Published on Tuesday, February 13, 2001 in the Guardian of London
The Profits That Kill
Intellectual Property Agreements are Making Too Much Money for the West
by Madeleine Bunting
One of the most grotesque and least well known achievements of the British in India was the great salt hedge. Roy Moxham's book, The Great Hedge of India, is testimony to a personal obsession to track this great monument to British imperial exploitation: 2,300 miles of thorny cacti, 10ft high, 14ft wide and guarded by 14,000 troops.
Its purpose was to prevent salt smuggling into British-controlled India, where the British collected an exorbitant salt tax - it was the equivalent of two months' salary of an Indian peasant. The burden of this colonial crime is self-evident: the first health tip for anyone who gets sick in a hot country is to keep up the salt level. But not once under the British Raj was this salt tax relaxed, not even during famines. Salt became the symbol of imperial exploitation for Mahatma Gandhi's independence movement and the civil disobedience campaigns begun with the salt march of 1930.
We complacently assume that such colonial atrocities are a thing of the past, and that in a much more enlightened 21st century, we wouldn't tolerate such a blatant disregard to human well being. But the unpalatable truth is that all that has changed is the form - colonialism has disappeared to be replaced by an alliance of corporate self-interest and governments eager to promote global capitalism. The salt hedge offers a neat analogy for Trips (the trade related intellectual property agreement) under the auspices of the World Trade Organisation - the purpose of which is every bit as exploitative and exclusive, and its consequences will be every bit as pernicious.
Of all the acronyms that multilateralism seems to spew out (WTO, Gats and so on), the fiercest battles will be over Trips. Intellectual property has not been much of a rallying cry at the barricades before, but it will be. Why? The most dramatic reason is Aids, which is exposing the whole international patent system on drugs as solely in the interests of the handful of multinational drug companies which make huge profits from their 20-year patents. Copies - generic drugs - are being made at a fraction of the cost, but millions will die because the multinationals invoke Trips to protect their patents, as an Oxfam campaign launched today will make clear.
Put baldly, patents are killing people. But that's not all. Intellectual property protection has become a tool to make permanent the growing inequality of the global economy: the rich get richer and the poor get poorer. Drugs are only the most blatant example of how, through Trips, the developed countries have stacked the odds in their favour. They have set the ground rules for the knowledge economy so they can extract a constant flow of income from less developed countries. Those countries will never be able to close the technology gap. This is the same principle as the salt hedge - ensure a steady flow of revenue and eliminate competition. It is also, to use another metaphor, kicking away the ladder which you have just climbed up - and it has never happened before in the history of industrial development.
What the rich countries chose to overlook is that their own economic development involved blatant abuse of patent law. The growth of the US textiles industry in the early 19th century was all based on ripping off the inventions being pioneered in the Lancashire mill towns. The Japanese did much the same later in the century with their textile industry, and in the early 20th century, they copied from the US and German steel industries. Post-war, Japan's economic miracle was based on innovative copying - with scant regard for patents.
Most developed countries have had domestic patent regimes to reward invention, but have always ripped off each other's ideas. There were attempts to achieve some kind of international patent protection, but they had no power of enforcement until the WTO negotiated Trips. If a country breaches Trips, it faces the threat of trade sanctions. Suddenly the whole game changes dramatically. Trade sanctions by a major trading partner on a vulnerable economy is so serious that in most cases it guarantees compliance.
The impetus for an international system of intellectual property protection was the rise of the knowledge economy. Countries such as the US wanted to maximise their returns on knowledge through licences on their patents across the globe. Seventy per cent of US export earnings are now linked to intellectual property - on everything from Aids drugs to brands such as Disney, McDonald's and Microsoft. The US needed an international regulatory regime to reap the benefits of its economic and cultural hegemony, and it is working: between 1991 and 1997, the value of royalties to the US doubled to more than $33bn a year. Naomi Klein addresses this in her book No Logo, as she charts the shift of production of trainers and jeans to Asian free trade zones where it represents a tiny cost compared to the value generated by the knowledge element - the brand management, advertising and design.
Real money in the global economy is no longer made from the production of commodities (for example, the price of coffee has plunged) nor even from labour-intensive manufacturing; it is made from knowledge-intensive technology and services. Since 1980, the share of global trade represented by commodities has halved to 13% while that of hi-tech goods has doubled. It becomes harder and harder for developing countries to catch up. They can't copy - they have to import the technology and pay royalties on the licences. The flow of revenue is one way, from poor to rich.
The stakes are so high in the knowledge economy that it is triggering a frenzied rush for patents. Applications for patents in the US have gone up from an annual 150,000 a year in the late 80s to 275,000 today. One of the most shocking examples is gene patenting. In October last year, there were patent applications on 126,672 human gene sequences. By this month that figure had gone up a staggering 38% to 175,624. Patents are now being used not just to protect an invention but as a strategy to scare off the competition by staking out an area of research. Of course, this rush to privatise knowledge only tilts the playing field more firmly against the developing world. In 1997, 26,000 patent applications were filed to the African intellectual property organisation. Only 31 came from resident Africans.
The analogy of the salt hedge would not be lost in India where the implementation of Trips into domestic legislation is proving bitterly controversial. One of post-colonial India's great achievements, argues the activist Vandana Shiva, was to frame a patent law in 1970, which recognised that there were issues of human welfare and development that must take precedence over profit, particularly in the areas of food and health.
This boosted a huge generic drugs industry which provides drugs which are much cheaper than over the border in Pakistan, and which have been exported all over the developing world. All that is now jeopardised.
One of the shabbiest sections of the government's white paper published at the end of last year (Eliminating world poverty: making globalisation work for the poor) was that on intellectual property; it praised Trips, but acknowledged the difficulties for many developing countries. It proposed the time-honoured British solution of setting up a commission to look into the issue. Two months on, no commission has yet been appointed; a senior official from the Department of International Development, after endorsing Trips, admits that neither at home or internationally has much thought been given to "what kind of intellectual property regime best serves poorer countries". It's about time it was.
© Guardian Newspapers Limited 2001