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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

13. Trade and Agriculture: Implications of trips

Pushpa M. Savadatti

Texte intégral

1The General Agreement on Tariffs and Trade (GATT) was an international forum established in 1948. It was one of the three institutions set up in post Second World War with the noble intention to work for peace, equality and progress in the world at large. One of these institutions, namely, the World Bank was to contribute to a reduction in the inequality in the international distribution of wealth and income. Likewise, the aim of the International Monetary Fund (IMF) was to ensure monetary stability that was essential for the growth and prosperity of countries. The need for a similar mechanism was felt to oversee the smooth conduct of world trade and to prevent the kind of trade conflicts prevalent in the pre-war years. The GATT was therefore set up in 1947 with 23 countries including India acting as the initial signatories. Legally it was an international treaty and hence its rules were binding on all its member countries, two-thirds of which were developing nations. The main advantages of GATT were: firstly, it provided a stable and predictable system in which international trade was to be carried out; secondly, it provided the means of settling disputes between countries on trade matters and thirdly, through periodic rounds of negotiations, it encouraged reduction in tariffs so that expansion in world trade became possible. The GATT later on had 110 members, who among themselves shared more than 90% of world trade. Ever since GATT was set up, eight rounds of negotiations have been held on trade matters. The first seven rounds of negotiations had a profound impact on the world economy. The eighth round known as the Uruguay Round covered seven years from 1986 to 1993. This round sought to rectify the low growth in world trade by cutting down tariffs, and making the objectives of the GATT more effective by covering new trade aspects. It included agriculture and emerging protocols like Trade Related Intellectual Property Rights (TRIPs), Trade Related Investment Measures (TRIMs) and General Agreement on Trade in Services (GATS).

Trade related intellectual property rights (TRIPS)

2The agreement on Trade Related aspects of Intellectual Property Rights (TRIPs) is an integral part of the WTO Agreement. The underlying theme of TRIPs being free trade as provided in the WTO/GATT, the countries are required to prepare necessary legal framework spelling out the scope and standards of protection for rights in regard to intellectual property. The WTO covers nine types of intellectual property, viz: copyright, trademarks, trade secrets, geographical indications, industrial designs, integrated circuits, plants, micro-organisms and plant varieties. It has also envisaged another form of Intellectual Property Rights (IPRs), known as Plant Breeders’ Rights (PBRs). The PBRs have introduced less stringent conditions for seeking patent for seed plants. The WTO provides for patenting of micro-organisms, which are of immense importance for medicine, industry, ecology and environment.

3The deliberations of the Uruguay Round witnessed a marked polarisation of views on TRIPs. The final outcome represents a definite victory for the industrialised countries, and the Less Developed Countries (LDCs) will have to go through a prolonged and painful period of adjustment in their national IPRs systems in the coming decades.

Agriculture and intellectual property rights issues in India

4The issues of IPRs protection in the field of agriculture are of relatively recent origin. The two main forms of IPRs recognition in this area are patents and Plant Breeders’ Rights (PBRs). Patenting of seeds and naturally occurring genes is one of the controversial provisions of the GATT agreement which has been widely discussed and debated amongst researchers, activists and policy makers. The provisions contained in the agreement in this regard are summarised below:

  1. Patents shall be available for any inventions, whether products or processes, in all the fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. The patent rights obtained are enjoyable without discrimination as to the place of invention, the field of technology and irrespective of whether the products are imported or locally produced.

  2. Members have been given the freedom to exclude from patentability inventions which may be necessary to protect public order or morality, including protection of human, animal or plant life or health or to avoid serious prejudice to the environment.

  3. Members may also exclude from patentability:

  1. Diagnostic, therapeutic and surgical methods for the treatment of humans or 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 a combination thereof. This provision had to be be reviewed four years after the date of coming into force of this Agreement.

