Putting intellectual property first will end a lot of the world’s ills
Trade tensions between the US and China continue to escalate and the World Trade Organisation (WTO), the global forum of the management of trade rules and disputes, seems powerless to stop them.
The WTO’s multilateral, rules-based trading system has underpinned huge increases in global prosperity since the 1960s. But shortcomings in investment rules and enforcement mean WTO reform is now top of the G20, US and EU agenda.
Much of the drama stems from US accusations that the WTO has failed to hold China to account for not opening up its economy as promised when it joined the body in 2001. No reform, says US President Donald Trump, could see his country withdraw from the WTO.
The US is seriously concerned about China’s attitude to intellectual property (IP) rights. The Trump administration claims Chinese theft of American companies’ proprietary knowledge, through cyber-attacks, counterfeiting, online piracy and forced technology transfer from investing companies has cost $50bn in corporate earnings.
The US is right: IP is vital to the modern economy. Trade used to be all about moving physical goods from their point of manufacture to customers in different countries. Today, it is increasingly about “intangible” products and services, based on research and development efforts, brands, and patented or licensed technology.
Much of modern international trade and investment is driven by human know-how, knowledge, creativity and innovation.
The WTO has accelerated this globalisation of knowledge-based industries thanks to its Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), ratified in 1994. TRIPS requires all WTO members to institute basic laws to protect IP. As recently as the 1980s, many countries did not even grant patents — unsustainable given era’s rapid pace of globalisation and technological development.