Ladies and gentlemen, thank you very much, first of all, to the organizers of this conference
for inviting me to be the keynote lecturer to this conference.
I have to say, when I got the invitation, this was really a challenge.
The reason for this is that I consider myself a real amateur in the field of law and economics.
And with regard to this particular status, I also would like to tell you kind of an anecdote,
because I am proud to have acquired my status as an amateur in law and economics back at
the University of Berkeley when I was an LLM student.
And one of my teachers was Bob Kutter.
And I'm very glad to meet him here again after many, many years.
And we had a very, very particular relationship.
When I attended his class, I came up to him and asked him whether I would have the privilege
not to take part in the written example to write a paper, because at that time, everybody
talked about the Maastricht Treaty, which had just been adopted in Europe at the beginning
of the 90s.
And he said, yes, go ahead.
And I wrote a paper on the subsidiary principle.
And maybe he liked it a bit, because later on, we started to work on a joint paper, namely
on the redistribution of power between the European institutions under the new co-decision
procedure.
And he asked me to write the first draft.
So I came up with a very nice model, I thought.
And he was horrified.
He said, it's methodologically absolutely flawed.
And it took him quite a while to explain to me what the flaws were.
And I understood the flaws.
But I still said, you know, the results of our two papers are just the same.
And I tell you as a student, I immediately understand my model, but I don't understand
yours.
And I needed a lot of time to explain to me why your model is better.
And then what we did was we finally published two versions.
His model went to the International Review of Law and Economics.
And maybe he still uses the second model or my model for teaching his students.
I don't know.
But maybe he used it for a while.
And I'm still in the same amateur.
Things haven't changed.
What I'm still doing is I try hard to explain the policy issues to the economists.
And I have to tell you, in Munich, we have a very intensive cooperation with the economists
at the University of Munich in the framework of a co-PhD program to make sure that they
don't simply stick on their methodologies and their models and get too far away from
reality.
But I'm fully aware that regarding the models, I'm still an amateur.
So please accept my apologies for presenting a topic which is very much related to economics.
But I'm certainly not able to give more methodological insights in capturing the problems.
So first I need my slides.
Sorry.
Just a moment.
So the topic, oh, yeah, you can't see anything.
So that's not, I can see my slides.
It could be important to have the slides.
I'm sorry.
Maybe I made something wrong.
This is what usually happens if you use PowerPoint slides.
You lose time.
Now it's coming.
Thank you.
The topic is very much up to date.
It was just a few days ago, on the 6th of September 2011, that the so-called Washington
Declaration on Intellectual Property and the Public Interest was published.
I don't know whether you have heard of this declaration.
This declaration was prepared by the Global Congress on Intellectual Property and the
Public Interest, which was held in Washington, D.C., and which was organized by a certain
number of very renowned U.S. universities, the International Center for Trade and Sustainable
Development in Geneva, which assembles a group of mostly retired former representatives
of international organizations, and also Google, which is not necessarily well-known for supporting
IP, I admit.
Did you change to the full picture?
Oh, sorry.
Of course.
Sure.
Yeah.
Nope.
Go to the bottom right.
No.
No, it works better.
Sorry.
Thank you.
So also in this regard, I'm a term.
I apologize.
This paper is very balanced, politically speaking.
However, the conclusions are still very clear.
This declaration asks for a re-examination and basically a standstill of IP law and extending
IP law, and for a better balancing of IP law and the protection of IP law with the public
interest within all institutional settings, be it on the national level, maybe the European
level, and of course also the international level.
The focus of my paper, of course, will be on the international level.
And the international level is probably the most important one, because once we have more
protection on the international level, it's very difficult to repeal such protection.
It's more difficult to repeal it than on the domestic level, and it's very clear.
I would also like to give you a recital from the preamble, which also makes clear where
we are right now.
And I have to say that many IP lawyers who usually would not be suspected to be against
IP law would see it just the same way, including me, I have to say.
The preamble says, the last 25 years have seen an unprecedented expansion of the concentrated
legal authority exercised by intellectual property rights holders.
