19 FTA Policy-Making in the EU and Its Effects：Policies toward Intellectual Properties(*)
Overseas Researcher: Momoko NISHIMURA(**)
Each country has recently begun to shift the priority in external trade negotiations to bilateral or regional
free trade or economic partnership agreements as multilateral trade liberalization talks have stagnated at theWorld Trade Organization. Even the European Union, which had given priority to multilateral systems, has
become proactive concerning free trade agreement negotiations since the second half of the 2000s, negotiating
FTAs with not only growing Asian markets such as South Korea and Singapore, but also major industrial
countries like Canada, the United States and Japan. At the same time, the EU has toughened provisions on
intellectual property rights protection in FTAs. The EU had adapted IPR protection provisions according to FTA
partners’ respective degrees of development in earlier FTAs, but has begun to expand the scope of protection for
geographical indications, increase items subject to protection, extend protection periods for submitted drug dataand enhance enforcement in a manner to go beyond protection standards under the TRIPs (Trade-Related
Aspects of Intellectual Property Rights) Agreement. Why has the EU proactively enhanced international IPR
protection through FTAs with industrial countries? The study analyzes changes in the EU’s IPR protection
policy in FTAs and political factors behind the changes.

Ⅰ Objectives and Composition ofThis Study
Over the recent years, the number ofbilateral or regional free trade agreements has
increased in the Asia-Pacific region while
multilateral trade liberalization talks at the World
Trade Organizations have stagnated. Most ofthese FTAs are comprehensive agreements
covering not only the elimination or reduction oftariffs on goods but also the elimination of
nontariff trade barriers including unique national
regulations and standards, individuals’ freedom of
movement, the deregulation of services andinvestment and the protection of intellectual
property rights. In contrast to Asia-Pacificcountries, the European Union had persistently
given priority to multilateral trade liberalization
talks and limited bilateral FTAs over those withneighbors and former European colony countries
since the creation of the WTO. But the EU’s
European Commission released a new trade
strategy titled “Global Europe” in 2006 and hassince then proactively promoted negotiations on
FTAs with growing Asian countries and industrial
countries such as Canada, the United States andJapan. The EU’s earlier FTAs had given priority
to the reduction of tariffs on goods and remained
negative regarding including IPR and investment

provisions into FTAs. Since 2006, however, theEU has incorporated very proactive IPR
protection provisions into FTAs.
The study’s objective is to analyze suchchanges over the recent years in the EU’s IPR
policy for FTAs from the viewpoint ofinternational relations. Specifically, the study
makes clear the EU’s IPR strategy through FTAs
and looks into factors behind the policy shift inconsideration of international relations involving
the EU.

Ⅱ Recent EU Policy Shift andChanges in International IPR
Protection
1

Increasing FTAs

The WTO Doha Round of trade negotiations
started on a full-fledged basis in January 2002 but
has stagnated due to emerging conflicts between
industrial and developing countries and theambitious premise of the single undertaking of
the negotiated eight areas. In the meantime, thenumber of regional trade agreements including
free trade agreements has increased rapidly sincethe 1990s. Spearheading FTA negotiations has
been the United States. After putting its North
American Free Trade Agreement with Canada and(*) This is an English translation of the summary of the report published under the Industrial Property Research

Promotion Project FY2013 entrusted by the Japan Patent Office. IIP is entirely responsible for any errors in
expression or description of the translation. When any ambiguity is found in the English translation, the original
Japanese text shall be prevailing.
(**) Post-doctoral Researcher, Department of Advanced Social and International Studies, University of Tokyo, as
Overseas Researcher under the Program for the Fiscal Year 2013.

