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Agriculture and The World Trade Organisation

 | 
Gurdarshan Singh Bhalla
, 
Jean-Luc Racine
, 
Frédéric Landy

V. Trade in agriculture and WTO: property rights issues

14. WTO, TRIPS, Agriculture and Environmental Issues: Interactions between Intellectual Property Rights and Common Goods

Hélène Ilbert

Texte intégral

1In its few years of existence, controversial judgments on trade barriers have been rendered by the World Trade Organization. One of the first decisions on synthetic hormones was related to food safety issues: in 1996 the European Parliament voted in favor of reauthorizing the ban on imports of hormone-treated beef and its trade within Europe already into effect since January 1989. This decision formally backed citizens’ and scientists’ position that hormones used in meat production increase cancer rates and may contribute to reductions in male fertility. But the United States argued that the health concerns of the European Union (EU) were not based on sound science and acted as a barrier to trade. Less than four months after the European Parliament’s vote the United States requested that the WTO determine whether the hormone ban complies with WTO rules. In early 1998 the WTO ruled in favor of the United States, forcing the EU to either remove its ban on imports or face severe economic sanctions.

2This decision gave a strong signal in favor of efficient trade: no barriers to imports, no national preferences. Same decisions were made against the United States’ restrictions on importing shrimp from Asian countries that have inadequate conservation policies for endangered sea turtles; and against the EU’s preference for Caribbean banana producers.

3Free trade and efficiency are the key words. The Agreements on Trade-Related Intellectual Property rights (TRIPS Agreement) are part of WTO: after the Dunkel Draft proposal, TRIPS agreements came into effect on 1 January 1995. The objective is to protect commodity trade from piracy and to increase innovation investments. The countries are required to prepare the necessary legal framework in order to fulfill commercial rules including standards of protection for intellectual property.

4This general harmonization is focused on patenting. Countries gradually comply with provisions of the TRIPS. Recently India, which led opposition to the patenting of life forms, has aligned Indian law. In April 1999 the Indian Parliament amended the Patents Act in order to fulfill the TRIPS agreement. According to the Bharatiya Janata Party (BJP) government, a strengthened patent regime was necessary in order to help Indian scientists and protect their inventions. In Parliament, opposition came solely from the communist and left-leaning parties which staged walkouts to record their protest against the “recolonisation” of India by transnationals. The NGO Gene Campaign has been carrying out a series of meetings on Intellectual Property Rights (IPRs) in major towns of southern Kerala which has a high, ninety percent literacy rate. Similar meetings have been held in Northern Haryana, Uttar Pradesh and Bihar states and concluded with mass signature campaigns as a means of giving voice to the poor who are likely to be most hit by the new laws: “New laws should facilitate rather than hinder the people’s ability to access basic resources and enable and protect food and health security”, said Suman Sahai, the leader of Gene Campaign. More than 1,500 groups across the country have also started a Gandhian-style bija satyagraha (rightful demand for seeds) calling for civil disobedience of laws which “threaten livelihoods, biodiversity, food security and health security”.

5This conflictual situation cannot be underestimated as it clearly shows contradictions between industrial innovation, competitive markets and long-term common goods protection. Intellectual property rights, control, access to the resources and benefit sharing are a major source of conflict. The opposition between industrial countries and under-developed countries is strong and has also clearly been expressed during the biodiversity convention negotiations: high-technology countries want free access to the resources in order to add a new character to the resource which can then be patented; groups of low-income countries claim national sovereignty in order to limit bioprospection and to negotiate benefit sharing.

6Efficiency, innovation protection, equity, solidarity are major conflicting key words. Experts, NGOs, scientists, bureaucrats and farmers’groups are lobbying at different levels, whether international, national and local. According to the rhythm of negotiation, an agenda is being pushed forward. Renegotiations of agriculture and TRIPS are scheduled under the WTO’s built-in agenda. Reviews enable countries to comply with its provisions. The extension of the review period has been requested and implementation of the TRIPS agreement by developing countries depends in part on the technical and financial assistance available to them. It depends also on the possibility of finding an internal political agreement. The original deadline was 1st January 2000, but an extension of the five-year moratorium has been asked for, based on the fact that the TRIPS Council has not been able to define either the scope or the modalities for non-violation complaints, as required by article 64.3.

