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					The WTO and the TRIPS Agreement


• The WTO
  – Main features (functions, principles, dispute settlement)
  – Developing countries & least developed countries

  –   Objectives
  –   Principles
  –   Transition periods and special & differential treatment
  –   Enforcement
  –   TRIPS Council, TRIPS criticism
  –   Copyright
Why Liberalize Trade?

• More effective use of resources in the economy
• Lower prices through import competition

• Access to new technology and ideas
• Economies of scale

• Political gains (dialogue, interdependence)
The General Agreement on Tariffs and
Trade (GATT)

• Entered into force 1948 in 23 countries, of which
  12 were developing countries
• A response to pre-war trade situation
• Only regulates trade in goods
• Developed countries’ tariff barriers for industrial
  goods decreased from on average 40% to ca
• Focus shifted to so called non-tariff trade
  barriers, incl. IPRs
Rounds of Trade Negotiations GATT-

• 1960-61 Dillon Round
• 1964-67 Kennedy Round
• 1973-79 Tokyo Round

• 1986-94 Uruguay Round     WTO

• 2001- Doha Round
The Uruguay Round 1986-1994

 New issues – services, IPRs, agriculture

Establishment of the World Trade Organization

 The WTO-package:
The World Trade Organization

• Established in January 1995

• 625 staff members at the WTO Secretariat

• Director-General Pascal Lamy

• Decision-making by consensus (WTO Members)

• 153 Members
Objectives of the WTO

• Preamble of the WTO Agreement stipulates
   – to contribute to raising living standards and ensure
     full employment while allowing for the optimal use
     of resources in accordance with the principles of
     sustainable development.

• Trade is not a goal in itself but an essential
  means of economic development.
Functions of the WTO

• Forum for trade negotiations
• Administer WTO trade agreements

• Monitor national trade policies
• Cooperate with other international organizations

• Technical assistance

• Handle trade disputes
The Dispute Settlement System

• Makes the trading system more predictable
• New features in WTO: appellate review, detailed
  procedures with timetables:
    1) Consultations   max 60 days (most settled here)
    2) Panel                   total: 1 year
    3) Appeal          total: 1 year 3 months

• The US - most active Member (EU 2nd most
• First and only dispute with an LDC as a principal
  party: Bangladesh vs. India 2004
WTO Principles

International trade should be:

• Freer (-progressive liberalization)

• Predictable
  – Binding commitments
  – Transparency through e.g. Trade Policy

• Most Favoured Nation Treatment
  – Give all members countries equally good treatment

• National Treatment
  – Treat foreign products equally good as domestic

… exceptions…
 - Regional trade agreements (RTAs)
 - Special & differential treatment for developing countries
The WTO and Developing
• > 2/3 of WTO Members are DCs or LDCs

• Special & differential treatment in all

• Current round of negotiations: the Doha
  Development Round (launched in Nov. 2001
  at Doha)
The WTO and the LDCs

• WTO work programme for LDCs (2002), e.g.
  encourages tariff and quota free market access
  for all LDC goods
• Technical assistance through the Integrated
  Framework for Trade-Related Technical
  Assistance to LDCs
• Doha Round: LDCs are expected to make new
  commitments only in trade faciliation
  (accompanied by assistance)
Why IPRs in a Trade Organization?

• Accomplished trade liberalization substantially
  increased trade in counterfeit goods
• Exporters lost profits when cheaper counterfeit
  goods circulated
• DCs preferred to deal with IPR conflicts
  multilaterally instead of unilaterally
• … in exchange for other trade concessions
  (textiles and clothing) and important TRIPS
    The TRIPS Agreement = Trade-
    Related Aspects of Intellectual Property
•    Minimum standards

•    Incorporates several WIPO treaties:
      – Paris Convention (1967) industrial property
      – Berne Convention (1971) literary and artistic works
      – Parts of the Rome Convention (1961) ”related rights” - perforormers, producers
        & broadcasting organisations
      – Washington Treaty on Intellectual Property in Respect of Integrated Circuits
        (IPIC – not in force)

