TRIPS: Consequences For Developing Countries

TRIPS had limited practical implications for most developed countries. Although there were areas where some developed countries had to adjust or complement existing IPR legislation in order to comply, none were faced with substantial new requirements. In all important respects, the agreement was negotiated to accommodate both the levels and the technical design of existing IPR protection in developed countries.

For nearly all developing countries, in contrast, TRIPS has very considerable implications. Because strong IPR protection, for obvious reasons, is an interest of economies strong in industrial research and development, it follows that developing country as a group have considerably weaker IPR legislation than developed countries. TRIPS will require substantial new legislation and infrastructure investment in practically all developing countries.

There is however wide variation also within the developing country group, again depending on their level of industrial research and development. Typically, the economically stronger developing countries already provide most forms of IPR protection and are members of the Paris Convention and other relevant treaties. For them, while the detailed standards of TRIPS may imply substantial additions and changes to national IPR systems, it normally will not as a rule require entirely new legislation or infrastructure. In contrast, the economically weaker developing countries, and in particular the least developed countries (LDCs), often lack several types of IPR entirely and face very heavy new obligations.

Concerns raised by developing countries
Developing countries have raised a range of different concerns with the TRIPS agreement. A number of these are discussed in this section. It is divided into three parts, dealing in turn with general concerns, concerns related to biodiversity and agriculture, and concerns related to health care.

General Concern
Balance of interests
As mentioned above, the conceptual basis of IPR protection presupposes a balance between the time limited monopoly granted to inventors, and the total benefits to society of the increased inventive activity. The stated objective of TRIPS reiterates this principle. It reads in full:
The protection and enforcement of intellectual property rights 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.

TRIPS Article 7 (Objectives)

A number of developing countries, most recently India in a TRIPS Council paper (India 2000) have questioned whether this balance can be achieved under the present TRIPS text. India points in particular to the fact that the agreement allows very limited flexibility. Although Article 8 explicitly allows members to adopt measures "necessary to protect public health and nutrition and to promote the public interest in sectors of vital importance to their socio-economic and technological development", it is clear from the same article that such measures may in no case contradict any of the substantive provisions of the agreement.
India also notes that even the use of existing flexibility in TRIPS by developing countries, for example regarding the use of compulsory licensing, has repeatedly been questioned by developed country members.

Similarly, India points out that the meaning of "limited exceptions to the exclusive rights conferred by a patent" allowed under Article 30, has been very narrowly interpreted by the Dispute Settlement Body, India's conclusion is that if TRIPS is to fill the function of a trade agreement, and not "a means of enforcing private rights irrespective of their trade effects" it needs to be clarified that the objectives and principles contained in articles 7 and 8 take precedence over other provisions in the agreement, and not the other way around.

India's concerns appear to be very broadly shared among developing countries. At the heart of the matter is the question of the relation between strong IPR protection and economic development. Developing countries generally take the view, as expressed by Kenya in another recent TRIPS Council submission, that strong IPRs "do not by themselves lead to FDI, neither encourage technology transfer nor local innovation" (Kenya 2000).

Developed countries, in contrast, express very strong trust in the capacity of IPRs to generate economic growth in and by themselves. "There is a direct correlation", writes a high representative of the US Department of State, "between a country's protection of intellectual property - patents, copyrights, and trademarks - and its economic growth and development...

The tide of technology is strong and capable of lifting all economies. But nations that fail to protect intellectual property will be left behind." (Eizenstat 1999)
While it is a correct observation that strong IPRs correlate with high economic development, this does not necessarily imply a causal relationship. As already mentioned, existing scientific data, although inconclusive, clearly tends to support the developing country view in this matter (UNCTAD, 1996; Correa, 2000).
It should also be noted that intergovernmental organisations with development mandates recently have begun to flag concern about overly strong IPR systems. A World Bank research paper concluded that the balance now institutionalised in industrialised country IPR systems "is tipped toward the interest of commercialized producers of knowledge - tipped past the point of optimality even for the community of interests that make up the industrialized country societies" (Finger & Schuler 1999).

The 1998 World Development Report questioned the increasing use of IPRs to protect fundamental research tools and thus block competitors from entering the field (World Bank 1998). The 1999 UNDP Human Development Report likewise discussed the increasing privatisation of basic research, and concluded in no uncertain terms: "The relentless march of intellectual property rights needs to be stopped and questioned" (UNDP 1999).