7This review of the TRIPS agreements can play an important role in the balance between fair trade and equity: if all the bargaining parties are negotiating freely in order to improve fair trade mechanisms, which of them are well informed enough in order to negotiate counterpart conditions? In other words, are voluntary agreements feasible if part of the agenda is hidden or if agendas interfere from one international convention to another? Which player is able to attend at the same time different organizations in order to be aware of the debates? Which player is able to set the calendar, rhythm and rules? How far can common good be preserved, if fair and clear identifications of products are not transparent? Could the interactions between institutions (the WTO, the Biodiversity Convention and its biosecurity protocol as well as the FAO commitment for genetic resources) be articulated in a global architecture, which would allow the players to act with a clear understanding of each party?

TRIPS and WTO: a tight framework in which players are bound

8The WTO assumes the power to require each member to “ensure the conformity of its laws, regulations and administrative proceedings with its obligations as provided” in the Uruguay Round agreement. Under these rules, the WTO can oblige members to enforce the revision of certain national, state and local laws—such as regulations for pesticides, use of public lands, or nutrition labeling. According to the Office of the U.S. Trade Representative, even “Indigenous Tribes” recognized through a century of treaties negotiated according to the U.S. Constitution, will be considered “sub-federal jurisdictions” under the WTO.

9Self-exclusion is almost unthinkable, especially for developing countries involved in structural adjustment policies. The WTO uses voting and dispute resolution procedures backed by economic sanctions to enforce its decisions. It is a permanent political body and can, with a three-fourths majority, establish new obligations at any time; under the old GATT, the principle of non-discrimination gave every country an implicit veto toward any new obligations that might be proposed.

10Disputes resulting over implementation of the Uruguay Round are decided by panels of trade experts appointed by governments; the rules prohibit the members of a dispute panel from releasing documents and from disclosing their opinions to the public. When a dispute panel judges that a country’s trading behavior or domestic law does not comply with the rules of the Uruguay Round agreement, the country may bring an appeal to another panel of appointed appellate judges. A losing country must change the offending practices, laws or administrative procedures within a reasonable period of time. If it fails to do so, the winning country can retaliate by asking the WTO for permission to suspend a certain amount of its trade with the loser.

11Intellectual property rights do work in this general framework. The dispute between India and the US arose in 1996 essentially from the following facts. Section 5 of the Indian Patents Act, 1970, does not permit product patents to be granted in respect of “substances intended for use, or capable of being used, as food or as medicine or drug”. Only “claims for the methods or processes of manufacture shall be patentable” in respect of those substances. Thus, India did not make available patent protection for pharmaceutical and agricultural chemical products commensurate with the obligations of Article 27 of the Agreement on TRIPS, which requires that “patents shall be available for any inventions, whether products or processes, in all fields of technology…”.

12In December 1994, the President of India promulgated the Patents Amendment Ordinance, 1994, with a view to meeting India’s obligations of the TRIPS Agreement. The ordinance explicitly allowed the filing of patent applications and a system for the grant of exclusive marketing rights. However the ordinance lapsed because of the dissolution of Parliament on May 1996. Between January 1995 and February 1997, a total of 1339 applications for pharmaceutical and agricultural chemical products have been received. All these applications have been stored for future action but there is no legal basis for the grant of exclusive marketing rights.

