Has The World Trade Organization Outlived Itself?

by jakecarberry

The 1995 Marrakesh Agreement saw the official introduction of the World Trade Organisation (WTO), replacing the 1948 General Agreement on Tariffs and Trade (GATT) as the key organisation responsible for promoting the liberalisation of international trade, and for providing a framework wherein its members can negotiate and formalize multilateral trade agreements and resolve trade disputes.(1) Since its inception, the WTO has been no stranger to controversy, particularly within the area of intellectual property. It is thus of great significance to explore the WTO’s approach to intellectual property rights, with particular reference to the WTO agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). This entry will therefore illustrate the extent to which the TRIPS Agreement is in direct conflict with WTO development policy.

The 1994 TRIPS Agreement, negotiated at the end of the Uruguay Round of the GATT, remains the single greatest advancement in universally applicable intellectual property rights on a global scale to date. It was designed to ensure a minimum level of intellectual property protection within all WTO member states: copyrights, trademarks, geographic indications, industrial designs, patents, integrated circuits layout designs, undisclosed information and trade secrets are all protected under the TRIPS Agreement.(2) The WTO claimed that the reasoning behind TRIPS was that varying standards of IP rights amongst its members had led to a “…growing source of tension in international economic relations” and thus, regulation was necessary in order to “…cope with these tensions.”(3) Advocates of TRIPS emphasise the importance of the economic theory underpinning the agreement; that intellectual property rights are necessary to create and protect sufficient incentives for producers. As outlined by the WTO in Article 7 of the agreement, the protection of IP rights is required to encourage innovation and aid the dissemination of technology and knowledge.(4)

This argument seems to be built upon sound economic principles. However, an emerging school of thought led by influential economists such as Joseph Stiglitz, suggests that the current global intellectual property regime may actually “impede both innovation and dissemination”, and that reforms, such as placing greater emphasis on other means of stimulating innovation, are necessary.(5) Moreover, the seemingly incompatible relationship between the current IP system and WTO development policy underlines the severity of the problem; inherent within the current IP regime is a redistributive mechanism which serves the economic interests of developed countries to the detriment of the poorest. Through linkage bargaining by the developed countries, developing countries were forced to accept higher minimum standards of IP rights than optimal for their economies.(6)

The WTO is built upon the idea that through cooperation all members can gain. Whilst this may be true with regards to greater free trade, it is not the case in intellectual property; there must be winners and losers.(7) In summary then, the TRIPS Agreement should be seen as bad policy as it is built upon some rigid, antiquated economic principles while the WTO is an institution no longer suited to a modern global IP system so rife with complexities.

(1)WTO Website, ‘What is the World Trade Organisation?’, Understanding the WTO, Available online at:http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm
(2)WTO Agreement, Agreement on Trade-Related Aspects of Intellectual Property Rights: Text of the Agreement, Available online at: http://www.wto.org/english/tratop_e/trips_e/t_agm0_e.htm
(3)WTO Website, ‘Legal texts: the WTO Agreements’, A Summary of the Final Act of the Uruguay Round, Available online at:http://www.wto.org/english/docs_e/legal_e/ursum_e.htm
(4)WTO Agreement, Article 7: ‘Objectives’, Agreement on Trade-Related Aspects of Intellectual Property Rights: Text of the Agreement, Available online at: http://www.wto.org/english/tratop_e/trips_e/t_agm2_e.htm
(5)Joseph E Stiglitz, Claude Henry, ‘Intellectual Property, Dissemination of Innovation and Sustainable Development’, Global Policy, 1 (3) October, (John Wiley & Sons, 2010)
(6)Margaret Chon, ‘Intellectual Property and the Development Divide’, Cardozo Law Review, 27 (6) Spring, (2007) p.2832
(7)Peter M Gerhart, ‘The Tragedy of Trips’, Michigan State Law Review, (2007) 183-184, Available online at:http://www.msulawreview.org/PDFS/2007/1/Gerhart.pdf