The Hindu Business Line : Agenda for Hong Kong WTO Ministerial

THE SUCCESS of the Hong Kong Ministerial of the World Trade Organisation scheduled to be held in December 2005 depends upon the resolution of the two contentious issues of (1) agricultural subsidies by the rich countries, and (2) loosening of the TRIPS (Trade-Related Intellectual Property Rights) agreements in the area of public health as agreed at Doha.

It is likely that the rich countries will concede on both the issues and Hong Kong will be brought to a successful conclusion. Can this be called a 'success' for the developing countries though? The removal of agricultural subsidies will be beneficial for the rich countries. They will save on the huge amounts they give to their farmers. They will also benefit from the decline in the prices of imported agricultural commodities due to the intensification of competition among the supplier developing countries.

There is a misconception among the leaders of the developing countries that removal of agricultural subsidies by the rich nations will bring immense benefits to their farmers. That will not happen because increased competition among the developing countries will push down prices.

The final beneficiaries will be the rich countries who are net importers of agricultural goods. The developing countries have been fooled into demanding removal of agricultural subsidies that is actually going to benefit the rich. They are like the traveller who offers to pay a higher price to the boatman who pretends reluctance to take him across the river.

Likewise the developing countries are offering concessions to the rich that are pretending reluctance to the removal of agricultural subsidies. The pharmaceutical companies of the rich countries certainly stand to lose from the loosening of the patents in the area of public health. But this may be small in comparison to the millions saved in aid to manage health epidemics in the developing countries.

The rich countries have managed to divert the attention of the developing countries towards these issues which are both beneficial for the rich countries. In the process, the main culprit of the TRIPS agreement is likely to slip unchallenged and the growing inequity of the world economic order will be further strengthened. How deep the bluff is can be gauged from the fact that the most vociferous opponents of the TRIPS regime only demand loosening in the area of pharmaceuticals rather than loosening of TRIPS across the board.

The Public Citizen, for example, in an article provocatively titled "WTO — Shrink or Sink!," while demanding the removal of the TRIPS from the WTO, says: "TRIPS agreement promotes monopoly by transnational corporations; prevents access to essential medicines and other goods; leads to private appropriation of knowledge and life forms; undermines biodiversity; and keeps poorer countries from increasing their levels of social and economic welfare and developing their technological capacity."

The focus shifts to medicines, life forms and biodiversity in a subtle manner. Similarly Ashfak Bokhari in an article in Dawn of July 18 titled "Breaking patents in retaliation," points out that Brazil "spares no effort in resisting rich states' hegemonic shenanigans.

Now, it has set a bold precedent for the Third World countries by deciding to retaliate against the US intransigence by breaking patents of the multinational firms' drugs, in general, and of those relating to HIV/Aids, in particular." Note again, that the retaliation is to be made in the area of pharmaceuticals rather than say Windows software, which is the basic cause of present inequality.

One would do well to take a look at the Report of the Commission on Intellectual Property Rights set up by the British Government in September 2002 with Prof John Barton, Chair and Dr R A Mashelkar, Director-General, Indian Council of Scientific and Industrial Research, as one of the members. The report clearly spells out the reality of the TRIPS regime.

To quote: "At the country level, there appears to be little economic research on developing countries that directly links the IPR regime to domestic innovation and development. An approach common to Germany, and the East Asian countries (including China), was the introduction of easily obtained utility models (or petty patents), which combined a lower standard of inventiveness, with registration rather than examination, and a shorter protection period.

When introduced in Germany, in 1891, these provided for three years of protection (renewable for a further three years) and by the 1930s, twice as many utility patents as examined patents were granted. Studies of Japan's patent system in the period 1960-1993 have suggested that utility models were more important than patents in stimulating productivity growth."

The report gives many more details of how the TRIPS regime has become a stumbling block to research. The result is that the developing countries will be triply hurt as a result of the success of the Hong Kong Ministerial. Their farmers will get lower prices for their produce; the rich countries will make savings from the reduction in aid; and the rich countries will continue to extract huge technology rents that are not justified by increased research. The agenda for the developing countries at Hong Kong should be to take TRIPS wholly out of the WTO or, at least, reduce the period of patents to three years from present 20. That alone will help establish a just world economic order.

(The author, a New Delhi-based freelancer, can be contacted at bharatj@nda.vsnl.net.in)

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