This expansion has been driven by governments in the developed world and by international
organizations, so this is where international law comes into play, that have adopted the
maximization of intellectual property control as a fundamental policy tenant.
When we look at the historical development concerning international IP law and trade,
and that's also clear, that nowadays when we look at the treaties in which we actually
have IP provisions, all those treaties nowadays are trade related.
We have to go back to the general agreement on Paris and trade of 1947, which at that
time has been the cornerstone of trade liberalization, and only a very few provisions related to IP,
mostly from the perspective of IP as a barrier to trade, because IP rights, of course, and
still are domestic rights and can create barriers to entry to national markets.
In 1967, the World Intellectual Property Organization, WIPO, was established in Geneva,
which is only dealing with IP protection, and WIPO took over the administration of much
older conventions, especially the Berne and Paris Convention for the protection of
intellectual property and industrial property, including patents and trademarks.
Later on, things changed dramatically.
In WIPO, the emergence of many developing countries after the independence of former
colonies actually blocked the development of IP protection, and then it was basically
the US, but also the Europeans, who, during the negotiations of the Europe round within
the framework of GATT, then put IP on the trade agenda.
Finally, in 1994, when the World Trade Organization Agreement, the Marrakesh Agreement, was
concluded, this agreement also created a new agreement, the agreement on trade-related aspects
of intellectual property rights, the TRIPSIS agreement, as the package of the new World Trade
Organization, that actually promoted higher standards of protection, that then had to be
accepted by all World Trade Organization members.
During the negotiations, those standards were promoted as substantive standards, already
indicating that those standards should now be considered to be more adequate standards.
However, some of the nations, especially the United States, were not really happy about
the achievements, and they were convinced that the standards were, in some fields, not high enough.
So immediately, the US, especially, reconsidered its policy and asked itself, what are possibilities
to promote TRIPS plus standards?
And this is why then, beginning in 2002, especially in the United States, we saw a development
towards bilateralism, free trade agreements that then would include so-called TRIPS plus standards.
And many other trading nations, including the EU, have followed suit.
They are, nowadays, also concluding many of those free trade agreements, bilateral agreements,
with individual partner countries, especially in the developing world, that include such TRIPS plus standards.
In my presentation, I don't want to bother you so much about legal issues.
I really want to concentrate on policy issues.
The most legal part, maybe, is that I will try to describe the changing concept of trade-relatedness,
beginning in 1994 under the TRIPS agreement, and reconsider that concept and ask ourselves,
where are we now with this concept of trade-relatedness?
In doing this, I would also like to assess and evaluate this trend towards IP bilateralism,
and, as the Washington Declaration calls it, IP maximization from an economic perspective.
When we look at the concept of trade-related aspects of intellectual property rights,
we can probably distinguish three different dimensions.
Of course, the concept, first of all, is a legal one, because we find it in a legal document,
especially the TRIPS agreement.
The second dimension is an economic one.
The question is, is there an economic justification for creating a link between trade and higher IP standards?
And thirdly, it has a very strong political dimension,
because it's also clear that IP became an issue within the WTO negotiations,
because it was easier to achieve a deal by bargaining trade with IP in the framework of a trade agreement.
Whereas in WIPO, where you only discuss maybe higher standards of IP,
you will always have a group of countries that would not agree.
And this, of course, can be analyzed at different stages of the development.
What is the concept of trade-related aspects of intellectual property?
What was the concept in 1994?
When we look at the legal dimension, there were basically two issues.
The first issue related to international law.
Of course, the question was whether GATT actually had a mandate to negotiate an agreement on IP,
because there was WIPO, and WIPO was the international organization competent for intellectual property.
I think this debate has completely disappeared, and for good,
because as long as you have countries that want to agree on an agreement in whatever forum,
international law would not prevent them from doing it,
and it is for other conventions whether they actually allow this,
and whether a new agreement would be considered a violation of previous conventions.
And as the previous conventions allowed member countries to agree on higher standard in whatever forum,
nothing argued against concluding tricks.
In Europe, we had another legal debate,
namely especially whether the European Union had an exclusive mandate to negotiate trips and to conclude trips.
