US President Donald Trump lived up to his reputation as America’s most volatile and impulsive President ever during his maiden address to the UN General Assembly. Even the most clairvoyant analyst would not have predicted that he would not just threaten to totally destroy North Korea and mock its President but also disparage the efforts of those trying to get Kim Jong-un see reason. Trump has shown his disregard for institutions and their processes right from his inauguration by sacking nearly four dozen ambassadors. The result: India does not have a US envoy while the tiny Sri Lanka has one. Having already sent the normal channels of conducting diplomacy in a tailspin, his single sentence damning North Korea, besides Russia and China, may be the biggest blow to US diplomacy yet.

The offensive tone of President Trump’s speech is unlikely to persuade China and Russia to support more sanctions on North Korea and may even persuade them to lend back-handed support to Pyongyang. None of his allies are also going to be on board for a nuclear weapon-led military action that will impose horrendous casualties in the Korean Peninsula as also on Trump’s fellow citizens and the Japanese if Kim opts for preemptory strikes. If Kim was guilty of dangerous overreach by sending missiles over Japan, Trump has joined him in the dunce’s corner.

By making the ultimate threat of use of nuclear weapons, Trump has also inadvertently strengthened Kim domestically. Trump has gifted the North Korean enough domestic political capital to ride over the hardships of the fresh round of sanctions. And if Trump also tries to go back on the Iran nuclear deal, both China and Russia would have enough reasons to suspect that the neo-Con vision of a unipolar world is once again in play. Instead of continuing to assist the US, they would be more inclined to let Trump stew in the embarrassment of the world’s most powerful nation not being able to carry out a threat broadcast no less from the global high table against the world’s economic and political basket case.

(Tribune India)

It must reopen the discussion on balancing the global intellectual property system with development

Global trade and intellectual property are at a crossroads. In a time when multilateral consensus is languishing on a large number of issues, the Trump administration is considering pulling the U.S. out of most free trade agreements on the ground that it needs a more favorable environment for its companies and its people. Much will be written about the carnage as far as jobs, wages and national sovereignty that the current American onslaught on trade deals brings to the fore. Here, I focus on a critical issue — how trade deals are becoming the new Trojan horse to ensure stronger patent protection and continued profits to global companies.

Problem with trade deals

A bit about the historical trajectory of events. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) embodied an international regulatory regime for the first time, in 1995. Although it represented a major compromise for most developing countries, it was only the starting point for many other nations, which have since then promoted excessive protection of private investor interests through bilateral trade agreements, often at the expense of wider public interests. Corporate libertarians, riding high on increased market power, continue to lobby their governments for absolute protection of intellectual property (IP) rights of corporations.

For the U.S., which has never made any qualms about the importance of its domestic corporate interests, trade agreements are a prime vehicle to supplant its strong domestic standards of IP protection in partner countries, in a bid to ensure the same level of privileges for its companies abroad. Over the past 20 years, the American strategy has been a neat one: to pursue bilateral agreements with individual countries one by one to ensure stronger IP protection across markets, by sidestepping the multilateral regime.

Gaming the system

 In an inter-connected and highly globalized world, what goes around comes around quite fast and often with drastic consequences for all. In this case, the crux of the matter lies in how these stronger rules are changing the global corporate landscape. For years now, while patent protection is getting stronger in all sectors in a large number of countries, the conditions for its grant are becoming greatly relaxed. Not only do such lax patenting requirements allow companies to claim patents more broadly — or consecutively, with little show of original effort as in the case of evergreening — but also patents can be claimed on all possible inventions (and discoveries) that are of relevance to the present, and even to the future. A large number of countries have already foregone many degrees of policy freedom by signing up to ‘TRIPS-Plus’ standards of protection. This, in conjunction with other trade measures, is disintegrating existing markets and rigging established rules of the game. A superstar firm today is not necessarily one with the greatest technological breakthroughs or the largest research and development labs, but surely is one that has a large IP portfolio, engages in extensive litigation on patent issues, and thrives on licensing revenues. Noting the gravity of the situation, The Economist in 2016 produced two short opinion pieces on how corporate profits and returns on capital are at near record levels in the U.S. and what might be wrong with it. It argued that established companies are “becoming more entrenched” in existing markets worldwide, and made the case that high profits may be a sign of a sickness rather than growth and called for reining in IP rights.

At the global level, these sectors are stratified, with profits neatly split up between large corporations and new kinds of non-innovator firms that simply amass patents speculatively in upcoming, promising technologies for spurious returns. The non-innovator companies are the patriciates of the system: when they hit the technology jackpot, they control the market and have the power to shift wealth and control competition. An example that beautifully captures the situation is Qualcomm Inc., an American company that is the legal patent holder of thousands of patents that are considered critical to build mobile phones with wireless technologies, accounting for a total profit of $5.7 billion through intellectual property licenses in 2016 alone.

