Notice & Comment

Renegotiating Trade Deals in Light of Advances in Multilateral Treaty Law Applicable to the Life Sciences Economy

Donald Trump’s team has led an insurrection against the dogma of free trade, calling for a revision or dissolution of NAFTA and killing US participation in the Trans-Pacific Partnership.  They promise to “repeal and replace” the prevailing multilateral system with bilateral deals that do a better job of allocating trade gains to the U.S. (and, implicitly, its blue collar workers). When the major international trade bargain of the last generation was struck – the Marrakesh Agreement Establishing the World Trade Organization (WTO) – it was widely viewed as a victory for U.S., European and Japanese firms and, to a lesser extent, Asian, African, and Latin American countries. The agreement aligned tariff- and non-tariff barrier lowering and most-favored nation provisions with the economic strengths of these respective parties – firms in developed countries got major protections for intellectual property investments which represented important sectors of value-added growth, especially for agriculture and life sciences, while developing countries won lower barriers to trade in agricultural goods, clothes, and textiles where they held comparative advantage. This is why American and European pharmaceutical companies may now obtain patents for drugs in India (it did not allow them from its founding until the establishment of the WTO on the theory that provision of inexpensive medicine was a duty of the state), textile employment in South Carolina declined by 68.2% between 1990 and 2005, and China experienced extraordinary export-led growth after it joined the WTO in 2001.

The fate of valuable innovations derived from living organisms was among the most difficult aspects of the negotiations. Article 27(3)(b) of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) allowed governments to ban patents on “plants and animals other than micro-organisms” while leaving “micro-organisms” undefined. TRIPS did require governments to allow intellectual property protections for new plant varieties. The scope of the provision is important because after firms obtain patents on seeds and other genetic resources (like tailored pesticides), they may charge high prices for those products, and may pursue legal action against farmers who use patented seeds without authorization (even when that use was unknowingly or done as a result of traditional practices like seed saving and exchange). These protections can have enormous impact on economies in which farmers depend upon seed collection and exchange for livelihood.  Similarly, the ability to use administrative and judicial processes to protect high prices on drugs can substantially effect the orientation of public health systems in poorer countries.

Indeed, that was the argument made by lower- and middle income countries at the time, which asserted that the Convention on Biological Diversity should inform the WTO’s interpretation of provisions that affected the life sciences sector. In 1992, three years before the establishment of the WTO, the Convention on Biological Diversity (often tied to its sibling treaty, the U.N. Framework Convention on Climate Change) not only endeavored to create worldwide agreement on conservation of biodiversity and sustainable practices for plant genetic resources, it also established a general regime for “access and benefit sharing” when those genetic resources were utilized.

The result has been a decades-long dispute between countries in North America, Europe, and Japan that host firms undertaking the most robust research on the genetics of microorganisms, seeds and plants and the countries, mostly in Africa, Asia, and Latin America, that provided the genetic resources that allowed that research (and resulting products) to advance. The latter countries, especially in Africa, always argued that TRIPS had to be read together with the Convention on Biological Diversity (CBD), effectively allowing those governments to either prohibit patents on genetic resources or to share in the benefits arising from research that used their genetic resources.

One consequence of that dispute was the 2001 International Treaty on Plant Genetic Resources for Food and Agriculture (International Seed Treaty), which was adopted pursuant to the CBD and sought to protect farmers from firms’ efforts to assert intellectual property rights against them. Article 9 of the International Seed Treaty enumerates three elements of farmers’ rights: (1) protection of relevant traditional knowledge, (2) the right of farmers to participate equitably in sharing benefits arising from the utilization of plant genetic resources, and (3) the right of farmers to participate in making decision at national levels. The treaty further provides that “nothing in this Article shall be interpreted to limit any rights that farmers have to save, use, exchange and sell farm-saved seed/propagating material, subject to national law and as appropriate.” Many countries, including India and Zambia, have adopted implementing laws that provide extensive protections to farmers.

The latest agreement aimed at regulating the relationship between genetic resources and commercial exploitation is the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (Nagoya Protocol), a treaty adopted pursuant to the CBD and intending to give teeth to its provisions on benefit sharing. Countries adopting legislation or regulation pursuant to the treaty ensure that any genetic resources within the territory of that country condition access to those materials on prior informed consent not only of the country of origin but also “in accordance with domestic law,” and the consent of indigenous and local communities. Once access to genetic resources results in a commercially viable product, “benefits arising from the utilization of genetic resources as well as subsequent applications and commercialization shall be shared in a fair and equitable way with the Party providing such resources that is the country of origin of such resources or a Party that has acquired the genetic resources in accordance with the Convention.” In short, developing countries are increasingly using agreements on biodiversity to weaken disadvantageous provisions in international trade law, or at least, redistribute gains that would otherwise run mostly to firms in wealthy countries.

What all of these disagreements mean for Trump’s stated trade negotiation strategy – “repealing and replacing” existing multilateral trade deals with bilateral ones more favorable to U.S. manufacturing interests – may hurt sectors privileged in existing agreements. Many developing countries have been clamoring for the opportunity to revise WTO agreements applicable to life sciences since they were adopted and what may replace them – bilateral or multilateral – are agreements that reflect these countries’ more sophisticated and better informed experience with how trade deals work.



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