13On July 1996, the United States requested a mutual understanding from India and then turned towards the Dispute Settlement Body. The panel terms of reference were established in 1997. The US essentially claim before the panel that:

  1. India has failed to implement its obligation under Article 70.8 of the TRIPS Agreement to establish a mechanism that preserves the novelty of applications for pharmaceutical and agricultural chemical product patents during the TRIPS transition period
  2. Such mechanism must allow inventors to file patent applications from 1 January 1995, even though the decision on whether or not to grant any patent itself needs to be taken. This “mailbox” provision is there to receive and store the applications. The date of filing is used for assessing whether the application meets the criteria for patenting, including novelty
  3. India has failed to comply with its transparency obligations under Article 63 of the TRIPS Agreement in respect of a mechanism for filing patent applications pursuant to Article 70.8
  4. India has failed to implement its obligations under Article 70.9 of the TRIPS Agreement, which arose on 1 January 1995, to establish a system for the grant of exclusive marketing rights
  5. Under a system for the grant of exclusive marketing rights under Article 70.9, competitors of the owner of such rights should not be permitted on the market in the absence of the owner’s consent.
  • 1 Early 2002 the new Patent Bill was yet to be accepted by the Indian Parliament. In August 2001, ho (...)

14The United States requested the Panel to recommend that India brings its measures in conformity with its obligations. On the basis of the findings set above, the Panel concluded that India has not complied with its obligations and has failed to establish a mechanism that adequately preserves novelty and priority in respect of applications for product patents regarding pharmaceutical and agricultural chemical inventions. The dispute settlement body requested India to bring its transitional regime into conformity with its obligations under the TRIPS Agreement for April 1999. The Indian Parliament decision of March 1999 is a positive answer to the WTO. Sanctions and cross-retaliation are avoided. However, national consensus might be difficult to obtain as the Gene Campaign indicates.1

15The extremely tight timetables for panel work and the working procedures accelerate the agenda. Little time is left for national debates and consensus building. The threat of economic sanctions has pressured countries to adapt their domestic law to the international calendar. Because of its enforcement abilities, the TRIPS in the WTO are becoming an international norm protecting information and innovation investment. The USA plays a major role, as India as well as a number of developing countries have been placed on the priority watch list of the Special 301 provision of the United States Trade Act for denying effective intellectual property protection or market access to United States’ firms. These include Argentina, the Dominican Republic, Egypt, Guatemala, India, Indonesia, Kuwait and Peru.

TRIPS and importance of patents: biotechnology industry strategy

16Efficiency of patenting has never been proved: many industries such as the automobile prefer the trademark strategy. However, patents on specific genetic sequences are a specific strategy for biotechnology firms in order to lock the market. Accesses to the market and information control are the key. In order to obtain a bargaining position, transnational companies are both merging and depositing patents.

17The small start-up firms in the biotechnology industry that had been created early (in the 1980’s) have been taken up by multinational companies. Merging is current and new life industry giants control the market. In 1997, merging between US firms has been estimated at 745 billion dollars. A firm such as Monsanto, the second largest agrochemical firm after Novartis, has invested over 8 billion dollars in seed purchasing over the last 5 years in order to control over 85% of the grain market and 33% of the soya market. This dominant position is being consolidated by patents which are being taken on key products such as Monsanto RoundUp resistant seeds. Transnational companies are seeking patents to control crops giving sole access to their products through dependency licenses.

18Narrow markets for biotechnology globally estimated to 13 billions dollars altogether in 1998 explain partly merging and patenting strategy. In a competitive global market, which takes a long time to take off (2 billion dollars in 1988) and which takes lots of investments, information and access to the market have to be controlled in order to limit competition. Patenting is also a usual practice for the chemical and pharmaceutical industry. Monopoly rights are a way to negotiate a position in the market which is slow to start up, even if the American Office of Technological Assessment (OTA) had expected a biotechnology boom since 1988.

World market

All processes

Biotechnology

Transnational

All sectors

2 billion $ in 1988

13 billions $ in 1998

Pharmacy

Estimates in 1988 for

36% of the market

1988

136 billion $

1998:

hold by "top 10" &

25% of the market

57% by "top 20".

1998

251 billion $

6 billion $

Agrochimics

1988

20 billion $

Estimates in 1988 for 1998:

30% of the market

1998

31 billion $

?

