Examination of witnesses (Questions 400
- 419)
TUESDAY 23 MAY
THE RT
HON CLARE
SHORT and MR
JOHN ROBERTS
400. I think there is a Green Room in the WTO
headquarters.
(Clare Short) It has now got all these associations
of an in group, not being accountable, not being transparent.
I am simply saying as well as changing the arrangements, I really
think we should get rid of that concept.
401. Yes.
(Clare Short) It is not for me to determine the language
but I think we should have the final negotiating group, some agreement
on who is represented on it and who they are accountable to and
how they report back. That is not difficult to organise. I think
as discussions are going on people are quite content that is fairly
easily organised. It is a matter of will. It is not rocket science.
402. Would it be fair to characterise what you
are saying as you want an inclusive arrangement as opposed to
what the Green Room suggests is an exclusive arrangement?
(Clare Short) Indeed. Absolutely. We all have to accept
that there will have to be a smaller group at the end of any massive
negotiations to finally bring a package together but then that
smaller group must be representative of the others and report
back to the others. That has not been properly done yet.
Chairman: Can we go on the dreaded TRIPs
and Nigel Jones has volunteered to lead us with TRIPs and then
later on TRIMs.
Mr Jones
403. In DFID's memorandum to us on this inquiry
it states that the Government "... recognises that in particular
cases the TRIPs agreement will increase the cost of achieving
the international development goals and targets. In these cases
the Government will seek to collaborate with concerned parties
to find appropriate solutions". Can you give us any examples
of countries where the implementation of the TRIPs will, in your
opinion, result in an increase in the cost of achieving the international
development targets and of any solutions which have been proposed?
(Clare Short) I would just like to say a couple of
preliminary things and then bring in John on some of the detail.
I think these agreements on intellectual property and, indeed,
traded services, the NGO rhetoric is that these are all against
the interests of developing countries and oppressive for developing
countries. We do not agree with that. We think proper intellectual
property protection is part of creating the conditions which will
make your country attractive for inward investment and, indeed,
that people in your own country will in turn get protection for
their own invention. I just want to say that it is very much in
the broad rhetoric that this is totally oppressive and not helpful
to developing countries. I do not personally believe that to be
true. There is a stand alone organisation—what is it called—on
intellectual property. The countries join voluntarily to become
part of an international system of intellectual property that
has been growing up alongside but without any enforcement mechanism.
The change that was made in the Uruguay Round was to bring that
inside the World Trade Organisation. Can you answer the specifics
of the question on costs?
(Mr Roberts) Yes. There are short term costs and longer
term gains in the introduction of intellectual property protection.
The short term costs obviously relate to the fees which you have
to pay, the royalty fees or the licence fees which you have to
pay to the owner of intellectual property through the product
price. I suppose this cuts in most dramatically in the case of
pharmaceuticals. In the longer term there is gain from having
a business regime which is more orthodox and in which innovation,
research and development finds its reward. Companies which are
investors, who are in information intensive businesses, will be
willing to invest in order to take advantage.
(Clare Short) But you are not answering the question
on the specific costs. For example, in India there is a lot of
production that is imitation of other products, and in China indeed.
I have visited, I think it was, an EU-funded irrigation project
in China and they said "This is the Italian one, this is
the German one and we think this is the best. We have tried to
copy it but we could not get it right". There is that culture
of creating—without paying any respect for intellectual
property—imitation goods. Now that tends to be second rate
goods and so on and has all sorts of other consequences for an
economy, but if a country is going to sign up and start enforcing
people who are in those kinds of sectors they will obviously have
a problem. Has anyone estimated costs? There is some World Bank
estimate that we think is a guess of the costs of these adjustments.
(Mr Roberts) I cannot quote a figure but certainly
there have been attempts at working out the cost benefit ratio
of intellectual property protection.
(Clare Short) Can we look into that and come back
to you? I think that is best, John, rather than blabbing on here.
I have seen a figure somewhere and I think it is unreliable but
let us look at what there is and come back to you.[2]
Chairman
404. The Director-General of the WTO was due
to report back—and I think the suggestion is that he has
reported back within May, after the General Council meeting must
be the answer to what we are asking—on the extension of
a deadline for compliance with the WTO agreements on Intellectual
Property, Investment Related Measures and Custom Valuation Agreements
beyond December 1999. He is now proposing, as we understand, further
postponement of these deadlines. I think you, Secretary of State,
have said to us during the course of this discussion that in fact
you think the deadlines for implementation of these agreements
on Intellectual Property should be examined country by country
and in agreement made on implementation with each one of them.
Is that now going to be the policy or what is going to be the
future for implementing TRIPs, TRIMs and Custom Valuation Agreements?
(Clare Short) Actually developing countries were supposed
to implement TRIPs by January 2000 but in those sectors not previous
protected by patents developing countries have until 2005 to implement
TRIPs obligations. Least developed countries must implement obligations
by 2006. I think that is the existing timetable.
405. Right.
(Clare Short) I think the commitment on implementation,
because of course January 2000 has happened—
406. Yes, exactly.
(Clare Short)—is a commitment to revisit where
countries have not been able to comply. That would be country
by country and I think it will not be exemption. It will be "what
are your problems, how can we help you, do you need some technical
back-up and assistance, but you are expected to adhere to the
obligations you took on".
Ms King: Chairman, in case there is anyone
here who does not understand what we are talking about with TRIPs
and TRIMs, is there any chance of a definition?
