October 3, 2012 10:17AM

Should Trade Agreements Protect Intellectual Property?

In the Wall Street Journal, former U.S. Trade Representative Charlene Barshefsky argues for strong intellectual property protection in international trade agreements, in particular the Trans Pacific Partnership (TPP) currently under negotiation:

Every country’s competitiveness and economic well‐​being ultimately depends on its companies’ ability to innovate. So governments’ trade policies should help companies to successfully realize returns on their innovative capabilities so that they have the incentive to continue developing the new products that will improve consumer welfare and deliver rising wages and living standards.

The touchstone for evaluating TPP should be whether it positions the U.S. to compete on the basis of innovation. The United States trade representative has been seeking to ensure that TPP is such an agreement—but difficult work lies ahead.

To meet this test, the agreement needs strong intellectual property provisions, which several TPP negotiating parties are reportedly resisting.

U.S. companies have lots of intellectual property, and it’s not suprising that they want it protected. But this is not a free trade issue, and it does not really fit within trade agreements (despite the fact that it has been in there for more than two decades now — it didn’t fit at the beginning, and it doesn’t fit now). It’s in there because powerful interest groups want it in there, not because of any real connection to free trade.

In fact, including intellectual property in trade agreements is more akin to protectionism, as the U.S. pushes for inclusion so as to give U.S. companies an advantage in global markets. Barshefsky says: “governments’ trade policies should help companies to successfully realize returns on their innovative capabilities.” I don’t think that’s what trade policy should do at all. Trade policy should pursue free trade, which is in the interest of the country as a whole, not go to bat for particular domestic companies or industries.

That’s not to say there are no issues with regard to global protection of intellectual property rights. Most people would agree that intellectual property deserves some protection. The real question, though, is how much protection. The U.S., with lots of intellectual property, wants a good deal of protection. Developing countries, with less of it, want weaker protection. None of that is surprising. The way I see it, these countries can argue about what the right level of protection is, and find an acceptable balance between the competing interests. They can negotiate this directly, or in an international forum devoted to intellectual property. But I can’t see any good reason to do this in trade agreements.