Review procedures
There has been considerable disagreement between developing and developed countries over the building review provisions in TRIPS, in particular the review of subparagraph 27.3(b) on limits to life patenting, mandated to take place in 1999. During most of 1999 and into 2000, developed countries insisted that the review should only concern implementation of the subparagraph, while developing countries insisted it should concern the substance of the text.
While it is true that the term 'review' is used incoherently for several different purposes in the TRIPS text, and interpretation sometimes may legitimately differ, this is hardly true in this context. The text clearly says: "The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement."

Non-violation complaints

Non-violation complaints are a peculiar feature of the GATT agreement. Under its general rules of procedure, a member is entitled to lodge a complaint against another member even though that other member has not violated the agreement in any way. If a member judges that benefits which should have resulted from the agreement are not forthcoming, and that the responsibility in some way falls to another member, this is sufficient basis for a complaint. If accepted by the dispute settlement mechanism, a non-violation complaint can be the basis for cross-retaliation measures like any other complaint.

In principle, GATT rules apply to TRIPS in this respect. However, a 5-year moratorium on non-violation complaints was agreed during the negotiation. This period ended 1 January 2000. A decision on whether to prolong or eliminate it was supposed to have been taken at the Seattle Ministerial.

Developing countries, with support from a growing number of developed countries, insist that non-violation complaints should not be allowed in TRIPS, because of the fundamental difference between traditional trade agreements, which are about reducing barriers, and TRIPS which is a minimum standards agreement. The USA however defends the use of non-violation complaints in TRIPS, although it has also indicated that for the time being, it will lodge complaints regarding TRIPS based on violations only.

Human rights compliance

The right to protect intellectual property is a human right which has been set down in article 27, §2 of the Universal Declaration of Human Rights and article 15, §1c) of the International Covenant on Economic, Social and Cultural Rights. This human right is subject to limitations in the public interest, and it must be judiciously balanced not to infringe on other basic human rights.

Developing countries have raised concerns regarding actual and potential conflicts between the implementation of the TRIPS Agreement and the realisation of basic economic, social and cultural human rights. Specific concerns have been raised regarding the patenting of life forms, which is regarded by many developing and least developed countries as violating basic human values. The Africa group has requested the TRIPS council to exclude the patentability of life forms on the grounds that it is unethical, and the LDC group made a similar proposal in WTO General Council during the preparatory process for the Seattle Ministerial.

The UN Commission on Human Rights, Sub-Commission on the Promotion and Protection of human rights has noted these concerns (UNCHR, 2000).

In particular, the sub-commission has pointed out possible negative consequences related to:
• patenting of genetically modified organisms and plant variety protection and the right to food;
• Reduction of indigenous and local communities' control over their own genetic and natural resources and cultural values, and
• Patented pharmaceuticals, restrictions on access to essential drugs and the implications for the enjoyment of the right to health.

The sub-commission on the promotion and protection of human rights has pointed out that there are apparent conflicts between the intellectual property rights regime embodied in the TRIPS Agreement, on the one hand, and international human rights law, on the other (ibid.).

Reminding all governments of the primacy of human rights obligations over economic policies and agreements, the sub commission has requested the TRIPS Council to take fully into account the existing State obligations under international human rights instruments. The sub-commission has also requested and recommended further work by a number of international bodies, including WIPO, WHO, UNDP, UNCTAD, UNEP and UNHCHR, to clarify the relationship between intellectual property rights and human rights.

Bilateral pressures to over comply
In the course of preparation of this report, we have been alerted to a considerable number of cases where bilateral trade pressures have been applied by developed countries to make developing countries legislate 'TRIPS-plus' levels of IPR protection or to implement various TRIPS provisions ahead of time. In the nature of the matter, those cases are usually not documented, nor have we made any efforts to substantiate or double-check facts, something which would at any rate be near impossible.

Given the large number of well-placed informants from national governments as well as intergovernmental and non-governmental organisations, we are left with the impression that there is a sizeable problem. The few literature mentions we have seen underscore this impression. Correa (1999) claims developing countries are "under the continuous pressure of some countries (notably the United States) to grant a protection broader than required under the Agreement". At the end of 1999, the office of the US Trade Representative was reported to have46 current actions against poor countries for using internationally accepted and WTO compliant measures such as compulsory licensing and parallel import to save lives (ACT-UP 1999). The WHO has noted that some countries, formally and informally, have reported such pressure not to include TRIPS-provisions intended to safeguard access to essential drugs in their national legislation (WHO 1999). Reichman (1998) ascribes such "bullying tactics" ultimately to "powerful firms in the developed countries" which stand to lose some advantages if developing countries fully exploit the 'wiggle room' left in implementation of TRIPS.