Chairman
407. Yes. TRIPs is Trade-Related aspects of
Intellectual Property rights and TRIMs is Trade-Related Investment
Measures. I get them muddled up myself. The question, therefore,
is that these countries already in breach of the original deadline,
are they going to have a blanket roll-over, is that what Mike
Moore is proposing?
(Clare Short) My understanding is that it is going
to be case by case, country by country: "What is the problem?
What kind of assistance do you need? What kind of timescale is
reasonable?"
(Mr Roberts) That is right.
(Clare Short) I think that is the right way because
some countries will have much more capacity than others.
408. Yes.
(Clare Short) You have to make sure that it is not
countries trying not to comply, that it is a genuine process that
is fair to all.
409. Who will decide when this roll-over takes
place? Will it be the Director-General?
(Clare Short) I do not think it is a roll-over, I
do not think that is the right concept. It is country by country:
"How far have you got? What are your difficulties? What kind
of technical support do you need? What is achievable by what date?"
Then that country would have a new time frame.
410. So the Council is going to examine each
of these non-compliant states, ask those questions and then make
a new—
(Clare Short)—make a new plan with each one.
Some committee is being set up.
(Mr Roberts) The Special Implementation Review Mechanism
in the General Council will supervise this.
(Clare Short) Then it will come down to lots of technical
work. There is an open committee structure to supervise it. So
far, we are at the beginning of it, there is a general sense amongst
developing countries that is good.
411. Could we have a note as to which countries
have yet to comply and the new mechanism for taking the programme
forward you have just outlined, Secretary of State?
(Clare Short) I think we might not know the full answer
to your question. You can certainly have a note on everything
we know.[3]
Some of these dates have not come in yet.
412. Right.
(Clare Short) I suppose countries that are not complying,
people might not even know until there is some kind of conflict
over it. We can do the best we can.
413. Would you? Would you clarify our minds
as far as possible.
(Clare Short) Yes.
Mr Rowe
414. I am so ignorant about this that I am going
to ask a very simple question. Do all countries have patent offices
and places where you can register Intellectual Property or do
they, in fact, go to some kind of regional office? Is there an
international office to which they have access? It seems to me
improbable that some of the countries which are emerging would
have the kind of patent office that can provide them with any
serious protection.
(Clare Short) Absolutely. It was agreed under Uruguay
that everyone should put in place Intellectual Property Protection,
I think to minimum international standards. There is this international
body—tell me the name again?
(Mr Roberts) World International Property Organisation.
(Clare Short) World Intellectual Property Organisation,
WIPO, that is it. It has grown up voluntarily. The countries have
joined in order to agree some sort of minimum standards and to
get some technical advice about what minimum standards are. That
was all growing up anyway. A lot of countries want to comply to
be a good place for investment. There was a process at work which
made more and more countries want to come into it. What was agreed
under the Uruguay Round was that all countries as part of the
Round would agree to become part of it. I think there is not a
rigid formula, it is minimum provision for the protection of Intellectual
Property. As you say, lots of countries have got no idea how to
begin to go about it, especially some of the poor least developed
countries. They have never had any Intellectual Property law,
they have not got a patent office. No-one has ever thought about
doing this. They need some back-up and help.
415. If I lived in Rwanda, or somewhere like
that, and had a brilliant idea for a bicycle to go on water or
something like that, presumably if I register that with whatever
Rwanda's office is, there must be a huge risk that somebody in
this country or America or somewhere will invent a very similar
thing and the protection granted by the Rwandan Patent Office
will be regarded as faulty?
(Clare Short) My understanding is you have to register
country by country. The fact you have registered in the UK does
not protect you in Rwanda or the US.
Chairman
416. That is right.
(Clare Short) All companies have to register in every
country so it is quite a business.
417. It is a huge cost.
(Clare Short) Yes. Of course lots of rural people
who are inventing tools and things will just get on with it. It
is when you are starting to take things to market and fearing
that somebody is going to rip you off and copy your invention,
it is going to be a higher stage up the market where anyone is
going to bother to register. Of course then intellectual property
rights do become exhausted they are not permanent. They are meant
to reward the inventor and then be exhausted.
Chairman: Yes. I am going to ask Tess
Kingham to ask questions on Trade-Related Investment Measures
and their agreements.
Tess Kingham
418. Yes, from TRIPs to TRIMs, Trade-Related
Investment Measures. I am not going to give a two sentence definition
of that, I am afraid. Do you think countries like South Africa
should be allowed to have laws which require foreign investors
to employ a certain proportion of their workforce from a particular
ethnic or other group or to purchase a certain proportion of raw
materials locally?
(Clare Short) The Trade-Related Investment Measures,
they do exclude—or do they—commitments on a certain
proportion of local sourcing. They do bite on that. They do not
bite on lots of financial incentives.
419. It is more about that local content, how
much of that local content can be used?
(Clare Short) Apparently in the world system it is
the chemical and automotive sectors that do most of this and it
is in industrialised countries. The agreement was not intended
to bite on developing countries, it is bad practice in economies
like our's and most of the countries that are affected by the
chemicals and the automotive sector. If Alec Erwin brought this
up it would be a question for them to take back into the negotiations.
Some countries have rules that companies have to have a certain
proportion of local ownership if they are not affected currently
by TRIMs. The amount of local sourcing— Is that right?
(Mr Roberts) That is right. Of course, there are other
ways of going about it. Even in this country we encourage foreign
investors to source locally and they do.
2 See Evidence p. 169. Back
3
See Evidence p. 169 and p. 173. Back
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