5The Indian Patents Act 1970 excludes inventions which are frivolous, which would be contrary to law or morality or injurious to public health, etc. Inventions relating to atomic energy are also not patentable. In the case of inventions claiming substances intended for use of food, or as medicine or drugs, or substances prepared by chemical process, no patent shall be granted in respect of claims for the substance themselves. Thus it can be observed that the GATT agreement, for the first time in history of mankind, proposes the covering of plants under the scope of patents. The agreement has proposed three major changes vis-à-vis the existing patent laws in India.

  1. It has suggested patenting of all life forms including plants and micro-organisms which were not earlier covered by the Indian Patent Act.

  2. The existing Indian Patent laws, under the Act of 1970, protect processes and not products. The agreement requires that India switch on to patenting of products.

  3. The GATT agreement has also reversed the onus of burden of proof. Earlier the onus for providing patent infringement was on the complainant. However, according to the new provision suggested, the person charged with the offence, that is the ‘defendant’, has to prove his innocence.

6The TRIPs demand that either patents or another form of IPR known as Plant Breeders’ Rights (PBRs) should be made applicable to plants. PBRs are granted for plant varieties which exhibit the following characteristics:

  1. Stability (over repeated propagations)

  2. Homogeneity (uniformity of salient characteristics over a single patenting)

  3. Distinguishability, i.e., the variety for which PBRs are sought should be distinguished from existing varieties.

7A landmark in the evolution of plant patent protection was the adoption of the International Convention of New Varieties of Plants (commonly known as UPOV) in 1960. UPOV has currently about 17 signatories mainly from the Organisation for Economic Cooperation and Development (OECD) countries (no LDC is a subscriber to the Convention). UPOV covers plant varieties only and confers PBRs as described above. In the wake of UPOV, several OECD countries introduced or modernised legislation relating to PBRs. The US legislated the Plant Variety Protection Act in 1970, and in 1980 the US Supreme Court, in the famous Diamond vs Chakraborty case, for the first time extended patent protection to living organisms. Plants and seeds patenting was recognised in the US only in 1985. Whereas the US provides a very broad scope of patent protection for living organisms, this scope is considered narrower in other industrialised countries, and virtually non-existent in the LDCs (where most plant breeding work is under the aegis of public research institutions).

Plant breeders rights and innovative activity

8As discussed above, seeds patenting is a very recent phenomenon and so it is too early to predict what impact patents have on innovative activity. PBRs, on the other hand, have been in existence for a long time (especially in the US) and hence substantial evidence of their impact on research in agriculture technology has accumulated. The consensus emerging from several studies on the US (Sasson 1988, Lesser 1983) indicates that the PBRs stimulate private sector research, as measured both by the number of breeders as well as by the number of new varieties introduced.

9The potential impact of PBRs and seed patenting on private sector innovative activity in LDCs is very difficult to assess, because very few LDCs, at the moment, provide any form of plant variety protection. In India, an additional complication arises from the fact that until very recently private sector breeding activity has been discouraged officially for the fear of displacing the public sector’s commanding presence in the commercial seed market. The various criticisms of PBRs have been grouped under the following broad headings.

  1. Narrowing the genetic base: The narrowing of the genetic base increases the vulnerability of the crop to single-gene-based pathogens. Genetic uniformity therefore increases the danger of famines. PBRs aggravate this risk in two ways. Firstly, the homogeneity provision encourages uniformity and secondly, as the protected varieties have higher yields, producers are tempted to switch from more genetically varied crops to these protected varieties.

  2. Freezing the exchange of genetic base: breeding activity depends on the availability of novel germplasm and the economic value imparted to germplasm by PBRs may act as dampener on the free exchange of protected material and thus jeopardise further research. There is already evidence in the US that PBRs have slowed the flow of information from private breeders to universities.

  3. Germplasm conservation: Germplasm conservation has raised an important issue in the North-South Context. The South is the source of the most bio-diversity, but most international collections are under Northern control. The genetic resources are flowing freely from South to North. The collection is being undertaken with a view that genetic resources are the “common heritage of mankind“. However beneficiaries of these collections will not be guided by the “common heritage” logic, but by private property logic. The rights of the original donors of genetic resources – the farmers – do not figure anywhere in the exchange.

