9:09 AM Aug 5, 1996

IPRS BLOCKING ACCESS TO ECO-FRIENDLY TECHNOLOGY

New Delhi, 2 Aug (Martin Khor) -- The international patent regime, especially the WTO's Uruguay Round Trips agreement can prevent developing countries from having effective access to environmentally sound technologies (ESTs).

Holders of the patents to these technologies, usually the transnational corporations headquartered in the North, can refuse to grant permission to companies in the South to use the technologies, even if they are willing to pay market prices.

Or else the technologies may be made available at high prices (due to the monopoly enjoyed by the patent holders). Companies in the South may not afford to pay such prices, and if they do their competitiveness could be affected.

As a result, developing countries could find problems meeting their commitments to phase out the use of polluting substances under international environment agreements. The global fight to improve the ecology could be hindered.

That this scenario is not simply a hypothesis is shown by a problem that has already emerged with Third World firms finding it difficult or impossible to have access to substitutes for chloroflourocarbons (CFCs), chemicals used in industrial processes as a coolant, that damage the atmosphere's ozone layer

This hinders the South's ability to meet commitments under the Montreal Protocol, a multilateral environmental agreement aimed at tackling ozone layer loss by phasing out the use of CFCs and other ozone-damaging substances by certain target dates.

Under the Protocol, developed countries originally agreed to eliminate production and use of CFCs by the year 2000, whilst developing countries are given a ten-year grace period to do the same.

A fund was set up to help developing countries meet the costs of implementing their phase-out, and the protocol includes articles on technology transfer to the South on fair and favourable terms.

According to a senior official at India's Commerce Ministry, developing countries like India that manufacture products (such as refrigerators) that use CFCs are finding it very difficult to phase out CFCs because of the lack of access to environmentally acceptable substitutes controlled by Northern transnationals.

There are five Indian companies that are major manufacturers of products that depend on the use of CFCs. They face closure if they are unable to meet the dateline of eliminating CFCs use by the year 2010.

Despite the provisions in the Montreal Protocol, the funds made available to developing countries are grossly inadequate for overcoming the problems caused by the phase-out or to develop substitutes.

Worse, the pledged technology transfer on fair and most favourable terms has not materialised, according to the official.

Three of the Indian companies formed a consortium to commission a technology institute in India to produce a substitute for CFCs. The research is at an advanced stage and India now has a real possibility of locally producing the substitute substance, HFC-134A.

However, the implementation of this plan faces obstacles because once the TRIPS agreement relating to product patents comes into force, Indian manufacturers would be barred by law from producing or using the substitute without the permission of the owners of the patent for HFC-134A.

The patent rights to the substitute are held by a few TNCs. In order to maintain competitiveness and increase market share, they do not want to grant permission to use the technology to companies in developing countries which they view as rivals.

Some Indian companies are willing to pay the market price or even higher for the technology. But one TNC holding the patent has refused to licence the patent unless it can take a majority stake in the companies' equity.

The above example shows how much the developing countries have been put on the spot.

On one hand they are persuaded or pressurised to join international environmental agreements and commit themselves to take painful steps to change their economic policies or production methods.

Financial aid and technology transfer on fair and most favourable terms are promised during the hard negotiations, to persuade the South countries to sign on.

Then, when the agreements come into force, the funds are far from the promised level, and technology transfer fails to materialise.

Instead, in another forum like the WTO, other treaties such as TRIPS are negotiated which produce an opposite effect, and that is to block the South's access to environmental technology.

Yet, when the time comes, the South can be expected to be pressured or coerced to meet their full obligations, such as phasing out the use of CFCs (in the Montreal Protocol) or reducing emissions of Greenhouse Gases (in the Climate Change Convention).

There is thus an unfair imbalance. The North does not follow its obligation to help the South, but the South has to meet its commitments, which because of the lack of aid and technology, will cause economic dislocation.

The South is told to play its part in seeking solutions to the global ecology crisis, but prevented from doing so (except under pain of severe dislocation) because the North has not kept to its side of the bargain.

Despite the unfairness in this imbalance, some Northern governments, research institutions and NGOs are quick to paint developing countries as being "obstructionists" in not wanting to take steps to reduce global environmental problems.

There is growing anxiety in many Northern countries that industrialisation and development in the South will cause impossible stress on the global ecology.

