IPRs give "double advantage" to owners under MEAs

by Chakravarthi Raghavan

GENEVA: Global Intellectual Property Rights (IPRs) under the WTO/TRIPs accord and Multilateral Environment Agreements (MEAs) with time-bound environmental targets are providing double benefits to owners of IPRs, an expert meeting under UNCTAD auspices was advised in the first week of November.

The meeting (3-5 November) of Experts on Positive Measures to Promote Sustainable Development, Particularly in Meeting the Objective of Multilateral Environment Agreements, ended with a summary from the Chair, but no agreed conclusions.

Problems of technology transfer

Some participants said that although there were no agreed conclusions, there was some "progress" in that several of the international institutions admitted what they had skirted around before, namely, that there were problems of technology transfer, and if not resolved, would come in the way of the implementation of Multilateral Environment Agreements and future agreements would find it difficult to attract developing country support.

The issue reportedly came up in the context of the experience of India over the Montreal Protocol for phasing out of Chlorofluorocarbons (CFCs), and other ozone depleting substances (ODS) which are on the agenda of the Contracting Parties to the Montreal Protocol.

The problem of CFCs and getting technology for substitutes has also arisen in the case of China and South Korea, where domestic companies have been producing CFCs and using them for refrigerators and other products, and are facing difficulties.

According to the Chair's summary, "a lively debate" developed on whether these problems were related to IPR protection that is granted to the technology owner, or to "weak" IPR regimes, "discouraging" an investment climate, or to "inadequate" payments by companies in recipient countries.

In the case of India, it has been brought out at the WTO Committee on Trade and Environment (CTE) as well as in public discussions, that the TNCs having patent rights for the substitutes have been refusing to licence the tecnnology for the substitutes on commercial terms, at "reasonable costs", but have been demanding equity rights (including majority ownership rights) in the Indian enterprises making the CFCs used in refrigerators and other consumer products.

[The new technologies for substitutes are in fact held by the same TNCs in the North, who long after the ozone-depleting character of the CFCs were known, had expanded production and in finding more uses, had sold the technology to the three developing countries. Instead of the "polluter pays" principle, the firms are being rewarded for their past activities]

Experts from India and South Korea reportedly narrated the difficulties of their countries in this matter. There was no Chinese expert at the meeting.

Some experts rebutted the view that the difficulties were due to a weak IPR regime and restrictions on foreign investors, by pointing out that similar concerns about accessing Environmentally Sound Technologies (ESTs) for ODS substitutes also prevailed in other producing countries which have strong IPR regimes and have received large amounts of FDI.

It was suggested by some experts that financial mechanisms could play a role in filling the gap between the interests of technology owners, and requirements and abilities of licensees.

It was suggested in this regard that a technology rights bank could be created under the financial mechanism of the Montreal Protocol with involvement of TNCs in the initial stages of the negotiations.

The Chair's summary does not indicate what this last would actually achieve. In the case of the Montreal Protocol negotiations, US TNCs were fully involved, and the US agreed to a Protocol only after they had given clearance and said they would be ready with substitutes.

Another issue involved related to the diminishing level of official development assistance (ODA) and the need for "innovative approaches" to financial mechanisms - national environment funds, green investment funds quoted in international stock markets and joint ventures on sustainable development projects.

Investments in the "green funds" in the OECD countries, which are tax-free, were considered suitable by some to promote sustainable development projects in the developing countries.

Under market-based instruments, there were discussions on Joint Implementation and emissions trading (both being promoted and pushed by the US in the context of the climate change negotiations).

A US expert presented the US experience on emissions trading permits, in relation to acid rain problems, and said that environmental benefits had been achieved at substantially reduced costs as compared to regulatory measures. From this experience, the US expert said, that an international emissions trading system could be evolved for dealing with Greenhouse Gases (GHGs).

A Brazilian expert explained Brazil's proposal for a Clean Development Fund, which has been supported by the G77 and China at the climate talks. He suggested that this could be of use in the context of positive measures to help developed and developing countries to achieve the objectives of the UN Framework Convention on Climate Change (UNFCCC).

Joint Implementation

On Joint Implementation (JI), several experts from developing countries expressed concern that JI could distract attention from the obligations of Annex I parties to the FCCC to meet their commitments - particularly those related to technology transfer and finance.

Some of these experts said that JI was a supplementary tool in the context of the UNFCCC and the design of JI schemes should give full attention to the promotion of technology transfer in accordance with the priorities of the host country.

Another expert said that for host countries which voluntarily participate in Joint Implementation schemes, the value of the projects that transfer energy-efficient technologies may be greater than projects promoting carbon sequestration.

Several of the industrialized countries promoting JI, have preferred carbon sequestration (through forests and so on) and taking credit for it in terms of their own emissions, rather than technology transfer, which they argue is in the hands of their private enterprises and developing countries have to provide necessary incentives and an investment climate for this. (Third World Economics No.174, 1-15 December 1997)

Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS).