Frederick M. Abbott

Product standards for internationally integrated goods markets

This work is part of the Integrating National Economies series. As global markets for goods, services and financial assets have become increasingly integrated, national governments no longer have as much control over economic markets. With the completion of the Uruguay Round of the GATT talks, the world economy has entered a fresh phase requiring different rules and different levels of international cooperation. Policies once thought to be entirely domestic and appropriately determined by national political institutions, are now subject to international constraints. Cogent analysis of this deeper integration of the world economy, and guidelines for government policies, are urgent priorities. This series aims to meet these needs over a range of 21 books by some of the worlds leading economists, political scientists, foreign policy specialists and government officials. All the books in the series are offered at the same price: #22.50 for hardbacks and #8.50 for paperbacks.

The WTO Medicines Decision: World Pharmaceutical Trade and the Protection of Public Health

On November 14,2001, the Ministerial Conference of the World Trade Organization, meeting in Doha, Qatar, adopted the Declaration on the TRIPS Agreement and Public Health (Doha Declaration). The declaration affirms that the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights “can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all,” and it reaffirms that the Agreement “provide[s] flexibility for this purpose.” The Doha Declaration mandated further negotiations on one important subject, providing in its paragraph 6: “We recognize that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem … .“

NAFTA and the Legalization of World Politics: A Case Study

I examine the trend toward using hard legal instruments in international trade governance and explain this trend in the context of the North American Free Trade Agreement (NAFTA). I suggest that hard law (1) reduces intergovernmental transaction costs, (2) reduces private risk premiums associated with trade and investment, (3) promotes transparency and provides corollary participation benefits, (4) tends to restrain strategic political behaviors, and (5) may increase the range of integration effects by encouraging private actors to enforce intergovernmental obligations. I compare the legalization model of NAFTA with those of the European Union (EU) and the Asia-Pacific Economic Cooperation (APEC) forum.

A New Dominant Trade Species Emerges: Is Bilateralism a Threat?

Over the past decade, government trade and finance ministries have increasingly turned toward negotiating bilateral and regional trading arrangements, and away from negotiations in multilateral forums like the WTO. There are several reasons for this shift, including changes in the global political environment and negotiating obstacles encountered by the multinational business community at the multilateral level. This shift appears to be an embedded phenomenon. Positive and negative aspects of preferential trading arrangements (PTAs) are in evidence. Trade creation-trade diversion economic analysis suggests the results may be net global welfare enhancing, although such analysis does not readily assess distributional effects. The global economy is enjoying a period of sustained and widely distributed economic growth, suggesting that the PTA phenomenon is not an immediate economic threat. On the negative side, the PTAs lead to administrative complexity, and may be somewhat destabilizing as businesses are encouraged to relocate. Some countries may suffer if left out, but this risk is ameliorated by the wide availability of potential negotiating partners. The PTA negotiating environment strongly favors powerful economic actors like the United States and European Union, which are largely dictating terms to developing (and developed) countries. Developing countries, particularly the less economically powerful, are losing autonomous decision-making authority. The consequences of this are difficult to quantify, and may raise questions better attuned to moral philosophers than economists. The WTO continues on its way, relegated to a less central status. A return to the WTO might reinvigorate the role of less powerful actors, but such return does not appear an immediate prospect. The PTA phenomenon, on balance, does not appear aggressively threatening. We may, however, be underestimating the positive role of multilateralism. , Oxford University Press.

TRIPS in Seattle: The Not-so-Surprising Failure and the Future of the TRIPS Agenda

Government trade ministers arrived at that the WTO Seattle Ministerial Conference in late November 1999 without preliminary agreement on the future course of multilateral trade negotiations, and they departed without reaching consensus on a new WTO agenda. There was ample warning that the WTO Ministerial Conference in Seattle would face serious difficulties, with or without the public protests that disrupted the meeting. Only a few months before, WTO Members had completed the selection of a new Director-General – in fact the selection of two new Director-Generals to serve sequentially – in a tortuous process that lasted nearly a year. The Seattle agenda included a host of divisive issues involving serious substantive differences that Members had been unable to resolve in months of pre-meeting negotiations. Beyond hope in some quarters that pressure to maintain “momentum” would cause Members to abandon or compromise strongly held views, it is not clear why the Seattle Ministerial might have been approached with optimism about a comprehensive result. The failure to reach consensus on a WTO negotiating agenda in Seattle left considerable unfinished business on the table. In a number of areas, such as agriculture, existing WTO texts prescribed that negotiations would be resumed. Since the ministerial, the WTO General Council has agreed to move forward with negotiations in agriculture and services, at least to the extent of seeking to clarify the subject matter to be pursued. There has been no agreement on a future agenda for negotiations regarding trade-related aspects of intellectual property rights (or TRIPS), although a number of “built-in” agenda items remain before the TRIPS Council. The lack of agreement on a “new” TRIPS agenda is not surprising in view of the wide gulf in perspectives on this subject among WTO Members.This essay seeks to explain the absence of consensus on TRIPS, and why the near-to-medium term prospects for the setting of an ambitious agenda are not too bright. It reflects in modest detail on the particular controversy surrounding the potential for non-violation nullification or impairment complaints to be brought in the TRIPS dispute settlement context. This essay suggests that WTO Members might be best served in the near term by concentrating their efforts on establishing improved multilateral mechanisms to aid in the transfer of information and technology to developing and newly-industrialized countries.

