Agreement on Trade-related Aspects of Intellectual Property Rights

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Background
The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS Agreement) sets minimum standards on intellectual property rights (IPR) protection and enforcement with which all WTO member states must comply. The United States, the European countries, and the IPR business community were instrumental in including IPR on the Uruguay Round agenda. Many developing countries were wary of including IPR in trade negotiations, preferring to discuss them under the World Intellectual Property Organization (WIPO) instead. However, developing countries acceded, after being granted delayed compliance periods, and after achieving negotiating goals on other issues such as textiles and clothing, and savoring the prospect of operating under a rules-based trading system.

While previous international agreements on intellectual property rights continue to exist. the TRIPS Agreement was the first time that intellectual property rules were incorporated into the multilateral trading system. Two basic tenets of the TRIPS Agreement are national treatment (signatories must treat parties of other WTO members no less favorably in terms of IPR protection than the party’s own nationals) and most-favored-nation treatment (any advantage in IPR protection granted to the party of another WTO member shall be granted to nationals of all other WTO member states).

TRIPS Coverage
Much of the TRIPS Agreement sets out the extent of the agreement’s coverage of the various types of intellectual property: copyrights, trademarks, geographical indications, industrial designs, patents, layout of circuitry design, trade secrets, and test data. The TRIPS Agreement provisions build on several existing IPR treaties administered by the WIPO. Another part provides standards of enforcement for IPR covered by the agreement. It enumerates standards for civil and administrative procedures and remedies, the application of border measures, and criminal procedures. A Council for the TRIPS Agreement was established to monitor the implementation of the agreement and transition arrangements were devised for developing countries.

Finally, the agreement provides for the resolution of disputes under the Uruguay Round Agreement’s Dispute Settlement Understanding (DSU). The binding nature of the DSU, with the possibility of the withdrawal of trade concessions (usually the reimposition of tariffs) for non-compliance, sets this agreement apart from previous IPR treaties that did not have effective dispute settlement mechanisms.

The TRIPS Agreement also seeks a balance of rights and obligations between the private right, enumerated above, and the obligation “to secure social and cultural development that benefits all.” Article 7 declares that:


 * . . . the protection and enforcement of IPR should contribute to the promotion of

technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare and to a balance of rights and obligations. This paragraph attempts to link the protection of IPR with greater technology transfer, including technology covered by IPR protection, to the developing world. The language itself has been interpreted in various ways. Developed countries have tended to consider this language exhortatory, but developing countries have tried, without much success, to make technology transfer a meaningful obligation within the TRIPS Agreement system. Article 66.2 of the agreement requires developed country members to provide incentives to their enterprises and institutions to promote technology transfer to least-developed countries to assist them in establishing a viable technology base. Developed countries report annually on their efforts to encourage technology transfer (LDCs).

Complying with international IPR standards may impose greater burdens on developing countries than developed countries. Developing countries generally have to engage in greater efforts to bring their laws, judicial processes, and enforcement mechanism into compliance with the TRIPS Agreement. Consequently, developing countries were given an extended period of time in which to bring their laws and enforcement mechanisms into compliance with the TRIPS Agreement. Developing countries and post-Soviet states were given an additional four years from the entry into force of the agreement (January 1, 1995). For products that were not covered by a country’s patent system (such as pharmaceuticals in many cases), an additional five years was granted to bring such products under coverage. For developing countries, all provisions of the TRIPS agreement should now be in force. For the least developed countries (LDCs), the phase-in period was set at 10 years (January 1, 2006), and for pharmaceuticals, the compliance period was later extended to 2016.

IPR and Development
The controversy over the relationship between IPR and development was engaged by the advent of the TRIPS Agreement, which for the first time placed IPR obligations on developing countries. Some hold that expansion of IPR is an obstacle to growth and development in less advanced countries, while others, with a diametrically opposing view, maintain that IPR are beneficial to both developed and developing countries.

Some IPR critics believe that a strong IPR regime may reduce developing countries’ access to technology from advanced countries by imposing higher fees for technology licenses and production right, limiting their innovation and economic growth and development. For instance, Japan, Singapore, Taiwan, and South Korea enhanced their technological abilities and developed their economies through “reverse engineering” of foreign technologies.

Others claim that IPR promote technology transfer through increased trade, foreign investment, and licensing in the long-run by making a country more attractive to foreign partners. A 2002 OECD study concluded that stronger IPR laws, particularly enhanced patent standards, may be associated with increased foreign direct investment (FDI) and trade for developing countries over time, with variation by industries and level of development. For instance, India experienced an increase in foreign investment and technology transfer once it expanded its patent protection. China offers a counterexample of a country with a weak IPR regime but high FDI and trade levels.

There is also evidence that IPR’s impact on developing countries may vary by the level of development. One study suggests that IPR protection may offer more benefits for the more industrialized developing countries, such as Brazil and India, compared to other developing countries. Another study finds that rapid economic growth is associated with weak intellectual property regimes, but that developing countries with higher levels of per capita income may benefit economically from stronger IPR regimes.