The USA, at least for domestic audiences, is relatively open about its intentions. A deputy US Trade Representative, speaking at a Congressional hearing, makes a point of how "we have pressed countries wherever possible to accelerate implementation of [TRIPS] provisions", and details a number of cases where the USTR in close cooperation with US industry has intervened directly to demand new legislation in developing countries or deliver threats of WTO dispute settlement proceedings (Fisher 1999).

While perhaps not technically in violation of TRIPS, this kind of activity certainly seems to be in contradiction of the spirit of the very first paragraph of the agreement, stating that Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement... Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice.
TRIPS Article 1.1 (Nature and Scope of Obligations).

Even more worrisome, if correct, are reports that intergovernmental organisations involved in advising developing country governments on the implementation of TRIPS have misused their position to further their own agendas. Again, we have not ventured to check details, but we have been made aware of several instances where WIPO counselling is reported to have resulted in TRIPS-plus IPR legislation, and UPOV involvement has created the impression that Plant Breeders' Rights are necessary for compliance with the sui generis provision of TRIPS 27.3(b).

Concerns Related To Biodiversity And Agriculture

Patents on life
The life patenting provisions in Article 27 are no doubt the part of TRIPS which has raised most serious concern among developing countries. This should come as no surprise, as patents on life may over time bring profound changes in the way biological resources are controlled and exploited. The potential effects are relatively more important for developing countries because agriculture and other natural resource based livelihoods are still a major part of their economies, but also because biodiversity is one of few areas where they have a comparative advantage which could form the basis of indigenous economic development.

It should also be noted that patents on living organisms continues to be a highly controversial subject in many developed countries as well. In the EU, the new directive passed on the matter in 1998 after more than 10 years of negotiation was immediately challenged in the European Court of Justice by two member states (ECJ case C-377/89). Only three members had fully implemented the directive by the official deadline in July 2000 (GRAIN, 2000d), and recently the German government announced its intention to demand a renegotiation.

A number of developing countries have tabled formal submissions in TRIPS Council regarding life patents, including the full African Group, the LDC Group, India, Brazil, Venezuela and several other Latin American countries. Their arguments centre on the following issues:
Biopiracy, Although not (yet) a formal legal term, biopiracy is a concept formed by direct analogy to the concept of copyright piracy, commonly used, including in the TRIPS agreement itself, to describe unlawful use of copyrighted materials. Biopiracy refers to the appropriation of biological resources through IPRs without proper agreement with its developers (concerning domesticated materials) and/or without proper consent by relevant government authorities as mandated by the Convention on Biological Diversity (concerning wild materials).

Biopiracy occurs mainly due to low standards of what is considered a 'novelty' or an 'invention' for the purpose of patent registration, or sometimes by lax interpretation. One key issue is what information examiners are required to consider when checking for novelty (so-called prior art). For example, under US patent law, there is no requirement to check non-written sources outside the USA itself.

This means that traditional use anywhere else in the world which is not documented in writing does not formally constitute prior art. A number of highly publicised cases of biopiracy have resulted from this rule, including the neem patent which the Indian government challenged in a US court . But even in countries where examiners are in principle required to check both written and non-written sources globally, examination is in practice often limited to what is readily available in scientific literature and patent databases.

Another key issue is how the boundary between invention and discovery is drawn. Especially when the subject matter of a patent is a biological substance found in nature, such as a DNA sequence or a cell line, the dividing line tends to be blurred. A number of biopiracy cases involve this type of material, collected from developing countries and subsequently patented in developed countries.

Although most countries formally provide patents only for inventions (the USA being the main exception), the requirements for technical intervention (inventive step) are in practice often set at a very low level. Major controversy has surrounded the US practice of granting patents on isolated DNA sequences per se, but other developed country governments have only marginally higher standards.

