10:13 AM May 29, 1996
TRIPS AND TECHNOLOGY MONOPOLIZATION
Bangkok May 29 (Focus/Walden Bello) -- The United States announced recently the economic equivalent of the threat of a massive air-strike -- the US Trade Representative's announcement of the "Watch List" of countries that are prime candidates for retaliatory trade measures for allegedly violating US corporation's intellectual property rights. As expected, China was on top of the hit list as a "priority foreign country" for "extensive piracy of intellectual property." Eight other countries were placed on the "priority watch list," including Japan, India, Indonesia, and Korea. Another 26 made the "watch list," including Thailand, which was charged with "a falling off of enforcement activity in 1995; the lack of a Trade-Related Intellectual Property Rights [TRIPs]-consistent patent law; and the need to ensure that deterrent penalties are imposed on convicted pirates." Enforcing TRIPs has become the great American crusade. And Washington now has a powerful weapon in the form of the TRIPs agreement of the World Trade Organization (WTO), which US intellectual property specialists practically wrote single-handed and rammed through the negotiations. The WTO TRIPs accord provides for a minimum protection period for patents of 20 years; increases the duration of the protection for semi- conductors or computer chips; institutes massive retaliatory measures against countries deemed to be violating intellectual property rights; and places the burden of proof on the presumed violator of process patents in the dispute settlement process. Yet despite such favourable provisions, American business does not think the TRIPs accord is tight enough. Recently, the influential President's Advisory Committee for Trade and Negotiations (ACTPN) complained that the transition periods for developing countries to adopt the WTO TRIPs regime are "overly long." The ACTPN worries that unless the US pressures Third World countries to hurry and adopt measures to make their intellectual property standards 'WTO-compatible,' the "end result could be a de facto extension of transition periods." The ACTPN also worries about "activities underway in the Committee on Trade and the Environment [that] could weaken WTO member's TRIPs obligations" -- apparently a reference to efforts by developing countries to preserve ownership over their genetic resources and prevent them from being privatized via patents for exploitation by transnational drug firms. The TRIPs agreement is the heart of the WTO. It also exposes the lie that the GATT Uruguay Round was mainly about promoting "free trade." For, TRIPs is about consolidating monopoly over advanced knowledge in the hands of the US high tech industry by ensuring that heavy royalties will be charged for adoption, adaptation, and diffusion of technology by non-US producers. TRIPs is not about market-derived profit. It is about that most feudal of economic practices -- the exaction of rent. The nature of knowledge is that it tends to be universalized quickly after pioneering inventions are made. The history of technological advance has been largely one resulting from a cooperative social process. When the first societies invented settled agriculture, they had no proprietary obsession that drove them to control their neighbours' ability to borrow their technological revolution to better their lot. When Gutenberg invented the printing press, he was not interested in controlling its diffusion in order to make money. Even Henry Ford was not interested in patenting the assembly line. But in the person of Bill Gates, who is now seen as the paragon of the US high tech industry, we encounter a different animal. This acknowledged technological genius is less interested in the social benefits of his technological innovations than in using them to amass money and power for himself and his corporation, Microsoft. The relatively loose diffusion of technology has been a major factor in the waves of industrial development that have swept the world in recent times. The US industrialized in the 19th century by using but paying very little for British manufacturing innovations, as did the Germans. The Japanese "economic miracle" was due to the widespread copying, with little compensation, of American advances in manufacturing, process, and design technologies. And the Koreans industrialized by copying quite liberally, but with relatively little royalty payments, for US and Japanese designs and processes. Since the British Industrial Revolution, in fact, early industrialization in the countries that have since become industrial powers has been industrialization-by-imitation. The TRIPs Accord threatens to make industrialization-by-imitation a thing of the past. As the UN Conference on Trade and Development has warned, the TRIPs regime represents a "premature strengthening of the intellectual property system ... that favours monopolistically controlled innovation over broad- based diffusion." A few decades ago, the US government and US firms were less uptight about other unauthorized use of US technology. There were several reasons for this. IBM, for instance, tolerated the massive cloning of IBM PCs by East Asian producers in order to make the PC the computer industry's global standard, thus out-manoeuvring its rival Apple strategically. Another reason stemmed, quite simply, from a superiority complex: as David Halberstam pointed out in his book The Reckoning, General Motors and Ford were quite loose in allowing the Japanese access to their technologies in the 1950's because they never believed that Toyota and Nissan would ever succeed in turning out vehicles that would even remotely rival an American-made car. A third reason was the priority Washington placed on the Cold War alliance against Communism, which made the Americans cast a benign glance at Japan, Korea, and Taiwan's deviations from free-market policies as well as their unauthorized borrowing and adaptation of American technologies. The change in the American attitude stemmed from several developments, including the end of the Cold War and the rapid development of the East Asian economies, which increasingly became perceived as economic rivals as they built up trade surpluses with the United States. But most important was the realization that with the speeding up and diffusion of the microelectronic revolution, the ability to maintain the edge in innovation in high technology became the key determinant of both the long-term profitability of American firms and the strategic predominance of the US in the global economy. And to maintain the strategic edge of the United States, it was important not only to lead in innovation but also to control the rate at which others could innovate. To achieve the latter, it was essential to develop the international legal and coercive framework that would allow the US monopoly over the most advanced innovations. Thus the TRIPs Accord, which has been a devastating setback for the natural process of the universalization of knowledge and a giant step toward its privatization and monopolization. One of the likely consequences of this trend is the emergence of "rentier capitalism" in the high tech industry. Already, an increasing part of the income of some US firms, like Texas Instruments, derives from royalty payments from past innovations rather than profits based on current market performance. Another consequence might be a dampening of high tech innovation in industrializing countries. For when any company in the industrializing countries wishes to innovate, say in chip design, software programming, or computer assembly, it necessarily has to integrate several patented designs and processes, most of them from US hardware and software specialists like Intel, Microsoft, Texas Instruments, and IBM. As Korean firms like Samsung and Hyundai have bitterly learned from their experience of being targeted for intellectual property violations by US government agencies, exorbitant multiple royalty payments to what one analyst has described as the "US high tech mafia" keeps one's profit margins low while also reducing incentives for indigenous innovation based on the creative integration of existing patented technologies. It is true that the people that US Commerce Secretary Mickey Kantor derisively refers to as "pirates" are out to turn a profit for themselves and can hardly be said to be acting consciously in the service of humanity. But, in spite of their private motivations, "pirates" are, objectively, acting as the great democratization of high tech, making it available to millions of people who would not otherwise have access to it as an exorbitantly-priced product. The real obstacle to the democratization of high technology are today's "grand seigneurs", the American high tech TNCs that, in classic Orwellian doublespeak, are advancing their high-stakes game of techno-monopoly in the name of defending "intellectual property rights." (*Dr. Walden Bello, from the Philippines, is co-director of Focus on the Global South, a Bangkok-based NGO Research Group)