Toward free and fair trade: a global public good perspective - Reforming Globalization - Statistical Data Included

Challenge, Sept-Oct, 2002 by Ronald Mendoza, Chandrika Bahadur

Furthermore, the content of the agreement was also contentious. The provisions that were beneficial to technology producers (read "developed countries"), like the scope of intellectual property rights (IPRs, i.e., all products and processes in all technologies), the length of patent protection (twenty years), the scope of exceptions allowed (very limited to specific cases), and the legal compliance required from domestic patent laws in member countries, were all binding provisions. Noncompliance with these provisions was tantamount to a breach of the agreement and could be challenged under the dispute settlement mechanism.

On the other hand, provisions that were beneficial to technology consumers (read "developing countries") such as technology transfer and technical cooperation were nonbinding provisions. In other words, noncompliance with these provisions invoked no penalty at all. There were also significant short-term costs of compliance for the developing countries that were mainly rule-takers in the process. These costs involved, among others, setting up an appropriate patent office, training personnel, and creating mailbox provisions for exclusive marketing rights. All these expenditures constituted an immediate outflow of their already scarce resources. Therefore, despite the stated objective of balancing the needs of producers and consumers, the TRIPS agreement was biased in favor of the technology-producing developing countries in its design.

Finally, one potential long-term implication of the TRIPS agreement is that by protecting the rights of technology producers at the expense of technology consumers, it can lock developing countries into a state of perpetual catch-up, where it becomes even more difficult for them to develop technological capabilities. This was the main fear of developing countries at the time of the negotiations (CUTS 2001), and the design of the agreement only reinforced that concern.

The Agreement on Textiles and Clothing (ATC)

The Agreement on Textiles and Clothing (ATC) emerged in response to the developed countries' post-World War II protectionist Multifiber Agreement (MFA) regime for textile and clothing imports from the developing countries. Specifically, the ATC phased out the MFA in four tranches over a ten-year period (in 1995, 1998, 2002, and 2005), which would cover 16 percent, 17 percent, 18 percent, and 49 percent respectively of imports of all categories of textile products (tops/yarn, fabrics, made-ups, and clothing), with the liberalization process being binding and final (Spinanger 1998).

The ATC was an important step in making the trading regime consistent with its own stated goals of sharing the gains from access with all members. However, the developed countries succeeded in negotiating a phased liberalization for textiles and clothing. This meant that the gains from market access for developing countries were back-loaded until ten years after signing the agreement. The agreement also focused on overall import shares of textile and clothing products rather than elimination of specific quotas, giving developed countries the freedom to selectively liberalize without violating the agreement. In fact, it was possible to liberalize products in the first three tranches that were not even protected under the MFA. By reducing tariffs on these products, developed countries conceded little in terms of market access to developing countries.