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close this bookBiotechnology and the Future of World Agriculture (GRAIN, 1991)
close this folderControlling the profit
View the document(introduction...)
View the documentAn historical appraisal
View the documentThe great reversal
View the documentTightening the grip: the push for patents on life
View the documentBox: Twelve Reasons to say no to life patents
View the documentThe implications

The great reversal

But then came what Surendra Patel, former UNCTAD official deeply involved in the patent debate, calls 'The Great Reversal'. (10) While in the 1960s and beginning of the 1970s calls for a New International Economic Order echoed loudly in the corridors and meeting rooms of the United Nations, the late 1970s and 1980s witnessed a mounting economic crisis and the rise of 'no-nonsense' and protectionist attitudes in the North. In 1974, the OECD Council still warned member states, in unusually strong language, against 'abusive practices in which patentee and their licensees may engage'. (11) One decade later, the same OECD countries pushed the discussions to the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) where the dissident voices of the Third World are hardly heard. After having effectively blocked the UNCTAD and WIPO negotiations, the North is now ruthlessly pushing ahead for universal patent protection, based on their own laws and traditions. In the discussions on Trade Related Aspects of Intellectual Property Rights (TRIPS) of GATT, even the initial ministerial declaration of the GATT Uruguay Round, in which the industrialized countries explicitly promised not to push for measures that might be inconsistent with the need of developing ones, (12) seems to have been forgotten.

Discussions on the special needs of developing countries and about the importance of using the patent system as an instrument for national development and technology transfer, have been substituted by simple arguments that the North is losing huge amounts of money because the South does not have strong patent protection. The US Chemical Manufacturers Association (CMA) reports US chemical industry losses of up to $6 billion annually due to intellectual property infringements. PMA, the* pharmaceutical counterpart, claims they are losing $4 billion a year to 'intellectual property piracy'. (13) The US International Trade Commission (US-ITC) circulates estimates from a low $43 billion to a high$102billion for American business alone, (14) while the International Chamber of Commerce puts the losses at $70 billion worldwide. (15) These extravagant claims by industry, though mostly unsubstantiated, are repeated by the US government to increase the patent pressure on developing and other countries. (16)

The figures are completely out of touch with reality. If the US-ITC claims were to be extrapolated to other OECD countries, we would be talking about anything between $100 and $300 billion in 'lost' income from the South. This compares with total Third World exports of some $500 billion in 1987. (17) In practice, this means that industrialized countries, through strengthened patent systems in the South, are requesting enormous amounts of additional revenue to be transferred from the South to the North. It would make the net South-North transfer of funds, currently in the order of $50 billion a year, crippling as it already is, seem insignificant. This 'scare-the-hell-outof-you'strategy is absurd and constrasts sharply with the more serious attempts to analyse and revise the patent system also to benefit Third World development, undertaken at UNCTAD a decade earlier.

The USA is not waiting for the outcome of the GATT Uruguay Round to settle its grievances. Bilaterally, it has already started to sanction those developing countries without strong patent regimes. In 1988, the Reagan administration passed a new Trade Act, which includes the setting-up of a watch list of infringing countries. A study has already been drawn up on 36 countries, including Brazil, China, India, Korea, Mexico, Taiwan and Thailand, all of which are now under strong pressure to amend their patent laws. If the countries fail to respond in a way that pleases the USA, trade sanctions will follow. Several countries can already explain what that means. In late 1988, the Reagan administration increased import tariffs on $165 million worth of goods from Thailand because of lax enforcements of intellectual property laws in that country. (18) Also in 1988, Brazil faced similar retaliations, when the US imposed punitive tariffs, valued at $39 million, on Brazilian imports to the US because that country does not allow for patents on pharmaceutical products. (19) Some countries have started giving in to the pressure by changing their laws, but many are resisting. The stakes are simply too high.

The bitter irony of this bully-strategy lies in its double standards. On the one hand, the OECD is requesting Third World countries to strengthen their patent laws in order to allow TNCs from the North to monopolize markets in the South. But on the other hand, the same OECD countries carefully protect their own markets from imports from the South with a whole arsenal of measures including subsidies, quotas and tariffs. It is estimated that in the United States alone this protection covered 25% of all US imports in 1986, compared to 8% in 1975. (20) The situation in Europe and Japan is hardly different. At the same time, since 1980 the US Congress has quietly passed 13 laws on intellectual property protection to make the American bully-strategy more operational. Even basic science suffers. In 1987 the Reagan administration ordered that US agencies sign scientific research agreements only with those countries that respect US patents. According to the magazine Trends in Biotechnology, the new laws considerably favour US nationals in the application for patents. (21) One of these laws, for example, rules that US patents are granted to residents from other countries only if those countries have brought their patent protection in line with US standards. (22) This 'patent rationalism' is exactly the basis on which the US accuses other countries of unfair practices.

The second irony lies in the patent history of countries such as Japan and the USA. Japan has joined the USA in the current GATT negotiations in trying to push stronger patent protection into the Third World. Until not so long ago, Japan itself was a newly industrializing country that, according to many observers, developed on the basis of imitation. Now Japan is among the countries that want to close this route for others. In the 19th century the USA itself was attacked by Britain, then world leader in technology, for not providing strong patent protection. The Washington Post reported that these complaints had little effect; American companies wanted the freedom to capitalize quickly on British innovations. (23)

The battle over whether pharmaceutical products should be patented is a good example of the biased arguments of the North. Many Third World countries do not allow patenting on drugs because they regard secure indigenous capacities in this field as vital for national development. Some, like Brazil, have already been punished for that. But major OECD countries themselves started allowing for product patents on drugs only after their pharmaceutical industries had become firmly established: France in 1958, West Germany in 1968, and Switzerland in 1977. The Japanese only allowed for pharmaceutical product patents in 1976 when their country already ranked second in world production in drugs, and controlled 80% of its home market. (24) These figures might lead to the conclusion that the national pharmaceutical sector in many OECD countries was able to grow precisely because of the convenient absence of strong domestic patent protection for drugs. Only when export interests began to dominate did patent protection appear more desirable. The North, through its demands in GATT, is now seeking to deny the Third World that same route to development. This new technological protectionism would result in the perpetuation of current comparative advantages of the industrialized countries in world production and trade. (25) It would also further warp the existing international division of labour, already heavily biased towards the interest of the North.

In discussions on development, experts from the North often quickly point to the Asian NICs, such as Singapore, Hong Kong and the Republic of Korea, as extremely successful development models that should also be followed by other Third World countries. Yet, again, much of the economic success there was based on freely using and building upon knowledge and technology from the North. Korea and others are now on the US patent watch list. Ultimately, the issue boils down to the question of whether or not sovereign nations, especially those from the Third World, have the right to choose the policy instruments that most suit their national development needs. Perhaps the time has come to start arguing for the Right to Imitate, rather than the Right to Intellectual Property. Historical evidence might show that much of the economic and industrial advancement of OECD countries has been based on exactly that.