Argentina’s current patent law exempts pharmaceuticals from protection until 2000, allowing local companies to copy patented drugs without legal repercussions and without contributing to the research and development that makes such drugs possible. 

According to the Pharmaceutical Manufacturers of America, Argentina’s poor patent protection causes the U.S. pharmaceutical industry to lose an estimated $600 million annually. The pending legislation would extend the pharmaceutical patent exemption to 2005, blatantly violating Argentina’s obligations under the Trade Related Aspects of Intellectual Property agreement, passed during the Uruguay Round, and slowing hemispheric trade harmonization.

This latest legislative assault on intellectual-property protection, led by several prominent Argentine congressmen, constitutes an overly hostile response to recent actions taken by the Office of the United States Trade Representative.

For years, Argentina was a constant presence on USTR’s Special 301 Priority Watch List, which monitors the world’s worst intellectual property offenders. The office frequently issued formal criticisms of Argentina’s deteriorating patent conditions and reluctance to comply with trade 
accords it signed. Because neither the complaints nor the official revocation of Argentina’s deteriorating patent conditions and reluctance to comply with trade accords it signed.  Because neither the complaints nor the official revocation of Argentina’s trade preferences under the Generalized System of Preferences brought about significant change in the Argentine patent
regime, Washington decided in April to bring Argentina before the World Trade Organization for dispute settlement.

Unlike Sweden, Denmark and Greece, which faced WTO dispute settlement cases but reached agreements with the United States prior to adjudication, Argentina chose to respond in an alarmingly negative manner.  It attempted to worsen already weak laws. 

The proposed measure found support quickly in Buenos Aires, as few Argentine politicians in this Presidential election year were willing to upset the powerful national pharmaceutical industry or make statements that might appear to favor the United States over “local interests.”

Nonetheless, current Argentine President Carlos Menem courageously denounced the legislation and promised to veto it.

Peronist presidential candidate Eduardo Duhalde has also severely criticized the proposed
changes, asking his party members to vote against the bill and refusing campaign donations from the national pharmaceutical organizations. And the Argentine newspaper La Nación has run several editorials condemning the short-sighted legislation, not just because it ignores international commitments and harms bilateral relations, but also because it ultimately retards Argentine economic development.

It is time for Argentina to step in line with global intellectual property standards. 

Substantial intellectual-property reforms in other sectors of the economy have been led by the Argentine software, motion picture and recording industries themselves. As one of the most advanced economies in Latin America, Argentina can ill afford to rely on the inventiveness of other nations. Harvard economist Jeffrey Sachs argues that, "In the poorest countries, it is possible to have economic growth without much innovation because they can borrow or import technology. However in a country like Argentina, that has a high level of revenues, progress really requires a much larger community of innovation."

Argentina is also losing out financially to its Latin American neighbors; Brazil received nearly $750 million in foreign investment commitments shortly after enacting considerable patent protection legislation in 1997. 

The rancorous intellectual property debate between Argentina and the United States does not mean real change is impossible. Indeed, Washington now has a unique window of opportunity to work with the outgoing Menem administration, with whom it has maintained extremely friendly relations, and with the presidential candidates. 

The legislation offered by the national pharmaceutical industry and their political cronies stinks of last ditch efforts to save a sinking ship and has been publicly tainted by well-founded allegations of corruption. The real risk of American sanctions and Menem’s pledge to veto the bill have also reduced support for the legislation.

The Free Trade Area of the Americas will provide unique trade and employment opportunities for the United States.  However, in order for hemispheric integration to proceed, one of the last remaining trade barriers-- the lack of intellectual-property protection-- must be removed.

Argentina is not the only Latin American country whose intellectual property protection needs improvement, but it is the one country that has most forcefully resisted change. As a regional political and economic leader, Argentina should be paving the way to the Free Trade Area of the
Americas, not rolling big boulders into an already rocky road.