This led to an opinion by the European Court of Justice,
which actually held that the European Union cannot conclude the agreement alone.
It had to be a mixed agreement.
It also had to be concluded by the member states.
Also here I mentioned that this has now changed under the Lisbon Treaty.
Under the Lisbon Treaty, the European Union now has exclusive competence for concluding agreements
on the so-called commercial aspects of intellectual property.
What about the economic justification?
There was a big problem already in the late 1980s and of course in the 1990s,
and it's still existing, and that's the trade deficit in some of the major trading nations,
especially the United States.
The problem at that time was that of course in countries like the United States,
we're able to control imports from other countries and to stop infringing products.
That's what they are still doing.
And everybody agrees that border control and the control of parrot goods and counterfeit goods
is certainly a trade-related aspect.
But this does not solve the overall global problem
because a country like the United States would also want to export goods that are IP protected,
but on international markets, the United States and also Europe had to compete with products
that were manufactured in countries with very low standards,
maybe in countries where no protection was available.
So there was a very strong incentive of raising IP protection worldwide.
And it's also good to remember that at that time everybody talked about the Asian tigers,
like Taiwan, South Korea, Singapore.
It was not about China and it was not about India.
So also the countries we are talking about have changed nowadays.
And the second aspect certainly was that of course there was the problem of the balance of payments.
And if production takes place in other countries, you still might have a trade deficit.
But if the manufacturers there need a license
and they pay license fees to right holders in the United States and the European Union,
this would also sustain a more balanced payment balance for those countries.
Strategically, this explains the so-called package approach.
So all countries that actually wanted to join the WTO then had to accept such higher standards,
the so-called TRIPS standards.
And on the other hand, what we can see is that there were no obligations
and there are no obligations within TRIPS that would balance the interests of IP right holders.
If you look at a domestic IP law, domestic IP laws are always based on the balance of interests,
also of the consumers, the users of subject matter of protection.
And those interests are maybe taken into account by certain provisions of the TRIPS agreement,
but there are no obligations with regard to introducing a ceiling,
introducing ceilings regarding the level of protection.
Here I would now want to explain why we had this trend towards bilateralism.
First of all, there are some legal reasons why this came about.
First of all, if you look at TRIPS, Article 1, paragraph 1 says that WTO members are free to introduce higher standards.
So those standards we have in TRIPS are not maximum standards.
So expansionism is possible.
This can be done autonomously, but it can also be negotiated bilaterally.
And this is what has happened then.
Under the gut agreement, there is an exemption from the most favored nation clause regarding trading goods.
This means that member states of the WTO are free to negotiate bilateral free trade agreements,
which actually create privileges for the partner countries.
So, for example, if the U.S. enters into a free trade agreement with Peru,
Peru gets lower tariffs for imports to the United States.
Countries that would reject a free trade agreement with the U.S. don't get that privilege.
So this is a particular exemption from the system of the GATT.
In contrast, Article 4 of the TRIPS agreement also has a most favored nation clause,
which means if Country A grants a particular advantage to Country B in the field of IP,
this advantage needs to be given to all other WTO members.
However, in this regard, there is no exception, unlike the GATT system.
Which means if Peru enters into an agreement with the United States on free trade
and accepts higher IP standard, it gets a privilege in the United States.
Other countries cannot claim the same lower tariffs for the United States,
but Peru now is obliged to grant the same level of protection in the field of IP to all other WTO members.
That's a very important issue, which basically means that as of that moment,
the Europeans don't even need to negotiate such an agreement,
because the European nationals immediately get the same kind of protection as the U.S. Americans in Peru.
This policy of bilateralism has emerged in the United States in 2002
when the United States adopted the so-called Bipartisan Trade Promotion Authority Act.
This act explicitly provides for a rule that the United States negotiate free trade agreements
with IP provisions that are identical to domestic U.S. law.
You may call this legal imperialism, which is done by many other countries nowadays as well.
And I have just heard a representative from the Indian Trade Ministry who said,
we are doing it the same way.
