Comments for Comments for TRIPS Plus Ten: TRIPS Plus Ten:

Economic Economic Implications Implications Keith MaskusKeith Maskus

Prepared for SIDA/ICTSD Prepared for SIDA/ICTSD Conference, Stockholm, 24 Conference, Stockholm, 24

September 2004September 2004

PerspectivesPerspectives

A trade economist’s view of IPRs and A trade economist’s view of IPRs and developmentdevelopment

Based both on researh and practical Based both on researh and practical experienceexperience

Complex questions without simple Complex questions without simple answers: focus on a few themesanswers: focus on a few themes

Expectations of TRIPS Expectations of TRIPS

Original idea: agreement on counterfeiting Original idea: agreement on counterfeiting and piracyand piracy

There were many differences among There were many differences among developing countries.developing countries.

Positive expectations:Positive expectations: Central concession in return for market access;Central concession in return for market access; Additional flows of ITT and research;Additional flows of ITT and research; Shift of global innovation toward needs of poor Shift of global innovation toward needs of poor

countries;countries; Relief from IPR-related trade threats and access to Relief from IPR-related trade threats and access to

dispute resolution.dispute resolution.

Have Expectations Been Have Expectations Been Met?Met?

Considerable dissatisfaction among Considerable dissatisfaction among developing-country governments:developing-country governments: Weak link to market access;Weak link to market access; Limited success in ITT;Limited success in ITT; Recognition of need for broader reforms;Recognition of need for broader reforms; Not much evidence of targeted Not much evidence of targeted

innovation;innovation; Concerns in agriculture, medicines, Concerns in agriculture, medicines,

science and education.science and education.

Was TRIPS a Good Idea?Was TRIPS a Good Idea?

Yes, because of policy externalities.Yes, because of policy externalities. Yes, because IPRs are a pillar of Yes, because IPRs are a pillar of

market support. market support. But the details of TRIPS leave But the details of TRIPS leave

considerable room for argument considerable room for argument about how well or how equitably about how well or how equitably IPRs are globalized.IPRs are globalized.

Importance of flexibility.Importance of flexibility.

Is TRIPS a Boost for Is TRIPS a Boost for Development?Development?

Positive case for TRIPS:Positive case for TRIPS: IPRs support market deepening and IPRs support market deepening and

product quality, even at low development product quality, even at low development levels.levels.

IPRs support greater flows of ITT.IPRs support greater flows of ITT. IPRs offer scope for improving IPRs offer scope for improving

commercialization of publicly supported commercialization of publicly supported research.research.

IPRs can improve scope for IPRs can improve scope for implementing critical new technologies.implementing critical new technologies.

Is TRIPS an Obstacle to Is TRIPS an Obstacle to Development?Development?

Negative case for TRIPS:Negative case for TRIPS: Heavy demands on development budgets and Heavy demands on development budgets and

expertise.expertise. Limits policy space for learning and imitation.Limits policy space for learning and imitation. Raises potential for anti-competitive activity.Raises potential for anti-competitive activity. Stronger protection could reduce technology Stronger protection could reduce technology

flows to poorest countries.flows to poorest countries. Neutral case: impacts may be slight in poor Neutral case: impacts may be slight in poor

countries.countries. One opinion: it is still too early to be One opinion: it is still too early to be

confident of much.confident of much.

Focus on ITTFocus on ITT

Importance of inward technology for Importance of inward technology for developmentdevelopment

Both access and adoption/learning are Both access and adoption/learning are necessary for productivity.necessary for productivity.

Major market-mediated forms of ITTMajor market-mediated forms of ITT Trade in goods and services (capital goods)Trade in goods and services (capital goods) Foreign direct investmentForeign direct investment Technology licensing (patents, trademarks, Technology licensing (patents, trademarks,

know-how)know-how) Non-market forms are also importantNon-market forms are also important

Potential Market and Policy Potential Market and Policy FailuresFailures

Asymmetric information and Asymmetric information and transactions coststransactions costs

Market power and markups on Market power and markups on technology pricestechnology prices

Externalities and spilloversExternalities and spillovers Policy coordination difficultiesPolicy coordination difficulties

Subsidies and tax holidaysSubsidies and tax holidays Trade and investment policiesTrade and investment policies Intellectual property rightsIntellectual property rights

TRIPS and ITTTRIPS and ITT

TRIPS-like protection can resolve TRIPS-like protection can resolve some of these difficulties.some of these difficulties.