Biotechnology and TRIPs

10Biotechnology connotes the use of bioprocesses to develop the new technologies. The bioprocesses may be modifications or intensification of known processes or manipulation of living organisms for new processes leading to new products. It is a new and fast developing technology which is by its very nature expected to be bio-friendly. The application of these techniques could be grouped under four headings:

  1. Plant genetic manipulation and breeding

  2. Industrial tissue culture

  3. Application in dairying and animal husbandry

  4. Use of genetically manipulated microorganisms to produce new and displace old agricultural products.

11Biotechnology has immense potentials for raising the productivity of agriculture in both industrialised countries as well as the Third World. Specific improvements relate to:

  1. Yield growth

  2. Nitrogen fixation (in non-leguminous crops)

  3. Enhancement of photosynthetic activity

  4. Better tolerance to soil conditions (such as moisture, salinity, etc.)

  5. Pest and pathogen resistance

  6. Plant architecture.

12Even though the long-run impacts of biotechnology are likely to be favourable, in the short run, the LDCs are likely to make several adjustments. It has been argued that the most distinct feature of the ongoing bio-revolution is its essentially private character. But from the LDCs perspective, this has the critical implication that unlike during the Green Revolution (where the leading players in the developed world were public-sector research institutions) when the technology was on government to government basis at very low cost, the technology transfer under the bio-revolution is likely to entail substantial costs with joint ventures as the favoured medium for the transfer. The issue of IPRs is likely to loom large as a pre-condition for the effective transfer of technology. Since India has accepted the Final Text of the Uruguay Round and the IPR regime implied therein, the necessary conditions for the transfer of biotechnology from the advanced countries have been met. But still, because of the specialised nature of the IPRs in this area, enforcement problems will be manifold: firstly, it could be difficult to identify a patented plant of seed because both are subject to natural genetic drift and mutation; secondly, agricultural innovations can give rise to derivative or dependent inventions, with the result that multiple royalties could occur on a single product; and thirdly, very often infringement can only be proved by comparing entire genetic make ups. All these mean that mechanism to prove infringement can prove to be quite costly for LDCs.

Biodiversity and TRIPs

13Biodiversity is one of the vital issues that affect the survival of the large majority of people in Third World countries whose livelihood depends on agriculture, fisheries, animal husbandry, sponsored health care, etc. Therefore the IPRs as related to biodiversity will determine the rights to and the control over biological resources as well as the rights and access to knowledge and innovation. Unlike mechanical artefacts, innovation and knowledge related to utilisation of living resources have been a highly evolved tradition in all cultures. Innovations for which patents are being given often only build on prior knowledge and the use of existing biological systems for food and medicine. IPRs particularly as being imposed worldwide through the new GATT agreement, pose restrictions at three levels:

  1. The first restriction is the shift from common rights to private rights. This excludes all kinds of knowledge, ideas and innovations that take place in the intellectual communes, in villages among farmers, in forests among tribals and even in Universities among scientists. TRIPs is therefore a mechanism for the privatisation of the intellectual communes, and a de-intellectualisation of civil society

  2. The restriction of intellectual property rights is that they are recognised only when knowledge and innovation generate profits, not necessarily when it may meet social needs

  3. The most significant restriction that IPRs achieve is by the prefix ‘trade related’. Since most innovation in the public domain is for domestic, local, and public use and not for international trade, the multinational corporations (MNCs) are innovating for the sole purpose of increasing their share in global markets and international trade. So TRIPs in multi-lateral trade organisations will only be an enforcement of the rights of MNCs to monopolise all production, all distribution and all profits at the cost of all citizens, small producers world-wide, and the Third World countries in particular.

TRIPs and bio-substitutes

14The use of chemical fertilisers and pesticides generally leads to impoverishment of soil and degradation of environment. These factors are compelling the agricultural sector to move away from the use of chemicals to their bio-substitutes (bio-fertilisers and bio-pesticides). This is expected to reduce the cost of cultivation in the long run and also promote sustainable agricultural development. Research has already started in which India is also taking part.