87% of the market hold by the "top 10"

Seed Industry

1988

15 billion $

Estimates in 1988 for 1998:

40% of the market

1998

20 billion $

1.8 billion $

40% of the market hold by the "top 10"

Source: H. Ilbert, tabulated from OTA, ISAA and RAFI sources.

19Control of market and information are a way to limit competition: market shares access and control are the only way to handle the absence of market take-off. Patent is an anti-risk reflex which is now systematic for any actors whether public or private. All the products actually commercialized are patented. Over 70% of patents are USA patents and 90% are private patents. The agricultural sector is the first trading experiment for the biotechnology industry. Since 1994, when the first genetic plants had been commercialized (Mac Gregor tomato and virus-resistant tobacco), 48 new agricultural products are on the market. Those products are mostly covering the basic commodity production, which is: corn, soya, tomato and cotton. This fast take-off has been expected for over ten years, a period in which biotechnology has been tested in 15,000 places and distributed in 34 countries all over the world.

20The countries mostly involved in biotechnology are the USA, China, Australia, Canada, Japan, and Europe. The USA is by far the first country which has chosen this production model. European moratorium on Bt corn in England, Austria and France has been slowing down the commercial distribution. This moratorium period is a trial for this industry which has already invested over 2 billions in agricultural research and development biotechnology and has only made 100 million dollars in agricultural products sales. Losses for the industry are significant, and even if legal framework allows commercial distribution, the industry may prefer to wait in order not to loose the consumers’confidence. In the USA, production have been mixed and over 27 million hectares are estimated to have been planted with transgenetic crops in 1997. Now, costs for segregation are high. Products have to find other destinations (CARE has been dealing with Monsanto in order to distribute GMOs products in micro-credit aid programs).

  • 2 The genome can be defined as the whole of all existing genes containing all genetically inherited (...)

21Future potentialities of biotechnology should emerge once the functions and interactions are fully known. That might take a certain number of years. According to a 2001 calculation, the human genome2 is supposed to contain around 30,000 genes. Until now, only around 100 genes have an established relationship with a disease or a specific function. The function of all the other genes is still unknown. Ability to develop large-scale biological test systems controlling access to information libraries as well as the technical process and the product being used could open huge markets. Competition between innovative technological systems is openly launched. The European directive on the protection of biotechnological invention which has been adopted in 1998 after ten years of discussions is an example of the alignment of countries on a model based on high technology. A new area with protected trade including the USA and Europe has been created.

22Under such circumstances, TRIPS renegotiations are central for biotechnology transnational corporations as they give a strong possibility to claim and maintain a dominant position. They are also central for countries which have chosen biotechnology as a development motor. Possibilities to affirm another development model in which farmers’ rights or environmental protection would be taken into consideration are being discussed in other international fora.

Biodiversity Convention and FAO commitment: common goods conservation and indigenous rights

23Those global conventions do not have the same enforcement power as the TRIPS. However, their logics and principles may play an important role if they happened to be coordinated in a fair trade transparency system.

24The Biodiversity Convention has been adopted in Rio in 1992. After the Bruntland Report (1987) in which the necessity to find multilateral agreements for conservation and exploitation of the common heritage of mankind had been recognized, the Biodiversity Convention confirms the need of preservation and usage of biological diversity. Equitable sharing of benefits is a major principle which is leading to build procedures in order to evaluate resources and possible counterparts. The second major principle is the national sovereignty. The nature of the common good to preserve has led government to ban common heritage: access to genes and direct industrial or scientific uses are progressively under national control.

  • 3 Neem (Azadirachta indica A. Juss) is a tree with medical and pesticide uses.

