Patents and technology transfer through trade and the role of regional trade agreements

Abstract

Regional trade agreements can have powerful impacts on technology transfer (TT), primarily through their effects on trade in high-technology goods and services, foreign direct investment (FDI), and licensing, all of which are key channels of information diffusion. In that context, regional trade agreements (RTAs) and mega-regionals such as the TPP embody considerable promise for direct expansion of TT, if primarily within the agreement. Moreover, recent econometric evidence largely finds that each of these flows responds positively to strengthened patent laws and other intellectual property rights (IPR), though this conclusion must be conditioned on a variety of factors (Maskus, 2012). These basic observations suggest that there could be an important complementarity between the formation of trade agreements and their IPR standards, a critical question that has not yet attracted much investigation.In addition, it stands to reason that countries joining RTAs are likely to observe growing within-agreement patent registrations. In that context, patent applications in themselves can facilitate the international diffusion of technological information. Patents are published and may be read by firms seeking to learn new technologies and invent around them, or simply to imitate them if associated patents are not in force in a particular location. At the same time, patents embody market power and may be deployed in ways that diminish access to technologies, whether through restrictive licensing practices or unaffordable rights fees.These basic observations point to the importance of thinking about how international strategies might be devised to increase TT on affordable terms in key sectors going forward, with some emphasis on the potential roles RTAs could play. An opportunity for such reflection arises in the recently completed negotiations of the TPP and continuing intergovernmental and NGO work on climate change and access to medicines. In brief, I argue that RTAs could play a positive role if they are supplemented with additional financing commitments, technical assistance, and knowledge sharing. In this context they could be useful complements to larger global initiatives, including an agreement on access to basic science and technology.