We look in all those, and if we don't have TRIPS plus standards, we will not negotiate TRIPS plus standards.
So this kind of attitude has now spread everywhere, whether it's an emerging economy or a developed economy.
But this has launched a number of free trade agreements of the United States,
which has attracted a lot of criticism and has even affected elections in many of the partner countries,
which actually negotiated such agreements.
Other nations have followed suit, like the European Union, Japan, and the after countries.
The after countries are quite interesting, because there is one country, namely Switzerland,
which has a very strong interest in promoting TRIPS plus standards, especially for pharmaceutical products.
And I would like to mention another very important development or another set of legal sources.
And these are the WTO accession agreements with countries that later joined the WTO.
And in such agreements, the accession countries accept very broad TRIPS plus standards.
This has been the case, for example, for China, but it has also been the case of the poorest countries of the world, like Cambodia,
and it is now under negotiation with Russia.
So these are also partially very, very important countries, and we don't have it in bilateral free trade agreements.
And that's quite remarkable, because you can see that it is not sufficient to simply accept TRIPS when you want to join the WTO.
As a new member country, you have to accept more, higher standards.
What is the geography and what are the elements?
I will be very brief and short on those points.
If we look at the bilateral agreements of the US, we can see that there is a particular focus on Latin America,
and there is also a particular focus on Arab countries.
But there are also other countries, like Singapore and Australia.
The reason for this probably is that the United States would try to negotiate agreements,
especially with countries that at a given time have a government which is more America friendly, I would say,
and provides a higher likelihood to actually enter into such an agreement.
Regarding the European Union, the picture is much more diverse.
The European Union has tried to include IP protection and TRIPS plus standards,
especially its new agreements, the so-called economic partnership agreements,
with the former colony countries of the Caribbean, African, and Pacific region.
Such provisions are in the first agreement with the Caribbean countries,
the so-called easy-carifforum economic partnership agreements.
And it seems that nowadays the European Union is moving away from having IP provisions
in the other economic partnership agreements, especially with the African countries,
because the African countries tell the Europeans we don't want to have it,
and it seems that Europe accepts it.
But there has been a very important free-trade agreement between the European Union and Korea,
which has just entered into force, which has very broad IP provisions,
and there are important agreements under negotiation with Peru and Colombia.
This is one free-trade agreement, and another free-trade agreement is negotiated with the Central American countries.
For Japan, this policy has also become extremely important,
because Japan is not part of any other regional integration system,
and therefore Japan relies heavily on bilateral trade agreements.
And Japan has a particular focus on Asian countries, which is also very clear.
There are some countries that heavily resist the move towards bilateral agreements,
and this is especially true for Brazil, Argentina, and India.
You may have heard that India is currently negotiating a free-trade agreement with the European Union.
The European Union is pushing for IP standards, and India is saying,
no, we don't want to have IP standards,
and we will see whether India can actually be strong enough to resist.
And I recently heard some rumors also from the European Union,
the Commission, that this might be a successful strategy.
So especially important emerging economies, the BRIC countries,
might have a good chance to resist this trend towards bilateralism.
Of course, we would also like to know what are we talking about when we talk about trips plus standards.
On this slide, I'll give you a few examples.
I would like to mention the most important one.
It's politically the most critical one,
and this is very briefly described as data exclusivity,
but it's very difficult to understand what it is really about.
If you are a pharmaceutical company, you do not only hold patents,
you also need marketing allowance for selling your drugs based on safety requirements.
If you want to have marketing allowance, let's say in the United States and Europe,
for a new molecule, for a new drug, you have to present data on clinical testing.
And producing such data is the most important investment in the development of drugs.
When you hear about US$1 billion going in the development of one drug,
most of that money goes into clinical testing.
The law in the United States and Europe says that you get data exclusivity for a number of years.
What does this mean?
This means that a generic company cannot rely on that data for getting marketing allowance for the same substance
for this particular number of years.
In the US, I think it's about five years,
and the free trade agreements of the US have a term of five years.
In Europe, it can go up to ten years.
Only then, a generic company can go to the marketing authority
and submit in the United States it's called an ANDA,
an application based on bio-equivalence, arguing this is basically the same substance.
