The TRIPS Disagreement: Should GATT Traditions Have Been Abandoned?

The world standards for patents and copyrights established by the Agreement on Trade-Related Intellectual Property Rights (TRIPS) have been controversial from their inception. This article establishes parallels between cooperative increases in the duration of intellectual property protection and cooperative reductions in tariff protection. Whereas a country’s tariffs lead to unintended harm to other countries, its intellectual property protection generates unintended benefits. The long-established GATT principle of trade liberalization has traditionally achieved mutual gains for countries of all types through symmetric tariff rate cuts that result in different final rates. By contrast, the TRIPS agreement created the likelihood of losses for developing countries by requiring asymmetric increases in patents and copyrights to establish common worldwide standards. The technical annex to this paper formalizes the analysis with a simple model of “North-South” patent protection. Sample calculations suggest a decline in the net benefits from innovation in developing countries in the order of 40 percent.