Compulsory Licensing and domestic policy space - A view

I had written about compulsory licensing, TRIPS and the exercise of domestic policy space, albeit in a judicial context, here. 

An interesting piece titled "Compulsory Licences for pharmaceuticals: An inconvenient truth?" by Sivaramjani Thambisetty on the recent grant of compulsory licenses in India highlights the various principles involved. As summarized by the author, the case brings to the fore these issues:

"Irrespective of the outcome of this case on appeal, the decision of the IPAB plays a crucial role in building up alternative and legitimate legal narratives around TRIPS and the ability to meet the public health needs of populations in all parts of the world. Despite the explicit legal grounds to grant compulsory licenses, they have been used relatively rarely in developing countries. There are many poorly reasoned and inadequately articulated fears that have prevented their wider use: fears that a CL will be seen as protectionist and incompatible with the TRIPS agreement; fear that it will chill foreign direct investment; or fear that a CL will draw the kind of political pressure and sanctions that were common prior to the TRIPs agreement. These fears appear in many cases to trump the reasonable legal conditions that have to be met in all cases where CLs are granted as well as widespread precedents from developed countries where CLs are used to tackle anti-competitive measures. (For instance, see here and here. )"

Issues of the violation of TRIPS, defining public interest, exercise of domestic policy space, developing country needs in the context of multilateral rules as well as public health concerns are raised here. Definitely more food for thought.

A wonderful read.

70000 and counting

Marking the blog's viewership count gain with this blog post. 70000 it is.

Hitting 70k page views is a satisfying experience. I have marked the previous occasions thus: 10k, 20k, 30k, 40k, 50k, 60k. The other heartening thing is that while it took 180 days for the first 10000 hits, it took only 20 days for the last 10k.

Thank you readers.

Developing countries and strategizing at the WTO

I have often written about developing countries participation at the WTO both in terms of negotiations and dispute settlement. An example that is often heralded as a beacon of hope for the developing and Least Developed Countries in multilateral trade participation is Brazil. Brazil's successful participation and strategy at the WTO has been a subject of extensive research over the years.

Came across this interesting paper by Gregory Shaffer, Michelle Ratton Sanchez and Barbara Rosenberg that summarizes the strategy that Brazil has adopted in engaging successfully with the multilateral trading system. It summarizes the strategy thus:

First, we argue that international trade law and judicialization have mattered in Brazil, unleashing a competition for expertise and helping to transform the government’s relations with business and civil society regarding trade policy. 

Second, and related to this point, we contend that being a defendant in WTO cases can help catalyze these changes, giving rise to mechanisms of public-private coordination to defend a country’s interests at the international level.  

Third, we find that these developments have not represented a weakening of the state, but rather the strengthening of the state’s ability to engage at the international level through a diffusion of international trade law and policy expertise. 

 Fourth, we observe that these processes reflect a growth of pluralism for trade policymaking within Brazil, as the government has been pressed to become more transparent and open to dialogue. 

Fifth, we maintain that these processes are not automatic, but are a function of domestic as well as international factors. We highlight the roles of Brazil’s professional, merit-based Ministry of Foreign Affairs, the development of Brazilian career paths in the international trade field, Brazil’s private sector that has been able to overcome collective action problems to engage with the government, and a general shift in orientation in Brazil’s development strategies.

 Sixth, we find that although the example of Brazil offers some hope to other developing countries, these countries generally face greater challenges and will need to develop their own strategies in light of their own contexts.  

Seventh, we conclude regarding the need to take into account the reciprocal interaction of the domestic and international spheres to understand the operation of international legal orders."

Are there lessons for other developing countries to develop internal institutional capacities to engage with the multilateral trading system? Another more recent study on the participation of Latin American countries participation in the WTO highlighted the importance of private sector involvement and the need for creative solutions to engage with the rule based system. 

Developing countries must engage proactively in the system be it through negotiation, dispute settlement, participation in the  proceedings of various Committees at the WTO or private sector engagement. The strategy should be to actively engage withthe rules rather tan shy away from it. However each country would have to develop its own creative, need based strategy depending on its own requirements. Though there is no one-size-fits-all strategy, lessons learnt in Brazil's engagement would surely help other developing countries. A BRICS strategy perhaps?

