Broken Bargains

A vital battle is playing out at the World Trade Organisation over the temporary waiver of intellectual property rules related to Covid-19 vaccines, treatments and technology. In October 2020, India and South Africa proposed the suspension of the relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) until widespread vaccination has been achieved. The proposal has now been officially co-sponsored by sixty governments and supported by more than a hundred. The waiver has also been backed by more than four hundred civil society groups, the World Health Organisation, the African Commission on Human and Peoples’ Rights, the South Centre, UNAIDS, thousands of parliamentarians from around the globe, and more than 170 former heads government and Nobel laureates. Yet seven months on, the TRIPS waiver continues to be blocked by a small but powerful group of WTO member states, including the European Union, the United Kingdom, the United States, Australia, Brazil, Canada, Japan, Norway and Switzerland.

The discussion of the resulting stalemate at the WTO has quite properly focused on the spectacle of wealthy states privileging the monopoly rights of their powerful pharmaceutical corporations over the global effort to protect public health during a pandemic. While the number of daily deaths from Covid continues to rise, the small group of countries opposing the TRIPS waiver has collectively secured most of the available production of vaccines for 2021. The Economist Intelligence Unit has predicted that 85 countries will not see a substantial roll-out until 2023. There is also a marked lack of transparency about the terms on which wealthy states have been able to secure priority access to vaccine supplies.

Much of the debate takes the existence and legitimacy of the TRIPS Agreement and the property rights it lays down as a given. That’s a testament to the way that enshrining highly contested political positions in international agreements can make them appear necessary and inevitable. The TRIPS Agreement came into effect in 1995 as part of a broad new suite of trade agreements resulting from the Uruguay Round of multilateral negotiations that led to the creation of the WTO. The agreements were treated as a ‘single undertaking’. States had to sign up to all of them if they wanted to join the new organisation.

On its own, the TRIPS Agreement was a strikingly bad deal for most states, especially in relation to the expanded patent regime it established. The design of domestic patent laws had always been a complex political exercise. Patents create property rights in knowledge about inventions and give the patent owner monopoly control over the physical production of material objects derived from those inventions for a limited period. States traditionally designed their patent laws to achieve a balance between two goals: rewarding inventive work and enabling the spread of useful knowledge. They did so by granting patents for only a limited term, requiring that the patent be worked within the country, ensuring that the invention was published in a manner that enabled others to learn how to manufacture it, and limiting the inventions over which patents could be granted to exclude essential commodities.

Many European countries refused to grant patents over medicines until well into the 20th century. The practice became more widespread in the decades after the Second World War, largely under pressure from the US. European states that granted patents for pharmaceutical processes or products tended to do so for short periods, and required that the patents be worked within the country so local firms could gain the necessary manufacturing skills. In the 1970s, states such as India and Brazil decided to exclude pharmaceutical products from their patent laws, facilitating the emergence of a successful generic pharmaceutical industry that threatened to expose the inflated prices of medicines in Western markets.

The 1980s saw the beginning of an aggressive campaign by the United States, working with Pfizer and other major US companies, to introduce a US-style patent system on a global scale. The negotiation of the TRIPS Agreement was one of the most important achievements of that campaign. Existing international agreements governing intellectual property were largely unenforceable and maintained a compromise between the private interests of rights holders and the public interest. The genius of the Uruguay Round negotiations was to link global intellectual property rights with the enforcement mechanisms of the new trade dispute settlement system.

The TRIPS Agreement required states to put in place robust patent regimes covering all forms of technology, including pharmaceuticals, and extended the length of patent protection to twenty years. For many in the Global South, it was seen as a form of recolonisation, creating new forms of property in seeds, traditional knowledge and medicines. The lack of a requirement that patents be worked in countries where they were registered effectively turned them into mechanisms for securing exclusive rights over global export markets. The agreement included a set of exceptional measures that states could take in the event of a public health emergency, including the capacity to issue compulsory licences allowing someone other than a patent holder to manufacture a patented product. Yet attempts by states to make use of the flexibilities supposedly built into the TRIPS Agreement were routinely met with the threat of expensive litigation at the WTO or investment arbitration. The TRIPS provisions also required member states to engage in cumbersome and lengthy negotiations with newly empowered patent holders, who showed little interest in meeting governments halfway.

Most states had nothing to gain and much to lose from signing the TRIPS Agreement. They did so because it was part of a broader package. The wide-ranging agenda of the Uruguay Round negotiations meant that a loss in one area could be offset by a win in another. States that joined the WTO undertook to resolve their trade disputes through its newly created settlement mechanism overseen by an Appellate Body. The willingness of the US to submit its complaints to that system, rather than continue its heavy-handed use of unilateral sanctions, anti-dumping duties and countervailing practices as retaliation, was a significant factor in the decision of many states to sign up to the WTO agreements.

The US, however, has now torn up its part of the Uruguay Round deal. Both the Obama and Trump administrations blocked appointments to the Appellate Body in protest at a series of decisions with which the US disagreed. The WTO dispute settlement system no longer functions in its original form. The US continues to rely on a raft of threats and economic sanctions to pursue its trade goals and has rejected the limitations on its economic policy-making imposed by the WTO dispute settlement system.

Most states that signed up to the TRIPS Agreement were not swayed by the moral urgency of the claims of pharmaceutical lobbyists, or a belief in the primacy of property rights over all other public goods. They were making a larger bargain. The circumstances in which it was made have fundamentally changed. The US has walked away from the dispute settlement system. Resort to the meagre flexibilities of the TRIPS Agreement has been constrained by Western powers and big pharmaceutical companies. And the WTO is unable to reach agreement on the need to limit intellectual property rights to meet pressing public health needs during a pandemic, as the months-long debate over the Covid-related waiver illustrates.

The current scarcity of vaccines is the predictable effect of a system that allows the use of monopoly rights to control pharmaceutical production globally. The result is a moral catastrophe as well as an ongoing public health and economic crisis. The ability of a handful of powerful companies based in Europe and the US to claim property rights over innovations resulting from the collective processes of modern science, and to use those rights to control the pace of manufacture and thus the price of pharmaceutical products, is not an unfortunate side effect of this system but its goal. It’s past time for states to terminate the TRIPS Agreement and the failed model of global monopoly rights that it champions.