Oct 17, 1988

TECHNOLOGY: AGENDA OF 70S STILL RELEVANT FOR URUGUAY ROUND MTNS.

GENEVA, OCTOBER 13 (IFDA/CHAKRAVARTHI RAGHAVAN)The agenda that third world countries sought to pursue in the 1970s for their development objectives are even now relevant in any efforts for Multilateral framework at the interface of trade, investment and technology flows, according to the un conference on trade and development.

In pursuance of their development objectives, UNCTAD notes, third world countries sought, within the United Nations, to elaborate general and equitable standards that could be applied to transnational corporations and international transfers of technology.

The links between the two, UNCTAD notes, also seems to be necessary if the interests of all countries are to be taken into account in the multilateral frameworks.

The U.S. and other advanced industrial countries are currently trying to preserve and advance the trading interests and global competitive strategies of their TNCS through multilateral frame-works created in GATT on so-called trade-related investment measures (TRIMS) and trade-related intellectual property rights (TRIPS), and for trade in services.

The drive of U.S. and other industrial countries on these matters in the Uruguay round MTNS is against the background of a growing multipolarity in supply of technology and an intensified rivalry in the 1980s in the international markets for technology, and slowdown in technology flows to the third world.

While the slowdown in technology flows is cited by U.S. spokesmen as proving the need for higher intellectual property rights (IPRS), protection, UNCTAD notes in (TD/B/C.6/145) that this is closely related to the general performance of the world economy, and the continuing need of third world countries to divert resources to servicing of external debt.

The U.S. which dominated as a technology supplier in the 60s and 70s, and is still the most important supplier to the third world, is now challenged by Japan particularly in key areas likely to have an impact on the future of the world economy - microelectronics, robotics and new materials.

West Germany has strengthened its position as technology supplier in relatively old industries like machine-building and textiles, while Switzerland and Sweden have kept their command of certain key technologies, such as metal working, precision instruments, civil engineering, and biotechnology.

They are increasingly involved in the more rapidly growing third world countries, particularly of Asia. But the strongest technological links of west European countries are with Africa, and a wide array of other lesser-advanced third world countries.

In its report (TB/B/C.6/146), UNCTAD notes that during the 1780s, the rapid rate of technological change, especially in the microelectronics sector, and its growing impact on how goods and services are produced and traded, have added new and critical dimensions to the traditional issues of development, protection and transfer of technology.

Lead times between successive innovations have become shorter, and have made people more aware of the impact of technology on their lives.

Governments are also confronted with new policy challenges on utilisation and future economic potential of microelectronics and information technologies.

There are also similar policy challenges in other new and frontier technologies like biotechnology (BT), new materials and electro-optics, though these are still in the development stage and commercialisation is just beginning.

Short life spans of these technologies and products, and uncertainties about possible new innovations, have all increased pressures for quick commercialisation and rapid recovery of research and development (R and D) costs.

The heightened concern to protect technology has also been influenced by the changes taking place in the competitive structure of international trade (often due to causes lying beyond trade policy spheres, such as monetary and financial fields).

In this environment, governments and their industry have come to see technological innovation as the centrepiece of their efforts to deal with market losses, trade imbalances and structural adjustment problems created by increased competition on world markets.

Technological innovation is seen by countries as requiring uses of a broad range of policy measures - industrial promotion, investment, and trade policy measures.

In this framework, governments and industry are also seeking a strengthening of the international legal framework and national regimes for protection and commercialisation of technology, particularly of new technology.

The U.S., Japan and the EEC, towards this end, are calling in the TRIPS negotiations in GATT for new and substantive international norms of intellectual property protection, extending to areas never before covered or thought of as capable of IPR protection - such as for example trade secrets.

The intellectual property issues have hitherto been dealt with in the world intellectual property Organisation (WIPO), which administers the Paris union conventions on patents and trademarks, and the Berne convention on copyright.

But the entire philosophy behind the Paris union conventions has so far been as an instrument for promotion of technological and industrial development at the national level.

A central feature of the current multilateral framework has also been "the freedom of countries to fashion their individual regimes to suit their own economic and development needs owing to the territorial nature of the rights granted".

This has allowed for differences in various standards and regimes among countries, with "national treatment" as the basic standard - namely, the same level of protection to nationals of other countries members of the Paris union conventions, as to one's own nationals.

Depending on the level of industrial and technological development, countries have had differing standards and norms about the degree of protection granted.

Many third world countries now limit the scope of protection granted to foreign technologies or exclude some products or sectors altogether from protection.

The present day industrialised countries (including such vociferous champions of IPRS now as U.S. and Japan) had in the 19th century, and even until very recently, pursued the very same policies themselves.

However in the context of the Uruguay round, and in their efforts to prevent emergence of new competition from the third world, as also to preserve the rentier incomes of their TNCS, the U.S. and other industrialised countries are orienting intellectual property protection issues towards what UNCTAD calls "protection of the global trade and competitive interests of intellectual property owners".

This orientation, UNCTAD notes, is dominating the current international discussions on protection of technology and is also reflected in the linkage of industrial property protection to trade liberalisation.

Hitherto, countries have been relatively free, within limits set by international conventions, to shape their intellectual property regimes in line with their perceived developmental and other economic and social interests.

But this freedom, UNCTAD points out, would be curtailed if they had to follow international norms in exchange for trade concessions in other areas, "unless the normative framework itself provides appropriate scope for the promotion of domestic technological development".

"The issue", UNCTAD says, "is not whether the protection granted by developing countries, as well as some industrialised ones, should be weaker or stronger, but rather to what extent they could continue using intellectual property protection (in the same way that many of today's industrialised countries have done in the past) as a policy instrument for influencing the rate and direction of their domestic technological development".

UNCTAD cites as an example the provision in many national laws to prevent use and non-use of patent rights as import monopolies.

Until a few decades ago many industrialised countries considered non-working of patents to create import monopolies as sufficient ground for nullification of patent rights, and even now some industrialised countries maintain on their national laws provisions for compulsory licensing.

"The critical issues," UNCTAD says, "is thus the balancing of the need for legal protection of technological innovation with the equally important need to encourage increased access to technology and local technological development."

Stronger protection for IPRS, UNCTAD says, should not also result in reduced competition, thus stifling technological innovation and undermining the very objectives for which IPRS have been granted.

Excessive protection, it adds, might not only restrain competition, but also be in conflict with consumer welfare.

UNCTAD suggests that the conditions under which IPRS are granted would also need to be clarified.

Third world countries, it notes, have always underscored local working requirements, allowance of parallel imports, and greater scope for compulsory working in absence of local working.

The last is seen by third world countries as needed for strengthening the development and social welfare function of the IPR system.

These have also been the basis of initiatives spearheaded by third world countries in the 1770s for the revision of the Paris conventions.

Though launched ten years ago, the process has not been successfully completed.

Though UNCTAD does not mention it, the third world efforts in WIPO were blocked by the U.S. and other industrial. countries, who have now taken the issue into GATT and the Uruguay round.

"Whatever might be the final outcome of this revision process (in WIPO), the underlying objectives Jo not seem to have lost their relevance and importance for the developing countries and would thus need to be taken into account in international deliberations on the subject", UNCTAD adds.