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Latin American Economists Support Strong Intellectual Property Protection
By Margalit Edelman

AdTI Issue Brief No. 175
October 26, 1999

Executive Summary

While the Latin American pirates who oppose strengthened intellectual property protection may have shouted louder and longer than their opponents, they can’t drown out the voices of the Latin American economists featured here. 

In the following pages, these scholars analyze the state of intellectual property protection in their countries, advocate modernized laws and better enforcement, and chastise the unhealthy reliance on a pirate economy that rewards imitation.

Their commentary comes at a crucial juncture. Key events in the next few months – the Free Trade Areas of the Americas (FTAA) business forum and ministerial, the World Trade Organization Ministerial and the Trade Related Aspects of Intellectual Property Agreement’s January implementation deadline -- will set the stage for intellectual property protection in the next millennium. The supporters of vigorous protections must now step forward to help shape the debate and prevent backpedaling on agreed standards

There’s little doubt that the U.S. will continue to head the crusade for strengthened laws that protect all forms of intellectual capital. Unfortunately, U.S. leadership in this area has occasionally been portrayed as First World bullying. 

It’s a characterization that’s unfair and untrue.

The benefits of intellectual property protection -- investment, innovation, and development -- are well known to Latin Americans. The scholars printed here help illustrate the recognition that intellectual property rights are a fundamental aspect of every modern state and are essential in this era of globalization and high technology. It’s time that their voices were heard and that their governments follow their lead. 

Introduction 

The stakes are high: the very future of intellectual property protection in the next millennium will soon be discussed and debated in two major venues.

Hemispheric leaders will converge in Toronto to negotiate the Free Trade Area of the Americas (FTAA) and a World Trade Organization (WTO) Ministerial in Seattle will attract global leaders prepared to initiate a new round of trade talks. 

It’s no surprise that intellectual property protection will be a subject of contention. Those who profit from piracy and an imitation economy are reluctant to allow any change. They defend themselves cloaked in national sovereignty and paint efforts to improve global and hemispheric intellectual property protection as a source of first world aggression. Their efforts have paid off. In many cases, they successfully lobby against important intellectual property legislation and are now trying to stave off commitments their countries made under the Trade Related Aspects of Intellectual Property Agreement (a pact which sets global standards of minimum protection). Infrastructural gaps and widespread corruption also help prevent the proper implementation and enforcement of laws that are in place.

Experience and research have shown time and again that strong intellectual property protection is crucial to fostering trade and achieving the goals and benefits of modernization. There is clear proof that countries characterized by high standards of protection attract more investment, foment more innovation, and experience rapid and more extensive development than those countries with limited protection. Countries with inadequate protection suffer from patent, copyright and trademark infringement that hinder commerce and harm local and regional economies.

As the statements we’ve collected from several prominent Latin American scholars deftly illustrate, intellectual property isn’t about the U.S. or Europe. Rather, our scholars point out that intellectual property rights must be a fundamental component of every modern society and every free market economy. Though their countries represent a wide spectrum of political and economic situations, these economists all concur on the role of effective intellectual property protection in spurring innovation and investment that ultimately leads to sustained growth and development. 
 

Argentina

José María Ibarbia

President, Fundación República Para una Nueva Generación

The Fundacion Republica Para una Nueva Generación reaffirms the words of the 19th century Argentine economist and writer, Juan Bautista Alberdi, who said, "to rip one’s property from them, in other words, to violate the exclusive right which every man has to amply use and offer his work, his inventions , his capital…is to do nothing more than …make wealth an impossibility" 

"The right to own property is the stimulus of production, a work incentive, and the compensatory end to which any industry strives." 

Respecting intellectual property rights, a form of private property, is a source and guarantee of liberty and freedom. 

Fundación República is a non-profit organization devoted to supporting and promoting the ideas of a market economy, individual rights, democracy and limited government in Argentina.
 

