[Ip-health] Charlene Barshefsky in the Wall Street Journal Asia: America's TPP Touchstone

Thirukumaran Balasubramaniam thiru at keionline.org
Wed Oct 3 07:13:34 PDT 2012


	• October 2, 2012, 12:38 p.m. ET
America's TPP Touchstone

To grow, innovate. To innovate, protect intellectual property rights.


America's TPP Touchstone
To grow, innovate. To innovate, protect intellectual property rights.


Every country's competitiveness and economic well-being ultimately depends on its companies' ability to innovate. So governments' trade policies should help companies to successfully realize returns on their innovative capabilities so that they have the incentive to continue developing the new products that will improve consumer welfare and deliver rising wages and living standards.

It's a simple concept, but negotiating trade agreements that are consistent with this goal is a struggle. Countries at an earlier stage of development may be tempted to free-ride on the richer countries' innovations. While this may bring benefits in the short term, it hobbles their own companies' ability to begin innovating, and leaves the global economy worse off.

American leadership can overcome this barrier to innovation. And the negotiations over the Trans-Pacific Partnership (TPP) offer a crucial opportunity to do so.

The TPP is the United States' most important trade negotiation of the past decade—a free-trade area linking some of the fastest-growing economies in Asia-Pacific, such as Vietnam, Malaysia and Singapore, to important larger markets such as Canada, Mexico and Australia. All in all, 11 countries, accounting for fully one-third of U.S. trade, are taking part. Japan may join once its internal politics are settled, and the agreement will be watched carefully in Beijing. The TPP will set the terms of trade for many years in the world's most economically dynamic region.

The touchstone for evaluating TPP should be whether it positions the U.S. to compete on the basis of innovation. The United States trade representative has been seeking to ensure that TPP is such an agreement—but difficult work lies ahead.

To meet this test, the agreement needs strong intellectual property provisions, which several TPP negotiating parties are reportedly resisting. The United States is the traditional advocate for IP protection in trade negotiations. But as countries in the Asia-Pacific seek to transform their economies and rely less on low wages to compete, they should recognize that their longer-term interests also lie in strong patents and other IP rights.

Three areas bear particular note:

• Data protection for biologics. Biotechnology and biologic medicines are highly complex, research-intensive fields that use sophisticated tools such as genome sequencing and recombinant DNA techniques to create new medical discoveries. The United States helped pioneer these technologies, and today is responsible for 80% of the world's biotech research and development, including roughly half of all new biologic drugs. U.S. law incentivizes the enormous investments in biologics research by allowing innovators to prevent their competitors from using that data for a sufficient period of time, to allow the innovators to recoup their investments. The TPP should do the same.

• Trade secrets. Innovative sectors—including information and communications technology and advanced manufacturing—all depend on trade secret protection. Indeed, the value of trade secrets such as know-how owned by U.S. companies has been estimated at $5 trillion. These assets are particularly fragile; once a trade secret is disclosed, the damage is done. At the same time, the threat to trade secrets from economic espionage is growing. The TPP should include strong provisions that promote the protection of trade secrets and other commercially sensitive information.

• Forced technology transfer. China and other key developing countries have sought to force companies to transfer technology as a condition of doing business in their markets. This occasionally comes in the form of de jure conditions on market access. More frequently, businesses are subject to coercion from the host government—for instance, to set up an R&D facility or transfer technology before discretionary approvals will be granted. Current trade rules address these practices only to a very limited degree. The TPP should go further and include strong, enforceable provisions that prohibit governments and state-sponsored enterprises from forcing or coercing technology transfer..

In all of these areas, the United States should seek the highest possible standards, consistent with U.S. law, and then strictly enforce them. The alternative is an international policy environment that enables free-riding on others' innovation, ultimately undermining the innovation that all governments need and want.

America's economic success will depend on our ability to innovate and to protect the global returns from that innovation. As U.S. trade negotiators look to advance the TPP to conclusion in the coming months, they should keep this objective squarely in mind.

Ms. Barshefsky was the United States trade representative from 1997 to 2001.


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)

thiru at keionline.org

Tel: +41 22 791 6727
Mobile: +41 76 508 0997

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