GDAE Working Paper No. 09-01 Resources, Rules and International Political Economy
Although the rules of the WTO clearly empowered developing countries in this
regard, allowing them to secure the clarifying statement on the important issue of TRIPS
and health, one must be careful not to overstate the degree of empowerment. After all,
what, ultimately, developing countries accomplished was clarification and affirmation of
a set of already-existing rules that they only grudgingly accepted in the Uruguay Round.
It might very reasonably be suggested that genuine empowerment would allow actors to
secure new rules that are more in line with their preferences. Indeed, many developing
countries may wish to substantially revise - or even abolish - TRIPS, but doing so is
clearly beyond their means.
The limits to developing countries’ power and influence are illustrated by looking,
briefly, at the aftermath of the Doha Declaration. TRIPS permits countries to issue
compulsory licenses, a right reaffirmed by the Doha Declaration, but the remaining
uncertainty regarded the export of drugs produced under CL. After all, few countries can
produce their own pharmaceuticals, so a compulsory license, to be useful, must permit
that drugs can be exported from the countries that do have such manufacturing capacity.
Here TRIPS did indeed complicate matters, by requiring that compulsory licenses must
be “predominantly” for domestic use (Article 31.f). The Doha Declaration recognized
this unresolved business and committed members to finding a solution, and for more than
four years addressing this issue consumed the TRIPS Council. Space limitations preclude
detailed discussion of these negotiations,27 though what is clear is that developing
countries were much less successful here and, ultimately, had to settle for what many
observers regard as an unsatisfactory resolution. The reason why is that, in contrast to the
issues addressed in 2000-2001, which entailed clarifying TRIPS, to resolve the CL-for-
export issue to their liking developing countries would have had to secure substantive
reforms of TRIPS.28
Politics of Investment
Managing inward DFI has historically been a key point of economic development
policy. States regulate international investors, quite simply, because what is best for
individual enterprises may not be best for all of society. Even states that are largely
neoliberal in orientation, i.e. guided by the principle that private actors’ autonomous
decisions regarding resource allocation are optimal, are likely to regulate international
firms, because local subsidiaries of transnational firms do not make resource allocation
decisions “autonomously” but rather in coordination with (if not under control of) their
parent firms.
As in the case of IP, the “North-South” conflict over international investment
regulation (IIR) is rooted in economic structure. Most DFI (roughly eighty percent)
occurs among advanced, industrial economies. Developed countries, thus, approach the
area of IIR as capital exporters and capital importers: Canada and France regulate foreign
investors, for example, and Canadian and French firms are subject to regulations in other
countries. Developing countries, in contrast, approach the area of IIR as capital
importers: Argentina and Senegal regulate foreign investors but few Argentinean and
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