I don't have to do the same testing for proving it's safe.
And then you automatically get the marketing allowance.
This has now been introduced in many agreements,
like for example the US agreement with the Central American countries,
which now oblige those countries to have such data exclusivity,
which creates a very important impact on access to medicine.
And it makes it much more costful to have access to medicine,
and this explains why there is so much debate, especially on this particular feature.
Another feature, which is kind of a different nature,
is the fight between the United States and Europe for the soul of the world,
regarding geographical indications, like the denominations we have for wine.
The US Americans would like to protect it as trademarks for anybody who applies for trademarks,
whereas the Europeans want to protect champagne for people from the champagne region.
And we even nowadays have countries that entered into agreements with the US
and the Europeans, especially the Dominican Republic, with conflicting obligations.
So there is really a race who is first in this regard.
And enforcement is another very important aspect which will be mentioned a little bit later on.
The most recent development is the trend towards a so-called country club approach.
This now seems to be a multilateral approach, but basically it's still a bilateral approach.
You may have heard of ACTA.
A big debate is currently going on on whether the European Union should join ACTA or not,
and the same is going on in the United States, but basically it's an EU and US initiative.
What is ACTA all about?
In the ACTA negotiations, some like-minded nations joined and said,
we want to have higher levels of enforcement standards regarding IP
without those countries who actually are the major infringers of IP.
So it doesn't really make sense to have such an agreement among like-minded nations.
You may ask, where is the obligation?
Those countries would have such standards based on autonomous decision.
The reason is that this agreement is meant to be a reference point.
So once those countries then enter into bilateral agreements,
they then only have to refer to ACTA and oblige the partner countries to accept the standards of ACTA.
So it's basically preparing another extension of IP protection.
And here comes a very important legal point or a legal aspect here in Europe.
After the Lisbon Treaty, the parliament has a veto right on such agreements.
So the parliament, the European parliament, can now say no.
And higher IP standards has become a very critical point,
especially when you think about, oh, dear.
I haven't done anything.
That's probably the BIMA.
The lady is coming.
So this is now very much under discussion.
This ACTA agreement has created a lot of resistance,
especially from civil rights groups in the field of copyright in particular,
because ACTA would also raise the enforcement mechanisms
regarding the use of copyrights on the internet
and maybe create obligations of internet service providers.
And there is a very important impact also on data protection, personal data.
And this is why these negotiations have been kept or have been developed in secret for a long time.
And the government needed to be pushed to make it more transparent.
And it seems after that resistance, the level of protection has been brought down quite considerably.
But there are still quite a number of critical voices on ACTA.
There is a most recent debate now whether the emerging countries could do the same
and also apply in the so-called country club.
So the idea now is that maybe the emerging countries who do not want to have higher standards of protection
would join, conclude an agreement, but actually introduce ceilings
as a defense to bilateral trade agreements.
So you can see that basically the troops are now organized.
And there is now a big debate within BIPO
whether this is an acceptable approach of the emerging countries.
And the emerging countries are arguing and accusing the US Americans who don't like it
and the Europeans who don't like it either.
Well, you are doing the same.
So the same rules apply to everybody.
So maybe ACTA has not created a very good example.
Okay. Does it work better now?
Yeah.
So maybe there is some interference or two.
Now I would like to come to the second part of my lecture,
namely the economic considerations.
Here I would like to allude to different fields of economics,
the economics of intellectual property, of international trade,
the economics of competition, development economics,
and maybe most importantly, institutional economics.
Let's start with the economics of intellectual property.
The most important theories that are usually cited in the field
are public goods theory and, of course, property rights theory.
With regard to public goods, economics explains us
that without exclusive protection of the subject matter,
of protection of IP, we have underproduction of such subject matter,
and therefore we need exclusive rights.
The question, however, is whether on the international level
we also need similar protection in all countries
in order to create additional incentives.
One might argue if we have patent protection in the major countries
where the firms earn enough to cover their investment
in research and development,
then the public goods argument has already been addressed,
and therefore from an economic perspective,
we don't need additional protection in other countries.