15It is very clear that there is going to be a revolutionary change in agricultural technology in which living micro-organisms are going to play an important role. If TRIPs is going to patent all these, the control over the entire range of seeds, fertiliser and pesticides will be with the multinationals which not only have a lead in bio-technology but also command enormous capital to invest. This will, no doubt, render all research into the hands of multinationals which would make all inputs costly because of their monopoly.

Plant breeders’ rights and farmers’ rights

16The UPOV Convention included two very important exemptions, namely farmers’ exemption and breeders’ exemption. Farmers’ exemption allowed the farmers to multiply their proprietary seeds for sowing their own fields. Even if India accepts the milder form of IPRs represented by PBRs it is opined that the consequences would be negative. Further, it is argued that under the PBRs regime, other seed companies will not be allowed to multiply the protected seeds thereby preventing the development of a widely dispersed seed industry, which could affect the supply of seeds. It will even prevent the farmers from selling the seeds to their neighbours. It has been shown that the practice of the farmers of obtaining the new varieties from agricultural universities, multiplying them and supplying them to their neighbours, plays a very important role in the spread of new varieties. It is the lifeline of development which is sought to be cut by the PBRs system in the interest of the multinational companies.

17Even farmers’ organisations and leaders are divided over the implications arising out of the TRIPs. One section of farmers argues that once the seed is patented, the farmers lose the right to modify, retain or use his seeds. They also fear that a large number of small seed companies will be simply swallowed up by large MNCs. So TRIPs would be nothing but a way of promoting ‘legalised monopoly’ of MNCs in India and the world. Another fear is that the implementation of TRIPs as contained in the WTO would stop farmer-to-farmer sale of seeds, hence a huge volume of sale in the informal sector which is the lifeline of Indian agriculture will be choked.

18The other side of the story is presented by leaders like Sharad Joshi and activists like Gail Omvedt of the Shetkari Sanghatana. For instance, Omvedt (1993) calls the above prediction as an “alarmist and exaggerated fear of the market”. According to her, patenting of seeds will not make any difference to traditional varieties as agricultural processes deem it necessary for farmers to buy fresh seeds every year. That farmers will buy at a high price the low yielding seed is an insult to the common sense of Indian farmers. MNCs cannot force farmers to get into such agreements. Farmers will buy only if the seeds yield higher productivity and better results. If more seed companies come in the market including the MNCs, farmers will have more seed varieties to choose from. What is required is the motivation which pushes scientists and researchers to innovate and to do original research which is rewarded appropriately.

Conclusion

19This paper has ranged over a wide spectrum of issues relating to IPRs in the context of LDCs, with special reference to India. The economic impacts will depend not only on the IPRs regime itself, but also on several associated factors such as the official Indian Policy on Foreign Collaboration and Foreign Direct Investment, as also on fiscal concessions for R & D in firms, etc. It is also important to note that impact of the new IPRs regime will vary from sector to sector. Two of the most important sectors likely to be affected vitally are the pharmaceutical and agricultural sectors, and the latter (in the Indian context) has been analysed at some length in this paper. This paper has given a serious examination to populist views, advocated by several academicians and politicians in India, to renege on the new GATT agreements. The WTO is a Hobson’s choice for India and most other LDCs.

20The opt-out strategy advocated by LDCs critics of the TRIPs agreement may not be a feasible strategy at the current stage of development of most LDCs. The cost of an opt-out strategy would be enormous and consequences would be unpredictable.

21The feeling is that it is possible for India to comply with provisions of the TRIPs Agreements while retaining a balance between public interest and the private interest of the holders of IPRs. The new Bill passed in 1999 for amending the 1970 Patent Act is said to be a step in this direction. The future will tell us if this current adjustment to TRIPs agreement will really safeguard the interests of Indian farmers and consumers, in the larger framework of the liberalisation of India's economy.

Bibliographie

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