OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), formerly the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to the Caribbean.

http://www.crnm.org

Innovation is emerging on the multilateral agenda

arguably as the new frontier of multilateral

cooperation at the WTO. This is not surprising for a

number of reasons.

It is clear that innovation as a development issue would

increasingly influence the multilateral trade agenda

because as the Global Knowledge and Creative

Economy deepens, developed and developing

countries are becoming concerned about the important

linkage between innovation performance and trade

performance and competitiveness.

Although there are many factors that affect

international competitiveness, innovation is the only

factor that allows countries regardless of their current

stages of development, to achieve sustainable

economic growth and competitiveness in the long

term. Innovation is in its own way amassing a political

economy within the global knowledge and creative

economic system in the sense that the ability to

harness and wield innovation effectively will determine

the future ‘winners’ of this economic landscape and

can be a tool to close the development gap between

rich and poor countries.

The prospects for the evolution of the multilateral

trade agenda are also worth some consideration. As

barriers to trade progressively reach de minimis

levels, the WTO agenda as it currently stands will

eventually reach natural conclusion. The question

that emerges is what will be the future of multilateral

trade cooperation?

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SPECIAL

OTN Update April 22, 2013

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), formerly the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to the Caribbean.

http://www.crnm.org

The removal of barriers to trade should be

considered but a single component of a wider

comprehensive framework to ensure the effective

and sustainable participation of both developed and

developing countries within the global trading

system. Arguably, an essential next step for trade

multilateralism is facilitating the promotion of trade.

Given that the nexus between innovation and trade

is inherently trade promoting, there should be room

for this issue within a multilateral trade agenda that

is predicated on trade promotion.

The TRIPS Council Discussion on the Nexus between

IP and Innovation

In light of the foregoing, it is noteworthy that in

November 2012, a new agenda item, ‘Intellectual

Property (IP) and Innovation’, was proposed for

debate and discussion by the United States of

America (U.S) and Brazil at the meeting of the WTO

TRIPS Council. In addition to the US and Brazil, a

number of countries participated in the discussion

including, China, Egypt, India, Bangladesh, Chile,

Chinese Taipei, Mexico, Peru, Canada, Australia, New

Zealand, Switzerland, Japan, the European Union

(EU), and Korea.

In addition to recording measures that are being

adopted by WTO Members within their own

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jurisdictions to encourage and promote innovation,

the Meeting revealed a range of perspectives on the

role of IP in innovation development and promotion.

Amongst the various interventions that were offered

by the participating WTO Members, which offered

perspectives with varied nuances, certain trends in

viewpoint emerged.

It appeared that all the Member States concurred

that intellectual property protection is important for

innovation development but IP protection is but one

of a larger mix of different tools to promote

innovation.

With respect to providing IP rights protection that

optimally encouraged innovation development, there

were concerns articulated about finding the

appropriate balance of rights and obligations. Such

concerns primarily related to balancing such rights

and obligations with respect to the health and

pharmaceuticals sectors. In this regard, primarily

developing countries such as India and Brazil

emphasized the need to take advantage of the TRIPS

flexibilities. On the other hand, the EU cautioned

about the use of TRIPS flexibilities, signalling that

measures adopted under the TRIPS flexibilities

should not be construed as the norm but as the

exception otherwise IPR regimes would be rendered

uncertain and unsustainable.

These opposing comments between developing

countries and developed countries seem to reflect

that frictions still remain regarding the interpretation

of TRIPS flexibilities. The debate on the TRIPS,

including the TRIPS Flexibilities, to some degree,

pitted developing countries against developed

countries prior to the adoption of the Doha

Declaration, which affirmed categorically that the

TRIPS “can and should be interpreted and

implemented in a manner supportive of WTO

Members’ right to protect public health and in

particular, to promote access to medicines for all”.

The recognition of the need to maximise the use of

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), formerly the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to the Caribbean.

http://www.crnm.org

TRIPS flexibilities does however underscore a

previous point that the WTO Members did

themselves observe, which is that IP protection is not

enough to facilitate innovation development. It is

clear moreover that IP protection regimes are

insufficient to achieve sustainable innovation

performance evenly across both developing and

developed countries.

Defining the Appropriate WTO Forum for Innovation

Development Issues

The observation cogently made by Egypt that there

exists an innovation divide amongst WTO Members

that needs to be bridged in order to secure

‘innovation for all’, provides an interesting segway

that takes the discussion about innovation outside

the narrow confines of the protection of IP and the

TRIPS agenda.