25Conflicts between the TRIPS provisions and the Convention on Biological Diversity are open. Countries are focusing on Article 27 of the TRIPS agreement to introduce in WTO the traditional rights, or the indigenous and local communities rights, according to the Biodiversity Convention. Traditional knowledge recognition is now central in the negotiation and any benefits derived from the use of local knowledge needs to be approved and shared. For example, the so-called Biopiracy Acts has led countries to deposit claims against industries that are patenting indigenous resources. The neem controversial patenting by American firms is a typical example3. Actors such as governments, NGOs, scientific bodies are now organizing defensible sui generis instruments that preserve the public interest - defining the collective rights of indigenous peoples, strengthening the definition of Farmers’ Rights with the FAO International Undertaking on Plant Genetic Resources, building up Farmers’ Rights and biosafety protocols which could become a legally-binding protocol.

26In 1983, the FAO adopted the “International Undertaking on Plant Genetic Resources” to promote the availability of plant genetic resources for the purposes of scientific research, plant breeding and genetic resource conservation. In 1989, the FAO endorsed a concept of Farmers’ Rights as an annex to the Undertaking that specifically recognized farmers’contributions to developing biodiversity and the obligation to share with them the benefits of their work - the exact opposite of patent restrictions. In fact, this resolution stipulates that “plant genetic resources are a common heritage of mankind to be preserved, and to be freely available for use, for the benefit of present and future generations.” Another FAO resolution in 1991 proposed implementing Farmers’ Rights through an international fund to support plant genetic conservation and utilization, particularly in developing countries. Governments agreed that the resources of the fund should be substantial, and sustainable, and that the donors of genetic resources would determine and oversee its management. A 1993 resolution requested the Undertaking to be revised as a binding international law in harmony with the Convention on Biological Diversity, a process that is presently underway.

  • 4 CGIAR: Consultative Group on International Agricultural Research, including El Centro Internaciona (...)
  • 5 National Agricultural Research System.

27The Commission on Genetic Resources for Food and Agriculture is the only inter-governmental body where member countries, both donors of funds and technology, and users of genetic resources, discuss matters specifically related to agricultural biological diversity. Its relation with the CGIAR4 is important to define statute of genetic collections. About 600,000 collections are being stored as public good. For now, efforts are being made to improve the user-responsiveness of the system and to provide access to a wider range of information on the ex situ collections, that will meet the requirements of different users (breeders, curators, researchers, policy makers). In the medium term, links will be developed with the databases of key partner (NARS5, gene banks) and an information system (SINGER) in order to provide access to the full range of genetic resources information available within the CGIAR. Issues of access and control of gene banks are now under consideration. The possibility for an enterprise to use one item of this collection in order to introduce an innovation and patent the variety is a danger that has occurred already once or maybe more. Issues of control protection, innovation and counterparts are also being discussed. Even if the CGIAR has recently condemned the Terminator technology patenting, pressures for strong classical patenting also exist among the scientific innovative sector.

28According to market principle, issues of information access and risks have to be constantly evaluated. The biosafety protocol, which is being supported by a large majority of countries including the EU, could also modify the TRIPS agreement by introducing the precaution principle which is not taken into consideration by the WTO.

29Clarifying the statutes of common goods threatened to be destroyed, clarifying the products to be distributed through clear labeling, are conditions for fair markets. Agreements on different types of property rights or negotiation in order to limit actual binding exclusive rights on living cells are on their way. The refusal to identify clearly a product such as a genetic engineered organism disrupts the fair trade rules: no transparency, no transaction cost in the negotiation. The coordination of the different international organizations in charge of ecological or economical risk assessments is necessary in order to facilitate information transparency between actors acting at different levels.

Annexure

30What are intellectual property rights?

31Intellectual property rights are the rights given to persons over the creations of their minds for a certain period of time. Intellectual property rights are customarily divided into two main areas:

  1. Copyright and rights related to copyright
  2. Industrial property divided in two main areas. One is characterized as the protection of distinctive signs, in particular trademarks and geographical indications. The other category is related to industrial innovation: patents, industrial designs and trade secrets are the major tools. It provides protection for the results of investment in the development of new technology, thus giving the incentive and means to finance research and development activities. The protection is usually given for a definite term: typically 20 years in the case of patents.

