GDAE Working Paper No. 09-01 Resources, Rules and International Political Economy
accomplish the first objective by providing actors with the means - legally enforceable
rights of exclusion - to appropriate the returns to their investments in innovation and
knowledge production. The catch, however, is that the instrument to achieve the first
objective can undermine fulfillment of the second objective, because IPRs - by their very
nature - restrict use by converting knowledge into privately owned property where
owners set the conditions over use.14 In sum, IP regimes have two desirable - but
unavoidably conflicting - objectives, that knowledge be generated and that knowledge be
used.
Structural characteristics that distinguish developed and developing countries
generate different perspectives on how to prioritize the quests for generating and using
knowledge, thus leading to conflict over international IP rules. Wealthier countries, with
higher levels of innovative capacity and where more research and development tends to
produce new knowledge, have tended to opt for setting incentives to encourage and
reward knowledge generation. Poorer countries, in contrast, with lower innovative
capacities and where most new knowledge is that which is imported from abroad, have
tended to opt for setting incentives to encourage dissemination and use of new
knowledge. Thus, wealthier countries have historically offered stronger IPRs than poorer
countries.
Prior to the 1980s, the international rules on IP permitted the sort of diversity
described in the previous paragraph. In the 1980s and 1990s, however, the developed
countries, pushed for a less flexible set of international regulations regarding national IP
policies. Importantly, these more stringent regulations would be embedded in the
international trade system, thus making developing countries’ ability to export goods to
developed countries’ markets conditional on their treatment of IP.15
The hallmark of the effort to link higher standards of IP to trade was the inclusion
of the TRIPS agreement in the Uruguay Round. Many middle-income developing
countries were opposed to the integration of IPRs into the GATT and attempted to block
negotiations on IP. Yet IP was a high priority for the developed countries (especially the
US and European Community) in the Uruguay Round, and developing countries were
unable to keep IP off the negotiating agenda.
In the course of negotiating the TRIPS Agreement, developing countries were
able to exploit differences between the US, Europe, and Japan, and thereby prevent
inclusion of some of the strictest and most egregious restrictions on national policy, but
few could disagree with the conclusion that the developed countries prevailed in getting
most of what they wanted out of the negotiations.16 TRIPS dramatically alters the
international environment for IP policy, precluding - or at least complicating - the use of
many instruments that have historically been used to manage knowledge and technology.
With regard to patents, for example, the agreement requires countries to grant patents in
areas that many countries previously treated as ineligible for patent protection (e.g.
pharmaceuticals and chemicals) and places new restrictions on states’ ability to issue
compulsory licenses.