For example, under the EU biopatent directive, a biological discovery (for example a DNA sequence) becomes a patentable invention as soon as a potential use can be described.
It should be emphasized that TRIPS is certainly not the cause of biopiracy. As should be clear from the above, the space for biopiracy is created by deficiencies in national patent legislation. The concern raised by developing countries is that TRIPS in no way addresses this situation. In contrast to its very detailed requirements in many other areas, TRIPS leaves the definition of the three fundamental patent criteria (novelty, inventive step, industrial applicability) entirely to the discretion of national governments. No minimum standards are set. Implicitly, it can be argued, biopiracy is thus condoned by TRIPS.

In addition, it is not inconceivable that TRIPS may add insult to injury by forcing developing countries themselves to create laws to grant and enforce patents over biopirated objects. There is also a clear possibility that such patents may serve to block or circumscribe related R&D needing access to the same basic discovery or traditional technology.

For some developing countries, the risk of biopiracy is one of the arguments for excluding living organisms entirely from patent protection (eg Africa 1999, LDC 1999), thus removing the potential for biopiracy altogether. Others have suggested (e g India 2000a, Brazil 2000) that an international remedy to biopiracy should be sought by amendment to TRIPS. India notes that with patentability of life forms, this is the only practicable solution, as developing countries do not have the resources to monitor all piracy cases outside their borders and challenge them through litigation in foreign courts.

• Ethical, religious and cultural values. A fundamental opposition out of ethical principles to "the commoditization and marketing of life structures" (Africa 2000) has been voiced by several developing country submissions. The very possibility of living organisms constituting inventions has been questioned. It has been pointed out that there is a clear difference between ownership of individual plants and animals, which is recognised in most cultures, and ownership of life-forms as such, which is not. But also some of the potential consequences of patents of life are questioned from an ethical point of view, such as privatised research increasingly targeting products for the affluent.

• Right to save and exchange seed. The right of farmers to save, reuse, exchange, or sell seed from their own harvests are restricted to various extents both by patents and by PBRs under the most recent UPOV text (1991). Of course these restrictions apply only to seeds protected under such systems. Any seed previously in the public domain will continue to be so. Yet it is quite likely that an increased use of IPRs on seeds would restrict developing country farmers' choices in many cases and increase their costs to the extent that it would directly impact on food security. As a rule, developing country farmers are dependent to some extent on the market for renewing their seed supply. Only in some areas and in a limited number of crops are there still intact local systems of traditional seed maintenance and farmer breeding which offer a complete alternative to commercial seeds. Typically, farmers rely on a combination of both systems, and thus the right to reuse and modify commercial seeds is key to the stability of their production systems.

• Development objectives and control over research. The general discussion mentioned above about the objectives of the agreement and the balance of interests has also been raised specifically in the context of life patents. The most recent African Group submission, for example, asks for the 27.3(b) review to address "whether and how intellectual property rights such as patents and plant breeders rights lead to relocation of investment to natural resource endowed countries, transfer and dissemination of technology, research and development, and innovation to developing countries" (Africa 2000). It also raises the issue about patents potentially restricting access to research materials.

The two major trends in agricultural research over the past 20 years have been the privatisation of previously public research, and the merging of the agricultural chemicals, plant breeding and pharmaceutical industries into what is now commonly referred to as the 'life industry'. The net result is that much of the research which was previously in the public domain, freely shared within the scientific community by means of peer-reviewed publications, is now held by private industry and shared under various forms of commercial agreements. After a rapid concentration process during the last few years, this industry is now dominated by only a handful of huge conglomerates. While the exact patterns of causes and effects are very difficult to analyse, it is clear that both the development of genetic engineering and the concomitant extension of the patent system to living organisms were two of the key factors driving this development. While originally much of biotechnology research took place in smaller, specialised research companies, these conglomerates now between them control most of it, with patents both on living organisms themselves and on associated knowledge and research tools as the primary means of control.

Consequently, access to patented processes, organisms and genes is now judged by most agricultural research organisations, private or public, as crucial to their long-term survival. An instructive example is provided by the recently established research partnership between the Swedish plant breeding company Svalöf Weibull (SW) and the German-based chemicals transnational BASF, which was negotiated strictly for this reason. SW ranked, before the deal, number 13 globally in plant breeding, so it was certainly not a minor company. Yet, SW's analysis was that without direct access to the patent stock of a considerably larger company, they would no longer be competitive. The issue was not the specific subject matter covered by BASF-held patents; it was accessing a large enough stock to be able to take part in the cross-licensing arrangements routinely made between the major players.

