The Development of Intellectual Property in the International Trading System

Although the GATT, the forerunner to the WTO, was not established until 1948, consideration of the benefits of multilateral trade agreements had begun as early as the 1930s. Due to the Great Depression, import tariffs and other discriminatory barriers were raised. However, as:

many large economies became protectionist simultaneously or in retaliation, so more rather than less suffering resulted from these policies.. .Hence the belief that there must be gains from getting together to sign a multilateral trade agreement to prevent such destructive trade policy lapses in the future. (Anderson 1996)

After the Second World War, the desire to establish an international trade organisation grew stronger. Although the primary aim of such an agreement was economic, there was also the issue of political stability to consider. Therefore, initially countries wanted to establish a trading organisation for reasons of political stability as well as economic gains.² Subsequently, the GATT came into being in January 1948, with 23 initial contracting parties, which included China.

In terms of intellectual property, the provisions of GATT were very limited with scant mention of IP protection, as the primary focus of GATT, at least initially, was tariff reduction. However, GATT Article XX(d) did allow contracting parties a general exception to the rules on trade barriers to allow signatories to adopt or enforce measures “necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including. the protection of patents, trade marks and copyrights, and the prevention of deceptive practices.”³ This Article was invoked in two disputes under the GATT dispute settlement process. In the first from 1983, the panel held that patent protection was an area in which a contracting party could take action which did not otherwise conform to their GATT obligations. In the second case from 1989, the panel held that although domestic patent law could not be challenged, the contracting parties had an obligation to try to enforce their intellectual property legislation in accordance with their GATT commitments (Gervais 2003, p. 7).

Therefore, although GATT 1947 did mention intellectual property protection in brief, it was not a major concern of the multilateral trading system until the 1970s. The complex drafting history of the TRIPS Agreement and negotiations that took place during the Uruguay Round from 1986 to 1994 will be further detailed in Chap. 3, as the characteristics of the TRIPS Agreement are discussed in the context of their possible impact upon subsequent compliance by WTO members. It is important to note that IP protection is now one of the major issues in the international trading system, particularly in the past few decades as the emphasis has shifted from tariff barriers to trade to non-tariff barriers, such as inappropriate IP protection. As a result, compliance with the TRIPS Agreement is a matter of great concern for many WTO members.

On the other hand, it could be argued that evaluating compliance with the TRIPS Agreement is futile and ineffective as we move into a “post-TRIPS” era. Since the TRIPS Agreement was signed more than 20 years ago, many countries (particularly developed countries) around the world have continued to negotiate and pressure trading partners to assent to a wide array of free trade agreements (FTAs). Such bilateral and regional agreements have frequently included IP standards in their discussions and the resulting mess of criss-crossing free trade agreements has even been described as a “spaghetti bowl” (Antons and Hilty 2015). In addition, it was not only the developed industrialised nations which sought to negotiate differing IP standards from those contained within the TRIPS Agreement. Developing countries were also subsequently dissatisfied with the contents of the TRIPS Agreement and in particular, those focused on the provisions affecting public health, human rights, biodiversity and plant genetic resources (Helfer 2004, p. 4), which led to the Doha Declaration in November 2001. Looking back to when the TRIPS Agreement was accepted in 1994, “it soon became clear that TRIPS only represented the starting point for more substantial demands” (Kur 2016, p. 136) and for many members, TRIPS was never enough (Sell 2011).

The reality today is that the post-TRIPS system of unilateral, bilateral and regional standards of IP rules undeniably goes beyond the multilateral norms found in TRIPS and creates an increasingly fragmented system of ‘TRIPS-plus’ protection and enforcement around the globe (Ruse-Khan 2016, p. 163). In other words, it could be argued that compliance with the TRIPS Agreement is of little or no significance in the so-called post-TRIPS era in which many countries have entered into subsequent unilateral, bilateral or regional agreements involving intellectual property standards which frequently go beyond the minimum standards defined in the TRIPS Agreement which was concluded more than two decades ago in 1994.

However, I would argue that China’s compliance with the TRIPS Agreement is of considerable interest for many reasons. Firstly, China’s compliance or otherwise with the obligations imposed upon it by the TRIPS Agreement can act as an indicator of likely compliance with other trade-related agreements to which China may accede in the future. Furthermore, the TRIPS Agreement remains the key global agreement containing the international intellectual property standards. Compared to the subsequent trade agreements incorporating IP standards such as the Anti-Counterfeiting Trade Agreement (ACTA) and Trans-Pacific Partnership (TPP), the TRIPS Agreement is seen as “in many respects still the better Agreement” as it is more balanced, fairer and more flexible (Jaeger 2016, p. 641). Furthermore, it is also undeniable that TRIPS is still the key Agreement laying down the international intellectual property standards because although subsequent agreements have expanded the levels of protection, such agreements have largely either failed to be ratified and implemented, are still under negotiation, or are only bilateral Free Trade Agreements (FTAs) affecting those trading partners only.

In addition, ACTA, TPP and the Transatlantic Trade and Investment Partnership (TTIP) have all been negotiated in complete secrecy which not only prevents public comments on the negotiation process but also leads to considerable suspicion about the provisions contained within the final agreements and thus to consequent reluctance to ratify and implement the agreed provisions. ACTA was “different from other multilateral IP agreements to the extent that it was conceived as an agreement between like-minded nations” (Drexl 2016, p. 67). In other words, the arena of international intellectual property rule-making shifted from an inclusive approach seeking to establish minimum standards to which all trading partners can commit, to a “country club” approach in which like-minded nations break away to form their own agreement and instead seek to set a “gold standard” in IP rights, particularly in enforcement. Compared to TRIPS, ACTA was widely felt to embed tougher standards entirely for the benefit of rights-holders (Jaeger 2016, pp. 625-6). Consequently, the TRIPS Agreement is still recognised as offering an acceptable balance between rights-holders and users, whereas subsequent agreements are generally regarded as tipping the balance further towards rights-holders.

Furthermore, the narrative of China’s shifting compliance with the TRIPS Agreement over the past 15 years since formal WTO accession can offer valuable lessons to other countries, particularly developing countries acceding to trade agreements. For example, Russia joined the WTO in December 2011, a decade after China, and experienced similar issues in implementing WTO commitments due to ingrained “institutional challenges” (Lane 2013). Finally, China’s compliance with the TRIPS Agreement, as a recognised and respected set of international intellectual property rules, is of continued interest to rights- holders in China—both foreign and domestic. Having considered why China’s compliance with the TRIPS Agreement remains of interest, I will now consider the specifics of China’s accession to the WTO.