Editor’s Note: This article first appeared in Malaysia’s New Straits Times.
This week in Nairobi, ministers from 162 Member countries of the World Trade Organization (WTO) gather to try and reactivate global trade negotiations. The meeting marks the 20th anniversary of the WTO, but has been clouded by doubts over whether further global trade liberalisation is possible in a forum where progress requires all members to agree.
Over the past 20 years, WTO members have made great progress to reduce barriers to trade in sectors as diverse as agriculture and information technology.
One area the WTO has been routinely, but unfairly criticised, is healthcare. The source of much of that criticism can be traced back to 1995, when the WTO ratified its Agreement on Trade Related Aspects of Intellectual Property (TRIPS).
It set a global requirement for the first time for WTO members, apart from the poorest countries, to grant inventors basic forms of intellectual property such as patents.
Global IP rules have allowed middle-income countries to get into pharmaceutical innovation. India and Chinese companies have started to collaborate more with multinational companies on research.
The major global offensive on HIV in the mid-1990s prompted dire warnings from NGOs that forcing developing countries to respect patents would make medicines unaffordable and cost lives.
It’s not played out like that. Access to HIV medicines in lower and middle-income countries has increased dramatically. In 2003, only 400,000 people living with HIV had access to HIV medicines; today the figure is over 15.8 million.
Prices actually dropped 95% between 1995 and 2000, as donor governments committed billions for purchasing the medicines, creating new markets and economies of scale.
Other health issues have overtaken HIV in the global spotlight, but arguments about WTO patent rules and health persist. The latest controversy is affordability of the new generation of cures for Hepatitis C. This debilitating liver disease is highly prevalent in developing countries.
But TRIPS has fuelled progress here too. Working within the framework, owners of these medicines have entered into licensing agreements with Indian drug manufacturers. They allow the medicines to be distributed cheaply in 101 developing countries to reach more than 100 million people, or half the total global infected population.
These licenses are win-win. They give more people access to new medicines and preserve the incentives to invest in researching new treatments – the reason IP rules exist.
Global IP rule have also allowed middle-income countries to get into pharmaceutical innovation. In the pre-TRIPS world, pharmaceutical research and development was strictly the preserve of the West, while other countries stuck to copying existing medicines.
In recent years, India and Chinese companies have started to collaborate more with multinational companies on research work, with India carving out a niche in vaccine development, and China getting into biotech innovation.
Earlier this year, Chinese company Shenzhen Chipscreen Biosciences released a new biotech for a rare form of lymph node cancer – one of the first drugs to be researched and manufactured from start to finish in China.
While South East Asia’s biopharmaceutical innovation takes place mainly in Singapore, the day will soon come when Malaysia, Thai and Indonesian companies are also contributing their own home-grown medicines.
Patents don’t dictate healthcare though. Weak health infrastructure and shortages of medical staff and financial resources mean large numbers of people still don’t have access to essential medicines, most of whose patents have long expired.
A recent survey of five representative middle and lower income countries found that less than half of previously diagnosed patients had access to the medicines they need (16% in Uganda, 33% in Kenya, 33% in the Philippines and 49% in Jordan).
Overall, the story of trade and health is enormously positive. In the 1980s and early 1990s many governments in South East Asia pursued trade and investment liberalisation, opened borders to trade, slashed import tariffs, removed exchange controls and limited restrictions on the free movement of capital. Under WTO membership, these policies have only been accelerated.
Free trade has seen health technologies, from vaccines to pharmaceuticals, and new medical knowledge spread across the globe.
As national borders opened, life expectancy rocketed as citizens became wealthier and enjoyed better healthcare, sanitation, nutrition and new medical technologies.
Crucially, free trade has seen health technologies, from vaccines to pharmaceuticals, and new medical knowledge spread across the globe.
In 1960, average life expectancy in Malaysia was 59 years. By 2013 it was 75 years – the same as the United States as recently as 1993.
Government investments in healthcare have certainly helped, but it is difficult to deny the role of trade-driven economic growth in this compelling tale. The WTO’s influence remains vital and its legally-binding rules prevent members sliding back towards protectionism and economic autarky.
Perhaps after 20 years the WTO has had its day. Future effective trade liberalisation could belong to regional trade agreements, such as the Trans Pacific Partnership. After all, fewer negotiating partners make deals easier to strike.
But as the negotiation in Nairobi begins, ministers should remember that there are enormous benefits to be gained by removing trade barriers, not reinforcing them.