Pirates on the High Seas: Conclusions

Pirates on the High Seas

The United States and Global Intellectual Property Rights

Bénédicte Callan

1998

Conclusions

Over the past ten years, the world’s understanding of intellectual property has radically evolved. Once an inviolable element of national technology policy, intellectual property rights are now an international trade concern. IPRs are no longer anathema to developing countries, and advanced nations are switching their focus to behind-the-border monitoring and compliance with agreements. These are impressive changes, despite the many loopholes that trouble American IP developers.

Strangely, U.S. policy has not evolved as rapidly. The USTR’s approach to weak intellectual property rights abroad remains grounded in the concerns and rhetoric of the mid-1980s. In fact, it is difficult to distinguish Clinton’s IP policy from that of Bush or even Reagan. USTR officials are quick to point out the continuity, despite the creation of the WTO, in the U.S. multitrack approach to IP negotiations. But the tools presently available to the United States feel dull or inappropriate for the fine task of monitoring behind-the-border compliance and creating domestic constituencies that will autonomously clamor for IP protection. New strategies are necessary to meet novel challenges.

In its second term, the Clinton administration has a unique opportunity to remodel American IP practices. The timing is perfect. The WTO is new and relatively untested; Clinton is a lame-duck president with a certain freedom to rework trade policies; and the next few years are critical for engaging developing countries in further IP negotiations. The challenge is to stop making intellectual property a divisive issue, and to create a consistent, transparent policy that will inspire confidence in and a commitment to intellectual property protection in the big emerging markets.

There are several improvements the Clinton administration should consider. First, the United States would benefit by articulating a two-track approach to TRIPs. On one hand, the creation of a smooth international intellectual property system demands that the United States put its full support behind the TRIPs agreement. On the other hand, the United States can and should use its leverage to accelerate TRIPs implementation with a handful of specifically identified big emerging markets. Bifurcating U.S. goals will foster greater confidence in the international IP system while still moving the standardization process forward.

Full support of the TRIPs Agreement entails not only bringing violations to the WTO’ s Dispute Settlement Body but permitting many developing and all the least developed countries to use their allotted grace periods for fulfilling TRIPs commitments. Despite being a signatory to TRIPs, implicit in the present U.S. strategy is pressure on a disparate group of developing countries to accelerate implementation. In other words, while the United States signed the TRIPs agreement, it wants TRIPs-plus implementation. But since the United States can only employ bilateral measures when the rest of its trade relationship with a partner is solid or when it has little to lose, not all countries are subject to equal scrutiny. This impatience lends a schizophrenic or opportunistic tone to the American use of bilateralism.

In contrast, the benefits of the WTO are precisely its consistency and broad base. By honoring the TRIPs timeline (while closely monitoring its implementation), the United States would signal that its first priority is the creation of a global system of protection. A strong multilateral forum for IP is important if it is to reach a large number of countries, establish minimum levels of protection, and resolve IP disputes. The WTO and WIPO can reach and aid the small and medium-size countries that the United States, Europe, and Japan do not have the resources to actively target. But the value of the WTO and WIPO is much greater, as forums trusted by the developed and developing nations for future negotiations on intellectual property.

That said, the Clinton administration should explicitly acknowledge its desire to accelerate TRIPs implementation through regional agreements with the large and dynamic developing countries. Specifically, the United States can and should set higher goals for the richer developing countries of the Western Hemisphere (for instance, Chile, Argentina, and Brazil) and possibly the Pacific. The bifurcated strategy requires that the United States explicitly identify TRIPs-plus candidates, and articulate why they should be subject to advanced-country norms.

For example, NAFTA allows the United States to dictate to future members that accession is premised on strong IPRs. The potential for NAFTA expansion has already had a ripple effect throughout Latin America, an advantage the United States should exploit. APEC may be harder to influence. Certainly the new enthusiasm for regional trade organizations works in favor of the United States because many of the groups are actively harmonizing IP standards and creating regional patent and trademark offices (as ASEAN is planning to do). To create a global IP protection system, the United States should encourage all such regional efforts, including APEC. But discussions in APEC may fail to reach TRIPs-plus goals, and the United States should be ready to

accept that as long as the countries fully abide by the TRIPs Agreement. China, Thailand, Indonesia, and India will need time to create legal systems capable of enforcing stronger IP regulations. APEC will be important in creating a support structure and minimizing costs. It may not substantially accelerate the process, however.

A second improvement in the Clinton IP strategy would be a clear and unified policy of financial and technical aid for developing countries that are revamping the judicial, customs, and administrative structures underpinning intellectual property—especially for countries identified as TRIPs-plus candidates. Presently the United States has an ad hoc system of technical and financial aid that does not match funding problem piracy with regions. The United States should systematically gather information on IP practices, abuses, and costs. Better estimates of losses due topiracy, by country and by product category, would help identify problem areas. In addition, greater information about the effect of stronger IP rights on investment, technology transfer, job creation, and innovativeness in developing countries—especially evaluations by economists from less-developed countries—would help in convincing countries that the economic payoffs are worth the political risks. The work should be fascinating; natural laboratories like Mexico and Brazil furnish goldmines of information for empirical research. Such an IP information policy could be coordinated multilaterally, through WIPO or the WTO.

A third improvement would be to involve Europe and Japan in IP policymaking more fully. The United States definitely plays the "bad cop" to European and Japanese "good cops" in intellectual property negotiations. The confluence of Northern interests in stronger IP rights should allow for a more united front against the most egregious IP pirates. A triangulation of strategies, or at least a commitment to emphasize the importance of IP to each region, would facilitate the task of raising standards enormously either through bilateral negotiation and pressure or through multilateral organizations.

Finally, the United States needs to resolve the place of IP in trade policy. While it is true that the some of the most advanced high-technology and export-intensive sectors suffer from piracy, the sectors in question are limited and their losses relatively sustainable. These industries should influence, but not dictate, the U.S. position on IP policy. In fact, a broader public debate recently erupted over the protection of digital information and databases. Through this debate, the interests of the print, music, and video industries in controlling digital works are being balanced against those of Internet users, Internet companies, libraries, and scientists who want to maintain affordable access to Internet information sources. In general, wrangling over the desired balance in IP policy is necessary to prevent its capture by limited interest groups.

The government must also remember that intellectual property policy is not a magic bullet. Strong and global IPRs will not automatically spur development or ensure that corporations succeed in new markets. The rationale for protection is primarily to encourage investment in creative research and artistic works, at home and abroad. Since IP is but one part of a country’s economic problems, countries should not hang their hopes or fears on IP policies alone. American IP policies, therefore, must be part of a larger trade strategy. Since funding and the political stamina for IP battles are not limitless, U.S. IP policy should dovetail with its larger goals in Asia and elsewhere.

There is probably no single best IP strategy to achieve American goals because both the global trading system and what constitutes intellectual property are moving targets. But American interests have changed remarkably since Trollope’s time and even since the end of the Uruguay Round. U.S. IP policies must also evolve to create a sustainable discussion on standards with developing countries, in a forum that does not force us to create unnecessary trade conflicts. Part of such a strategy requires bilateralism to be de-emphasized in favor of more active regional and multilateral strategies.