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July 23, 2008

U.S. on TRIPS: No Can Do

Thanks to the WTO’s excellent and archived web casting, I saw U.S. Trade Representative Susan Schwab announce the U.S. agricultural subsidies offer at her July 22 press conference. At the end of her prepared remarks, she said, “we need more ministers to start talking about what they can do, not what they can’t do.” Her remark challenged developed countries and developing countries to do more to open up their markets to U.S. agricultural and non-agricultural goods “in exchange” for the U.S. offer to cut $2 billion from its annual ceiling on agricultural Overall Trade Distorting Support, and for assurances that U.S. agricultural support programs would be exempt from legal challenge by other WTO members. The remark was in no way intended to include the U.S. among WTO members that would “do more” to negotiate changes to the WTO agreement on intellectual property (TRIPS).

On July 17, 108 WTO members submitted a proposal for “Draft Modalities for TRIPS-Related Issues." The proposal concerns three issues: 1) protecting genetic resources (GR) and traditional knowledge (TK) used in patented products; 2) creating a register of Geographical Indicators (GI) (e.g. “Roquefort cheese”) to help protect the sales of GI products; 3) expanding GI protections. The proposal is opposed by a small group of WTO members, including Australia, Argentina, Canada, Chile, Costa Rica, Mexico, New Zealand, South Africa and the United States. Perhaps even more importantly, the International Chamber of Commerce, the Intellectual Property Owners Association and the National Foreign Trade Council, representing patent holding companies, had written to Ambassador Schwab to warn her of the alleged damage to their financial interests if TRIPS were opened for re-negotiation.

Because the Doha Round is a “single undertaking” in which “nothing is agreed until everything is agreed,” it is difficult to understand why the United States refuses to negotiate on TRIPS. If the U.S. wants agricultural and non-agricultural market access, surely it understands that a promised $2 billion cut is an insufficient offer, particularly in light of its past refusal to notify agricultural subsidies to the WTO accurately and on time. What is such a promise worth, given the U.S. track record?

Furthermore, most economic modeling estimates that the results of the Doha agreements on agriculture and non-agricultural market access will harm or be commercially insignificant for most developing country members. Amending TRIPs to require that patent applicants disclose genetic resources and traditional knowledge used in patent products could lead to a system for licensing the use of GR and TK that might yield real financial benefits for many developing country members, especially mega-biodiverse members, such as Mexico and Costa Rica.

As the proponents of the amendment argue, and I reiterated in a Mexican Chamber of Deputies seminar on July 10, the TRIPs amendment is needed not only to protect GR and TK in patented products, but also to improve the general quality of patents. U.S. patent documentation has become so deficient that in May 2007, the U.S. Supreme Court ruled (KRS International Inc. v. Teleflex Inc. et al) that patent applicants had to furnish more and better documentation to satisfy the criteria for receiving a patent. The current state of U.S. patents is such that the patent examiner approves the claim of utility, “if you can spell it [the word “utility”], according to a lawyer interviewed in Peter Drahos and John Braithwaite’s Information Feudalism.

The U.S. may get its way on TRIPS by doing nothing but deny that there is a consensus to amend TRIPS. But it cannot hope to get a Doha deal with an offer to cut $2 billion in agricultural subsidies, and reporting those cuts to the WTO when it likes and how it likes. Nor can it begin to address the “patent pathology” that is killing important innovations and awarding dubious patent claims.

Steve Suppan


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