The World Trade Organization was created to protect free-trade rules to spread prosperity. Now it's becoming a vehicle to raid U.S. innovation. See Friday's agreement by the WTO's 164 members that lets developing countries, including China, steal intellectual property for Covid vaccines.
The White House is flogging the deal as a diplomatic victory. But it's an enormous defeat for U.S. national interests that will benefit China and set a precedent that erodes intellectual property protection. This won't be the last time global grifters seek to pilfer U.S. technology.
The WTO fight began in fall 2020 when India and South Africa submitted a resolution to suspend IP protection for Covid vaccines, therapeutics and tests. They quickly rallied support from low-income countries and progressives who complained about a lack of "equity." Never mind that the U.S. and Europe financed the development of these technologies.
Succumbing to pressure from the left, President Biden endorsed an IP waiver. He also undercut European allies who opposed the patent giveaway. And for what? Vaccine makers had already committed billions of doses to developing countries. Now the world is awash in vaccine doses and tens of millions are thrown out because low-income countries lack the healthcare infrastructure to distribute them. This makes the WTO agreement all the more perplexing.
WTO rules already set out a process for compulsory patent licensing of drugs in developing countries during public-health emergencies. These rules require some due process and fair compensation for drug makers. They also protect against public disclosure of clinical trial data that include trade secrets. The new agreement overrides these rules.
An earlier draft of the compromise would have prevented China from taking advantage of the waiver. Friday's agreement doesn't. It merely says that developing countries such as China "with existing capacity to manufacture COVID-19 vaccines are encouraged to make a binding commitment not to avail themselves of this Decision" (our emphasis).
In short, there's nothing legally binding to stop China from stealing U.S. mRNA technology, using it to develop its own vaccines including for other diseases, and then selling the shots under their own brands. The agreement lasts five years so it could potentially cover a future combined mRNA vaccine for Covid, flu and respiratory syncytial virus.
Despite their victory, waiver advocates aren't satisfied. "Vaccines have already lost relevance," India's Minister of Commerce and Industry Shri Piyush Goyal said. The West's "hope is to unburden their chest of any guilt today, show the world that we have been so magnanimous today, kick the can down the road for therapeutics and diagnostics which are really now essential."
Guilt for what? Saving millions of lives through biotech innovation?
The only silver lining is the agreement doesn't extend to Covid testing technologies and therapeutics, at least for now. But it requires WTO members to decide within six months whether to do so. Will the Biden Administration rush to the ramparts to defend Pfizer's Paxlovid patents this fall? Don't bet on it.
Why did the Biden Administration and Europeans go along with the deal? Maybe they figure countries won't take advantage of it because Covid vaccines are plentiful. But this is short-sighted. Now that the WTO has set the precedent of breaking patents during emergencies, there will surely be more demands to do for other "essential" technologies.
Lo, United Nations Secretary-General António Guterres recently proclaimed that "renewable energy technologies, such as battery storage, must be treated as essential and freely-available global public goods" and "removing obstacles to knowledge sharing and technological transfer—including intellectual property constraints—is crucial for a rapid and fair renewable energy transition."
Semiconductors and genetically engineered crops could become fair game too. IP protection encourages companies to invest in new technology. It is a major reason the U.S. is more innovative than China. By undermining the incentives that underpin innovation, the WTO agreement will hurt America, and that means the world too.
Journal Editorial Report: The week's best and worst from Kim Strassel, Jason Riley and Dan Henninger. Images: AFP/Getty Images/Reuters/Zuma Press Composite: Mark KellyCopyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the June 18, 2022, print edition.
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