•    TRIPS adds some provisions to the treaties and excludes some

•    Enforcement of IPRs

        - Copyright and related rights
        - Industrial property (related to innovation and distinctive signs)    ->
IPRs Covered by the TRIPS

•   Copyright and related rights
•   Trademarks
•   Geographical indications
•   Industrial design
•   Lay-out designs (topographies) of integrated circuits
•   Patents and the protection of new plant varieties
•   Undisclosed information / trade secrets (& test data )
TRIPS Objectives Article 7

 “The protection and enforcement of intellectual
 property rights should contribute to the
 promotion of technological innovation and to the
 transfer and dissemination of technology, to the
 mutual advantage of producers and users of
 technological knowledge and in a manner
 conducive to social and economic welfare,
 and to a balance of rights and obligations.”
 Basics of the TRIPS Agreement

• Non-discrimination principles (NT & MFN)
   – unlike GATT, they apply to persons/”nationals” (IPR holders)

• Exhaustion – freedom to chose exhaustion regime

• Minimum requirements for all IPRs

• Provisions on enforcement of IPRs
   – new feature compared to previous agreements

• Dispute settlement and trade policy reviews

• Special & differential treatment
Special & Differential Treatment

• Developed country Members must provide, on
  request and on mutually agreed terms and
  conditions, technical and financial
  cooperation in favour of DCs and LDCs (Article
• Developed country Members shall provide
  incentives for their companies to transfer
  technology to LDCs (Article 66.2)
TRIPS Transition Periods

• Developed countries 1996 (1 year)

• Developing countries
   – 5 years (1 January 2000)
   – Additional 5 years (1 January 2005) for product patents if not
     provided for certain products in 1995
• Least developed countries
   – 10 years originally (January 2005)
   – Extended to July 2013 in general and to January 2016 for
     patent protection for pharmaceutical products.
   – Further extension shall be accorded upon duly motivated request
     by an LDC Member.
TRIPS Flexibilities

Minimum standards give Members certain freedom
with respect to their national IPR regimes:

  – Definition of undefined concepts;
  – Freedom to provide for certain exceptions to
    substantive rights or to raise the protection level;
  – Enforcement;
  – Areas not covered by TRIPS (e.g. utility models,
    traditional knowledge).

The TRIPS Agreement does not require all
Members’ IPR protection regimes to be identical.

Members have freedom to determine the
appropriate method of implementing the provisions
of the agreement within their own legal system and

Governments must:
• Ensure that IPRs can be enforced under national
• Make available procedures that are fair and
  equitable, and not unnecessarily complicated,
  costly or lengthy;
• Ensure that administrative and judicial decisions
  can be reviewed;
Enforcement (cont.)

• Courts have certain authorities:
      • Obtaining evidence;
      • Ordering injunctions, damages other penalties, and
      • Provisional measures.

• Courts must have authority to order the disposal or
  destruction of counterfeit and pirated goods;

• IPR holders must be able to receive the assistance of
  customs authorities to prevent imports of counterfeit
  goods (border measures);

• Wilful trademark counterfeiting or copyright piracy on a
  commercial scale must be subject to criminal
The TRIPS Council

• Representatives from all WTO Members
• Monitoring function: Members review each other’s
• Consultations on any TRIPS issue
• Reviews and negotiates on specific subjects:
   – Negotiations on GIs
   – Review of Article 27.3(b) on patentability of micro-organisms and
     plant varieties
   – Discussion of relation between the TRIPS and the Convention
     on Biological Diversity (CBD) and protection of traditional
     knowledge (added in Doha Declaration)
• Review of the TRIPS Agreement
TRIPS Disputes

• 25 TRIPS disputes have been initiated
• 10 cases have led to reports
• Focus on GIs and patents & mostly Nort-North-
  disputes this far
• Some famous disputes
  – US - Copyright (US- EU, panel employed the ”3-step
  – Canada – Pharmaceuticals (Canada-EU, confirmed
    inter alia the TRIPS compatibility of the ”Bolar
Criticism of the TRIPS