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Mexico into effect in 1994, the U.S. government
invigorated FTA negotiations on the strength of
the Trade Promotion Authority Act enacted inJuly 2002. The range of the United States’ FTA
negotiation partners expanded to cover not only
Latin America but also Australia, the Middle East,
Africa and Asia. The United States has also
proactively tackled negotiations on wide-area
FTAs including the pending Trans-PacificPartnership Agreement.
Many people have criticized a widening
network of bilateral and regional FTAs in the
Asia-Pacific region as complicating international
trade relations. Clearly, however, industrial
countries have shifted priority from multinational
trade negotiations to bilateral and regional talks.
Reaffirming the shift has been the Asia-Pacific
Economic Cooperation forum’s emerging move tobuild a free trade area covering all APEC
economies as well as the Group of Eight majorcountries’ policy of giving priority to FTAs as
specified through their annual summit.
2

beyond protection levels under the TRIPs
Agreement and are called “TRIPs plus clauses.”
Representative “TRIPs Plus” clauses in U.S.
FTAs provide for extending copyright protection
periods, exceptions to lack of novelty of invention
subject to patent protection, grace periods forpatent applications, protecting patents on animals
and plants, extending drug patent protection
periods, clarifying protection periods for
submitted data for drug approval applications,limiting conditions for exercising compulsory
licenses, restricting parallel imports, expanding
the scope of trademark protection and enhancing
enforcement (by strengthening border measuresand expanding the range of infringements subject
to criminal procedures). Legal experts havealready given objective analyses about theinterpretation and classification of “TRIPs Plus”
clauses and relevant problems, while many
academicians and citizen groups have criticized
IPR protection enhancement under U.S. FTAs for
only expanding rents for multinationals at thecost of developing countries’ interests.

FTAs and IPRs
3

International IPR protection has beenchanging greatly due to the increasing number ofbilateral and wider-area FTAs. Since the creationof the WTO in 1995, international IPR protection
had centered on the implementation of the TRIPs(Trade-Related Aspects of Intellectual Property
Rights) Agreement. Over the recent years,
however, developing countries’ strong opposition
to the TRIPs Agreement has led WTO
negotiations to deal mainly with traditional
knowledge, genetic resources, folklore, publichealth and other problems involving developing
countries
and
focus
on
the
flexible
implementation of the TRIPs Agreement.
As it has become difficult to realize
comprehensive international IPR protection asenvisaged upon the creation of the WTO,
industrialized countries have grown eager toincorporate their IPR protection standards into
FTAs. Taking the initiative to do so has been the
United States. The Trade Act of 2002, including
the Trade Promotion Authority Act that triggered
U.S. government efforts to promote the FTA
policy, provided that the U.S. government makeinternational IPR protection levels similar to
those under domestic U.S. law through tradenegotiations. In fact, most of FTAs that theUnited States has concluded since then haveincluded clauses calling for the same IPR
protection as under domestic U.S. law. They go

Recent Revisions in EU FTA Policy and
IPRs

The EU had retained its policy of giving
priority to multilateral trade negotiations led by
the WTO despite other countries’ growing moves
to conclude FTAs. It had reiterated concern that
other countries’ proactive efforts to conclude
bilateral or regional FTAs had been an obstacle topromoting the Doha Round. Even since before the
WTO’s creation, the EU (or EC) had concluded
many FTAs mainly to stabilize relations withneighboring countries in preparation for
expanding the EU (or EC) or maintain historical
relations with former European colony countries.
The EU’s earlier FTAs focused on tariff
reductions and were negative in regard toprovisions about other matters including IPRs. In
contrast to the United States attempting toincorporate “TRIPs Plus” clauses into FTAs, theEU had been negative about IPR protection under
FTAs. Unlike the U.S. FTAs providing for specific
IPRs for protection by FTA partners, EU FTAs
had only called for IPR protection under existing
international treaties and indicated a flexible
attitude of promising to settle any IPR conflicts
through talks. The EU had then been eager tobuild a new multilateral system for geographicalindications through WTO negotiations. But it had
fallen short of taking up the geographicalindication problem in FTA negotiations. The U.S.

