Frank Samolis: Waiving patent rights will make us less prepared for the next pandemic
The World Trade Organization (WTO) recently released the text of a proposal to suspend patents on COVID-19 vaccines. All WTO members will vote on the proposal in June. The text won’t take effect unless all 164 members sign on. But if it is approved, companies in developing nations will be allowed to use medical technology from U.S. companies and inventors without their consent or supervision. Waiving patent rights would hurt not only the American companies that developed COVID-19 vaccines, but the biopharmaceutical sector, medical innovation, and the U.S. economy as a whole. And invalidating intellectual property rights would fail to address the real problem that waiver advocates say they want to fix: low vaccination rates in the developing world. The governments of India and South Africa, which first petitioned the WTO for a patent waiver in 2020, insist that suspending intellectual property rights will boost manufacturing and thus get more shots into arms. That simply isn’t true. According to the analytics firm Airfinity, about 12 billion COVID-19 vaccine doses have been delivered to date, and global production capacity for 2022 is 20 billion. That’s more than four doses for every person on the planet. Doses are piling up unused. In February, the Africa Centres for Disease Control and Prevention stopped accepting vaccine donations, as its stockpiles are full and excess supply could expire. India’s largest drug manufacturer, the Serum Institute, has 200 million doses stockpiled and has ceased production until new orders come in. The problem is not production — it’s distribution. Some of the actual challenges hampering vaccine distribution are public skepticism and lack of infrastructure. Well-executed foreign aid could help expand access. But we won’t solve any of these challenges by upending intellectual property rights. To the contrary, doing so would undermine global public health for decades to come. At the simplest level, a patent protects an inventor’s right to make and sell her product for a set period of time. A patent doesn’t guarantee business success; rather, it encourages inventors to risk time and money on developing products that may or may not prove successful. America’s robust intellectual property protections are the reason so much innovation takes place in the United States. Notably, strong intellectual property laws encouraged years of research into messenger RNA, the technology underlying the COVID-19 vaccines made by Pfizer and Moderna. If we cancel vaccine patents, we won’t just punish the companies that delivered these life-saving inoculations. We’ll also undercut the small biotech firms that licensed their groundbreaking tech to these larger, vaccine-producing behemoths. And we’ll slash investment into drug development as a whole. Before entering an international agreement to waive patent rights, the Biden Administration should consult with Congress and the U.S. Patent and Trademark Office (USPTO), the agency charged with protecting intellectual property. Previous directors of the USPTO — from the Obama and Trump Administrations — have spoken out strongly against the patent waiver. Some of those pushing for a patent waiver may genuinely want to increase vaccine access and improve global public health. But if the current proposal becomes international law, it will distract from real solutions. And it will undermine our ability to fight disease in the future. Frank Samolis, an attorney, is a partner and co-chair of the International Trade Practice at Squire Patton Boggs. Previously, Frank was counsel to the Subcommittee on Trade of the Committee on Ways and Means, US House of Representatives. The views expressed here are his own. This piece originally ran in the Detroit News. Republished with the permission of The Center Square.
China raises tariffs on US pork, fruit in trade dispute
China raised import duties on a $3 billion list of U.S. pork, fruit and other products Monday in an escalating tariff dispute with President Donald Trump that companies worry might depress global commerce. The Finance Ministry said it was responding to a U.S. tariff hike on steel and aluminum that took effect March 23. But a bigger clash looms over Trump’s approval of possible higher duties on nearly $50 billion of Chinese goods in a separate argument over technology policy. The tariff spat is one aspect of wide-ranging tensions between Washington and Beijing over China’s multibillion-dollar trade surplus with the United States and its policies on technology, industry development and access to its state-dominated economy. Forecasters say the immediate impact should be limited, but investors worry the global recovery might be set back if it prompts other governments to raise import barriers. Those fears temporarily depressed financial markets, though stocks have recovered some of their losses. On Monday, stock market indexes in Tokyo and Shanghai were up 0.5 percent at midmorning. Beijing faces complaints by Washington, the European Union and other trading partners that it hampers market access despite its free-trading pledges and is flooding global markets with improperly low-priced steel and aluminum. But the EU, Japan and other governments criticized Trump’s unilateral move as disruptive. The United States buys little Chinese steel and aluminum following earlier tariff hikes to offset what Washington says is improper subsidies. Still, economists expected Beijing to respond to avoid looking weak in a high-profile dispute. Effective Monday, Beijing raised tariffs on pork, aluminum scrap and some other products by 25 percent, the Finance Ministry said. A 15 percent tariff was imposed on apples, almonds and some other goods. The tariff hike has “has seriously damaged our interests,” said a Finance Ministry statement. “Our country advocates and supports the multilateral trading system,” said the statement. China’s tariff increase “is a proper measure adopted by our country using World Trade Organization rules to protect our interests.” The White House didn’t respond to a message from The Associated Press on Sunday seeking comment. China’s government said earlier its imports of those goods last year totaled $3 billion. The latest Chinese move targets farm areas, many of which voted for Trump in the 2016 presidential election. U.S. farmers sent nearly $20 billion of goods to China in 2017. The American pork industry sent $1.1 billion in products, making China the No. 3 market for U.S. pork. “American politicians better realize sooner rather than later that China would never submit if the U.S. launched a trade war,” said the Global Times, a newspaper published by the ruling Communist Party. Washington granted EU, South Korea and some other exporters, but not ally Japan, exemptions to the steel and aluminum tariffs on March 22. European governments had threatened to retaliate by raising duties on American bourbon, peanut butter and other goods. Beijing has yet to say how it might respond to Trump’s March 22 order approving possible tariff hikes in response to complaints China steals or pressures foreign companies to hand over technology. Trump ordered U.S. trade officials to bring a WTO case challenging Chinese technology licensing. It proposed 25 percent tariffs on Chinese products including aerospace, communications technology and machinery and said Washington will step up restrictions on Chinese investment in key U.S. technology sectors. Trump administration officials have identified as potential targets 1,300 product lines worth about $48 billion. That list will then be open to a 30-day comment period for businesses. Beijing reported a trade surplus of $275.8 billion with the United States last year, or two-thirds of its global total. Washington reports different figures that put the gap at a record $375.2 billion. Republished with the permission of the Associated Press.