That's a first consideration that we can make.
The public goods theory does not explain the breadth of protection,
the scope of protection.
And in this regard, the property rights theory goes a step further
and explains intellectual property as a trade-off.
Intellectual property produces efficiency effects,
but it also produces costs because it makes access
and the use of the subject matter of protection
more expensive and more difficult.
IP never comes without costs,
and basically we have to balance the pro-innovation effects
of intellectual property with the costs.
And therefore from an economic perspective,
a trend only towards extension doesn't make sense.
We need our balancing principles within intellectual property protection,
also from an economic perspective.
Efficiency, however, can be assessed nationally, domestically.
I'm really sorry, but I can also do it without the slides now.
I think that's clear enough.
It's good for a reminder for me.
The previous slides were more important.
I'm sorry.
I'm not doing anything except to expect speaking.
So efficiency can be assessed domestically and internationally.
The domestic standard has been fixed by national parliaments,
maybe based on such a trade-off.
And maybe the trade-off, domestically, is an adequate one.
The question then is whether we should also export that standard on a global level,
whether also all other countries should apply the same trade-off.
And here I have to warn you why the costs in developing countries
and emerging economies might be much higher than in other countries.
And the benefits of IP protection might be much lower.
So by exporting the same standard, we might not reach the same trade-off.
We might reach overprotection.
And these are purely theoretical arguments, nothing more.
And I know it's very basic, and you will know much more about it methodologically
and maybe I gave you some incentives to do future work in this regard.
With regard to economics of international trade,
of course, here we all think about Ricardo
and the welfare-enhancing effect of international trade.
This idea has been accepted as the economic foundation of the gut system.
Legally, this liberalization of trade is implemented within the gut system,
the agreement on trade and goods, by the principle of mutual concessions,
which has then actually been accepted as the overall principle of the WTO system.
This means that when nations negotiate trade agreements,
they all have to make concessions.
And by making such concessions, everybody at the end will benefit
and we will have more liberalization.
In this framework, negotiating framework, now IP is introduced.
And we have this particular bargaining of IP with trade.
And the issue here is, is it so simple
to actually assess the pros and cons of IP?
And especially if you enter into negotiations with smaller economies
and with people who are not well trained.
Ask yourself, what is the bargaining power of the United States and Bahrain
when they negotiate an agreement?
What's the bargaining power between the European Union
and the very small Caribbean countries regarding the understanding
and the implications of IP?
That's a very difficult task.
When the US concluded the agreement with Australia,
everybody said when the Australians know about IP.
And they agreed.
So it can't be so bad after all.
I checked it on the internet and tried to find out about the debates
in the Australian parliament.
At the very end, even diplomats resigned.
They didn't want to have the agreement.
The Prime Minister went into parliament and said,
you have to accept it if you don't accept it.
Everybody will consider us anti-American and the parliament accept it.
So that's already a big issue.
There might be another more theoretical concern.
If a country gets free trade, it's an immediate benefit.
As of the entry into force, this country benefits from lower tariffs.
At the same time, the same country makes concessions regarding IP.
But those concessions do not necessarily materialize immediately.
So maybe now it becomes easier to grant patents.
But still, there aren't many patents.
Only now firms will come and apply for patents.
I'll give you an example.
I recently talked to Sandoz, which is one of the big generic companies.
Do you know where they produce their generics?
Mostly in Europe.
It's Malta.
Malta has recently joined the EPO system, the European Patent Office.
So they have the same kind of protection.
But it only starts now.
Still, for 20 years, there are many pharmaceuticals that are protected
everywhere, as in the European Union under European patents.
But those patents are not yet protected in Malta and they will not be protected
because you can't apply now, it's not new anymore.
So it's too late for having patent protection in Malta.
So it only comes later.
And this also creates a problem.
Because politicians are more interested in immediate benefits
and are not so worried about the long-term effects of concessions.
But from a long-term perspective, it might become very, very dangerous.
And lastly, and that's maybe the most important concern,
the whole system has a distorted effect by this particular problem
of progressive bilateralism.