Stemming the tide

For India, the fate of its pharmaceutical and software sectors swings in the balance, and guaranteeing fair and unfettered competition will be critical to ensure that we do not lose more ground to global companies abroad and at home. The United Nations Conference on Trade and Development (UNCTAD)’s recent Trade and Development Report calls for stronger measures to protect domestic sectors against the undue domination of large companies, particularly in high-profit sectors such as pharmaceuticals, media and information and communications technology (ICT), where foreign companies still account for most of the transfer of profits across borders. Warning against trade deals that seek to protect the status quo, the report identifies patents as an instrument of unfair market power across markets. The report uses data for U.S. multinational companies (MNCs) and their foreign affiliates in India to show that patent reforms have led to significant increases in the rates of return to affiliates of American companies by enabling monopoly profits when compared to publicly listed and locally headquartered companies, which are increasingly being left behind. In the pharmaceutical sector, for example, the analysis that ranges 20 years (from 1996) shows that profits of domestic companies are in sharp decline since the late 2000s while those for the American MNC affiliates operating in the Indian market are rising steeply. A similar trend is visible in the ICTs sector as well.

It is important to take these findings in the broader perspective of what India’s growth drivers will be in the years to come. Our high-technology sectors are already taking a beating because they operate in a volatile global environment. Supporting IP standards that simply follow a ‘winner takes all’ ideology without emphasis on technological advancement and competitive markets will be a regrettable mistake. What India needs right now is a clear and tough stance on intellectual property both in domestic policy and at the multilateral level. At home, support for innovation has to be accompanied with instruments that guard against the misuse of market power, coercive bargaining and aggressive merger and acquisition strategies if local firms should survive and flourish.

Heated negotiations in the run-up to the upcoming WTO Ministerial Conference in Argentina already show that these issues will be central: there are ongoing attempts by big business to push for new rules in areas such as e-commerce to slice up profit-making opportunities of the future. Other proposals being made will largely limit the ability of governments to constrain corporate behavior in the public interest even if they succeed partially. In such an international context, we need to stop soft-peddling on these issues in the pretense that we aspire to be a major IP player in the same vein as the U.S. What we need is a return to old-fashioned pragmatism that clearly shows the West that India recognizes the fallacy of the current IP system and leads the way to broker a global new deal. This new deal should not only call for a return to business in the WTO by tackling the forgotten issues of the Doha Round but also firmly reopen the discussion on balancing the global IP system with development. That way, even if we don’t win in Argentina, we will have made an ambitious start in redefining the global trade and IP agenda.

(The author is a policy expert at the United Nations Conference on Trade and Development, is one of the authors of the Trade and Development Report 2017)

 

 

 

 

“Notwithstanding the carefully structured discussions between the two leaders — and while Doklam did not figure in the discussions — relations between India and China are unlikely to show any marked improvement in the near, and perhaps even in the medium, term. For the present, avoidance of a conflict will remain the principal objective on both sides, with China no doubt looking for an expansion of opportunities for trade. The key watchwords would, hence, be peace and tranquility”, says the author.

 

The Brazil, Russia, India, China and South Africa grouping (BRICS) has since long ceased to be of material significance as multilateral institutions go. The recent BRICS Summit in Xiamen (China) only seemed to confirm this. It suggests that BRICS may be going the way of quite a few other organizations.

Inconsequential declaration

Little of consequence appears to have happened, or to have emerged, from the latest summit. The Xiamen Declaration is proof of this. Considering that this meeting was taking place in the shadow of significant global events, notably North Korea’s nuclear provocations and the U.S. response, other serious developments in Asia, including Afghanistan and West Asia, apart from issues of consequence elsewhere, the absence of any reference to these events in the Summit Declaration suggests that BRICS is clearly out of sync with current realities.

Much has been made by the media about the inclusion of Pakistan-based terrorist groups such as the Lashkar-e-Taiba and the Jaish-e-Mohammed among the many terrorist groups active in the region. It, however, needs to be understood that this was merely a reiteration of something already mentioned in the declaration of the Heart of Asia Conference held in India in December 2016.

The Heart of Asia declaration had highlighted the ‘gravity of the security situation in Afghanistan and in the region, drawing attention to the high levels of violence caused by the Taliban, terrorist groups including the Islamic State, al-Qaeda and its affiliates, the Haqqani network, Islamic Movement of Uzbekistan, East Turkestan Islamic Movement (ETIM), Lashkar-e-Taiba, Jaish-e-Mohammed, Tehreek-e-Taliban Pakistan, Jamaat-ul-Ahrar, Jundullah and other foreign terrorist groups’. To attach special significance to the inclusion of this passage in the Xiamen Declaration, and view it as China administering a resounding slap on its ally, would be a profound mistake.

The BRICS declaration is perhaps more significant for what it did not include. Absence of any mention of China’s Belt and Road Initiative (BRI) — even though Beijing sets such great store by it — is one. At this point, one can only speculate on the reason. It is possible that China may not have wanted to introduce a discordant note into the proceedings — knowing India’s reservations regarding the project — of a conference that it was presiding over. Or perhaps, China does not think that BRICS could make a material contribution to the achievement of its objective.