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or “narrow approach,” as opposed to a “generalist
approach” for the EU policy.
Reversing the EU policy was a trade strategy
titled “Global Europe: Competing in the World”
as released by the European Commission in
October 2006. The new strategy indicated apolicy of promoting FTA negotiations with Asianand other foreign countries while proceeding withmultilateral negotiations at the WTO. In fact, theEU has proactively promoted FTA negotiations
since the release of the “Global Europe” strategy
in 2006. It has already put into effect an FTA with
South Korea and has been negotiating FTAs withsuch Asian countries as India, Malaysia, Thailand
and Vietnam. Furthermore, the EU launchednegotiations on FTAs with Japan and the UnitedStates in 2013. Particularly, the proposed U.S.-EU
FTA, called the Transatlantic Trade andInvestment Partnership, or TTIP, would coverabout half global GDP. Along with theabovementioned
Trans-PacificPartnership
Agreement, the TTIP has attracted global
attention. Most of new EU FTAs arecomprehensive agreements covering nontariff
trade barriers, public procurement, services,
investment, competition policy and other mattersthat had not been subject to earlier EU FTAs.
New ones thus feature proactive provisions about
IPR protection.
A representative comprehensive EU FTA isthe agreement that the EU signed with South
Korea in October 2010 and put into effect in July
2011. The agreement features clauses that go
beyond the TRIPs pact by extending the
copyright protection period to 70 years from 50
years under the TRIPs pact, prohibiting thecircumvention of technical protection measuresfor copyrighted work and the provision of
circumvention means (Article 10.12) and
restricting service provider liability (Article
10.65-66). As for patents, drug patent periods areextended for up to five years (Article 10.35).
While the TRIPs pact’s Article 39-3 protects drug
approval
applicationdata
asnon-public
information, the FTA specifies the period for theprotection as at least five years from initial sales
approval in order to make protection clearer.
These provisions overlap those in the U.S.-South
Korea FTA. Meanwhile, the EU-South Korea FTA
features provisions concerning design rights,
enhanced
enforcement
andgeographicalindications. As for design rights, the EU-South
Korea FTA provides for a requirement for legalmeans to prevent unregistered designs from

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being used (Article 10.29). No such provisionexists in the TRIPs pact. While Article 51 of theTRIPs pact requires border measures to be
introduced against goods infringing trademarks
and copyrights, the EU-South Korea FTA’s
Article 10.67 on enforcement expands the bordermeasure coverage to include goods infringing
patents, design rights, geographical indications
and rights to grow new plant varieties. As forgeographical indications for protection, the
EU-South Korea FTA provides for expanding
additional protection targets to agricultural andfood products. As of the FTA’s effectuation, 162
EU and 64 South Korean geographical indications
were subjected to protection. Protection targets
are set to increase under future agreements. The
EU-Singapore FTA on which final accord wasreached in September 2013 also provides forprotection standards going beyond those under
the TRIPs pact. These provisions are almost
similar to those in the EU-South Korea FTA.
Details have yet to be released about the EU’s
FTA with Canada for which broad accord came on
October 18, 2013. A European Commission
document indicated a policy of including proactive
IPR protection provisions into the FTA and madeclear the EU’s emphasis on expanding the scopeof geographical indications for protection and on
access to drugs. IPR protection has been at issue
in the EU-India FTA negotiations that started inJune 2007. The EU and India have agreed torefrain from extending drug patents and providing
for the exclusiveness of drug approval application
data under their FTA in line with Indian citizens’
strong opposition to the extension andexclusiveness. In the meantime, the EU has madeno revision to its policy of expanding the scope ofgeographical indications for protection andenhancing enforcement. IPR protection is also
one of major agenda items at the FTA
negotiations the EU launched with Japan and theUnited States in 2013. Remarkably, the UnitedStates and EU, while vowing to maintain andimprove comprehensive IPR protection levels
including enforcement in their future TTIP talks,
noted that they would limit discussions toproblems subject to their respective national
interests instead of discussing all relevant
problems.
As made clear above, the EU has shiftedfrom adjusting IPR protection standards under
FTAs to the degrees of partner countries’
development to requiring partner countries toprovide the same IPR protection as the EU. Thismeans that the EU has been switching from the

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“generalist approach” to the “to-do list approach”
on IPR protection through FTAs. The European
Commission in charge of EU trade policy has
made the policy clear. The European Parliament
has indicated its approval of the European
Commission’s FTA innovation policy.
4

