IP and DEVELOPMENTIP and DEVELOPMENT

PETER DRAHOSAsian Regional Workshop on Bilateral

FTAsKL, Malaysia

26-28 August 2005

Strength of IP protection

W

LOSSGAIN

OPTIMAL

1970 19861995

2001

2003

PATENT

STRENGTH

FORUM SHIFTINGFORUM SHIFTING

BILATERALKOREA, 1986, JORDAN 2001

REGIONALNAFTA, FTAA

MULTILATERALWTO, WIPO

Global Intellectual property ratchet based on a principle of Global Intellectual property ratchet based on a principle of minimum protection that permits more extensive minimum protection that permits more extensive

protection.protection.

TRIPS Article 1.1

Jordan FTA

Singapore FTA

EFFECT OF RATCHET EFFECT OF RATCHET

COMPULSORY LICENSING

TRIPS

ALLOWABLE SUBJECT TO CONDITIONS

JORDAN FTA

NOT ALLOWABLE EXCEPT IN THREE CIRCUMSTANCES

SINGAPORE FTA

THREE CIRCUMSTANCES, PLUS KNOW HOW RESTRICTION

BIP BIT 301 WTOStatus**

Albania 1992 1998 MArgentina 1994 Y MArmenia 1992 1996 Y OAzerbaijan 1995 1997* Y OBahrain 1999* Y MBangladesh 1989 Y M (LDC)Belarus 1993 1994* Y OBolivia 1998* Y MBulgaria 1991

1994 1994 Y MCambodia 1996 A

US IP BILATERALISM

BIP BIT 301 WTO

Status**Cameroon 1989 MChina 1992 Y M

19951996

Congo (Zaire) 1989 MCongo (Rep) 1994 M (LDC)Croatia 1998 1996* MCzech Rep 1990 1992 Y MEcuador 1993 1997 Y MEgypt 1992 Y MEl Salvador 1999* Y M

BIP BIT 301 WTO

Status**Estonia 1994* 1997 Y MGeorgia 1993 1997 MGrenada 1989 MHonduras 1995* Y MHungary 1993 Y MIndia 1993 Y MJamaica 1994 1997 Y MJordan 2000* 1997* Y MKazakhstan 1992 1994 Y OKorea 1986 1989 Y M

1990

BIP BIT 301 WTO

Status**Kyrgyzstan 1992 1994 MLaos 1997* ALatvia 1995 1996 Y MLithuania 1994* 1998* Y MMoldova 1992 1994 Y MMongolia 1991 1997 MMorocco 1991 MNicaragua 1997 1995* Y MPanama 1994 1991 Y MParaguay 1998 Y MPeru 1997 Y M

BIP BIT 301 WTO

Status**Philippines 1993 Y MPoland 1994 Y MRomania 1992 1994 Y MRussia 1992 1992* Y OSenegal 1990 MSingapore 1987 Y MSlovakia 1992 MSri Lanka 1993 1991 MSurinam 1993 MTaiwan 1992 Y

1993

BIP BIT 301 WTO

Status**Tajikstan 1993 YThailand 1991 Y MTrinidad &Tobago 1994 1996 MTunisia 1993 Y MTurkey 1990 Y MTurkmenistan 1993 YUkraine 1992 1996 Y OUzbekistan 1994 1994* Y OVietnam 1997 Y O

FREE TRADE AGREEMENTSFREE TRADE AGREEMENTS

1. US – JORDAN (2001)

2. US-CHILE (2003)

3. US- SINGAPORE (2003)

4. US-MOROCCO (2004)

5. US-CENTRAL AMERICAN FTA (2005)

6. US-AUSTRALIA (2005)

US IP Bilateralism in AfricaUS IP Bilateralism in Africa

US IP Bilateralism in EuropeUS IP Bilateralism in Europe

US IP Bilateralism in AsiaUS IP Bilateralism in Asia

US IP Bilateralism in OceaniaUS IP Bilateralism in Oceania

US IP Bilateralism in US IP Bilateralism in Central AmericaCentral America

US IP Bilateralism in South AmericaUS IP Bilateralism in South America

Countries without patent Countries without patent officesoffices

East Timor

US INDUSTRY OBJECTIVESUS INDUSTRY OBJECTIVES

TREATY THAT IMPOSES IDENTICAL STANDARDS OF PATENTABILITY

SINGLE EXAMINATION MODEL (MAJOR OFFICES ONLY)

WIDEST RANGE OF PATENTABLE SUBJECT MATTER

G20 Ex –G20 Cairns Group FTA with US? Argentina Y Y Australia Y Y Bolivia Y Y Proposed Brazil Y Y Canada Y Y (NAFTA) Chile Y Y Y China Y Colombia Y Y Proposed Costa Rica Y Y Y (CAFTA) Cuba Y Ecuador Y Proposed Egypt Y El Salvador Y Y (CAFTA) Guatemala Y Y Y (CAFTA) Honduras Y (CAFTA) India Y Indonesia Y Y Malaysia Y Proposed Mexico Y Y (NAFTA) New Zealand Y Nicaragua Y Y(CAFTA) Nigeria Y Paraguay Y Y Pakistan Y Peru Y Proposed Philippines Y Y South Africa Y Y Y (SACU)

Being neg. Tanzania Y Thailand Y Y Proposed Uruguay Y Venezuela Y Zimbabwe Y 19 7 17

STRATEGIC USES OF FTAsSTRATEGIC USES OF FTAs

AUSTRALIA FTA USA

PBS SCHEME

MODEL FOR DEVELOPING

COUNTRIES

AUSTRALIA THAI FTAAUSTRALIA THAI FTA

Article 1302Observance of International ObligationsThe Parties shall fully respect the provisions

of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights and any other multilateral agreement relating to intellectual property to which both are parties.

ESTIMATED RENTS US COLLECTSESTIMATED RENTS US COLLECTS(based on Maskus World Bank Study and estimates of piracy (based on Maskus World Bank Study and estimates of piracy

losses by IIPA)losses by IIPA)

Rents from full application of TRIPS

Patents - $19 Billion Copyright $21 Billion

$40 Billion

RENTS AS A RATIORENTS AS A RATIO

For the US Patents part of TRIPS is worth 13 TIMES more to US than tariff package in Uruguay Round.

For China the obligation to pay IP rents is 5 TIMES its gain and for South Korea it is 18 TIMES its gain.

(ratios are taken from Michael Finger, ERD Working Paper series No. 21, Asian Development Bank, 2002.

WHY THE POLITICS OF IP WHY THE POLITICS OF IP ENCOURAGES RENT SEEKINGENCOURAGES RENT SEEKING

RENTSDiffuse Interests Concentrated Interests

Consumers

Schools

Old People

Multinationals

Local Exporters

Local IP Producers

Optimal IP Level

The GameThe Game

After Lucas van Leyden, The Card Players, probably c. 1550/1599

National Gallery of Art, Washington, Samuel H. Kress Collection

The first dealThe first deal

United StatesDeveloping country

US $40 billion

Developing countries work out Developing countries work out their hand to win at this gametheir hand to win at this game

US collects half of what’s US collects half of what’s expectedexpected

The next dealThe next deal

United StatesDeveloping country

US $80 billion

Developing countries work out Developing countries work out their hand to win at this gametheir hand to win at this game

US collects half of US collects half of what’s expectedwhat’s expected