Vera Thorstensen on currency manipulation and world trade

I have written about the growing significance of the currency question in international trade law here, here, here and here. Though there does not seem to be any immediate dispute at the WTO around this critical issue, Vera Thorstensen and others have summarised the issues in this CUTS paper. Titled "Trade and Exchange Rates: Effects of Exchange Rate Misalignments on Tariffs" the paper argues that the WTO must play a more active role in addressing the concerns that a devalued or manipulated currency could adversely impact a country's rights under the international trading system. 

Persistent exchange-rate misalignments cannot but create potentially infinite variations of market-access conditions among WTO members. This situation is directly the opposite of what the multilateral system sought with the establishment of the MFN principle, that aimed to assure that no particular country would have a commercial advantage in its trade with another contracting party, which otherwise could raise tensions and divert trade

The effects of misalignments are also distorting many other rules and instruments negotiated under the WTO, such as antidumping, subsidies, safeguards, rules of origin, GATT articles I, II, III, and XXIV. 

The WTO can no longer ignore what is happening behind its magnificent structure of complex trade rules. The persistence of opposite exchange-rate misalignments, of countries with overvalued currencies and others with undervalued ones, for long periods is eroding the objectives of the rules-based multilateral trading system.

The core principles of WTO construction - transparency, predictability and confidence - are under question. The strengthening of trade rules, with the negotiation of instruments to neutralise the effects of exchange rates, is fundamental to the existence of the WTO. Otherwise, the WTO might become a diplomatic-juridical fiction - void of economic reality. 

Historically currency exchange issues have been dealt with by by the IMF and this jurisdictional barrier has kept the WTO from intervening. Will the WTO members allow this topic to gain centre stage at the multilateral body? Will Brazil's submissions be discussed in more detail at the Committees of the WTO? Will a dispute settlement case be initiated by a WTO member against a persistent manipulator of currency? How will the Panel and Appellate Body react? Will ti get included in future trade negotiation rounds as an addendum? Is the situation as serious as made out to be that the WTO would become void of economic reality if it does not recognize and address the issue of widespread currency manipulation? What impact does this have on domestic policy space, multilateral rules and barriers to international trade?

Gender and trade

The Gender Agenda in Trade - a thought-provoking piece in the IntLawGrrls on the 'gender-agenda' in trade highlights the informal sector in trade and the predominance of women in this sector which often goes unnoticed, unecognized and unaccounted.

The biggest challenge would be to devise strategies to ensure that the benefits of globalisation reach these sectors as well as making sure that these groups participate in the global economy. This is a neglected area of trade policy research and implementation.

Regionalization vs. Globalization

An interesting Working Paper titled "Regionalization vs. Globalization" comes to the conclusion that the importance of the regionalisation of business cycles in a globalized world should not be underestimated.

"We have analyzed the evolution of global and regional business cycles over the past five decades. Our results indicate that regional business cycles have increasingly become more pronounced especially in regions where intra-regional trade and financial linkages have registered rapid growth since the mid-1980s. In particular, the regional factor has explained a larger fraction of business cycle variation in the North American, European, Oceanian, and Asian regions over the past twenty-five years. Surprisingly, the importance of global factor has declined over time. The total contribution of common factors (global and regional) has not registered a significant change implying that there has been no change in the degree of international business cycle synchronicity during the past quarter century. 

These results present a different interpretation of the impact of globalization on the synchronization of business cycles. Most commentators argue that globalization of trade and financial linkages have led to the globalization of business cycles as well. Contrary to these popular arguments, regional factors, rather than global ones, have become the driving forces of business cycles during the recent era of globalization. This has led to the emergence of regional business cycles.

A wide range of developments at the regional level can explain the emergence of regional cycles. For example, the dramatic increase in intra-regional trade and financial flows fueled by regional integration initiatives can promote a higher degree of business cycle synchronization across countries in a region. Regional business cycles can also emerge because of the prominent role of region-specific shocks driven by the implementation of similar policies in a region. Moreover, cross-border spillovers of disturbances originating in a large country in a region can translate into more synchronized national business cycles in that region."

I am not an expert in trade policy but I found this paper interesting since it highlighted the complex nature of globalization as well as the multiple factors impacting it. 

 

Laos joins the WTO

For those who missed it, Lao People's Democratic Republic became the 158th member of the WTO in February of this year.

The Diplomat carried a comprehensive analysis of the benefits and pitfalls of the entry of Laos into the WTO here.