Managing the Hydra: The Herculean Task of Ensuring Access to Essential Medicines

The task of ensuring access to essential medicines presents a complex and embedded set of problems that will remain a persistent feature of the international governance landscape for the foreseeable future. The WHO’s recommended list of essential medicines has been developed with a view to aiding procurement authorities in determining the supplies needed to treat local populations. The price of medicines is a significant factor in determining what should be included on the list since there is small utility in recommending expensive therapies that are not affordable.Nonetheless, the most recent WHO Essential Medicines list includes a significant number of antiretroviral medicines (ARVs) that are under patent. These drugs may not be affordable for many HIV-positive individuals, even taking into account recent price declines, unless public health budgets in developing countries are supplemented by international assistance.The world community is presently confronted with tremendous public health challenges due to HIV/AIDS, malaria and tuberculosis. Yet, populations around the world, and especially in developing and least-developed countries, face heavy public health burdens from many sources, including other infectious diseases, diarrheal diseases, cancer, diabetes, heart and circulatory disease, and other conditions. While HIV/AIDS is the most immediate problem, it is not enough to address only this scourge.Although there has been considerable public debate concerning the effect of patents on access to medicines, ensuring adequate supplies involves an extensive regulatory framework encompassing a multiplicity of factors. These include:* Research and Development* Safety and Efficacy (including Liability)* Manufacturing Systems and Controls (Good Manufacturing Practices)* Intellectual Property* Procurement, Distribution and Dispensing* Health Care Personnel and Infrastructure* FinancingEach of these elements in the essential medicines supply chain can and does act as a roadblock. Yet, each element is present for a reason. It is not helpful to supply inexpensive medicines if they are not safe and effective, or if they are prescribed to treat the wrong condition.The mythical Hydra was a many-headed beast with a remarkable regenerative capacity. The public health situation in developing countries shares these characteristics. The problem is multi-faceted, and addressing one aspect often reveals new challenges. Even Hercules was unable to slay the Hydra single handedly. He required the help of an assistant. Hercules did, however, provide strong leadership and commitment. Political leadership and commitment is likewise needed to address the problem of access to essential medicines, and it isnot yet clear from where such leadership and commitment will emerge.

The TRIPS-Legality of Measures Taken to Address Public Health Crises: Responding to USTR-State-Industry Positions That Undermine the WTO

The main WTO law-related focus of this essay is the treatment of compulsory licensing and parallel trade under the TRIPS Agreement, with emphasis on the AIDS crisis confronting Africa, Asia, and other parts of the world. There are two principal reasons for addressing this subject matter in some detail. First, and paramount, is the exigency of the present situation. Africa in particular, and developing countries in general, are facing a public health crisis of catastrophic proportions, and there is an urgency to assuring that the WTO acts to aid in addressing this crisis, and does not take steps to hinder governments as they seek to address it. Second, the conduct of the United States government and the pharmaceutical industry threatens the very fabric of the WTO - an institution that was formed to promote economic growth and peaceful trade relations following the Second World War. While the essential reasons for the WTO are today often obscured by rhetoric concerning its impact on non-trade concerns, the fact that the WTO provides the foundation for peaceful relations in world trade should not be overlooked. By acting irresponsibly, the US government undermines the WTO by providing ammunition to its critics. An institution designed to do good is portrayed as doing bad.The decision by the United States government to use its economic power as a weapon against developing countries fighting a battle against a deadly plague would plausibly lead developing country government officials and common citizens to question the economic, social, and political foundations of the TRIPS Agreement. Would any developing country government deliberately negotiate away its discretion to take measures to redress a health crisis of the most severe magnitude? Indeed, would any government or any group of citizens deliberately enter into a legal agreement condemning itself to early death?

