The multilateral trading system established by the World Trade Organization (WTO) has supported global prosperity. Recent events, though, have introduced new unpredictability, leaving businesses unable to plan for the future. This context highlights limitations in investment rules and enforcement urging WTO Members to pay attention to the issues regarding intellectual property rights, and agree on necessary reforms to improve the WTO’s functioning and avoid chaos in global markets.
Predictability, well-regulation and cooperation became the cornerstone of a current global trade regime that aims to benefit all nations. To achieve this goal, the WTO and its predecessor, the General Agreement on Tariffs and Trade (GATT), have provided the structures for trade negotiations, global trade rules, and dispute resolution since 1947, fostering globalization and international trade. In addition, impacts of WTO to global trade are positive even for non-industrialized countries. Not only the imposition of low tariffs on all the countries of the agreement aided in the commerce of the developing world, but the framework created by WTO simplified the access of the agricultural countries to the industrialized markets.
Recent events, specially the tariff war between the U.S. and China brought WTO reform to the top of the G20, US, EU, as well as Brazil’s agenda. [1] Much of the tension has its origin from U.S. accusations that the WTO has not hold China to account for delaying to open up its economy when it joined the body in 2001. The U.S. imposition of punitive tariffs on China in response to concerns about intellectual property rights, and the resulting retaliatory tariffs, in JONES 2019 words “flies in the face of one of the WTO system’s main goals: to put an end to the unchecked escalation of self-destructive tariff wars ”. [2]
U.S. trade representatives gave a different interpretation to the GATT article XXI [3] , that allows tariffs in wartime and national security emergencies, to impose unilateral protectionist tariffs on steel and aluminum imports. The argument is that unemployment in an industry counts as a national security threat. The U.S. also brought back to life the use of voluntary export restraints directly violating WTO regulations. In addition to roundabout and breaking WTO rules, the U.S. has rejected the organization’s system for dispute resolution. In its place invoked the Section 301 of the American Trade Act [4] to resolve conflicts through unilateral tariffs, a practice vastly used by the U.S. before WTO.
In Doha 2001 there was an attempt to update trading rules. A central problem was the difficulty of getting the WTO Members to reach a consensus. For a WTO 2.0, it is imperative for its Members to reach a common understanding that the new multilateral agreements should include rules that promote not only the practice of traditional trade but also the new modus operandi of trade with the new chains value.
One third of the value of manufactured goods sold globally, $ 5.9 trillion, comes from intangible capital, highlighting the importance of IP to the current global economy. However, counterfeit and pirated products account for 2.5% of global trade, according to WIPO 2017 report. Therefore, to ensure that modern trade and investment can continue on non-discriminatory terms for all, the WTO must put intellectual property first.
The global trading system needs to be updated and reformed, but its underlying principles are solid. A reality where economic actors cannot make plans within a predictable, rules-based system – meaning chaos – will lead to markets, businesses, investors, and consumers suffer. The international economy has become dependent on the WTO order and, at some point, the Members will reach an agreement to improve its functioning and stability that leads to international investment and growth.
1. The WTO Reform and Brazilian engagement on the subject, were part of the Brazilian President, Jair Bolsonaro, speech during the FWO meeting in Davos, CH, the 22-Jan-2019. Available at: http://www.itamaraty.gov.br/pt-BR/discursos-artigos-e-entrevistas-categoria/presidente-da-republica-federativa-do-brasil-discursos/19984-discurso-do-presidente-da-republica-jair-bolsonaro-durante-a-sessao-plenaria-do-forum-economico-mundial-davos Last access: 17-Feb-2019
2. JONES, Kent. Is This the End of the WTO as We Know It? Published at the Barron’s Magazine in 29-Jan-2019. Available at: https://www.barrons.com/articles/the-world-trade-organization-is-weakening-and-thats-not-good-51548770447. Last access: 17-Feb-2019
3. GATT Article XXI – “Nothing in this Agreement shall be construed (…) (b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security; (…) (iii) taken in time of war or other emergency in international relations;” OMC. GATT. Available at: https://www.wto.org/english/docs_e/legal_e/gatt.pdf. Last access: 17-Feb-
2019
4. The article “Section 301 And The New WTO Dispute Settlement Understanding” by Susana Hernandez Puente, from 1996, gives a deeper view of the U.S’s approach to the Section 301 as a means of securing broad trade liberalization and its use to secure US companies overseas IP rights, which was justified by understanding that the dispute settlement procedure as weak and the inadequate scope of the GATT.
Aline Schraier de Quadros
é advogada de Propriedade Intelectual, formada na UFPR e Universidade de Coimbra, tem experiência nas áreas de Propriedade Intelectual, Estratégia, Transferência de Tecnologia, Contratos e Direito Empresarial. Conecte-se com Aline pelo LinkedIn.
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