Wednesday, October 14, 2009

IPR takes centrestage in WTO dispute on cotton subsidies

The developed world is learning that the legal framework supporting and honouring the western IPR regime in a developing country cannot be taken for granted.

Brazil has been permitted by the WTO to retaliate against the injustice done to their cotton farmers by the generous subsidies doled out by the US to their cotton farmers, making it possible for them to undercut and underprice the cotton. And what form is this retaliation taking? Not new anti-dumping on US imports, or trade embargoes. 

Brazil has been permitted to allow their country's pharmaceutical companies to manufacture medicines in Brazil in deliberate violation of patents held by US companies. This one is a below-the-belt hit for the vibrant US pharma industry. Brazil is a huge market, and very lucrative too. All the lucre will disappear overnight in their Brazilian operations, if this were allowed.

This is very unfair, or very fair, depending on your point of view. 

For US companies, it will seem very unfair, because, for no fault of theirs, they are losing patent protection in a lucrative, large market (there aren't too many of those nowadays!). 

However, Brazil, and most of sub-Saharan Africa, which includes really poor countries like Chad, Mali, Liberia and Burkina Faso, will be cheering. They have cotton they cannot sell thanks to under-priced US cotton flooding international markets; they don't have factories that can add value to the cotton; and they have huge AIDS affected populations. Their cotton farmers and the AIDS patients will like the prospect of better times ahead.

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