Multinational Monitor

JUL/AUG 2003
VOL 24 No. 7


Grotesque Inequality: Corporate Globalization and the Global Gap Between Rich and Poor
by Robert Weissman

Left Behind: Domestic Inequalities and the Fate of the Poor
by United Nations Development Program

The Hogs of Rosebud
by Winona LaDuke


Inequality in the World Economy, By the Numbers
an interview with Branko Milanovic

Losing the Farm: How Corporate Globalization Pushes Millions Off the Land and Into Desperation
an interview with Anuradha Mittal


Behind the Lines

Patents, Profits, Power and Poverty

The Front
For Wealth, Not Health - A Light Homicide Charge

The Lawrence Summers Memorial Award

Book Notes

Names In the News



Patents, Profits, Power and Poverty

Intellectual property rules are only one among many sources of global economic inequality, the topic of this issue of Multinational Monitor. But they are surely among the most outrageous.

World Trade Organization (WTO) rules require all member countries to adopt U.S.-style patent laws, as well as copyright, trademark and trade secret protections. Given the centrality of copying industrial products from other nations in the development of most rich countries, including particularly the United States, there is every reason to expect WTO intellectual property rules to significantly impede development in the Third World.

What is already clear is that the imbalance in patenting between rich and poor countries is sucking money out of poor countries in the form of royalty payments. The World Bank estimates the United States will net an additional $19 billion a year thanks to TRIPS-required patents.

What is also already clear is that pharmaceutical patents are driving up prices for new drugs in developing countries, and denying access to essential medicines to millions.

The member countries of the WTO themselves have acknowledged at least this last problem. At the WTO meeting in Doha, Qatar in 2001, they issued the Doha Declaration on the TRIPS Agreement and Public Health reaffirming the flexibilities in the WTO's Agreement on Trade-Related Aspects of Intellectual Property (TRIPS), including the right of countries to issue "compulsory licenses," authorizing generic competitors to enter the market before patents expire. Generic competition for pharmaceuticals can reduce prices by as much as 75 to 95 percent, or more, from the monopoly prices charged by patent holders.

Although the United States was a signatory to the Doha Declaration, it has worked at every turn to undermine it -- with the effect of intensifying inequality and furthering avoidable death and suffering Ö all for the benefit of Big Pharma.

In its trade and international economic policy, an overriding U.S. mission has been to coerce developing countries into sacrificing the TRIPS Agreement flexibilities.

Among the many venues where it is pursuing this goal, none are more important than bilateral and regional trade agreements. In these trade deals, the United States is seeking to reach agreements on intellectual property rules that require countries to do more than TRIPS requires.

The United States has reached such agreements with Jordan, Vietnam, Chile and Singapore, and has commenced negotiations over such agreements with the Southern African Customs Union (SACU), which consists of South Africa, Namibia, Botswana, Lesotho and Swaziland, the countries of Central America, and Morocco. Most important of all, it is pushing for such provisions in negotiations over the Free Trade Area of the Americas, a proposed free trade agreement for the entire Western Hemisphere.

The U.S. patent hyperprotections are generally cloaked in technical language that doesn't mean much to most people, but has enormous consequences for healthcare delivery in developing countries.

Among the central components of the U.S. agenda on behalf of Big Pharma are restrictions on the grounds for compulsory licensing.

TRIPS provides countries with complete freedom to determine the grounds for granting a compulsory license. The U.S. has succeeded in several of the bilateral agreements in limiting compulsory licensing to a very restricted set of cases, making it almost impossible to undertake compulsory licensing in the private sector -- even as privatization is consigning more and more healthcare provision to the private sector

The U.S. preferred rule means non-governmental aid agencies, private insurers and private employers, among others, will not be able to purchase and distribute lower-priced generic versions of AIDS and other essential medications, until patents expire. That, in turn, will translate into fewer people treated.

For the least-developed countries, the U.S. demands are even crueler. The Doha Declaration stipulated that least-developed countries do not need to enforce pharmaceutical patent protections whatsoever until 2016.

Among the countries presently involved in trade negotiations with the United States, Lesotho and Haiti are least-developed countries. Signing a deal with the United States will mean forfeiting the additional flexibility promised by the Doha Declaration.

Demands for enhanced patent privileges in the Southern African region and the Caribbean -- the two parts of the world suffering from the highest rates of HIV infection --are particularly cruel.

They threaten to impede dramatically efforts -- including those promised as part of the Bush administration's much-touted AIDS Initiative -- to provide treatment to people with life-threatening HIV/AIDS, as well as other diseases, with deadly consequence for millions.

Offering a simple solution to these problems, Doctors Without Borders/MÈdecins Sans FrontiËres, Oxfam, Africa Action, Health GAP, Consumer Project on Technology, Global AIDS Alliance, ACT-UP Paris and Essential Action, a project of Essential Information, the publisher of Multinational Monitor, have called on the administration to exclude intellectual property from U.S. trade negotiations.

For most developing countries, there is no benefit at all to providing patent protection, and certainly no reason to offer more than required by TRIPS.

The international intellectual property regime, and the power politics surrounding it, is an extreme but representative example of the workings of the global economy. It is illustrative of the means by which corporate globalization is exacerbating global inequalities, with enormous consequences in life-and-death terms


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