June 18, 2015

Innovation in the Life Science Community Through Trade

By Mark Elliot

NOTE: This entry originally appeared in the BIO Show Daily on Thursday, June 18, 2015, distributed at the 2015 BIO International Convention.

This is a unique time for trade policy in the United States.

A renewal of Trade Promotion Authority (TPA), an absolute requirement for any U.S. president to negotiate a trade agreement, is being debated in Congress.

The Trans-Pacific Partnership (TPP) trade agreement between the United States and 11 other nations is patiently waiting in the wings for discussion once TPA moves forward.

Also under negotiation is the Transatlantic Trade and Investment Partnership (TTIP), a trade pact being discussed between the United States and all 28-member states of the European Union.

These pending trade initiatives offer the world an opportunity to set new global standards in a number of areas, but perhaps nowhere is that needed more than with intellectual property (IP) policies.

The 2015 International IP Index, produced by the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC), showed a wide disparity in the 30 IP environments examined from around the world.

Out of a possible score of 30, the United States led all other economies at 28.53, while Thailand sank to the bottom at 7.1. This significant gap shows there is much work to do, and trade agreements are perhaps one of the greatest opportunities to ensure everyone reaps benefits from the intellectual property system.

But why does it matter? Why should countries around the world want to have strong IP environments?

The GIPC Index found 15 meaningful and significant positive correlations between the strength of IP environments and common socioeconomic indicators, such as job creation, innovation and biomedical investment. This also includes access to creative content or information and communication technology (ICT) based services. In doing so, the analysis goes beyond looking at broad measurements of economic activity to measure tangible, deep-rooted benefits to economies that relate to IP rights.

The data found in the GIPC Index relates directly to the timely issue of trade. Here’s how: Trade agreements create a critical mechanism to tear down barriers between nations and open the flow of goods and services across borders. Agreements like the TPP — which will cover 40% of world trade — and TTIP — which encompasses an entire continent — offer incredible opportunities to create regional innovation blocs that unleash homegrown innovators and attract investment from IP-intensive multinationals.

Trade agreements serve as one tool to provide the legal certainty necessary before making significant investment decisions.

The data in the GIPC Index found that companies in countries with advanced IP rights are 40% more likely to invest in research and development (R&D) in those markets. Increased R&D not only allows an expanded global reach but also provides a foundation for long-term economic growth in the country itself.

Equally as pertinent to the innovative organizations and associations is the correlation between robust IP systems and R&D spending. For example, economies with supportive life sciences regimes experience roughly 2-6 times more biopharmaceutical R&D investment than do countries whose IP systems lag behind. In order for countries to attract this investment, strong IP protections, oftentimes made possible by trade agreements, must be in place.

Both TPP and TTIP provide an opportunity to reinforce high standards for IP protections, which will provide countless new business opportunities for innovative companies of all sizes and nationalities.

However, passage of TPA is critical to the conclusion of each of these agreements.

We hope that our allies in the life-sciences industry will stand with us to ensure that Congress swiftly passes this legislation in order to unleash the many benefits that trade provides.

Mark Elliot is executive vice president of the U.S. Chamber of Commerce’s Global Intellectual Property Center.

Photo Credit: Balint Porneczi/Bloomberg

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