What do I mean by this?
If Peru enters into a free trade agreement with the United States
and it now negotiates a free trade agreement with the European Union,
they get trade benefits right now and a certain amount of trade benefits.
But this benefit will progressively be reduced
whenever another country enters into a similar agreement
with the United States and the European Union.
The benefit is defined in comparison to other trading nations.
So the benefits fall down over time regarding trade.
But the concessions of IP remain the same.
So actually the balance of the negotiation result changes over time
and the advantages of the countries that actually enter
or give IP concessions will be reduced over time.
Economics of competition.
There are maybe two dimensions.
First, competition among trading nations.
By having those bilateral agreements,
competitive pressure increases on countries that stay outside.
The more countries that actually get trade benefits and lower tariffs,
the more difficult it becomes for other countries to stay outside
because they have to compete internationally when they want to sell products,
let's say, in the United States or Europe.
And it seems that only larger trading countries
or emerging economies like Brazil and India can actually afford staying outside.
But for smaller it's very, very difficult.
Of course, the more important aspect is competition,
cross-border competition among firms.
Nowadays, we all agree or we should all agree
that there is no inherent conflict between IP and competition law.
Both fields of law are meant to promote innovation and competitive pressure.
The more IP protection we have, the more incentives for investment
in research and development we have.
But without competition, without competitive pressure,
a right holder will not continue to invest in research and development.
So both elements are needed.
Higher IP standards might have a positive effect in this regard
because if you have higher standards, especially in an emerging economy,
it is more likely that foreign right holders will actually invest in that countries.
And investment then will lead to transfer of technology
and those countries are interested in transfer of technology.
And this is actually the big debate
whether TRIPS is actually good for emerging economies
or bad for emerging economies.
It's a debate of belief, I guess.
And countries are certainly in different situations.
You cannot compare India with Bangladesh and so on.
But there are also negative effects.
Do we really need uniform standards of IP protection
and have a higher standards for having a level playing field
of international competition?
Here I would like to mention that although we have TRIPS,
we don't have international markets for IP products.
We still don't have an international obligation of international exhaustion.
So especially in the field of pharmaceuticals,
patent holders can for close national markets for imports from other countries.
Which also has a beneficial effect on poorer countries
because this principle enables pharmaceutical companies
to price pharmaceuticals at lower prices in poorer countries,
which also enhances access to medicine.
But we don't have an international playing field for IP related products
and this also applies to luxury goods, about clothes or perfume.
We don't have international exhaustion,
especially Europe in this regard is still a big fortress.
And another issue is whether the extension of protection
for already existing subject matter has a beneficial effect.
Because if something is already protected
and countries only advocate an extension of the term of protection,
but for example the United States is very much doing with regard to copyright,
then this does not create additional incentives for creating new cultural products.
And if you have more and more extension of protection,
it becomes more and more difficult for newcomers to enter the market
with new products which might also be protected by IP.
Some arguments, oh, time is running, some on the development economics.
Here I will be very brief.
We were able to see that IP protection can have a positive effect
with regard to transfer of technology,
but the question is if IP protection is really beneficial
for developing countries and emerging economies,
why don't we allow them to make an autonomous decision?
They should be able to assess the benefits
and introduce higher standards based on their own decision.
And the other question is whether we still need additional incentives for innovation
beyond trips. Isn't trips enough to create enough incentives for transfer of technology?
This question is almost never asked.
The most important argument regarding development
is certainly the situation in the poorest countries of the world
where the governments are not able to actually subsidize social systems
that facilitate access to essential products, especially food and drugs.
So whereas in the European Union and to a lesser extent in the United States,
you have social systems that allow the financing of essential drugs,
if you have the same kind of protection,
especially data exclusivity in developing countries,
it's the patient, him or herself, who has to pay the price.
And it might well be that people buy because of such kind of protection.
And this is what I mentioned before.
It enormously increases the costs of such higher standards,
of trips plus standards.
I mentioned the aspect that still the trading system has also the other effect
of helping developing countries by not having an obligation of international exhaustion,
but this only mitigates this particular negative effect.
