The World Trade Organization was created to protect the rules of free trade in order to spread prosperity. Now it becomes a vehicle to attack American innovation. See Friday’s agreement by the 164 members of the WTO that allows developing countries, including China, to steal intellectual property from Covid vaccines.
The White House considers the deal a diplomatic victory. But it’s a huge defeat for US national interests that will benefit China and set a precedent that will erode intellectual property protection. This won’t be the last time global crooks seek to steal American technology.
The fight against the WTO began in the fall of 2020 when India and South Africa submitted a resolution to suspend intellectual property protection for Covid vaccines, treatments and tests. They quickly rallied support from low-income countries and progressives who complained of a lack of “fairness”. It doesn’t matter that the United States and Europe funded the development of these technologies.
Bowing to pressure from the left, President Biden approved an intellectual property waiver. It also undermined European allies who opposed patent distribution. And why? Vaccine makers had already committed billions of doses to developing countries. Today, the world is inundated with doses of vaccines and tens of millions of people are thrown away because low-income countries lack the health infrastructure to distribute them. This makes the WTO agreement all the more confusing.
WTO rules already establish a process for compulsory licensing of patents for drugs in developing countries during public health emergencies. These rules require due process and fair compensation for drug manufacturers. They also protect against public disclosure of clinical trial data that includes trade secrets. The new agreement cancels these rules.
An earlier version of the compromise would have prevented China from taking advantage of the waiver. Friday’s deal does not. It simply says that developing countries like China “having the existing capacity to manufacture COVID-19 vaccines are encouraged to undertake in a binding manner not to rely on this decision” (emphasis added).
In short, nothing legally binding prevents China from stealing American mRNA technology, using it to develop its own vaccines, including for other diseases, and then selling the vaccines under their own brand names. The agreement lasts for five years and could therefore potentially cover a future combined mRNA vaccine against Covid, influenza and respiratory syncytial virus.
Despite their victory, supporters of the waiver are not satisfied. “Vaccines have already lost their relevance,” said India’s Trade and Industry Minister Shri Piyush Goyal. The West’s hope “is to unload all guilt from its chest today, to show the world that we have been so magnanimous today, to kick the way for therapies and diagnostics that are really essential now”.
Guilt for what? Saving millions of lives through biotechnology innovation?
The only silver lining is that the agreement does not extend to Covid testing technologies and therapies, at least for now. But it forces WTO members to decide within six months whether to do so. Will the Biden administration rush to the ramparts to defend Pfizerit is
Paxlovid patents this fall? Don’t bet on it.
Why did the Biden administration and the Europeans agree to the deal? Maybe they think countries won’t take advantage of it because Covid vaccines are plentiful. But that’s shortsighted. Now that the WTO has set a precedent by breaking patents in an emergency, there will surely be more claims to be made for other “essential” technologies.
Lo, United Nations Secretary-General António Guterres recently proclaimed that “renewable energy technologies, such as battery storage, must be treated as essential, freely available global public goods” and “remove barriers to sharing knowledge and technology transfer, including intellectual property constraints — is crucial for a rapid and equitable transition to renewable energy.
Semiconductors and genetically modified crops could also become fair game. Intellectual property protection encourages companies to invest in new technologies. This is one of the main reasons why the United States is more innovative than China. By undermining the incentives that underpin innovation, the WTO deal will hurt America, and that means the world too.
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Appeared in the June 18, 2022 print edition.
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