191. The United States again welcomes this agenda item. As we explained in our intervention in the June 2013 TRIPS Council meeting, IPR is an indispensable catalyst for driving innovation addressing greenhouse gas emissions and climate change adaptation and mitigation efforts. In support of our position, we presented a significant body of research, economic analysis and other data, which demonstrates that green technology innovation is happening – including in developing countries – that voluntary technology transfer is occurring, and that IPR plays a significant and positive role in promoting both activities, without substantially raising costs.
192. For this reason, among many others, we continue to have serious concerns regarding the premise of the discussion paper submitted in advance of our June meeting, and the lack of research supporting that paper. We maintain our view that the recommendations included in that paper would undermine rather than advance the intended objectives of promoting green technology innovation and technology transfer. We have heard no concrete data to the contrary.
UNFCCC Technology Needs Assessments
193. In our intervention today, we want to focus on a different body of data – and that is what developing and least developed countries have themselves identified as barriers to – and enabling environments for – green technology innovation and transfer.
194. As part of the United Nations Framework Convention on Climate Change (UNFCCC), many developing and LDC parties have prepared Technology Needs Assessments. In its TNA, an UNFCCC party identifies its priority climate change technologies for mitigation and adaptation. TNAs are developed through consultations with stakeholders to identify the barriers to technology transfer and measures to address these barriers through sectoral analyses. In the process, the TNA may also identify regulatory structures and policy options, coupled with financial incentives and required capacity building that could facilitate access to these priority technologies for mitigation and adaptation.
195. Succinctly put, the purpose of a TNA is to assist in identifying and analysing priority technology needs, which can be the basis for a portfolio of environmentally sustainable technology projects and programmes, which can facilitate the transfer of, and access to, such technologies and know-how in the implementation of programmatic responses to the challenge of climate change. Under the current global TNA project supported by the Global Environment Facility, 36 developing countries were provided targeted financial and technical assistance for developing or updating their TNAs and in preparing their Technology Action Plans.
196. According to the most recent report of the UNFCCC Technology Executive Committee or TEC, by 31/07/2013, 31 of these countries had submitted their TNA reports. These countries included 11 African countries, nine Asian countries, three Eastern European countries and eight countries from Latin America and the Caribbean.1 These recently completed TNAs contain a wealth of contemporary information that is particularly relevant to this discussion.
197. In broad terms, these TNAs reflect two important conclusions. First, the developing and LDC countries that submitted these reports identified a long and wide-ranging list of green technology innovation and transfer barriers and enabling environments. Second, very few of those TNAs even mentioned intellectual property rights. And when IPR was mentioned in a few select cases, IPR was not identified among the priority issues to be addressed.
198. Rather than raising IPR, the TNAs focus on critical barriers that hinder climate change mitigation and adaptation responses. For the most prioritized mitigation sector – the energy sector – economic and financial barriers were identified by all Parties.
199. Within this barrier classification, the most commonly identified barriers were: (1) the existence of inappropriate financial incentives and disincentives; and (2) a lack of or inadequate access to financial resources. Both of these financial barriers were identified by more than 80% of Parties.
200. The main non-financial barrier, also identified by all Parties, was an insufficient legal and regulatory framework within the barrier classification of policy, legal and regulatory framework barriers.
201. The most commonly identified enablers to address these barriers – which were identified by 80% of respondents – were to provide or expand financial incentives, and to strengthen the regulatory framework for the technology, both to attract investors to the market. I will turn to the role of IPR in attracting investment momentarily.
202. For the most prioritized adaptation sector to climate change – the agriculture sector – the most commonly identified barriers were similar to those in the energy sector: (1) the lack or inadequate access to financial resources; and (2) an insufficient legal and regulatory framework. Both were identified by 96% of Parties.
203. Within the classification of financial and economic barriers, the barrier of lack of adequate access to financial resources was the most commonly identified barrier, at 89%. The most commonly identified enablers to address these barriers in the agricultural sector were the creation of national financial mechanisms or policies – at 65% – and the creation of an allowance in the national budget for this technology, including promotion of R&D, which was at 50% of all respondents. I will also return to the positive role of IPR in promoting R & D shortly.
204. Yet, despite this extensive self-analysis by a diverse array of countries regarding their green technology needs and the barriers they face to meeting those needs, IPR is virtually absent.
