2000 only a handful of the free trade agreements even mentioned IPRs. Today the so called Asia-Pacific Trade agreement noodle bowl which is made up of an entangled mass of hundreds of interwoven free trade agreements, bilateral investment treaties and other similar instruments signed by individual trading partners and country groups, contains more than 50 agreements spiced with IPRs.

Combining the rapid pace of developments with the limited capacity – and willingness – of developing countries such as India and Sri Lanka to absorb new IPRs legislation explains much of the concerns they exhibit in WIPO Committees and other traditional forums.

Trade agreements cast from different mold

Whereas many trade agreements only reinstate already existing obligations of TRIPS, Berne or Paris Conventions or give vague promises of strengthened intergovernmental collaboration some agreements go much further.

For instance, the 2001 agreement between the United States and Viet Nam practically established the whole body of intellectual property rights legislation in view of Viet Nam´s upcoming membership in the WTO with an approximate 48 percent of the whole free trade agreement being devoted solely to intellectual property issues.

Whether one wishes to see this as ruthless abuse of hegemonic powers, careful and strategic concessions given for much coveted market access or something in between, depends largely on how one approaches trade negotiations in general.
What is unambiguously clear however, is that trade agreements can also be used by innovation driven countries to push through even some of the most controversial and unorthodox IPRs issues. Issues, which would have most likely been shot down at WTO or WIPO negotiation tables.

Why negotiate if it’s not TRIPS-plus?

Somewhere after the change of the millennium the so called TRIPS-plus provisions has proliferated with an impressive clip. In fact, it is rare to find trade agreements signed by larger innovation driven countries which do not go well beyond TRIPS and even in the case of developing countries many of the provisions are similarly more stringent.

This trend has kicked up a dust storm around the justification and impact of TRIPS-plus provisions.  It is the view of a wealth of vocal civil society members that going beyond TRIPS in bi- or multilateral trade agreements is a more than questionable move aiming to circumvent established mechanisms for agreeing on IPRs through more consensus driven forums.

Fear mongering and doomsday calculations of the number of casualties due to lacking access to HIV medication and the like are next to follow. From an economist and trade lawyer’s point of view, an agreement which does not impact upon the existing trading environment is not far from being wasted paper. As such, surpassing the baseline created by TRIPS almost two decades ago, should be expected of all modern trade agreements which endeavor to have any real world effects.

Piecemeal approach to a wholesale problem?

Even if one cannot validly argue against the rationale behind negotiating more stringent intellectual property rights rules through trade agreements one can, and perhaps should, question whether these provisions should exist in bi- or multilateral trade agreements in the first place. What the traditional negotiating forums lack in flexibility, they make up to some extent with the international scope of applicability and the – at least seemingly – increased legitimacy of the process governed with a set of checks and balances.

It can also be argued that administering piecemeal approaches to wholesale problems might seriously undermine the potential for being able to negotiate landmark agreements on IPRs in the future; the trade-off here being between small but tangible short-term returns and more significant impacts generated by long-term multilateral negotiations.

Furthermore, addressing the current needs of European member states and other innovation driven countries through one-off agreements can create a fragmented landscape of regulation making future progress and negotiations difficult if not impossible. At the same time, the ease of doing business and private sector confidence in international legal certainty are undermined by an increasing lack of uniformity.

On the other hand, the piecemeal approach enables incremental iterative changes to IPRs legislation as opposed to one-size-fits-all solutions which have proven ineffective in the past. In fact, in many developing countries the private sector is adversely affected alongside the general public by the mismatch between the existing IPRs regime and the developmental stage of the country.

As shown by recent studies, higher levels of IPRs protection confer significant benefits only for countries which have sufficiently developed innovation dependent industries and that in the case of countries still relying on lower factor pricing and improved efficiency in manufacturing, high levels of protection of e.g. patents has, can negatively affect key economic indicators such as the GDP.

Findings like this make the point that establishing any developments in the realm of IPRs protection through mechanisms such as free trade agreements should be done with utmost care. The point is made even cleared if we consider the possibility of IPRs inclusive free trade agreements proving to be stumbling – rather than building – blocks on the way towards a global consensus on the future of IPRs.

Teemu Alexander Puutio
ARTNeT CENSUS initiative Coordinator,
United Nations ESCAP