BRICS’ limited scope

One takeaway from the conference also could be that China sees little use of BRICS to achieve its geopolitical and geo-economic objectives across Asia and beyond. BRICS as a body can hardly help China in dealing with a knotty problem like North Korea. It has no need for BRICS to deal with problems such as the South China Sea and freedom of navigation on the seas. From its point of view, BRICS is an outlier as far as pressing problem in the region and beyond are concerned.

BRICS suffers from other infirmities as well. Brazil and South Africa are increasingly becoming peripheral to BRICS’ aims and objectives. Russia is currently more preoccupied with establishing its supremacy in Eurasia, and its interest in BRICS is not of the same order as in the past. This leaves only India, and limits the scope of BRICS to issues and regions such as Afghanistan that have featured in previous BRICS meetings.

The summit, however, provided an opportunity for leaders to meet and conduct business. For instance, Prime Minister Narendra Modi’s intervention at the BRICS Business Council helped highlight India’s emergence as one of the most open economies on the globe. At the BRICS Emerging Markets and Developing Countries Dialogue, Mr. Modi highlighted India’s long tradition of partnership with fellow developing countries. Among the ten commitments he listed was that of creating a safer world by “organized and coordinated actions on at least three issues: counter-terrorism, cyber security and disaster management”. The Prime Minister also called for a skilled, healthier and equitable world, as also the critical importance of sustainable development goals.

Bilaterals, Beijing détente

Considerable significance attaches to the meetings held between Mr. Modi and the Russian and Chinese leaders on the sidelines of the summit. The emphasis during his meeting with Russian President Vladimir Putin seems to have been on the restoration of ties between the two countries to levels that existed in the past. Discussions also centered on ways to boost bilateral trade and investment, especially in the oil and natural gas sectors.

The meeting with Chinese President Xi Jinping acquired particular significance coming as it did after the over two-month-long stand-off at the Doklam Plateau. The convergence between the two countries on international terrorism at the BRICS Summit seems to have led to a thaw for the time being. Assurances emanating from the meeting, and the adoption of a low-key approach, were aimed at enhancing mutual trust. The intention seemed to be to establish ‘new ways’ to prevent future incidents such as Doklam, and concentrate on essentials needed to establish better relations.

Notwithstanding the carefully structured discussions between the two leaders — and while Doklam did not figure in the discussions — relations between India and China are unlikely to show any marked improvement in the near, and perhaps even in the medium, term. For the present, avoidance of a conflict will remain the principal objective on both sides, with China no doubt looking for an expansion of opportunities for trade. The key watchwords would, hence, be peace and tranquility.

The road after Doklam

It would take much longer for trust to return; as it is, trust between the two countries had begun to be affected as India moved closer to the U.S., strengthened its relations with countries like Japan and Vietnam that were not too well disposed towards China, and participated in multilateral defense exercises which appeared to have an anti-China slant. In the circumstances, restoring trust is not going to be easy.

In Astana in June this year, when the Indian and Chinese leaders met on the sidelines of the Shanghai Cooperation Organization Summit, the emphasis was on not allowing “differences to become disputes”. This was reflected in the so-called Astana Understanding. Doklam effectively put paid to this. While Mr. Modi is possibly willing to put Doklam behind him, the Chinese are unlikely to do so and are more likely to moderate their response keeping the Doklam incident in mind. China may continue to reiterate the obvious and talk of ‘peaceful co-existence and mutually beneficial cooperation to strengthen bilateral relations’, but India needs to be cautious. China is likely to view India’s actions with even greater suspicion than hitherto.

The kind of language employed by the Chinese side in the context of the meeting of the two leaders is an index of this. Mr. Xi observed that China and India are “each other’s opportunities and not threats”; India and China “need to show to the world that peaceful co-existence and win-win cooperation is the only right choice for the two countries”; China would like to work with India to uphold the Five Principles of Peaceful Co-existence (Panchsheel), advance political mutual trust, mutually beneficial cooperation and move forward the development of bilateral relations along the right track. This might sound like accenting the positive in Sino-Indian relations and moving to a more calibrated approach, but it does not necessarily reflect any greater willingness on the part of China to see the other side’s point of view.

Evidently, the China-centric world view will continue to prevail. For the moment, China is anxious to maintain peace on its border with India, as China has lately been sensing opposition to its policies from many other countries, apart from a host of problems in its neighborhood. In totality, these could undermine the Chinese Dream of Mr. Xi. North Korea is perhaps the most vexatious of the problems, one that is happening on China’s doorstep. Smaller countries of Southeast Asia such as Indonesia, and even Singapore and Vietnam, are signaling opposition to China’s restrictions on rites of maritime passage and freedom of navigation in the seas around China.

China also faces an ever-widening arc of threats from terrorists of different categories such as the ETIM, the Islamic Movement of Uzbekistan and Uighur separatists to its West. With the critical 19th Party Congress set to take place soon, peace and tranquility on its periphery has thus become an imperative necessity.

(The author is a former National Security Adviser and a former Governor of West Bengal)