Trade Costs and Shadow Benefits: EU Economic Partnership Agreements as Models for Progressive Development of International IP Law

This chapter addresses the specific question whether “development-friendly” provisions incorporated in recent European Union (EU) economic partnership agreements (EPAs) may serve as models for the progressive development of international intellectual property law. Other chapters in this volume strongly suggest that the intellectual property (IP) provisions represent a concession or cost for developing country parties in favor of the EU, including generally by eliminating flexibility to develop and implement industrial policy. The EU may view incorporation of the objective of sustainable development, enhanced protection of geographical indications (GIs), adherence to the Madrid System treaties and/or references to transfer of technology as representing benefits or gains for developing country parties. The general objective of sustainable development already is recognized in the Agreement establishing the World Trade Organization and various other international instruments, and its incorporation in EPAs does not confer material supplemental benefits on developing country parties. The EPA between the EU, on one side, and Colombia and Peru, on the other (EU/CP EPA), also incorporates references to sustainable development relating to protection of biodiverse resources. However, these references do not commit the EU beyond what it has already accepted in multilateral forums or internal legislation. While developing countries may (or may not) benefit from enhanced protection of GIs depending on their particular situation, the list of GIs subject to protection under the EU/CP EPA is weighted very heavily in favor of EU products, suggesting that EU producers will gain substantially more from the agreement than Colombian or Peruvian exporters. The latter countries will also bear costs associated with internal displacement of agricultural products. Developing country parties may gain from adherence to the Madrid System agreements because such adherence is helpful to small and medium-sized enterprises. But these countries do not need an EPA to undertake such adherence. Finally, the technology transfer provisions in the EPAs are framed in hortatory terms, and lack concrete funding mechanisms. In the absence of concrete funding commitments, it is difficult to construe these provisions as providing material benefits. In sum, the provisions that might be considered “development friendly” appear insufficient to offset the loss of flexibility and specific concessions on IP made by developing countries in the EPAs, and generally do not lend themselves as models for the progressive development of international IP law.

Integration Without Institutions: The NAFTA Mutation of the EC Model and the Future of the GATT Regime

Integration may be viewed as an evolutionary outgrowth of heightened social and economic interdependence brought about by advances in technology. As persons, goods, capital, services and ideas cross artificial national frontiers at increased rates of speed, the wisdom of imposing disparate governmental regulatory measures is not only called into question because of a variety of factors relating to efficiencies and economies of scale, but the authority of competing national power structures to regulate these flows is called upon for examination.The NAFTA itself is, like the EC, an experiment. It will provide a model for other nations which are interested in reducing trade barriers, but not in creating significant central institutions or in harmonizing laws and regulations. The EC model is a comparative success. In addressing problems confronted by the new NAFTA,solutions may be found by examining the EC experience. Of course, the EC model itself is imperfect and is continually being refined. Perhaps the NAFTA will benefit by observation of the EC as it works its way through the obstacles on the path to completed integration.Though the ambition of the NAFTA regarding the creation of regional institutions is rather modest, and the arrangement is lacking in mechanisms for the harmonization of law, the planting of the acorn of regional institutions in the NAFTA may prove to be a worthwhile task, in the hope of its long term growth into a solid oak of institutions capable of creating a complete and effective NAFTA regional arrangement.

Emerging Markets and the World Patent Order: The Forces of Change

The implementation of patent law in the emerging market countries is having an impact on the international patent system. First, it is apparent that the principal emerging market economies are not strictly adhering to the patent regimen of the USA, Europe and Japan, but are instead adapting patent law to their own unique environments. This is more a story of adaptive management of existing standards than it is an innovation of new standards and models. Much of this adaptation of patent standards has been concentrated in the public health sector. Second, to the extent that these emerging economies want to maintain the operating space within which to chart their own paths, they are unlikely to sign on to a strong global patent harmonization exercise. Third, the emerging economies have placed some priority on addressing social welfare within the context of the patent regime, such as by using compulsory licensing to provide access to medicines.Perhaps the most interesting trend among the emerging markets is the building up of local technology-dependent industries through use of preferential procurement policies and other industrial policy mechanisms. While the domestic and international patent system may play a role in the shape of industrial development, it seems that the emerging markets have concluded that a patent system “does not a high-growth economy make”. This does not truly represent a break from the industrial policy implemented by the USA, EU and Japan. The governments of each of these countries have used their vast resources to incentivize local R&D and production. For the USA, much of this has been done in the context of expenditures by the Department of Defense, and more recently by the Department of Energy. For Europe, Airbus Consortium R&D and local production was heavily supported by government subsidy. The Japanese government has invested heavily in its computer industries.For countries that are pursuing an integrated industrial policy that focuses on the result, rather than the particular means used to accomplish the objective, patents are likely to remain a part of the industrial policy mix. This chapter does not suggest that emerging markets have discovered an alternative to patents. Rather, and not surprisingly, they appear to have concluded, despite simplistic arguments about patents and innovation, that they cannot simply rely on the patent system to build up a sound technological base and a competitive economy. Patents are a tool to be modified and used as the specific task requires. As the task changes, so may the terms of patenting.