If it is accepted that innovation development is

concerned with a number of variables other than

appropriate levels of IP protection, and that

innovation development is necessary for trade

promotion and trade competitiveness, then outside

of the TRIPS Council, what would be the appropriate

WTO forum to deal with trade and innovation

development issues in a manner that would

engender ‘innovation for all’ and as a corollary,

promote effective trade participation and

competitiveness for all?

The answer to this question is not immediately

apparent. However, arriving at a solution is not

insurmountable. The circumstance under which

innovation has appeared on the WTO agenda is not

dissimilar to the circumstance that defined how

intellectual property and trade were initially linked in

the multilateral trade agenda.

Although the GATT 1947 does mention types of

intellectual property rights, there was no reference

to a programme to address the trade related aspects

of intellectual property rights per se. The linkage

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between IP and trade that culminated in the TRIPS

Agreement was advanced primarily through the

influence of the United States. Similarly,

notwithstanding the textual reference to innovation

under the TRIPS Agreement, there is no distinct

programme to address innovation development as a

specific trade issue within the WTO.

A linkage between innovation and trade in the WTO,

albeit under a discussion about IP, has been

promoted through the initiative of two countries –

Brazil and the U.S. An important distinction is that

unlike the context that led to the TRIPS Agreement,

with respect to innovation, a developed and a

developing country have both influenced the agenda.

This coalition of interests between a developed and

developing country augurs well for the potential for

creating a platform for innovation within the WTO.

The creation of such a platform would not be

impaired by a perception that the platform itself

would benefit developed country interests alone – a

status that beleaguered the IP and trade agenda

prior to the conclusion of the Uruguay Round.

An early multilateral consensus that innovation is

critical and that it is linked to trade competitiveness

OTN UPDATE is the flagship electronic trade newsletter of the Office of Trade Negotiations (OTN), formerly the Caribbean Regional Negotiating Machinery (CRNM). Published in English, it is a rich source of probing research on and detailed analyses of international trade policy issues and developments germane to the Caribbean. Prepared by the Information Unit of the OTN, the newsletter focuses on the OTN, trade negotiation issues within its mandate and related activities. Its intention is to provide impetus for feedback by and awareness amongst a variety of stakeholders, as regards trade policy developments of currency and importance to the Caribbean.

http://www.crnm.org

can help lead to the negotiation and adoption of a specific and appropriately calibrated agenda or agreement on trade

and innovation within the WTO in the future.

Significance for CARICOM

At this juncture however, it is essential that CARICOM countries enter the fray before the dust settles in order to weigh

in on this subject matter and related agenda as it evolves. Just as other WTO members have done at the meeting of the

TRIPS Council it would be useful for CARICOM to register how it regards the linkage between IP and innovation.

Importantly it would be necessary for CARICOM to go further to provide its own advice on how it perceives the context

of trade and innovation development for small developing economies and what kind of multilateral cooperation,

platform and rules of engagement would be appropriate to deal with that context.

As long as the subject of innovation remains on the agenda of the TRIPS Council, CARICOM should utilise opportunities

to participate in upcoming TRIPS Council Meetings to ensure that the agenda for trade and innovation is not dismissed

and that it is influenced in a manner that is not inimical to small developing states interests.

It should be remembered that with respect to the subject of the nexus between trade and innovation, CARICOM has

already been a distinct leader and pioneer. In its bilateral trade negotiations with developed countries namely the

European Union and Canada, CARICOM has been seeking to persuade with the argument that innovation is inextricably

linked to trade performance and competitiveness, and that for this reason, innovation needs to be treated squarely

within the trade cooperation agenda with its trading partners.

Within the multilateral trade arena, CARICOM should exploit its trade diplomacy and capital that it has been leveraging

within the bilateral trade arena. Furthermore, in this regard, CARICOM should seek to encourage consensus and to make

strategic alliances with other WTO Members that would bolster its position on this issue which is central to its economic

development.

The OTN invites you to participate in dialogue on trade and innovation development by registering with your respective

economic planners and trade representatives within your own countries your perspectives on the linkages between

innovation, trade performance and sustainable economic development.

The summary of the discussion on IP and Innovation from the Minutes of the November TRIPS Council Meeting is

available on the OTN website for your reflection and discussion. Please access the Minutes on the OTN website

homepage at http://www.crnm.org/index.php?option=com_docman&Itemid=113&task=doc_download&gid=1444

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