Donald Trump seeks probe by his trade office of China’s practices
Even as he seeks Beijing’s help on North Korea, President Donald Trump asked his trade office on Monday to consider investigating China for the alleged theft of American technology and intellectual property. Trump, in the midst of a 17-day vacation, left his New Jersey golf club to return to the White House to sign an executive action on the probe. He suggested that more steps would be taken against China on trade issues. “This is just the beginning – I want to tell you that,” Trump said. “This is just the beginning.” There is no deadline for deciding if any investigation is necessary. Such an investigation easily could last a year. In a phone call Friday, Trump praised Chinese President Xi Jinping for backing the recent U.N. vote to impose tougher sanctions on North Korea, and the leaders reaffirmed their commitment to a nuclear-free Korean Peninsula. But Trump also told Xi about the move toward a possible inquiry into China’s trade practices, according to two U.S. officials familiar with that conversation. They were not authorized to publicly discuss the private call and spoke on condition of anonymity. China announced Monday it will cut off imports of North Korean coal, iron and lead ore and other goods in three weeks under U.N. sanctions imposed against Pyongyang. In an editorial Monday, the China Daily, a mouthpiece of the ruling Communist Party, linked Trump’s trade announcement against China to his disappointment over China’s purported failure to rein in North Korea. The newspaper said a trade probe, which could lead to punitive tariffs on Chinese exports, would “poison” U.S.-China relations. Trump wants government officials to look at Chinese practices that force American companies to share their intellectual property in order to gain access to the world’s second-largest economy. Many U.S. businesses must create joint ventures with Chinese companies and turn over valuable technology assets, a practice that Washington says stifles U.S. economic growth. Trump’s action amounts to a request that his trade representative determine whether an investigation is needed under the Trade Act of 1974. If an investigation begins, the U.S. government could seek remedies either through or outside of the World Trade Organization. While Beijing has promised to open more industries to foreign companies, it also has issued new rules on electric car manufacturing, data security, internet censorship and other fields. An administration official contended that the possible investigation was unrelated to the showdown with North Korea. The official spoke on condition of anonymity to discuss the order before Trump’s formal announcement. As the crisis involving North Korea has unfolded, Trump has alternated praising China for its help and chiding it for not ratcheting up pressure on its Asian neighbor. “I think China can do a lot more,” Trump told reporters Thursday. “And I think China will do a lot more.” China, the isolated North’s main trading partner, has been reluctant to push leader Kim Jong Un’s regime too hard for fear it might collapse. But Beijing is increasingly frustrated with Pyongyang and supported a U.N. Security Council ban on Aug. 5 on coal and other key goods. The Chinese customs agency said Monday that it will stop processing imports of North Korean coal, iron and lead ores and fish at midnight on Sept. 5. “After that, entry of these goods will be prohibited,” said an agency statement. Trump has escalated his harsh criticism of North Korea for days, tweeting Friday that the U.S. had military options “locked and loaded.” Xi, in his phone conversation with Trump, urged calm, the officials said. Trump, in the past, has tied trade policy to national security, leading to speculation that raising the possibility of a probe – without committing to one – could be a negotiating tactic to get China to step up its assistance with North Korea. The forced sharing of intellectual property with Chinese firms has been a long-standing concern of the U.S. business community, with reports suggesting that losses stemming from it could total hundreds of billions of dollars annually that cost the U.S. economy millions of jobs. Trump has requested similar inquiries on trade, but the reports haven’t been delivered on deadline. Trump made addressing the U.S. trade deficit with China a centerpiece of his campaign last year and has suggested raising tariffs on goods from China. Republished with permission of The Associated Press.