Bolivia

Hugo Landívar

President, Fundación Libertad, Democracia y Desarollo (Fulided)

Experience indicates to us the importance of the role intellectual property plays within the development of a state that wants to consider itself modern. We refer to the great quantity of writings, formulas, ideas and concepts through which we develop the new software, medicines, and entertainment that people may benefit from every day. 

One distinctive characteristic of this property is that its essence is not physical, it is intangible, and though it provides an endless fountain of benefits, it is difficult to conceive of how to protect it. Many people believe that you shouldn’t protect intellectual property, but we are convinced that it is one of the most important factors that drives people to innovate, it acts as an incentive. Another incentive intellectual property protection provides is that the person who creates something also has the opportunity to receive credit and recognition for the benefits generated by their innovation. Additionally, it is necessary to make an investment in order to develop innovations. It is therefore equally important that an innovator be able to reap the profits of his creation and recoup the investment. 

It is fundamental to punish the violation of patents, authors’ rights, copyrights and trademarks, and to act with the ultimate goal of inspiring creative activity within our countries. 

The intellectual property protection situation in Bolivia is very peculiar. The current regulations are listed in the Law of Intellectual Property Protection: in the case of intellectual property related to biotechnology, the Law of Variatel protection protects property rights regarding the investigation and development of specific varieties of seeds, genetic improvements, etc. Institutionally, then, there are laws which protect intellectual activity.

Nonetheless, there is an extremely large piracy problem in Bolivia. There is no respect for the existing laws, and this has resulted in the creation of a large informal market which deals in falsifications and illegal copies of books, software, formulas, and entertainment products. 

In the last year, a business has started a campaign in defense of the protection of software author’s rights, which has generated a series of activities such as the initiation of judicial actions against important businesses which operate using pirated software, and raids on the great quantity of copies which are found on sale and within the chains of distribution. This has somewhat decreased the distribution of pirated software in businesses, but does not really combat piracy radically. We believe that the government must take measures which are more structural in nature, such as lowering the tariffs on software importation. Otherwise, such material arrives at the formal market with exaggerated prices and also gives an incentive to the informal market.

Similarly, little has been done to protect intellectual property rights in the areas of bibliographic materials, pharmaceuticals and discography. These industries are also plagued by a large informal market.

To diminish the sale and distribution of falsifications and copies of this type of product, we must strengthen our institutions, in a way that offers the minimum guarantees to promote the development of intellectual activities, and we can then enjoy the benefits it generates as a consequence of this activity.

FULIDED is a private, non-partisan, non profit institution dedicated to the realization of socio-economic studies and analysis which promote the principles of free will, private property, liberty, democracy and development.
 

Dominican Republic

Eduardo Jorge Prats

Executive Director, Fundación Institucionalidad y Justicia (FINJUS)

The laws regarding the protection of intellectual property in the Dominican Republic are antiquated and incomplete. The patent protection law dates back to the beginning of the century (1911) while the law that regulates trademarks dates back to 1938. Times have changed since these laws were enacted and they no longer provide adequate protection. The only recent law pertaining to Intellectual Property is Law 32-86 of 1986. Unfortunately, this law only covers copyright protection and thus leaves out all other fields of intellectual property. What is most striking is that intellectual property is protected by article 8 paragraph 14, that establishes, "The exclusive property during the time and under the conditions the law sets forth, of the inventions and discoveries, as well as of the scientific, artistic and literary productions.

Recognizing the need to comply with international treaties such as GATT and the need to promote foreign investment and innovation, the President created in 1997 a commission with the purpose of drafting the ordering of the Market Code. Book V of this code was supposed to create a modern legal framework for the protection of intellectual property. The code was submitted to Congress for approval in October 1998. Unfortunately, political squabbling and special interest groups have made its approval by congress impossible. The Code has become so controversial that some of the drafters made a joint public statement that the code had been so altered that they no longer recognized it as their work. Because of this we are now only three and a half months away from the January 1st 2000 deadline established by the TRIPs accords for approving intellectual property protection laws. If this is not accomplished by then, the Dominican Republic exposes itself to international trade sanctions.