While already in full evidence in developed countries, the privatisation and concentration processes started later in developing countries. Relatively speaking, there is still more left of publicly funded and controlled plant breeding in the developing world, including that of national agricultural research and, importantly, that of the CGIAR international agricultural research centres. The CGIAR centres have traditionally had a strong policy of making their results freely available as "international public goods". Facing both increasing access restrictions and cases of biopiracy, many of the centres are now increasingly turning to patenting of their results. They are experiencing the exact same pressures as SW, and follow the same route of remedy, seeking arrangements with the large transnational in order to ensure access to 'proprietary technologies'. This development is strongly encouraged by industry.

In the words of a representative of Agrevo:
Patenting the results of their research will not prevent the Research Centres from making them available, but it will give them the option of entering into cross-licensing agreements of collaborations with companies holding other intellectual property of interest. Patents become bargaining chips which can be traded to further the research aims of the Research Centres. (Richer 1999).

In practical terms, the result of the shift from public to proprietary science is plant breeding products incorporating dozens of different patents, restricting their use in agriculture and for further breeding. A current example, relevant to the developing country situation, is the so-called GoldenRiceTM, a rice line genetically modified to express betakarotene (provitaminA). According to a "preliminary freedom-to-operate review" prepared by an industry-funded institute (Kryder et al 2000), this plant is covered by a total of approximately 70 different patents, of which between 0 and 44 will apply depending on the country of use, and require individual licensing agreements with each patent holder.

While developing countries have presented remarkably similar arguments in relation to article 27.3(b) in the TRIPS Council discussion, their concrete proposals regarding the limitations to life patenting vary considerably. At one extreme, Brazil and India accept in the main the present boundary drawn, but ask for clarification that only microorganisms in a strict scientific sense be patentable, and that more than simple isolation be required to fulfil the inventive step criterion.
At the other extreme, both the African group and the LDC group have proposed not only that the allowable exclusion be widened to all living organisms, but that it be made mandatory for all WTO members not to grant any patents on life, including microorganisms and all natural processes that produce living organisms.

Sui generis plant variety protection

The actual meaning of the obligation to provide sui generis protection for plant varieties has been intensively discussed. Developing countries have demanded clarification about what constitutes "an effective sui generis system". Several developed countries have noted that adopting UPOV-compliant PBRs is a way to fulfil the requirement, and even sometimes suggested that UPOV membership should be interpreted to be the content of the obligation.

However, the consensus now seems to be that countries are free to design sui generis protection provided they respect some basic IPR principles. A considerable number of WTO are planning to use this option, often adding other related elements of biodiversity legislation. Notably, the OAU has drafted and recently agreed a Model Law for Africa incorporating plant variety protection, biodiversity access and benefit sharing provisions in conformity with the CBD, and protection for biodiversity related traditional knowledge (OAU 2000).

Relation to the convention on biological diversity (CBD)

The CBD objectives are the conservation of biodiversity, its sustainable use, and the fair and equitable sharing of the benefits arising out of the utilization of genetic resources. While all three objectives may be relevant in this context, the third objective is the one most obviously linked to TRIPS, as IPRs are an important factor in influencing how benefits are shared.

The CBD contains several direct references to IPR protection. On the one hand, it notes that IPRs must be respected in implementing the CBD, for example in agreements on technology transfer. On the other hand, it recognises "that patents and other intellectual property rights may have an influence on the implementation of this Convention", and requires members to cooperate "in order to ensure that such rights are supportive of and do not run counter to its objectives" (CBD Article 16.5).

However, TRIPS does not contain any reciprocal reference to the CBD, and the question has been raised by a number of developing countries how it can be ensured that IPRs mandated under TRIPS will be supportive of CBD objectives, as required by their obligations to that convention.

A basic principle of the CBD is national sovereignty over genetic resources, and it specifically requires that another party can only access such resources subject to prior informed consent (PIC) and under conditions of benefit sharing on mutually agreed terms (MAT). Several developing countries have proposed amendments to TRIPS in order to clarify that patents covering biodiversity must also be subject to those principles. Most recently and comprehensibly, Brazil has proposed that any such patent should include.

• identification of sources of the genetic material
• identification of traditional knowledge used to obtain that material
• evidence of fair and equitable benefit sharing
• evidence of prior informed consent from the government or indigenous community for the
• exploitation of the subject matter of the patent (Brazil 2000).

