The past several weeks have seen an orchestrated move by the industry lobbies in the US to challenge Indias intellectual property (IP) laws (read patent laws). The trigger for the orchestration is the annual review of the IP laws of its partner countries that the US Trade Representative (USTR) is conducting. These reviews began in 1989, after the enactment of the Omnibus Foreign Trade and Competitiveness Act of 1988. Special 301 provisions of this Act authorises the USTR to annually identify priority foreign countries whose failure to protect IP is the most onerous and has the greatest adverse impact on US products and which are not making significant progress in providing adequate and effective protection of IP rights (IPR). The USTR has the rights to retaliate against any country if it refused to reform its practices satisfactorily.
It is pertinent to note that the USTR was given powers under Special 301 when the Uruguay Round of negotiations under the General Agreement on Tariffs and Trade (the predecessor organisation of the WTO) was considering the inclusion of IPRs as an additional area within the purview of the multilateral trading system. India, along with several developing countries like Brazil, had opposed the inclusion of IPRs in the trade rules.
In the first year of Special 301s implementation (1989), the USTR did not identify any priority foreign country. Instead, it created the watch list and priority watch list of countries. However, in the three crucial years before the end of the Uruguay Round of the WTO negotiations in 1993, India was identified as a priority foreign country. This was clearly done with a view to seal the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which India, along with several other developing countries, was reluctant to accept. In opposing the TRIPS agreement, developing countries had argued that the agreement would strengthen the patent monopolies, which would result in increase in prices of life-saving products like pharmaceuticals.
WTO came with the expectation that unilateral actions by the dominant economic powers will be passé. However, the expectations were belied: USTR refused to discontinue the Special 301 investigations even when these investigations run counter to the letter and spirit of the WTO. In fact, the dispute settlement undertaking (DSU) of the WTO restrains the members of the organisation from making a determination of a
violation of any of the covered agreements, except through recourse to dispute settlement