Minutes - TRIPS Council - View details of the intervention/statement

H.E. Ambassador Dr. Walter Werner
11   INTELLECTUAL PROPERTY AND INNOVATION: SUMMARY OF THE 2018 THEME – THE SOCIETAL VALUE OF IP IN THE NEW ECONOMY, AND 2019 IP AND INNOVATION THEME: PUBLIC-PRIVATE COLLABORATIONS IN INNOVATION
295.   During 2018 the co-sponsors discussed the topic of 'Societal Value of IP in the New Economy'. South Africa actively participated and expressed its views on several sub-topics of this theme as introduced by the co-sponsors. 296.   In respect of IP-intensive industries and their impact on society, co-sponsors presented "evidence" that IPRs contribute to employment, gross domestic product, licensing revenue and trade. However, a closer look at the statistics indicate that a purely economic approach to IPRs may be misleading given that co-sponsors focus on the societal benefit of technological innovation. 297.   The effect of IPRs on economic growth in different countries depends upon their various stages of development (being measured in terms of per capita GDP growth and/or human-capital development); innovative capability and imitative activities; technological development; and factor endowments, etc. In general, due to different R&D activities, most the innovations are produced in high income countries. Furthermore, economic literature on the impact of IPRs is rather inconclusive. It remains ambivalent as to whether the social benefits of IPRs exceed their economic costs, even in relation to the developed world. The basic argument in favour of IPRs is that they are necessary to stimulate invention and new technologies. The main critique against IPRs is that they increase the cost of patented commodities which reduces welfare. This problem is exacerbated in developing countries because they are net importers of technology. Indeed, innovative activities are concentrated in a handful of developed country Members with the top ten countries accounting for 84% of global R&D activity. 298.   As already noted, many developing countries are large technology importers and developing countries that strengthened their IPRs protection (mainly in the 1990s) have significant negative balances on the royalty and license fees account. A 2016 study concludes that IPRs tend to raise income inequality by generating a more skewed distribution of wages. Stronger IPRs increase the demand for skilled labour force as it raises the return on R&D activities. This causes a relative increase in skilled labour wages, creating a wage bias in favour of skilled labour against unskilled labour, thus aggravating income inequality within a developing country. Moreover, the effect on inequality is more pronounced for developing countries that are experiencing higher per capita GDP growth rates. Swati Saini & Meeta K Mehra “Impact of strengthening Intellectual Property Rights Regime on income inequality: An econometric analysis centre for international trade and development.” https://mpra.ub.unimuenchen.de/75456/ MPRA Paper No. 75456, posted 10 December 2016. 299.   Proponents also advanced the argument that in respect of education and training, a range of intellectual property rich materials foster social and economic contributions to society. South Africa pointed out that a fundamental component of the right to education is access to high quality text books and other learning materials. Yet in many developing countries, access to such resources can be prohibitive since textbook scarcity is a serious challenge affecting the quality of education. We cited the example of an African country, where there is approximately one reading textbook available for every 12 grade-two students and one mathematics text book per 14 students. 300.   Co-sponsors argue that as more and more learning is facilitated through computer access and the internet, both students and teachers are able to log onto fast amounts of information. Unfortunately, access to these technologies are both inadequately and unequally distributed between the developed and least developed regions in the world. The disparities experienced in the physical world, we pointed out, is often exacerbated in the online environment. The UNCTAD World Development Report of 2018, indicates that there are still-large gaps between developed and developing countries: the active broadband subscription in the developed world (at 97%) is more than double that in the developing world (48%); in Africa, only 22% of individuals use the Internet, as compared with 80% in Europe. 301.   While there is no doubt that IP may be valuable and may contribute to economic development and growth, there are many factors that determine whether IP protection may create appropriate conditions that enable MSMEs to effectively exploit IP. 302.   In conclusion, South Africa has also indicated that we are reviewing our IP Policy, ensuring that appropriate balances are struck in providing protection for innovation and ensuring that benefits are shared equitably in society.
34.   The Chair said that the item had been put on the agenda at the request of Australia; Canada, Chile; the European Union; Hong Kong, China; Japan; the Republic of Korea; Singapore; Switzerland; Chinese Taipei; and the United States of America. It covered two aspects of the broader topic of IP and innovation:
a. "The societal value of IP in the New Economy", a topic that the Council had discussed at its meetings last year. A relevant communication has been submitted to facilitate discussion (IP/C/W/650); and
b. "Public-Private Collaborations in Innovation", a theme proposed by the co-sponsors for 2019. A relevant communication had been submitted to facilitate discussion (IP/C/W/652 and Add.1).
35.   The representatives of the United States of America; Singapore; Australia; Switzerland; New Zealand; Chinese Taipei; Chile; South Africa; Hong Kong; China; Canada; Japan; Mexico; the European Union; the Republic of Korea; Brazil; China; India and the Dominican Republic took the floor.
36.   The Council took note of the statements made.
IP/C/M/91, IP/C/M/91/Add.1, IP/C/M/91/Corr.1