Other countries have proposed that the conservation and sustainable use objectives of the CBD should also in some way be reflected in TRIPS.

Relation to the international undertaking on plant genetic resources
The International Undertaking on Plant Genetic Resources is a non-binding instrument negotiated at the FAO in the early 1980s as a framework for the conservation and sustainable use of (mainly) agricultural crop plants. In many ways a precursor to the CBD, the Undertaking is now in the process of being renegotiated to reflect the new international framework created by it.

The key component of the new Undertaking is foreseen to be a multilateral system for "facilitated access" to plant genetic resources of the major food crops. The system is conceived as a multilateral implementation of the CBD principles for access and benefit sharing, establishing, as it were, MAT and PIC collectively for the whole scope of the system.

The major advantage would be to avoid the immense transaction costs involved if agreements would have to be negotiated individually each time a plant breeder needed to access, for example, a foreign gene bank accession. Because intended to cover all genetic material within the major food crops, the Undertaking also holds the promise of recreating, within its coverage, the right of research access even to patented gene material, thus offering an alternative to the kind of byzantine maze of interrelated patents described above.

Negotiations have however been very difficult, and conflict between the "facilitated access" model and the IPR-based model of research cooperation has been a major cause. Breakdown has been very close on several occasions, most recently in November 2000 when the USA, together with Australia, Canada and New Zealand, refused to accept language they believed might conflict with certain provisions of TRIPS. Some developing countries have suggested that TRIPS be amended to clarify its compatibility with the Undertaking.

Traditional knowledge
As there is often a very strong link between biodiversity and the traditional knowledge (TK) about its conservation and use, the CBD explicitly acknowledges the need both to protect such knowledge and to promote its wider use. Again, TRIPS does not contain any corresponding provisions.

Over the last few years there has been increasing discussion both in CBD and WIPO fora about possible ways to provide better protection of traditional knowledge. Recently also UNCTAD convened an expert meeting on the issue, where two distinct approaches became quite clear . One, represented by WIPO and supported by many developed countries, primarily envisages protection by means of existing IPR systems and possibly new sui generis IPRs. The other, represented primarily by indigenous peoples organisations and supported by most developing countries and some organisations such as UNESCO, takes the view that existing customary law can in most cases be the basis for protection, supplemented as needed by national legislation, with IPR systems possibly an additional contribution in some cases.

In the TRIPS Council, many developing countries have proposed that TRIPS should in some way be amended to take TK into account to counter biopiracy, possibly by requiring patent offices to include it in examination searches.

Geographical indications
In a separate but partly related discussion, another agriculture-related IPR issue has attracted considerable interest from developing countries. Protection of geographical indications has traditionally been strong only in Europe. This is reflected in the fact that only wines and spirits, which represent the bulk of European 'appellations', are allowed the strongest form of protection which also bans expressions such as 'champagne-style'. Only for wines and spirits, also, is a multilateral registration system foreseen by TRIPS.

A number of developing countries are now considering the possibility of protecting as geographical indications some of their distinctive foods and other products, including some, such as basmati rice, which have been the subject of biopiracy. They are thus demanding that the higher level of protection should not only be available to wines and spirits, but opened up for general use.

Concerns Related to Pharmaceuticals
One-third of the world's population is estimated to lack access to pharmaceutical drugs (WHO, 1999). Barriers to drug access in developing countries are many, and they include poor health care infrastructure, irrational drug use and non-affordability of new drugs. Although intellectual property rights are probably not among the most important factors restricting drug access, serious concerns have been raised by several developing countries regarding potential negative implications of TRIPS on health care technologies and accessibility of drugs. With the adoption of the TRIPS Agreement around 50 countries, which had not previously conferred product patents to pharmaceuticals, were forced to do so (UNCTAD, 1997, in Correa, 2000b).

The World Health Organisation (WHO) shares some of these concerns, and WHO has become an active partner in supporting, facilitating and participating in discussions on the impacts of TRIPS on the accessibility of drugs in developing countries. WHO has also affirmed that it has an advocacy role to ensure that trade liberalisation contributes towards a more equitable distribution of economic benefits and a just society (Scholtz, 1999).

General effects of pharmaceutical patents

The pharmaceutical industry is increasingly global in scope. During the 1990's, there has been a wave of mergers and acquisitions of large pharmaceutical companies. Large national companies have become transnational (including the now part-Swedish Pharmacia & Upjohn and Astra Zeneca).