Analysis
BasedonInstitutional Theories

International

How has the structure of international IPR
protection changed as a result of EU IPR policy
revisions through FTAs? Among international
relations
theories,
international
political
economics to analyze the relationship between
international economics and international politics
has developed with a focus on international
institutional theories that attempt to clarify
conditions for international cooperation in
anarchic international political and economic
relations in the absence of any central
international government. Robert Keohane, aleading authority on international institutional
theories, used the so-called Prisoners’ Dilemma
game to explain how difficult international
cooperation is. In anarchic international relations,
Country A gives top priority to its interests andbetrays Country B. Country A believes that even
if Country A cooperates with Country B, it may
suffer a loss on Country B’s betrayal and see again on the part of Country B. As a result,Countries A and B are unable to cooperate in fearof each other’s betrayal even though bothcountries are ready to benefit the most from theircooperation. According to the game theory,
however, parties give considerations to theirchoices’ impacts on their later choices throughrepeated games and can easily build theircooperative relations by adopting a strategy of“eye to eye and teeth to teeth.” Keohane has thus
concluded that countries may gradually build
cooperative relations if they are allowed to repeat
the same game through international institutions.
But repeating any game alone cannot produce
cooperation. If cooperation is to be established,countries must share the recognition that one
country’s betrayal may invite others’ retaliation.
To this end, they must agree on the definition of
betrayal and cooperation. It may be difficult forany single country to monitor whether othercountries really cooperate with or betray thecountry. Keohane argues that if countries areallowed to freely negotiate through international
institutions, they may establish cooperation andget the most beneficial results.

The argument may fit the development oftoday’sinternational
intellectual
propertysystems. International cooperation in IPR
protection is the most desirable outcome for any
country. In the absence of a world governmentthat would require each country to protect IPRs,
however, each country may fear that even if it
protects IPRs, others could become free riders on
its protection without doing so. As each country
is expected to give no protection to IPRs unlesssome measures are taken, some international
institution may be created to maintaininternational cooperation. In the past, industrial
countries agreed to realize international IPR
protection through the WTO. In order to prevent
developing and other countries from becoming
free riders on others' IPR protection and maintaincooperative relations for IPR protection,industrial countries tried to build an international
institution where developing countries as well
could participate. Such efforts represented thepast international IPR protection framework. But
the EU's FTA policy shift has greatly changed theinternational IPR protection structure. In thisrespect, Arthur Stein has provided the mosthelpful argument. Stein argues that the simplified
national interest structure used as the
backgroundfor
producinginternational
institutions can be divided into two types -- thePrisoners' Dilemma and Battle of Sexes." In the"Battle of Sexes" type, Countries A and B
adopting Standards 1 and 2 try to make one ofthem an international standard. If these countries
adopt the same standard, they will benefit morethan at present. But Country A will benefit if
Standard 1 becomes international. If Standard 2 isadopted as an international one, Country B will
benefit. As the two countries fight over whether
to make Standard 1 or 2 an international one, aninternational institution is required for theircoordination. Recent international relations
involving IPR protection, or industrial countries’
individual attempts to enhance IPR protection
through FTAs, can be summarized as
representing a conflict over whether to choose
Standard 1 or 2. In the past, the EU had tried toadapt international institutions to the degrees ofdevelopment for multilateral trade and FTA
negotiation partners. In recent years, however,the EU has asked FTA negotiation partners toprovide the same level of IPR protection as theEU’s. In this sense, the EU has adopted the same
policy as the United States. In the future, adispute having the United States and the EU as
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over whether to adopt Standard 1 or 2.

Ⅲ Objective of EU’s FTA IPR Policy
Shift1EU’s Common Trade Policy

It may be needless to say that European
countries developed their economic integrationahead of the rest of the world. The European
Economic Community had attempted to achieve acustoms union at first, a common market in a
medium term and finally an economic union. The
customs union was established in 1968 after the
EEC and two other organizations were integrated
in July 1967 for the unified, efficient operation of
the community. The three were collectively called
the European Communities to emphasize
European unity. A basic setup for the present EU
was developed then, consisting of the European
Commission as the executive organ, theEuropean Council and European Parliament as
the legislature, and the European Court of Justice.
In the 1970s, global economic stagnation bogged
down European integration. In the 1980s,
however, Jacques Delors of France, thenpresident of the European Commission, took
leadership in accelerating European integration
with the adoption of the White Paper on theInternal Market seeking to realize market
integration by 1992 for the free movement ofpeople, goods, services and capital. In response to
the end of the Cold War and the unification of
East and West Germanys, the EC expansion
became a realistic challenge and European
countries attempted to reform the institutionalframework of the EC. In February 1992, they
signed the Maastricht Treaty, or the Treaty on
European Union. Then, the EEC was given
jurisdiction over non-economic areas as well andrenamed the European Community. Based on theEC, the EU was created under two pillars -intergovernmental cooperation in common
foreign and security policy and in judiciary andinternal affairs.
After the creation of the EU, newinstitutional reforms were implemented throughthe Amsterdam, Nice and Lisbon treaties.
Particularly, the Lisbon Treaty attracted attention
as a fundamental reform. This treaty replaced theEuropean Constitutional Treaty, which wasdrafted and failed to be enacted as a result ofFrench and Dutch referendums, and retained theconstitutional treaty's objective of setting up a
new European integration framework, though