One of the nightmare scenarios is that if every family in China or India alone were now to own a refrigerator, there would be such additional huge releases of CFCs as to cause even more catastrophic rates of ozone loss.

The fears are not without foundation, for the world is truly facing a variety of ecological crises. And for all the rhetoric about greening the Earth, in truth much too little is being done.

Many in the South are, however, justifiably indignant that the blame seems to be put on their countries, when in reality the rich nations of the North contribute about four-fifths of the world's resource depletion and pollution although they account for only a fifth of the population.

And although the North has pledged to provide financial resources and technology transfer to aid the developing world to more quickly change to environmentally sound ways of production, these have turned out to be empty promises or worse.

Four years after the Earth Summit in Rio, where the commitments were most seriously made, the level of aid has actually fallen significantly (rather than increase).

Moreover, the environmental agreements such as the Conventions on Biodiversity and Climate Change have yet to produce any significant funds for developing countries to meet their commitments.

Just as serious (and perhaps more so), there is even less sign that the South is going to have easy access to those environmentally sound technologies (ESTs) they so desperately require to control pollution emissions or improve industrial processes.

At the recent Geneva meeting of the Conference of Parties to the Framework Convention on Climate Change, US Under-Secretary of State, Timothy Wirth, though speaking in the context of the climate change issues, made very clear that the US would not be able to provide any new or additional aid funds, and that developing countries would have to look to private sources for both funds and technology to meet their commitments under international environmental accords.

Due to increasingly strict patent laws protecting the companies owning the "intellectual property rights" (IPRs) of the technologies, developing countries are being shut out.

This is especially so after the agreement on trade-related intellectual property rights (TRIPS) was passed in the GATT Uruguay Round.

TRIPS has made it compulsory for all countries of the World Trade Organisation to allow for high standards of intellectual property protection for almost all technologies, including ESTs.

And the accord has become an economic charter for the right of Northern TNCs to earn rentier incomes from their ownership of patents and, as in the Indian case, use it to muscle in into the domestic manufacturing sector through majority equity.

In the Earth Summit and several environmental agreements, Northern countries pledged to help arrange for the transfer of ESTs to the South on "fair and most favourable conditions".

Many developing countries had expressed the real concern that most ESTs are patented and therefore would not be made available to them, or else the technologies would be priced so high (due to the monopoly enjoyed by patent holders) as to be beyond their reach.

They had called for explicit references that patents and other intellectual property laws be relaxed, or that exemptions be given, for ESTs. At the Rio Summit this was strongly resisted by the North, so that the documents speak only of technology transfer on fair and favourable terms.

In the Biodiversity Convention, a fine balance is struck between the recognition that intellectual property rights should not hinder technology transfer, and on the other hand the recognition that IPRs should be protected.

In any event, it seems that Northern countries have no intention to make technology transfer easier. Some countries, like the US, make it clear they will defend their companies' IPR interests tooth and nail.

And so it appears that the South will find it more and more difficult to have access to environmentally-sound industrial technology.

The companies owning the IPRs could, if they wish, simply refuse to sell the technology or the right to its use. Or else the patent protection would enable the companies to jack prices high (to earn monopoly profits). Companies in the South may find the technology too costly to buy, or even if the purchase is made the high price could affect the cost competitiveness of the Southern country.

Besides the developing countries, the global ecology could also be the loser.

One remedy is to get the international laws on patents changed so that the full weight of IPRs is not applied to environmentally sound technology.

The Indian government has made out a strong case for amending the TRIPS accord in the WTO in order to recognise developing countries' need for transfer of ESTs on "preferential and non-commercial terms."

It tabled a paper on the issue of TRIPS and the transfer of ESTs at a recent meeting of the WTO's Committee on Trade and Environment in Geneva in July.

This initiative is likely to be opposed by the trade ministries of Northern countries, whose brief is to promote the interests of their corporations.

The US has made no secret of its total opposition to the move.

Perhaps support can be forthcoming from Environment branches of the Northern governments, and from the environmentally or socially conscious parts of the Northern population. Their views however carry less weight than the trade departments, at least for now.

Meanwhile, it is clear that more countries in the South should study the whole issue of TRIPS, IPRs and their social and environmental effects, and prepare for further action.