In most developing countries, including Sub-saharan Africa, transnational companies dominate the local market. A few large developing countries, including Chile, Argentina, India and China, have been able to stimulate the development of local pharmaceutical industries, which mainly produce generic drugs, often at a fraction of the cost of the original drugs. The generic drug industries are dependent on the possibility to copy original drugs, either (previously) in the absence of national patents on pharmaceutical products, by marketing generic versions after the expiration of patents, or by voluntary or compulsory licensing.
One study has been done in Thailand by the WHO collaborating centre for health and economics (Supakankunti et al., 1999) on the impact on the pharmaceutical industry of the 1992 patent law revision, which essentially followed TRIPS requirements.

The authors found that:
• there had been no significant increase in transfer of technology or foreign direct investment (FDI);
• originator pharmaceutical firms had done better than domestic generic pharmaceutical firms;
• the relative shares of the original drug market and the generic drug market had changed from being roughly equal (47,5%/52,5%) in 1992 to a situation in 1997 with original drugs having two thirds of the market share;
• pharmaceutical spending had increased at a higher rate than overall health care spending, i.e. drugs had become more expensive both in absolute and relative terms.
A study has also been done on the TRIPS implications for local production and access to medicines in Brazil (Bermudez et al., 2000). This study reviewed the first two years of the new Industrial Property Act. The Brazilian study revealed inter alia that:
• Of the drug patent applications filed since 1996, when the new Brazilian Industrial Property Act was signed into law, only 36 of 1387 patent applications were filed by residents of Brazil, or 2.6% of the total. 510 of the patent applications were by US residents.
• While Brazil's total imports for the period 1995 - 1998 increased slightly under 16%, the pharmaceutical imports during the same period increased over 228%.

The study concluded that the greatest beneficiaries of recent changes in Brazilian legislation and the implementation of the World Trade Organisation's TRIPS Agreement have not been Brazilian companies or institutions, but transnational companies… (Bermudez et al., 2000).

While it may still be too early to draw any firm conclusions, both studies, which are the first of their kind, support concerns raised by developing countries as regards impacts on FDI and transfer of technology.

Perhaps the most serious concern raised by developing country representatives is that stronger IPR on pharmaceuticals will not stimulate research and development of essential medical technologies.

In fact, while research and development of new drugs is intensive, R&D targeting diseases found in developing countries has practically come to a halt since the 1970s ('t Houen, 2000). Between 1975 and 1997, only 13 of 1223 new chemical entities, or 1%, were for the treatment of tropical diseases.

The World Health Organisation (WHO) has stressed the need to create mechanisms and incentives that drive research and development in the pharmaceutical field, since market forces in pharmaceuticals are imperfect to meet therapeutic needs. One such mechanism proposed by the WHO is nonexclusive licensing of innovations and patents created with public funds in order to encourage competition and promote affordability (WHO, 1999).

Proposed exceptions for essential drugs

Venezuela, Kenya and Pakistan have proposed that the exceptions to patentability in Article 27.3 (b) be extended to include the WHO Essential Drug List, in order to develop the principles established in TRIPS Article 8, i.e.: Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition …

Essential drugs are defined as drugs that satisfy the health needs of the majority of the population; they should therefore be available at all times in adequate amounts and in appropriate dosage form.

The first WHO Model Essential Drugs List (EDL) was published 1977. WHO's EDL serves as a model for the development of national essential drugs lists, and it is a key strategy to help improve access to essential drugs. Over 140 countries have adopted the use of essential drugs lists. The current WHO Model EDL contains 306 drugs. Of these, around 15 are patented and the rest are generic drugs. WHO has commented to the proposal by Venezuela, Kenya and Pakistan that since both the implementation of TRIPS and national essential drug lists are developed through national legislation (WHO,1999), WHO recommends using the options available in TRIPS at the national level rather than making a universal exception for essential drugs which may not be adapted to the individual needs of all developing countries.

WHO has also remarked that since the current process within WHO to update the model Essential Drugs List has cost as a criterion for selection of drugs for the list, vital and lifesaving drugs are sometimes not classified as essential by the WHO expert panel due to their high cost. According to WHO, excluding WHO Model Essential Drugs from patentability is therefore potentially flawed, i.e. it would not significantly assist developing countries in increasing their access to essential drugs.

