Sunday, October 09, 2005

Brilliant move by Brazil at the WTO

For those of you who follow intellectual property (IP) and international trade issues, I'm sure you’re aware of the rather schizophrenic nature of the US when it comes to enforcing international trade/WTO norms. While the US is one of the strongest enforcers of TRIPS obligations, it is also one of the most flagrant violators of antidumping and subsidy norms (the other side of the ‘international trade law’ coin).

Despite a WTO ruling almost 2 years back, the US continues with it’s notorious Byrd Amendment. I, for one, have always pondered about this and wondered why developing countries that were at the receiving end of US trade related sanctions (or threats) never leveraged this two faced behaviour to their advantage. Well, it seems the time has finally arrived and Brazil (which has been a sort of trend-setter in developing country IP policy) seems to be doing exactly this. I quote from a recent news item:

“Brazil yesterday formally asked the World Trade Organization toauthorize its request to impose over $1 billion in retaliation againstthe U.S. for its failure to eliminate WTO-illegal cotton subsidies, andasked that part of this retaliation take the form of suspension ofservices and intellectual property rights obligations.
Specifically, Brazil said in an Oct. 6 request to the WTO DisputeSettlement Body that it wants to suspend concessions in the areas ofcopyrights, trademarks, industrial designs, patents and protection ofundisclosed information, all areas subject to concessions under theWTO's Agreement on Trade Related Aspects of Intellectual Property Rights(TRIPS).One informed source agreed that Brazil's request "approaches a trend"among WTO members who want to retaliate against other members that donot comply with WTO rulings in a way that prompts them to comply, butwant to avoid imposing duties on imports, as these duties end up hurtingthe retaliating country. This source said this plan is "quite clever,"as it would likely put much more pressure on the U.S. to comply with thecotton panel decision."With tariffs, you only end up shooting yourself in the foot, and theymay not induce the U.S. to comply," this source said. In contrast, hesaid Brazil's proposal would "get the services and IPR people by thescruff of the neck," which would likely be much more effective inprompting U.S. compliance.”

It is indeed a “clever move” and developing countries have plenty to draw from this “thinking outside the box” move by Brazil. India, in particular, has a lot to gain, should Brazil succeed with this argument. On the one hand, India challenges antidumping/subsidy norms of the US before the WTO, and on the other hand, it remains at the receiving end, when it comes to intellectual property enforcement. Most folks are familiar with the notorious Special 301 Report of the US and the WTO complaint in 1999 against India, alleging that India’s patent regime did not grant interim protection to pharmaceutical inventions. The 2005 patent amendments in India are supposedly India’s final step towards complete TRIPS compliance. However, there are signs that the US (and more particularly the PhRMA) is closely watching to monitor the implementation of this legislation and check for TRIPS compliance. For those interested in this legislation, please see where I’ve done a short analysis of the new regime.

I remember reading a piece that stated at as regards WTO disputes, Brazilian and Indian legal arguments matched up with the best in the world, reflecting the quality of lawyering in these countries. This novel argument by Brazil at the WTO is again evidence of this trend. Can’t speak too soon though—as this is just an argument put forward by Brazil to the WTO and a ruling is awaited. However, it’s an interesting and creative argument that if accepted, would, at some level set right the inequities imposed by international trade agreements, particularly TRIPS.
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