TWN Info Service on Trade, Intellectual Property and Sustainable Development
25 May 2023
Third World Network
www.twn.my

WTO: IP regime should not constrain South’s industrialization – South Africa
Published in SUNS #9789 dated 25 May 2023

Geneva, 24 May (D. Ravi Kanth) — South Africa has proposed that the international patent regime should not become a major constraining factor for pursuing industrialization in developing countries, as access to technology in the prevailing intellectual property (IP) regime has become “more constraining than it was in the 19th century when today’s advanced economies were pursuing their industrialization”.

As major developed countries in the North are investing hundreds of billions of dollars in their industrialization initiatives, the developing countries are facing several major constraints ranging from a paucity of funds to the barriers imposed by the international IP system, which acts as a major drag for pursuing industrialization programs.

In a proposal (WT/GC/W/878), titled “Intellectual Property and the 1998 Work Programme on Electronic Commerce – Operationalizing Technology Transfer in the Context of Articles 7, 8, 40, and 66.2 of the TRIPS Agreement,” and circulated at the World Trade Organization on 15 May, South Africa raised some fundamental issues regarding industrialization and access to technology in developing countries.

The proposal is based on the mandate provided in paragraph 4.1 of the 1998 E-commerce work programme (WT/L/274).

It authorizes the WTO’s TRIPS Council to “examine and report on the intellectual property issues arising in connection with electronic commerce.”

Accordingly, “the issues to be examined shall include:

* protection and enforcement of copyright and related rights;

* protection and enforcement of trademarks; and

* new technologies and access to technology.”

In order to reinvigorate the 1998 Work Programme on Electronic Commerce (WPEC) in line with the WTO General Council Decision of December 2019, as well as the Ministerial Decision on the WPEC reached at the WTO’s 12th Ministerial Conference (MC12) in June 2022, South Africa has proposed an “intensification of discussions under paragraph 4.1 of the WPEC.”

It called for the TRIPS Council to include this item in its agenda as a standing item so as to facilitate “a deeper discussion of issues that could be based on a catalogue of themes that could be agreed by Members.”

South Africa underscored the need to mainstream “the relationship between intellectual property (IP) and development and the various Sustainable Development  Goals (SDGs)” into the discussion of the TRIPS Council.

It said that to meet the SDGs, there is an urgent need to harness new technology that could be accessed “by developing countries and LDCs, (and) supported by an effective framework for technology transfer.”

Citing the United Nations Conference on Trade and Development (UNCTAD) Digital Economy Report of 2021, South Africa said the report captures the transformative effect of digital technologies, as follows: “Increasing digitalization of the economy and society is changing the ways people act and interact. One of the distinguishing features of various digital transformations has been the exponential growth in machine-readable information, or digital data, over the Internet. Such data are core to all fast-emerging digital technologies, such as data analytics, artificial intelligence (AI), blockchain, internet of Things (IoT), cloud computing and all Internet-based services – and they have become a fundamental economic resource.”

Several studies have suggested that during the COVID-19 pandemic, there has been a rapid acceleration of digitalization processes, “as more and more people have continued, to the extent possible, with their activities through online channels – for example, for working, studying, communicating, selling and buying, or entertainment.”

South Africa said that at the cusp of this digital revolution are technologies such as key software-oriented technologies such as blockchain, data analytics and Artificial Intelligence.

It said another interesting development is the sudden surge in the deployment of “smart devices and digital interfaces to 3D printing, wearables, automation, robotics and cloud computing”.

That they are contributions to a notable digitization of the world is well established.

South Africa said the digital divide seems to impede “the participation of developing countries in digital value chains, while digital transformation is disrupting traditional sectors with severe socioeconomic consequences.”

On this basis, it said the UNCTAD report has concluded that “the current trends of new technologies being concentrated in a few countries and controlled by relatively few companies have implications for the ability of countries to participate in the technological learning processes needed to catch up and thrive in the digital economy.”

RELEVANCE OF TRIPS PROVISIONS

It is against this background that South Africa highlights the importance of Articles 7, 8 and 66.2 of the TRIPS Agreement, suggesting that they should be the basis for further discussions as part of the 1998 work programme on e-commerce.

South Africa said that Article 7 of the WTO’s TRIPS Agreement provides “a context to interpret the access to technology by emphasizing that the protection and enforcement of IPRs should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner that is conducive to social and economic welfare, and to balance rights and obligations.”

Stemming from Article 7 of the TRIPS Agreement, South Africa said in order to industrialize, it “is clear that developing countries would need more access to technology, however, it is also clear that as many developing countries pursue industrialization, they do so in the context of an international IP regime that is more constraining than it was in the 19th century when today’s advanced economies were pursuing their industrialization.”

In a similar vein, South Africa said Article 8 of the TRIPS Agreement “recognizes the right of WTO Members to adopt national measures to promote public interest in sectors of vital importance to their socio-economic and technological development as long as such measures are “consistent” with the TRIPS Agreement.”