32Patents give monopoly rights and exclude competitors. Scope and geographic expansion of patents are important factors. In the 1980 Chakraberty example of a bacteria eating up petroleum, not only the process was claimed, but the bacteria itself.

What are the TRIPS agreements?

  • 6 In theory, the WTO fosters negotiations among all of its members (multilaterally). In reality, man (...)

33Recognizing the need of a multilateral6 framework of principles, rules and disciplines dealing with international trade in counterfeit goods, recognizing that intellectual property rights are private rights, the agreement on Trade-Related aspects for Intellectual Property Rights follows one main objective: “The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.”

34After those general principles, the agreement settles the scope and use of intellectual property rights. The protection applies to copyrights, trademarks of all products of mind including books, movies, graphic designs, geographical indications, industrial design, patents and other undisclosed information. One of the most controversial segments is related to patents on genetically engineered products and living organisms. The now famous article 27 allows countries to exclude from patentability inventions which could disturb the public order or morality, including prejudice to the environment It also states that “members may also exclude from patentability:

  1. diagnostic, therapeutic, and surgical methods for the treatment of humans and animals
  2. plants and animals other than micro-organisms and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement.”

35The exclusive rights that must be conferred by a product patent are the ones of making, using, offering for sale, selling, and importing these purposes. Process patent protection must give rights not only over use of the process but also over products obtained directly by the process. Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contract (Article 28) and they are limited exceptions to the exclusive rights (Article 30). The term of protection available shall not end before the expiration of a period of 20 years counted from the filing date (Article 33).

36General enforcement procedures are being explained on the basis of right of information, transparency, equity and fair trade. Institutional arrangements as well as dispute settlements oblige countries to publish information in order to enable government and right holder to become acquainted with them (Article 63 and 70).

Notes

1 Early 2002 the new Patent Bill was yet to be accepted by the Indian Parliament. In August 2001, however, the Protection of Plant Varieties and Farmers’ Right Act was passed. Breeders can claim intellectual property rights in spite of some restrictions (rights limited to 15 or 18 years, no protection allowed in areas that would harm public health nor for any genetic use restriction technology such as Terminator), but farmers can save, re-sow or sell seeds of the protected variety «in the same manner as before except ‘branded seeds’, i.e., seed in a package or container and labeled as a protected variety». See A. Ramanna, “India’s Policy on IPRs and Agriculture”, Economic and Political Weekly, 22.12.01, pp. 4689-4692 (Note of the Editors).

2 The genome can be defined as the whole of all existing genes containing all genetically inherited information.

3 Neem (Azadirachta indica A. Juss) is a tree with medical and pesticide uses.

4 CGIAR: Consultative Group on International Agricultural Research, including El Centro Internacional de Agriculture Tropical (CIAT), the Centre for International Forestry Research (CIFOR), the Centro Internacional de Mejoramiento de Maiz y Trigo (CIMMYT), the Centro Internacional de la Papa (CIP), the International Centre for Agricultural Research in Dry Areas (ICARDA), the International Crop Research Institute for the Semi-Arid Tropics (ICRISAT), the International Centre for Living Aquatic Resources Management (ICLARM), the International Centre for Research in Agroforestry (ICRAF), the International Food Policy Research Institute (IFPRI), the International Institute of Tropical Agriculture (IITA), the International Plant Genetic Resources Institute (IPGRI), the International Service for National Agricultural Research (ISNAR), the International Livestock Research Institute (ILRI), the International Rice Research Institute (IRRI), and the West Africa Rice Development Association (WARDA).

5 National Agricultural Research System.

6 In theory, the WTO fosters negotiations among all of its members (multilaterally). In reality, many decisions are still made bilaterally (between two countries), principally between the United States and the European Union (EU). And the United States tends to impose trade sanctions on its own (unilaterally), although doing so is illegal under GATT. But only recently has the EU objected, while other countries lack the economic power to do so.

© Éditions de la Maison des sciences de l’homme, 2002

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