1. Criticism that TRIPS does not go far enough, e.g.
   – Does not include the Internet treaties
   – Does not require full data exclusivity
   – Does not require governments to provide procedures to prevent
     export of counterfeit or pirated goods

   These issues are often addressed in bilateral trade
   agreements ( - TRIPS ”Plus”)
2. Criticism that TRIPS goes too far, e.g.
   – Too much of ”one size fits all” approach
   – Entails high costs for implementation
   – Lenient provisions on transfer of technology
Copyright in the TRIPS

• Incorporation of substantive provisions of Berne
  Convention (1971, Articles 1-21)
  – Exception for authors’ moral rights (Berne Article

• Protectable subject-matter encompasses
  expressions, not ideas (- like Berne)
• Minimum term of protection 50 years post
• Right to create exceptions and limitations as in
  Berne (the ”3-step test”)
TRIPS Additions to Berne
• Computer programs shall be protected as literary works
• Compilations of data shall be protected as works if the
  selection or arrangement of the data constitutes an
  intellectual creation
• Authors shall have right to authorize or prohibit the
  commercial rental of ”at least”:
   – Computer programs
   – Films, if the rental leads to widespread copying

• If protection term is calculated on another basis than the
  life of a natural person, it must be at least 50 years from
Related Rights in the TRIPS

• Performers’ right to prevent unauthorized
  fixation, reproduction, wireless broadcasting and
  communication to the public of live
• Phonogram producers’ right to authorize or
  prohibit reproduction
• Broadcasting organisations’ right to prohibit
  unauthorized fixation, reproduction and wireless
  rebroadcasting of their fixations
• Term of protection: 50 years for performers and
  producers of phonograms, 20 years for
Current Issues

• Copyright is not much debated in the TRIPS
  Council, except in relation to enforcement, which
  is a very hot topic.
  – Dispute: China – Intellectual Property Rights

• The updates in the WIPO Internet Treaties
  (WCT, WPPT 1996) are not part of TRIPS
• 3 WTO disputes (all EU-US) on copyright (25 in
  total on TRIPS)
• Anti-Counterfeiting Trade Agreement (ACTA)
US — Section 110(5) Copyright Act
(DS160, 2000)

• Test of what constitutes acceptable exceptions to
  copyrights – 3-step test
• US exceptions to copyright allowed amplification of
  music broadcasts without copyright holders’
  authorization and without payment of royalties:
   – In small restaurants and shops if they only used ”homestyle
     equipment” and only for dramatic works
       • Panel: fulfilled the 3-step test
   – In restaurants and shops that did not exceed a certain square
     footage (”business exemption”)
       • Panel: did not fulfil the 3-step test
The 3-step test

Article 13 

Limitations and Exceptions
Members shall confine limitations or exceptions to
exclusive rights to certain special cases which do
not conflict with a normal exploitation of the work
and do not unreasonably prejudice the legitimate
interests of the right holder.
US — Section 110(5) Copyright Act
                           Homestyle               Business exemption
i) Certain special         Only 13-18 % of         70% of restaurants
cases                      relevant                and 45% of retailers
                           establishments          covered
ii) Do not conflict with   Little or no direct     Deprives right holders
normal exploitation of     licensing of dramatic   of usual compensation
the work                   musical works to        when their works were
                           these establishments    broadcasted
iii) Do not                Narrow scope + no       ... Therefore,
unreasonably               evidence that right     legitimate interests
prejudice the              holders would           were harmed
legitimate interests of    exercise their
the right holder           licensing right if
US Implementation of the Ruling

• The US expressed intention to implement panel’s
  recommendation but has not yet done so
• In 2001, an arbitrator ruled that EC benefits nullified
  or impaired by business exemption amounted to
  1,219,900 Euro per year
• In 2002, the EU asked authorization to suspend
  TRIPS concessions to US nationals (retailation)
  through a special border fee
• In 2003, the parties notified a temporary agreement
  – the US pays lump sum to EU performing rights
                  THANK YOU

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