Jul 6, 1989

GATT RULES ON TRIPS TO COST SOUTH ANNUAL $43-102 BILLION

GENEVA, JULY 5 (BY CHAKRAVARTHI RAGHAVAN)— Changes in GATT rules on Intellectual Property Rights (IPRS), demanded by the United States and Japan (and now the EEC) will cost the third world an annual outflow of billion dollars, the Rural Advancement Fund International (RAFI) has warned.

In its May-June newsletter, the Canada-based group, has given what it calls "the economic stakes" for the third world of the current battles over "Trade-Related Intellectual Property Rights" in the Uruguay round, and parallel efforts for biotechnology patenting in the world intellectual property Organisation (WIPO), and the union for the protection of new varieties of plants (UTPOV).

Based on U.S. data and RAFI warns that if the U.S. succeeds in its demands, third world countries would be expected to pay, annually, additional royalty charges equivalent to five percent of global trade. This could double or even triple the foreign exchange outflow caused by their annual debt repayments, estimated at US $ 60 billion in 1988. The RAFI estimates are based on data from the U.S. and the International Chambers and Commerce.

Patent rights, RAFI points out, have been geared to the western model of innovation. Intellectual property rights are recognised to be a form of social subsidy for research where in the government intervenes in the "free" market to create an artificial monopoly for a private interest.

The level of social subsidy is the royalty - the difference between the market value of the invention without the patent and the price charged with the patent. The extent of the subsidy is further augmented by the degree of social support for the higher education of the inventors, who obviously build upon earlier developments and rarely finance the full costs of their own schooling.

Recounting the two-century battle for monopoly control over innovations, RAFI notes that a compromise was signed at 1883 Paris Union convention between those opposing and supporting, based on the provision for "compulsory license" if an invention was "improperly worked or if the royalty charges were usurious".

But after the successive revisions, the strength of the actual monopoly has increased, and the relationship and debate has been reversed, RAFI complains.

* Where compulsory licenses were once seen as a compromise to control monopoly, recent industry and government papers (of the north) describe such licenses as offensive barriers to rightful monopoly.

* Where food, medicine and other goods vital to national security were commonly regarded as too important to be patented failure to provide national protection now leads to harsh trade reprisals for countries such as Brazil and South Korea.

* Where "life" was seen as beyond the rights of inventors, failure to offer life patenting may now lead to economic embargoes.

* Where patents were originally seen as a non-tariff barrier to free trade, the present GATT round would interpret the absence of patent protection as a trade barrier.

* And in a GATT round where agricultural subsidies are under attack, the most vociferous opponent of farm subsidies, the United states, is demanding patent subsidies for farm-based biological products and processes.

In Summary, a western model for private sector industrial technological innovation is now to be to be imposed over the entire world, over all living and non-living material, regardless of the original understanding and objectives of the patent treaties or the rights of sovereign nations to determine their own development and security requirements.

If the proposed changes in GATT and WIPO are successful, the only forms of human innovation for physical products and processes that will not be patentable will be those of informal innovators the third world.

Long after foods medicines and items of national security are subject to exclusive monopolies, only the improved germplasm of the third world will be deemed by the north to be "too important" or "too inconvenient" to be patented.

RAFI notes that at the beginning of the GATT Uruguay round of negotiations, the U.S. and Japan insisted that failure to subsidise foreign inventions should be seen as barriers to international trade and actionable grievances under GATT rules.

"Thus began 'trips' and a major 'trap' for the third world," RAFI comments.

While patent systems are geared towards recognising the "western model" of innovation, a more informal, communal system of innovation has existed for centuries in agriculture in third world countries where farmers continue to produce very valuable genetic materials and a plethora of crop varieties.

Biotechnology and modern plant breeding rely on the genes found in the third world. According to former U.S. Commerce Secretary, Richard Lyng, except for sunflowers, no major crop is native in North America and the U.S. is at the mercy of foreign nations, particularly third world countries, for genetic diversity.

The genes found in the third world, RAFI underlines, are not "raw materials" in the traditional sense. They have already been "selected", "nurtured", "improved" and "developed" by third world farmers, and the process continues even now. These materials reflect the ingenuity, inventiveness and genius of the people.

Northern enterprises, RAFI notes, recognise that the biological diversity of the south is worth billions of dollars in commercially viable products.

But as access to third world germplasm is being negotiated in UNEP in Nairobi and FAO in Rome, patenting systems to determine who owns, controls and benefits from this germplasm are being formulated at the GATT, and the WIPO and UPOV.

The south could be victimised by these proceedings, RAFI warns, and argues for the south to use its own economic clout and insist on "farmers' rights" and give power and meaning to the informal innovation systems in southern agriculture.

RAFI suggests that third world countries are not so helpless, but have some genuine economic clout of their own, for example, by denying the industrialised north access to its own germplasm and genetic material resources through the concept of "farmers' rights" as a counter to patent rights.

The farmers' rights issue, which has arisen in the FAO in 1987, has been juxtaposed ever since with plant breeders' rights. The basic features of the informal innovation system in the farmers' rights concept has been further advanced at the April 1969 third FAO commission on plant genetic resources.

Under this concept, farmer landraces, plants in use for medicinal purposes, other biological produces and processes in use and other innovations in use are the result of human ingenuity and represent immediate inventions. They may not be the product of academic or commercial research, but arise from "informal", cooperative efforts, which are as purposeful and creative as any similar efforts in the more formal. western models of innovation.

The farmers’ rights concept also recognises that crop plant connectors, gather present-day, improved germplasm, not the material of ten thousand years ago. Botanists collect medicinal plants and landraces and the knowledge, the "intellectual property", of those who have bred and discovered and protected the genetic material.

In each case the present intellectual integrity of the informal innovation system is compromised by existing IPR systems, which offer no recognition or compensation.

Although the informal innovation system is capable of meeting all the conceptual criteria for IPRS required by current conventions, the western model is based towards individualised and juridical application procedures not sympathetic to style of inventiveness common in rural societies.

RAFI suggests that negotiators in GATT, WIPO and UPOV as well as those reviewing "farmers' rights" in FAO and the proposed treaty on biological diversity in UNEP must reopen their discussions in order to incorporate fully the informal innovation system.

Alternatively, there should be a tax on all commercialised biological material in the north, and surrendered to an intergovernmental fund for conservation and utilisation of biological diversity in the south - roughly equal to a normal royalty charge.

Also, there should be automatic licensing rights, without royalties, to all third world countries for all patents based on any materials derived from the South.

Such a strategy would by no means exclude the normal application of sovereign rights over national property and would serve to compliment the protection afforded by UNESCO convention on the means of preventing the illicit import, export and transfer of ownership of cultural property.