[Marxism] Brazil Could Turn a Trade Victory Into Defeat (WSJ)

["Walter Lippmann" <walterlx@xxxxxxxxxxxxx>]

Taking a break from her regular role as "Cuba-Basher-in-Chief),
Nasty O'Grady goes after Brazil's president Lula on the issue
of intellectual property. She argues that the notion of "people 
before profits" has gotten too much influence in the WTO and is
convinced Lula should draw back. Thus the headline of this item.

It comes as no surprise, of course, that Cuba, as the tribune of
the world's peoples, it taking a leadership role in pointing to
the need for radical reform of the World Trade Organization, of
which the island is a member. Washington hasn't been able to 
exclude Cuba from this and many other international forums, try
as it might. Thus, Cuba's been able to put forth a vision of a
new vision for the WTO. We don't yet have the transcript of the
Cuban proposals for the WTO's restructuring, but there are some
indications in the Prensa Latina reports on the WTO confrence:
http://groups.yahoo.com/group/CubaNews/message/44992

Cuba's proposals for the reform of the United Nations and for
an international information world which respects both national
sovereignty and which aims to provide the benefits of modern
technology in such a way as to help the great majority of the
human race provide a framework for understanding the Cuban
approach toward the reform of international bodies like WTO.


Walter Lippmann, CubaNews
http://www.walterlippmann.com
http://groups.yahoo.com/group/CubaNews

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ 

December 16, 2005        
THE AMERICAS

Brazil Could Turn a Trade Victory Into Defeat 
By MARY ANASTASIA O'GRADY 
December 16, 2005; Page A19

It's entirely too early to tell if the World Trade Organization's
Doha round, launched in November 2001 and set to conclude at the end
of next year, can be completed successfully. The very fact that the
Hong Kong ministerial this week did not implode means that success
remains possible.

But one thing firm has come out of Hong Kong: As a key leader in the
Group of 20 developing countries demanding market access for
agricultural products, Brazil is now a critical player at the WTO.

Brazil is pushing for open markets in farm products because it is a
very large exporter of such commodities. And if it can force open the
door, other farm commodities exporters, in Africa, for example, can
gain as well. But Brazil could help its own case if it were more
forthcoming on the issues that matter to the rich countries, such as
protection of patents and other forms of intellectual property. Such
protections would not only give Brazil more bargaining power but
serve the interests of Brazilians as well.

It is a paradox of trade negotiations that what benefits any one
nation the most in a successful agreement is often delivered by
negotiators from the other side. What trade reps around the table are
really fighting for when they argue for "market access" is tax cuts
for people in the countries being asked to grant access. Similarly,
when rich-country negotiators push intellectual property-rights
protection in the developing world, they are in reality pushing for
improvements in the investment climate in poor countries, something
that makes people in those places better off.

Consider Brazil's efforts on behalf of millions of people in the rich
countries in the Doha round. At the Cancún ministerial in 2003, it
led the G-20 revolt against rich-country taxes on agricultural
imports and effectively collapsed the talks. The G-20 went home
pledging that it would not allow new foreign competitors into its
markets so long as its own access to other agricultural markets
remained blocked by high tariffs.

In Hong Kong this week, the G-20's stance has been widely recognized
as legitimate and the U.S. is on board. If the G-20 prevails in its
demands, it will have delivered a bountiful gift of tax cuts to
Americans, Europeans and Japanese.

There is still a chance that tariffs on agricultural and industrial
goods will also be lowered in the less-developed world. If so,
Brazilians and others will also get tax cuts. But unless tariff
reductions are accompanied by better protections for
intellectual-property rights, Brazilians and other inhabitants of
underdeveloped states will lose an important opportunity.

At issue is whether countries should have the right -- within the
WTO's Trade Related Aspects of Intellectual Property Rights (Trips)
agreement -- to produce generic versions of on-patent drugs when
there is a designated health crisis from infectious diseases like
malaria, tuberculosis and AIDS. Going by the Trips book, the answer
would be "no." But under pressure to put "people before profits" the
WTO granted a special exemption in the 2001 Doha Declaration, giving
countries the right to prioritize public health over intellectual
property.

In 2003 this notion was further refined with a provisional agreement
to specify that poor countries can manufacture generic drugs
--attempting to copy patented drugs -- or buy knock-offs from third
countries like Brazil and India. Last week, ahead of the Hong Kong
ministerial, the WTO made the 2003 agreement permanent.

The short-term appeal of this weakening of property rights for
middle-income countries like Brazil is in the area of HIV/AIDS
treatment, where state-of-the-art drugs are a must. For several years
now Brazil has demanded Africa-equivalent prices on innovative drugs
and has made a practice of threatening pharmaceutical companies with
compulsory licensing if it doesn't get those rock-bottom prices.

The WTO agreement last week is a victory for Brazil in its effort to
wrest effective therapies out of the hands of drug makers at below
cost. Yet as Richard Tren, director of Africa Fighting Malaria, and
Roger Bate, a scholar at the American Enterprise Institute, argue in
an AEI paper released Monday, Brazil's approach to treating HIV/AIDS
isn't a free lunch. Somebody's going to pay.

Messrs. Tren and Bate point out that Brazil's ability to deliver the
effective HIV/AIDS drugs is not likely to be replicable in other poor
countries. But the costs to innovation will be paid by all those
suffering. "Brazil's threats to intellectual-property rights have
probably deterred some companies from researching new AIDS
therapies," the authors write. "As the rise in drug resistance is
inevitable -- creating the need for new drug therapies -- governments
around the world should be encouraging as much research and
development as possible. Future generations requiring [antiretroviral
therapies], particularly those in the poorest countries, are likely
to pay for Brazil's current actions."

Stripping innovators of profits may seem like justice in the eyes of
big government, but markets are not likely to cooperate. "Since 1997,
the number of drug companies worldwide engaged in research on
HIV/AIDS is down by around 23% and the number of new molecules in
development for antiretroviral drugs is down by around 30%," Messrs.
Tren and Bate note.

The authors also point out that while the number of companies engaged
in research has recently increased by 10%, that's a lot less than
what might be expected given the attention the disease has garnered.
Drug companies may be finding it more attractive to put their
research into less politically charged diseases and "if Brazil's
hostile approach is copied in other middle income countries, then
expected returns from future investment will decline further." Far
from helping AIDS patients, the confiscation of property will harm
them.

Another harm that generics could deliver is increased drug
resistance, if generic manufacturing produces variable potencies or
other suboptimal results from reverse engineering. Finally, Brazil is
not likely to attract research and development investment in the
pharmaceutical industry, a sector it has officially deemed important,
when it practices confiscation of intellectual property.

The Doha round is dubbed the "development round" but legitimizing
government confiscation of innovation is anti-development. It's not
good for the sick, the poor or the unemployed. If all that comes out
of Doha are tax cuts for consumers in rich countries and the
legalization of intellectual-property theft, the round ought to be
renamed.



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