Apr 162012
 

At a PIJIP-hosted seminar on intellectual property and the Trans-Pacific Partnership Agreement (TPP) last week, present and former Chilean trade officials questioned whether joining the TPP would be worth its costs if it included additional demands on intellectual property.

The officials voicing this concern included Senator Ricardo Lagos, son of the former president of Chile and lead of the negotiation of the US-Chile free trade agreement (FTA) as the head of the Foreign Ministry’s Department of Trade Policy under President Michelle Bachelet; Alvaro Díaz, of ECLAC, the former Ambassador of Chile to Brazil and Undersecretary of Educationat the time of the US-Chile FTA negotiation; and Ana Novik, a current senior official in DIRECON (the Ministry of Foreign Relations) overseeing the current TPP negotiations.

Each of the presenters explained that Chile already has market access agreements with every country in the TPP region, and therefore the trade benefits of joining TPP are likely to be minimal. Each therefore questioned whether the costs of joining TPP, especially in terms of any presumed increased obligations to expand proprietor rights in intellectual property law demanded by the U.S., would be worth incurring.

The remarks from senior past and present trade officials provides a unique window on the challenges the US is facing attempting to push a radical IP chapter (beyond that in any previous FTA or multilateral agreement) in the TPP negotiation. Normally, the US maintains pressure on its negotiating partners by trading off market access to the U.S. for domestic legislative change in the foreign country. The legitimacy of this kind of barter should be questioned from the perspective of democratic process. But the barter is not even possible with countries that he U.S. has already opened markets to. For Chile and other TPP partners with FTAs with the U.S. (e.g. Australia and Peru), the U.S. IP chapter is all stick and no carrot.

Senator Lagos began the discussion questioning whether a trade agreement focusing on APEC countries has the proper geographic focus.

“Why don’t we have a true Latin American regional FTA? . . . Chile already has obtained a privileged relationship with all members of TPP. So will TPP be a benefit, or only a cost? Some countries want access to the US market. We already have it. Maybe there could be room for a little more pain on IP if I get something in return. When we developed the US FTA we received market access. But this (a market access benefit from the TPP) does not seem to be happening. What are we really going to get out of this?”

The real opportunity in the region will be in opening markets to China, not the U.S., he argued. But adopting a very high standard intellectual property chapter in TPP would likely prevent China from ever joining it, he explained.

“Many are saying that TPP is only a platform for the US. But what about China? How does this affect us if China is kept out?”

Alvaro Dias sounded a similar theme, beginning his remarks with the reflection that “The benefits to Chile in terms of market access will be marginal. So what about the cost?”

In analyzing the costs to the agreement, Dias addressed the changing economics and politics of the negotiation. “In the US-Chile FTA negotiation our main problem was the pharmaceutical industry. There were no internet groups then.”

Dias noted that the pharmaceutical issues being demanded by the U.S. have become more extreme, and repetitive of issues that were rejected in the US-Chile negotiations. “The [leaked] text I have seen contains surgical procedure patents,” he explained as an example. “That was already negotiated and refused in the Chile FTA.”

Focusing on the economics of the agreement, Dias agreed with Senator Lagos that any real opportunity from the agreement would come from opening markets to China and India, since markets with the U.S. were already open for Chile.

Dias remarked that a main driver of Chile policy in IP appears to be its listing on the USTR’s unilateral “Special 301” watch lists. But he attacked the lists as being no more than a political tool, created with what he called a “questionable methodology.” “For 16 or 17 years we have been on the 301 list, despite having passed the FTA and IP reform. One cannot take this list seriously.”

Ana Novik, a current trade negotiator, agreed with the core analysis of Dias and Lagos. She remarked that Chile would receive little direct market access benefits from the agreement, and that the agreement would only be valuable if it attracted other members and imposed minimal costs on Chile. She explained that this economic fact made is easier for Chile to push back against aggressive demands from the US negotiators and invited civil society to work with the Chile government to inject positive proposals into the agreement.

“The world has changed,” she explained. “Civil society is more aware about trade and globalization. We don’t have strong pressure on access to markets, so that gives us some negotiating space to push back on US. We are getting together with civil society and senators and others to make improvements [to the TPP text on intellectual property]. We have not finished reviewing the whole IP chapter. This is a slow negotiation. There are aggressive proposals [form the U.S.].”

In response to a question from the audience on whether Chile had already committed to sign the agreement, Novik remarked: “We are not just negotiating with countries with high IP standards. This agreement needs to reflect that. We will not sign the TPP no matter what comes out of the process.”

In response to a question regarding a recent challenge by Senator Hatch against Chile’s “notice and notice” ISP liability system (providing liability safeharbors for ISPs that pass on notices of copyright allegations from rights holders rather than taking down allegedly infringing content), Novik remarked that “We believe our FTA allows a notice and notice system for ISP liability.”

 

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