Resolved: The TRIPS agreement is unfair.

Thanks, Con.C1) Monopoly pricing is unfair to consumers.The purpose of TRIPS is to protect intellectual property. Intellectual property is what we call a pure public good: Concurrent consumption does not reduce the quantity or quality of a good to others, and the good is non-rival (you don't compete to get it) and non-exclusive (you don't stop anyone else from using it when you use it). This leads to a free-rider problem, in which some people benefit from the good without payment. Free riders pay zero price to obtain the good. The result is that we end up producing fewer goods and less benefit for society.The maximum willingness of honest users to pay for the good at each quantity makes up the marginal private benefit curve. The maximum willingness of all users to pay for the good at each quantity is the marginal social benefit curve. The divergence between the two curves prevents the market from reaching equilibrium condition. The consumer surplus, what the consumers gain (CS) and the producer surplus, what the producers gain (PS) form the total social surplus (TSS), which, in this case, is not maximised because of this divergence, leading to deadweight loss. Compare to a free market: The purpose of TRIPS is to turn a public good into private good, thereby eliminating free riders and shifting the MPB curve back to the MSB curve. This eliminates deadweight loss, to reach a socially optimal situation - economic efficiency.Yet does TRIPS really lead to economic efficiency?The implementation of IP rights grants monopoly power to the individual or firm that holds it. The problem with monopoly is that they are, well, inefficient - if simple monopoly pricing is practised. I will not go into the details of this pricing method, as the brevity of the debate does not allow it. Put simple, a monopolist will produce up to the point where marginal revenue = marginal cost, while the efficient position is marginal benefit = marginal cost.The sole producer is granted monopoly power in the market and enjoys all the producer surplus, while the consumer enjoys greatly reduced consumer surplus. Deadweight loss is also produced. This is unfair to the consumer. If the monopolist has enough market power and information as well as the ability to separate markets and prevent resale, it can practise price discriminiation. I will cover just first-degree PD here. The monopolist knows the maximum willingness to pay of all customers, so it can raise prices so that you pay exactly the highest price you're willing to pay - which means consumers gain nothing from trade at all! This is, again, obviously unfair to the consumer. Now, of course, all this can be ignored if we are talking about copyrights or trademarks. After all, there are a plenty of substitutes for your latest Harry Potter novel or the latest version of Microsoft Word. These open-market monopolists have a plenty of competition, and thus smaller market power, and raising prices will cause them to lose more customers. Yet when pharmaceutical companies come into play, things are different as medicines often have no close substitutes and the demand is less elastic. An increase in price will lead to a smaller-than-proportionate decrease in quantity transacted, so they have a greater tendency to abuse their market power and charge higher prices.Is this really happening? We do not even need to look as far as developing nations. In the United States, which is a proponent of TRIPS, medical patents have allowed monopolists to charge prices that are up to several thousand percent above free market price, according to the Centre for Economic and Policy Research. (1) We can thus that medical patents, which are necessitated by TRIPS, is unfair to consumers.C2) The signing of the TRIPS agreement was slanted towards developed countries.The TRIPS agreement was a protectionist move by the US, the policy-makers from which was worried of its increasing trade deficits. It sought to maintain its comparative advantage in international trade through protectionism. Business groups from developed countries also played a huge role in the elaboration of the TRIPS agreement. Less developed countries, by contrast, had very little input. Their initial reluctance only abated because of threats of American sanctions, lack of full understanding of the agreement's implications, and good prospects in other sectors. They clearly had much less say in the treaty, which is therefore unfair. (2)C3) TRIPS benefits the economies of developed nations and hurts those of the developing.The majority of technology patents are held by developed nations, most of which already have much protection of IP rights. The same cannot be said of developing nations. They incur high costs in the implementation of TRIPS' requirements. After the implementation of TRIPS, exports from developed nations to developing ones will certainly increase as developing countries pay royalties or import from to developed ones. (Note that while the purchase of a patent is calculated in the capital account, royalties belong to the current account.) This will worsen the current account balance of the developing countries for sure. In fact, it is estimated that the TRIPS resulted in a $20 billion redistribution of wealth from developing countries (which import technology) to developed ones (which export technology). (2)India's generic industry is an excellent example. India's pharmaceutical industry, a US$15.6 billion industry that is expected to reach $35.9 in 2016, is heavily reliant on the generics sector, with over 60,000 generics brands. (4)C4) TRIPS renders medication inaccessible to the poor in developing countries.Before venturing to actual examples, let us look at the theoretical basis. In a market economy, the basic function of price is to determine who gets scarce resources. The function I would like to deal with here is the rationing function of price, which means goods and services are awarded to the consumers with the highest maximum willingness to pay. As some users willing to pay a higher price can get the resource while those who are less willing cannot get it, it is said that the less willing users are discriminated against and this phenomenon is known as price competition.TRIPS, as we've seen above, drastically raises medicine prices. This means more users with lower maximum willingness to pay cannot receive the medicine, leaving users with higher maximum willingness to pay. Obviously, higher-income users have higher maximum willingness to pay, so we can conclude from this situation that low-income users are discriminated against. According to the Universal Declaration of Human Rights, 'Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.' (8) Access to medicines are a part of this. (7) However, as some are now denied adequate health because of their income, we can conclude that the situation is unfair.To further develop this point, we need to look at the situation of the generics industry. Less developed countries frequently reverse-engineer patented drugs from developed countries to work out generics, allowing them to sell drugs at a far lower price than is possible without patents, which protects the health of their citizens. This was possible for countries that lacked patent protection for medicines. This situation is similar to that of the industrialised nations themselves many years ago, before they had developed their own thriving pharmaceutical industries. Yet under TRIPS, this is no longer possible under Article 27 of the agreement. (3) As cheap generics are no longer available, expensive patent drugs must be purchased, essentially discriminating against those who are unable to afford such drugs. This situation is thus unfair.There are many ways in which this situation manifests itself in developing nations. For now, I shall concentrate on two examples: South Africa and India.South Africa's situation is the most frequent contention against TRIPS. Large pharmaceutical companies sued South Africa over the use of generics. They had used TRIPS flexibilities known as compulsory licensing, which was challenged legally by the pharmaceutical corporations. The United States threatened economic sanctions as well. Although the case was finally overturned amidst public outcry (5), the three-year delay in the provision of compulsory licences must have caused a great number of deaths in South Africa, which had an AIDS prevalence of rate of 24.8% in 2001. (6)India's HIV/AIDS case is another one that has garnered international attention. India did not implement patent laws pre-TRIPS, and thus provided generics drugs to its general populace (as well as fellow developing nations). First-line AIDS drugs continue to be provided by generics manufacturers at a low cost to AIDS patients, but second-line drugs are protected by patents. As soon as a patient develops natural resistance to first-line drugs, they will have to face the massive financial burden of second-line regimens, which are around nine times as expensive as generics. (9) (1) http://www.cepr.net...(2) http://www.e-ir.info...(3) http://apps.who.int...(4) http://www.ibef.org...(5) http://www.msfaccess.org...(6) http://www.avert.org...(7) http://europeandcis.undp.org...(8) http://www.un.org...(9) http://www.ncbi.nlm.nih.gov...