Submitted for Your Perusal

When the Peru Free Trade Agreement passed the Senate yesterday, John Kyl (R-Ariz.) voted against it. Kyl ordinarily supports trade treaties, so John Miller of National Review asked him to explain his vote.

Kyl replied, as you might expect, that he disliked the labor and environmental rules that came bundled with the agreement's tariff reductions. But then he added another complaint: that when it comes to pharmaceutical patents, the pact isn't protectionist enough.

I am concerned about the labor and environment provisions, but I am simply puzzled by the intellectual property changes. I am not sure what my colleagues hoped to gain by weakening standard protections for U.S. intellectual property through this trade agreement. I see no reason why U.S. legislators would want to weaken the ordinary protections that are normally accorded to pharmaceutical intellectual property in our bilateral trade agreements….

And why should we expect that those who want to weaken protections for U.S.-owned intellectual property will stop at pharmaceuticals? Are computers, movies, music, and other products that involve valuable U.S. intellectual property next? U.S. intellectual property is one of our most valuable exports; it is not in the national interest of the United States to unilaterally weaken protections for it.

For Kyl, apparently, "free trade" means getting the rest of the world to adopt the same intellectual property rules as the United States, as though there were some pure, Platonic patent terms that every nation should obviously embrace. (*) I prefer the perspective laid out a few years back by Jagdish Bhagwati and Arvind Panagariya, whose pro-trade credentials are at least as impressive as Kyl's:

The process of trade liberalisation is becoming a sham, the ultimate objective being the capture, reshaping and distortion of the WTO in the image of American lobbying interests.

The protection of intellectual property provides a good example of US tactics. Washington has used both inducements and punishments to secure its interests. During negotiations over the North America Free Trade Agreement, Mexico was told that the price of a deal was acceptance of intellectual property protection provisions.

It was a price Mexico was prepared to pay. But the US has also demanded that other countries accept similar provisions or face retaliatory tariffs. Subsequently, during the Uruguay round of trade liberalisation, the US was able to insert the trade-related intellectual property regime (TRIPs) into the WTO, even though no intellectual case had ever been made that TRIPs, which is about royalty collection and not trade, should be included.

I'm skeptical towards bilateral trade agreements in general. But if the Peru pact is a step back from the effort to impose American intellectual property laws everywhere, that's something to cheer.

Elsewhere in Reason: I look at the recent history of trade regulations.

Elsewhere not in Reason: Cato's Ian Vasquez is bullish on Peru -- and is happy to see the agreement "give permanence" to the country's trade policies.

* Actually, he might not want them to adopt the "same" rules. Previous trade agreements have often imposed even stricter regulations.

Comments

[bubba]

You're against Intellectual Property protection for pharmaceuticals?

Seriously?

[Warren]

Excellent post Jesse. You taking of "foreign affairs" in the new Welch regime?

[MikeP]

You're against Intellectual Property protection for pharmaceuticals?

He's against hegemonic projection of US IP rules to other countries being a prerequisite to lowering tariffs on trade with them.

[J sub D]

I would like to know what Peruvian pharmaceutical patent laws are before I opine on this.

[francesca]

Bhagwati and others have argued that non-trade issues, such as labor and environmental issues, do not belong in trade agreements, since they act in many cases as non-tariff trade barriers.

That's also true for the inclusion of IP provisions.

The WTO -- through the developing countries -- has resisted including enviro and labor provisions, but TRIPS was a big mistake.

If those issues are considered important, countries can and do have separate agreements on such issues as investment, IP, etc. And there are existing fora where labor (ILO) or environmental (UNEP and others) are the primary foci, even if one doesn't approve of those international bodies.

[Dynamist Dan]

I think the issue is more along the lines of what Francesca mentioned, is it appropriate to use trade agreements as leverage in negotiating IP laws?

The government's role is to enforce property rights, this includes doing what it can to see that those rights are respected internationally. While a homogenous set of international IP laws may not be desirable. There's no doubt that some countries just have poor IP laws that should be changed, maybe the U.S. system isn't perfect, but let's avoid the nirvana fallacy here. Just because it isn't perfect, doesn't mean it isn't an improvement. There is essentially massive amounts of theft taking place in countries throughout the world. Trade agreements may be an inappropriate bargaining chip, but protecting hard-earned valuable interests abroad is an appropriate role of government.