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treaty. The greatest reform under the treaty
repealed the three-pillar structure comprising the
supranational body including the European
Community, intergovernmental cooperation incommon foreign and security policy, and judicial
and police cooperation in criminal matters, andintegrated the pillars under the EU. The Lisbon
Treaty repealed the EC, authorized the EU totake over the EC's authorities and liabilities andgave the EU a single juridical personality. As aresult, the EU was empowered to conclude
international treaties with foreign countries andaccede to international organizations.
In the largest revision in the common trade
policy under the Lisbon Treaty and the preceding
Nice Treaty, it was stipulated that the EU has
exclusive authority over IPRs, services andinvestment as well as tariffs. This means that the
EU has exclusive authority to negotiate andconclude trade agreements covering IPRs.
Although the European Parliament’s consent tothese agreements is required, the European
Council can decide whether to ratify them byspecific majority vote. The revision can beinterpreted as indicating that major EU countries
can take leadership more easily in proceedingwith trade policy.
2

EU Trade Strategy Revisions and Their
Objectives

As explained above, the EU has establishedthe formal base for its promotion of trade policy
without being bound by interests of individual EU
member countries. When releasing the "Global
Europe" strategy as explained in the previous
chapter, the EU shifted trade policy priority fromthe WTO to FTAs and adopted remarkably
proactive IPR protection provisions in FTAs. How
can the objectives of the policy shift be
explained?
I would like to analyze the shift from threepoints. The first point is what specific traderelations the EU pursues in promoting FTAs. The
second is what specific countries are subject tothe EU's FTA promotion. The third is how thegoal of IPR protection provisions in recent EU
FTAs can be explained.
The first point can be explained from theviewpoint of how the EU positions therelationship between internal and externalmarkets. In March 2000 following the EU's
creation, the European Commission announcedtheLisbonStrategy
representing
a

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comprehensive economic and social plan. In five
years, it released the New Lisbon Strategy thatrevised the original one. While attempting toenhance EU infrastructure through the Lisbon
Strategy, the European Commission submitted"Global Europe" in October 2006. The "Global
Europe" trade strategy first gives future trade
policyprioritytoenhancing
Europe'scompetitiveness. In this respect, it has the same
goal as the Lisbon Strategy. But the strategy says
the EU should not pursue growth in the EU
market alone or protectionist policies as in thepast but rather open the EU market to foreigncompanies and give European companies
opportunities to compete with them while leading
foreign countries to open their markets andexpand opportunities for European companies to
conduct production and provide services inoverseas markets. It cites the globalization of theinternational economy and the rise of emerging
countries as the reasons for doing so. In the
globaleconomy,multinational
enterprises
produce goods and provide services in low-cost
countries, creating borderless supply chains
where intermediate goods rather than finishedgoods for traditional transactions are traded. A
trade framework where the United States and the
EU play core roles has collapsed, while Asian andSouth American countries have been developing
global networks rather than their respective
regional networks. The EU strategy aims toincrease opportunities for European companies totake advantage of the international economy’s
globalization and networking.
“Global Europe” and other EU trade
strategies indicate that the EU is attempting topromote intra-industry trade rather thaninter-industry trade with foreign countries
through FTAs. The European Commission had
initially expected that the establishment of thesingle EU market would increase horizontal
intra-industry trade between EU member
countries through thediversification of
consumers’ preferences and the division of labor
between them and inter-industry trade throughthe division of labor. In fact, however, verticalintra-industry trade has increased rapidly within
the EU, forcing low-income countries in the EU
to specialize in labor-intensive areas and suffer
economic stagnation greater than industrial
countries over a long term with unemployment
rates
remaining
unimproved.
Meanwhile,
intra-industry trade’s share of global trade has
expanded as trade in intermediate goods insteadof final goods has grown more frequent. Under