The most important economic arguments, to my opinion, are institutional arguments.
And maybe we have to think much more in terms of public choice theory
regarding those bilateral agreements.
Why is this so?
Right holders are of course much better organized,
despite the Pirates' Party in Sweden and here in Germany,
are much better organized to push their economic interest,
whereas the public interests are very diffuse interests of the users and the consumers.
And there is, of course, a risk of transitioning on all different levels of government.
However, the risk is much higher on the international level.
Why?
The negotiating agenda is only set by the governments.
I recently heard from a representative of the trade director general of the European Union,
when I complained that the European Union actually wanted to have criminal sanctions
for patent infringement in Central America.
The representative said, what can we do?
One member state on the council said, we want to have criminal sanctions.
And the council said, yes, go for criminal sanctions, and now we have to negotiate.
One member state of the European Union and the agenda is set.
And it maybe suffices to convince one government and you have it on the agenda.
And it's very difficult to get rid of it.
The transparency issue, which was in transparency issue,
was a very big one, a serious one in the context of ACTA.
Diplomatic negotiations are not transparent.
They are mostly done in secret.
And we need a lot of public opposition in order to break those secrecy approaches up.
And last but not least, the lack of democratic control.
I mentioned that this issue has now been addressed under the Lisbon Treaty,
and I'm very, very happy that we now have a provision that requires approval of such agreements
by the European Parliament.
But don't forget, the parliament will be requested whether to accept and to enter into an agreement
with the Central American countries.
They cannot make an individual decision whether there should be a criminal sanction for patents or not.
Just to mention in brackets, the European Commission wanted to have criminal sanctions for patents,
and the parliament said no.
That's nonsense. Never have criminal sanctions for patents.
But we have it now in the negotiations with the Central American countries.
How should the parliament decide when the European Commission says,
well, we can't renegotiate the whole package.
And please, those countries have to rely on trade with the European Union.
And you will be responsible if people suffer because the trade benefits will be reduced
and will not be implemented as early enough.
So early enough.
So that's actually where we can see that the package approach also plays out its negative impact
on the European level.
And the last aspect, and here I can allude to the previous example,
is that international obligations can also be used in order to actually make it more difficult
to repeal IP protection on the national level or on the European level
and even extend protection even more.
And the danger we have right now here in Europe is especially in the field of enforcement regarding ACTA.
I come to my conclusion.
Where do I be now with this principle of or concept of trade-related aspect of IPRs?
From a legal perspective, what we can see is that it is now broadly accepted.
We also have many bilateral agreements where the concept is used.
The Lisbon agreement for the European Union has created even exclusive competence for agreements
on the commercial aspects of IP.
But this also creates a particular challenge that this provision might now be used for extending IP protection.
What about the economic justification?
There might be the positive aspect that higher IP protection may lead to more investment
in emerging economies and developing countries.
But this will actually have the opposite effect that the US and the European Union expected from TRIPS in 1994.
It will not answer the problem of the trade deficit quite on the contrary.
What we can see is that more and more manufacturing is exported to the emerging economies
and less and less manufacturing is taking place in those countries that actually advocate higher IP standards.
And maybe higher IP standards are one reason why this takes place.
So maybe in this regard, the whole policy needs to be rethought.
What we can also see from the analysis I wanted to provide is that the whole system of using trade negotiations,
especially bilateral agreements, is really an agenda for having higher standards of protection
and that those higher standards have a strong tendency of being not justifiable from the perspective of economics.
From a political strategy, it's absolutely amazing how interested trading nations are to copy and paste bilateralism.
We have agreements with very high complexity where we have almost the same provisions in bilateral agreements with the same countries,
whether they are concluded by the European Union, by the United States, Japan, or whatever, take it.
It doesn't make sense given that those benefits are immediately multilateralized under the MFN clause of the TRIPS agreement.
What is obvious here is that governments are not well informed.
It seems that they mostly only listen to the vested interest of IP right holders.
And as you can see, the real problem or the most important reasons for this development are institutional reasons.
And maybe not much can be done about this. Thank you very much.