'Wiggle room' issues
As discussed above, there is widespread concern both in developing country governments and in intergovernmental organisations (notably the World Bank and UNDP) regarding the achievement of a balance of interests between inventors' interests and the benefits of society under the present TRIPS\ text. In part, the balance achieved may depend on the effective 'wiggle room' in TRIPS to allow national legislation for individual countries' needs. Some of this room is given by provision in TRIPS Article 30 for exceptions to exclusive rights.

All national patent laws allow for exceptions to the exclusive rights granted by a patent. TRIPS Article 30 provides for such exceptions to exclusive rights, and it does so in general terms, leaving member states certain freedom to define exceptions to exclusive rights in their national legislation. At the same time, since TRIPS only provides for exceptions in general terms, any exceptions may be challenged by other members before WTO dispute settlement tribunals.

Traditional medicine
Traditional medicine - medicine based on natural products and indigenous or local knowledge - is of major importance in many developing countries. It has been estimated that 80% of the world's population is dependent on or uses traditional medicine (the Crucible Group, 2000). While much of the traditional medicine use remains in the informal sector, there is also a large formal market for traditional medicine in many developing countries. For example, the study on TRIPS and access to drugs in Thailand (see above) noted that 19,4 % of the drug stores in Thailand are licensed to sell only traditional medicines.

In relation to TRIPS, developing countries have raised concerns that attempts to patent indigenous system of medicine, knowledge of medicinal plants and food crops could affect public health. Possible negative impacts could arise e.g. by patents themselves restricting traditional use or by having the indirect effect of discouraging knowledge holders from disclosure of traditional knowledge for purposes of improvement of local health practices. On the other hand, there is also a need to protect indigenous and traditional knowledge, and as noted above efforts have been made to find room in the TRIPS agreement to do this.

Interestingly, there has been resistance both within WIPO and from member states, notably the USA, against the idea of adapting IPRs for traditional knowledge.

An illustration of the sensitivities involved is the US reaction to a Thai government proposal in 1997 to introduce a new system of registration for medicinal genetic resources and traditional healers' knowledge. Even before the draft had become public, the Thai patent office director received a very aggressively worded letter from the US ambassador claiming that such a proposal could constitute a violation of the TRIPS agreement (Pollard, 1997).

Conclusion
The most obvious but also most central conclusion of this study is that the TRIPS agreement is not likely to bring any substantial benefits for developing countries.

By this, I am not saying that increased use of IPRs in developing countries will have no benefits. This is a much larger and more difficult question which we have not even attempted to answer. The above report indicates that IPR experts are at a loss as well. Present scientific consensus appears to be that there may be benefits to be reaped, but that the potential is very unevenly distributed. In particular, little benefit is expected to flow to LDCs.

What I am saying is that imposing a minimum standard of IPR protection does not benefit developing countries. This is what TRIPS is about. The agreement does not create any new options which were not present before. All kinds of IPR protection were available for developing countries to use also before TRIPS.
The optimal IPR strategy for developing countries would very likely be the same one that developed countries used during their industrial development process. They built an IPR system gradually, implemented forms of protection tested by experience in other countries, adapted those to national requirements, created own sui generis forms when needed, and cooperated on a voluntary basis to achieve an increasing measure of international coordination.. This, however, is exactly the strategy that TRIPS does not allow. The minimum standard is already fixed at the present (high) level of protection in developed countries. The space for experimentation with levels and forms of protection which used to exist below that level is no longer available.

In contrast, large benefits are expected by developed countries, mainly in the form of increased IPR revenue for their companies in developing country markets. For example, the US copyrighted products industry has calculated their annual loss of revenue due to unlawful copying abroad to over 20 billion dollars (Fisher 1999). Even though such estimates may be inflated, and even if only a fraction of that revenue loss will eventually be recuperated under TRIPS enforcement, the global figures when all IPR forms and all developed countries are added up are still likely to be very substantial.

As TRIPS was designed to accommodate the present level of IPR protection in the major developed countries, there is also virtually no direct implementation cost.

From a development perspective, it seems clear to us that what is needed in TRIPS is increased flexibility for developing countries to design IPR laws and decide on levels of protection.

Finally, as an absolute minimum, and something that should be self-evident, there is a need to clarify that developing country members have the right to use existing flexibility in the TRIPS without interference and over-compliance pressures from developed country members, in accordance with Article 1.

The author can be reached at: [email protected] - ph: 9823419277 / Print This Article

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