Along with the need to avoid sanctions, there are two main reasons why the Dominican Republic urgently needs intellectual property protection. First of all, the lack of protection for the products of intellectual activity effectively defuses any innovative effort by locals and the possibility for technological transfer from foreign businessmen. Finally, foreign investment is hard to come by when the know-how for the processes used in productions and their final results can be easily pirated. In a small economy like ours, these obstacles are practically a death knell to long term economic growth, even more so in times of economic integration such as these.

FINJUS is non-profit, non-partisan organization dedicated to the strengthening of the Dominican democratic system and human rights through the promotion of an independent judicial branch and equal access to justice for all Dominican citizens. FINJUS has organized several workshops on how to fight intellectual property piracy and a seminar on intellectual property law and published several pieces on the issue.
 

Ecuador

Dora de Ampuero

Executive Director, Instituto Ecuatoriano de Economía Política

The Ecuadorian Institute of Political Economy believes that intellectual property is one of the most important manifestations of property rights, the solid pillar which holds up a free and prosperous society.

In May of 1998, the Ecuadorian government created a new intellectual property law through which the state assumed the defense of intellectual rights. The intellectual property law includes national legislation, Andean Community legislation and is also WTO compliant through the ATIL treaty which is at the vanguard of intellectual property legislation in Latin America. The new law protects innovations in cybernetics, biotechnology and also implements the acquired international commitments. The new law also created the Instituto Equatoriano de Propiedad Intelectual, an entity given the responsibility of defending intellectual property.

Unfortunately, although the law is on the books, and has been written in a modern way, Ecuador sorely lacks the mechanisms necessary to enforce it. For example, the government still hasn’t named the pertinent judges, and therefore it is difficult to punish the violators. The law, and the debates that helped make it a reality, have at least contributed in the sense that they have begun to create a consciousness among society about the importance of our countries having strong intellectual property protection as a fundamental part of our country’s infrastructure.

Nonetheless, the actual protection of intellectual property in Ecuador is extremely weak. Intellectual Property violations are common. Books, computer software, videos and cassettes manufactured in other countries are copied and sold. Like the rest of Latin America, there is a big business of pharmaceuticals manufactured in Ecuador which are copies of products invented and developed in industrialized countries at a high cost, and to which the pirate industry has not invested equal resources. All of this is a total detriment to innovation and creativity because individuals know that they will never have access to harvest the fruits of their intellectual labor.

The Instituto Ecuatoriano de Economia Politica is an unaffiliated, non-profit independent center of studies. IEEP promotes the ideas of liberty, free markets, and equality for all citizens and limited government. IEEP organizes debates, conducts seminars, and publishes reports and articles on these themes.
 

Venezuela

Rocio Guijarro Saucedo

Executive Director, Centro de Divulgación del Conocimiento Económico (CEDICE)

In Venezuela, we believe in respect for intellectual property. Private property constitutes, in the economic order, the guarantee that man can take advantage of—benefit directly—from the product of his creative labors, and this indirectly benefits society in the creation and production of riches.

Private property is a sine qua non requisite to inspire man to produce more. Such production depends on the knowledge and assurance that all the rights which apply to private property and the production of goods are equally applicable and necessary to intellectual property. In Venezuela, we believe in this and we request a rule of law that respects this property, in accordance with a political and economic regimen characterized by liberty and freedom. 

CEDICE is a non-profit organization dedicated to contributing to the conceptions and consolidation of a free market economy and promoting a truly efficient and participatory democracy.

To see additional research on intellectual property and our statement on the Free Trade Area of the Americas and Intellectual Property Protection submitted to the 1999 Americas Business Forum. To contact the author: medelman@adti.net

Note: This report does not necessarily reflect the views of the Alexis de Tocqueville Institution and its directors nor is it to be understood as an attempt to aid or hinder the passage of any legislation before Congress.
 


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