But evidence suggests other But evidence suggests other problems could be worsened in poor problems could be worsened in poor countries.countries.

ITT is likely to be enhanced by ITT is likely to be enhanced by differentiated innovation regimes differentiated innovation regimes and IPR standards, safeguarding and IPR standards, safeguarding policy space.policy space.

TRIPS Provisions on ITTTRIPS Provisions on ITT

Article 7: IPRs should contribute to Article 7: IPRs should contribute to the promotion of innovation and the promotion of innovation and transfer of technology.transfer of technology.

Article 8.2: freedom to prevent IPRs Article 8.2: freedom to prevent IPRs abuses that interfere with ITT.abuses that interfere with ITT.

Article 66.2: positive obligation of Article 66.2: positive obligation of developed countries to provide developed countries to provide incentives for enterprises to promote incentives for enterprises to promote ITT to LDCs.ITT to LDCs.

Inherent difficulty of this task.Inherent difficulty of this task.

Increasing ITT: Host Increasing ITT: Host Country PoliciesCountry Policies

General support for technology General support for technology adoption and ITTadoption and ITT

Need for policy flexibility regarding Need for policy flexibility regarding nature of market failures, imitation nature of market failures, imitation prospects, competitionprospects, competition

Low-income countries should have Low-income countries should have wide exemptions from rigorous IP wide exemptions from rigorous IP protection, especially where public protection, especially where public goods are involved. goods are involved.

Increasing ITT: Source Increasing ITT: Source Country PoliciesCountry Policies

Improve market access.Improve market access. Technical assistance for capacity building and Technical assistance for capacity building and

technology adoption. Consider undertaking technology adoption. Consider undertaking competition policy actions on behalf of developing competition policy actions on behalf of developing countries.countries.

Fiscal incentives for ITT in parallel with those for Fiscal incentives for ITT in parallel with those for disadvantaged regions in OECD.disadvantaged regions in OECD.

Encourage differential pricing strategies, Encourage differential pricing strategies, especially for data and research results.especially for data and research results.

Greater opportunities for temporary movement of Greater opportunities for temporary movement of technical workers and students.technical workers and students.

Public research programs into LDC technology Public research programs into LDC technology needs.needs.

Multilateral (WTO) Multilateral (WTO) CooperationCooperation

Extend Article 66.2 on a graduated basis.Extend Article 66.2 on a graduated basis. Re-visit WTO rules on subsidies to expand Re-visit WTO rules on subsidies to expand

policy space for ITT.policy space for ITT. Clarify that TRIPS permits research Clarify that TRIPS permits research

exemption in patents and PVRs.exemption in patents and PVRs. Expand information flows on effective Expand information flows on effective

interventions.interventions. Expand Mode 4 GATS negotiations Expand Mode 4 GATS negotiations

(temporary movement) to include acquiring (temporary movement) to include acquiring education and skills (a “knowledge export”).education and skills (a “knowledge export”).

Other Multilateral Other Multilateral OptionsOptions

Dedicated small fee on international Dedicated small fee on international patent and trademark applications.patent and trademark applications.

Move toward consideration of a Move toward consideration of a multilateral agreement on access to multilateral agreement on access to basic science.basic science.

Consider additional measures for price Consider additional measures for price differentiation in information products.differentiation in information products.

Clarify international norms on the Clarify international norms on the scope of fair use in digital works.scope of fair use in digital works.

Concluding RemarksConcluding Remarks

TRIPS a qualified success.TRIPS a qualified success. TRIPS needs to be implemented in good TRIPS needs to be implemented in good

faith.faith. Reiterate the need for careful Reiterate the need for careful

consideration of appropriate standards and consideration of appropriate standards and flexibilities.flexibilities.

There is scope for improving ITT There is scope for improving ITT processes.processes.

Developing countries need complementary Developing countries need complementary policies.policies.