the circumstances, the EU is attempting to
expand intra-industry trade through progress intrade with foreign countries.
As for the second problem of what specificcountries or regions are subject to the EU's FTA
promotion, we can find some hints in FTA studies
under theories of international relations theories.
In general, “trade creation effects” and “trade
diversion effects” are frequently cited as
economic effects of FTAs. Empirical studies on
how these effects lead to the expansion of
economic well-being in countries concluding
FTAs have been conducted with various methods.
Meanwhile, a rising number of studies
theoretically look into why countries choose toconclude FTAs. According to these earlier studies,
key points for decisions to conclude FTAs include
distance, economic size and production factor
endowment. First, the shorter the distance
between two countries is, the less thetransportation costs are and the more the tradecreation effects are. The farther the distance is,the less the trade diversion effects are. The
larger the economic size is, the more the tradecreation effects are. The smaller the economic
size of a third country is, the less the trade
diversion effects are. The larger the relative
difference between the two countries in
production factor endowment is, the more
prosperous inter-industry trade is and the more
the trade creation effects are. The smaller thedifference is, the less the trade diversion effects
are. As noted above, the EU is attempting toswitch trade with foreign countries frominter-industry trade to intra-industry trade.
Therefore, it is expected to proactively promote
its conclusion of FTAs with countries with large
economies and industrial structures similar to theEU's. As noted earlier, the larger and closer two
countries' economies are in size, the more rapidly
intra-industry trade develops. In fact, the Global
Europe strategy had emphasized the significanceof FTAs with growth market countries. But a
trade strategy released in 2010 says the EUshould choose FTA partners in consideration of
their economic size, growth potential and impacts
on the global economy and give priority to theUnited States, China, Russia, Japan, India andBrazil. In this way, the EU is gearing up forconcluding FTAs with industrial countries withgiant economies and large influence on the global
economy for the purpose of promoting
intra-industry trade with foreign countries. As aresult, the EU has shifted from an approach ofgeneralizing former European colony countries as

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its traditional FTA partners to a new approach inwhich the EU reviews preferential relations withthese countries and asks them to liberalize trade,investment and services and protect IPRs in linewith their respective degrees of development.
Finally, the EU has begun to link IPR
protection enhancement through FTAs to thepromotion of European companies' overseas
investment. This means that that the EU leads
foreign countries to develop IPR systems in orderto promote European companies' overseas
expansion. The EU had given priority toharmonizing IPR systems within the region
rather than enhancing and harmonizing
international IPR systems. In fact, however, theharmonization process has remained difficult as
EU members have stuck to their respective
systems. In response, the EU has specified its
policy as asking foreign countries to provide thesame IPR protection as major EU countries in
efforts to develop systems for globally expanding
European companies to obtain profit, irrespectiveof whether the harmonization within the EU isachieved.

players indicate and how these preferences arelinked to the EU’s FTA policy.

Ⅳ Conclusion and Future Challenges
This study explained changes in the EU’s
IPR policy for FTAs over the recent years fromthe viewpoint of international political economics.
The study made the following two findings: First,
the EU now requires FTA partners to provide thesame IPR protection as in the EU, intensifying
international disputes over international IPR
protection systems. Second, the objective of the
EU’s FTA policy shift is to expand intra-industry
trade with foreign countries (particularly major
economic powers) and develop IPR protection
systems particularly to promote European
companies’ overseas investment.
Based on the above argument, I can conclude
that a factor behind the EU’s enhancement of IPR
protection through FTAs over the recent years isthe union’s attempt to develop trade relations
with foreign countries using the globalization andnetworking of the international economy. But
such international economic relations alone may
not be the only factor behind the FTA-based IPRprotection enhancement. As far as FTAs
represent a policy, domestic or regional politics
must be related to the FTA policy. On drug accessrules and geographical indications for which the
EU has set higher standards for FTAs than under
the TRIPs Agreement, I in the future would liketo look into what preferences regional relevant

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