In considering the consistency of measures, South Africa argued that “the inbuilt TRIPS flexibilities need to be taken into account across the entire spectrum of the TRIPS Agreement, including in relation to discussions that are taking place in other fora that may impact intellectual property rights.”

More importantly, it is well-recognized that data is “the new oil” in the current global economy, “a valuable resource from which information and knowledge can be extracted, and economic value created enabling the transformation of traditional sectors (i.e., the digitalization of trade via e-commerce).”

South Africa said data can also facilitate “the creation of new business models (i.e., platform economy) and new opportunities for industrialization. Preserving policy space to utilize data for digital industrialization is therefore important.”

Given the growing implications of electronic commerce, especially for developing countries, South Africa said that WTO members “need to identify the intellectual property issues arising from e-commerce, and discuss appropriate policy responses that address the development concerns, including in relation to the protection of the rights of indigenous artists, creators and small businesses, while also providing an appropriate balance to promote economic development and investment and achieve the objectives that are set out in the TRIPS Agreement, including in Article(s) 7, 8 and 66.2.”

It added: “Article 7 of the TRIPS Agreement broadly captures the need for balance between private property rights and public interest in respect of socio-economic and technological development,” and further links “the TRIPS Agreement directly with the 2030 SDGs and requires the promotion of technological innovation, transfer and dissemination of technology in a manner that advances the SDG goals.”

More importantly, South Africa said that “bolstered by Article 8 and Article 66.2 of the TRIPS Agreement, technology transfer is central to addressing development issues, including the digital divide.”

According to South Africa, “both demand and supply side issues are covered in these provisions, with Article 66.2 imposing a mandatory obligation on developed Members to provide a favorable environment and incentives to their enterprises and institutions to promote transfer of technology to LDCs.”

Lastly, Article 8 of the TRIPS Agreement “recognizes demand side imperatives that allow Members to promote public interest in sectors of vital importance to their socio-economic and technological development.”

To frame the discussions, as part of the 1998 E-commerce work programme concerning TRIPS-related issues, South Africa posed nine questions for members to discuss.

They include:

1. How can exceptions and limitations, in the IP system, be used as tools to ensure that the copyright and patent systems contribute to the promotion of innovation and to the dissemination and transfer of technology?

2. What are Members’ experiences in applying limitations and exceptions in the digital environment?

3. Articles 40.1 and 40.2 of the TRIPS Agreement deal with anti-competitive licensing practices. How have countries addressed anti-competitive conduct and structures with respect to e-commerce, including abuse of IPRs?

4. There is a rapid expansion in the number of patent applications related to AI technologies, including AI-assisted inventions and these may also be protected through trade secrets. What are countries adopting to improve access to such technologies?

5. What IP related policies have Members implemented in the area of source code protection, software and algorithms? What lessons have been learned in this regard in relation to competition, technology transfer and public interest?

6. Countries may establish in their national laws and regulations a series of liabilities for internet service providers (ISPs) & digital platforms. How are these issues addressed to balance IP enforcement with facilitating online use and digital content creation?

7. What are Members’ experiences with regard to regulating indigenous people’s rights and protections over data, indigenous data privacy, indigenous data sovereignty, and indigenous data governance?

8. What are Members’ experiences with regulating data that is derived from vulnerable populations, including rights and protections of those populations. What are the policy rationales for this approach to regulation and the implications for trade rules on e-commerce?

9. What are the implications of new business models – such as streaming services, e-commerce retailing platforms, machine learning companies, among others – on the IP system?

UN HLAB ON EFFECTIVE MULTILATERALISM

Meanwhile, the High-level Advisory Board on Effective Multilateralism (HLAB), established by the United Nations Secretary-General, has several important recommendations both on the international IP Architecture as well as on Digital and Data Governance.

These recommendations should be taken into consideration during the discussions proposed by South Africa on the 1998 E-commerce work programme and IPRs.

To start with, the HLAB calls for the “reform of the global trade and intellectual property system”, as it “allows for private monopoly of the crucial knowledge and technology that could accelerate an equitable shift to clean energy globally.”

It calls for a “global review of major bodies like the WTO’s Agreement on Trade-Related [Aspects of] Intellectual Property Rights (TRIPS) and the World Intellectual Property Organization (WIPO), driven by an understanding that the technology for a green transition is a global public good.”

The report emphasizes the urgent need for reform of the governance of trade and IP, so as to “regulate technology patents more effectively, increase limitations on patentability criteria to avoid privatization and/or enable distribution to those in need, and create incentives and disincentives to generate transparency and knowledge sharing.”

The report also calls for a “just digital transition” through the creation of a “Global Commission on Just and Sustainable Digitalization” and “convergence on principles for data governance through a Global Data Compact.” +