205. In fact, in its own TNAs on mitigation and adaptation, Ecuador did not mention IPR as a barrier to technology transfer. Instead it recognized the role IP plays to enable technology transfer by noting the importance of the Ecuadorian Intellectual Property Institute having the capacity to facilitate technology transfer.
206. It is also important to note that the UNFCCC Technology Executive Committee Report synthesizing all of the TNAs was silent on IPR as well. In contrast, the top 12 non-financial barriers raised in the TEC synthesis report are:
• Insufficient legal and regulatory frameworks;
• insufficient enforcement;
• policy intermittency and uncertainty;
• institutional and administrative barriers;
• clash of interests;
• highly-controlled energy sector;
• red tape (bureaucracy);
• rent-seeking behaviour and fraud;
• market barriers;
• infrastructure barriers;
• lack of awareness and skilled personnel; and
• public acceptance and environmental barriers.
207. Nor is IPR included on the list of financial barriers, which includes the following seven obstacles to technology innovation and transfer:
• The existence of inappropriate financial incentives and disincentives;
• lack of or inadequate access to financial resources;
• high cost of capital;
• financial non viability;
• high transaction costs;
• uncertain macro-economic environment, and
• uncertain financial environment.
So, of the nearly 20 barriers identified in the TEC synthesis report, IPR did not make the list.
Why is that? Was this simply an oversight? We don't believe so.
208. In fact, we have done further research in addition to what we identified in our intervention in June to support the conclusion drawn by more than 30 Technology Needs Assessments submitted to the UNFCCC.
209. We have identified three key areas where the economic and other literature elaborates on the areas we discussed in our last meeting in terms of the positive contributions of IPR to the global climate change challenge. These are:
• The high degree of correlation between developing country innovation and IPR;
• that IPR helps to promote green technology transfer through foreign direct investment and R&D; and
• that licensing is a catalyst for such transfers.
High Degree of Correlation between Developing Country Innovation and IPR
210. The data shows that in recent years, the world has witnessed a rapid growth in renewable energy investments (REIs) made by developing nations. In 2011, for example, 35% of global REIs were made by emerging economies.2 In 2012, investments in these economies topped $112 billion, versus $132 billion in developed countries.3 This increase has been met with a concurrent increase in global patenting of environmental technology. In 2012, 2623 Patent Cooperation Treaty (PCT) applications were filed for environmental technologies, a six per cent increase from 2011.4
211. And the gap between patent prosecution in developed and developing nations is rapidly closing. In 1998, one in 20 patents for environment technologies were protected in developing countries; in 2008, the numbers were one in five.5
212. These numbers are more than just a coincidence. According to the International Renewable Energy Agency (IRENA), the high patent growth rates have resulted in a very significant increase in the deployment of renewable energy technologies6
Promotes Technology Transfer through FDI in R&D
213. Part of the reason why IPR protection is one of the many factors promoting innovation in developing countries is that it helps to advance technology transfer. Such protection makes a country more attractive for cross-border investments, incentivizing multinationals to invest in R&D, which thereby raises demand for skilled domestic labour and strengthens the wages of the domestic work force.7
214. For instance, as Branstetter, Fisman and Foley have found, US multinationals specifically respond to changes in IPR regimes abroad by significantly increasing technology transfer to countries which improve their IPR environments.8
IPR, Licensing and Technology Transfer
215. One key aspect of technology transfer is licensing.
216. Protection of IP in the recipient country is of high importance to potential investors when considering whether to enter into licensing agreements. Data on US multinationals show that the likelihood of entering into licensing agreements increases as countries increase their protection of IPR9
217. In a survey study conducted in 2005, IPR protection is considered an important factor by 82% of the organizations surveyed, with 54% reporting that it was either a "significantly attractive condition or a compelling reason for an agreement."10
Conclusion
218. In conclusion, the economic literature supports, what the Technology Needs Assessments make abundantly clear, which is that IPR is not a barrier to green technology innovation and transfer. In fact, the literature is abundant, convincing, and as yet, un-refuted in this Council. IPR is one among many critical keys to unlocking the global climate change imperative.
219. For these reasons, we continue to have serious reservations regarding the paper's proposals, and are not in a position to support its recommendations, including any TRIPS Council or other decisions or Declarations.
220. We continue to view strong IPR protection as an environmental as well as an economic imperative, providing critical developmental benefits for developing and least developed countries in particular. Such protection is essential to facilitate access to, and transfer of, today's technologies and to promote tomorrow's innovation.
