Country Outward Transfer Inward Transfer Net Transfer­_______Ireland 2.99 4.30 656 -14 -1609 naINTELLECTUAL PROPERTY RIGHTS IN THE GLOBAL ECONOMYCHAPTER SIXTHE GLOBAL POLICY FRAMEWORK: INTELLECTUAL PROPERTY RIGHTSAND WRONGS?Keith E. MaskusUniversity of Colorado at BoulderFinal Draft1As discussed in earlier chapters, the global regime of IPRs protection strengthened dramatically in the 1990s, primarily through the negotiation of the TRIPS agreement, but further through unilateral initiatives and intellectual property chapters in regional trade agreements. The legal structure of TRIPS was presented in Chapter 2, and concepts were defined in Chapter 3, in order to set the stage for the positive economic analysis of international economic effects of IPRs in Chapter 4 and of IPRs and economicdevelopment in Chapter 5. We are now in a position to complete the circle by discussing important normative aspects of the new regime. The main analysis in this chapter focuseson the TRIPS agreement itself, both in terms of its implementation and potential impacts on the international balance of costs and benefits. Subsequent remarks are made about the implications of differential standards for IPRs in regional trade agreements. The normative analysis in this chapter is necessarily rather speculative, albeit grounded in data and economic logic. I present it largely as a basis for wider discussion.6.1. Putting the TRIPS Agreement into ActionThe TRIPS accord is still undergoing implementation and review for purposes of its eventual revision. Accordingly, it is premature to make confident claims about how it will affect the well being of people in particular countries. However, it is worth discussing in detail a number of important issues it brings up, such as problems in its implementation and administration. Moreover, it is important to understand that the minimum standards required in TRIPS still leave considerable flexibility for nations in selecting regulations that could promote welfare-enhancing competition on their markets.2Such decisions will be decisive in determining the ultimate international distribution of gains and losses from the new global regime.6.1a. Implementation IssuesThe TRIPS agreement is not solely about reform in developing nations. Several developed economies have changed aspects of their intellectual property laws in order to comply with its requirements. For example, the United States, while retaining its unique system of awarding patents to applicants who demonstrate they were the first to invent a technology, now ensures that the term of patent protection is 20 years from the date of filing. Other countries award patents to the first to file successful applications. For another, Ireland has failed to adopt the European Union’s directive on rental rights, including rental rights for films, which complies with TRIPS.1 The United States lodged a dispute at the WTO in May 1997, which is still pending. Thus, to an important degree the agreement updates protection even among those nations with strong prior regimes.To a far greater degree, the TRIPS requirements place significant demands for reform of the IPRs regimes in many developing countries. Primo Braga (1996) compiles some useful information. As of 1994, 25 developing nations (of 98 GATT contracting parties in this category) excluded pharmaceutical products from patent protection. Further, 13 of those countries failed to protect chemical products. In the full sample, 56 countries provided terms of protection for patents that were shorter than the 20 years required by TRIPS. Relatively few developing countries were members of UPOV and only six provided sui generis protection for plant varieties, although patent protection for plant strains was available in principle in a number of nations. Only 36 developing 1 Rental and Lending Directive, 92/100/EEC.3countries provided copyright protection for software as of 1994. Sherwood (1995) claimed that eight of the 12 Latin American nations he studied would require changes in their compulsory licensing laws, as indeed would nearly any country that had provisions for compulsory licenses adopted prior to the entry into force of TRIPS. These figures point to the need for significant legal and institutional change in a broad sweep of the developing world. Six years into the transitional periods, implementing laws and regulations are in place in a number of countries. Evidence of this point may be seen in the significant increases in accessions to the WIPO Conventions and UPOV noted earlier in Table 4.1.2 For example, Brazil passed new patent legislation in 1996, which entered into force in 1997. This law extends the term of protection to 20 years from filing date, recognizes thepatentability of pharmaceutical products and agricultural chemicals, and establishes reversal of burden of proof in process patents. However, it retains fairly broad procedures for issuing compulsory licenses, subject to the limitations imposed by TRIPS. For this reason it has been called inadequate by the Pharmaceutical Research and Manufacturers’ Association (PhRMA), an international industry association headquartered in the United States.As the Brazilian example suggests, implementation strategies adopted over the near term promise to be contentious. American trade authorities claim that adequate implementation and enforcement of obligations are U.S. priorities, which should be met before further negotiations are undertaken on IPRs.3 2 TRIPS does not require entry into UPOV, though some countries find it convenient to do so as they implement plant variety protection. 3 Interview of Joseph Papovich, Assistant U.S. Trade Representative, Inside U.S. Trade, 16 July 1999.46.1b. Administration and EnforcementSuch expectations are likely to be disappointed for some time, for two fundamental reasons. First, it will take years for developing countries to develop strong commitments to effective administration and enforcement of intellectual property rights. Many poor countries simply do not have in place administrative mechanisms beyond skeletal levels. The costs of developing a system adequate to handling even counterfeiting cases, let alone complex conflicts over patent infringement, can be a daunting impediment to their adoption. There are significant fixed costs of developing institutional infrastructure in the form of examination and registration offices and equipment,