The Biden administration is partnering with global organizations and foreign countries on an agreement that will undermine the intellectual property (IP) of American businesses. This will both damage American workers and businesses and will be a giveaway to geopolitical rivals like Communist China and Russia.
Intellectual property is important to the American economy. It includes patents on inventions, copyrighted books and movies and computer software. The value added to new products is largely intellectual property and millions of jobs rely on it, so allowing other nations to steal it is economic suicide.
The World Trade Organization (WTO) will soon consider a proposal to “waive” or remove IP protections for COVID-19 vaccines that exist under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). If adopted, foreign countries would be permitted to seize the patents and clinical data belonging to American businesses.
This would set a dangerous precedent across the world that foreign countries can steal IP from Americans with the support of the United States government. This would threaten American innovation and the millions of high-paying jobs that depend on this manufacturing and would certainly undermine the development of vaccines and treatments for future deadly pandemics.
Thanks to American medical innovation, several highly effective COVID-19 vaccines were quickly developed and distributed. One key reason for this success is the existence of strong IP rights which incentivize manufacturers to innovate, ensure medicines are safe and effective and invest in the next generation of cures.
Developing new medicines is a costly, risky, and time-consuming process. A manufacturer must invest an average of $2.6 billion, according to the Tufts Center for the Study of Drug Development. In all, just 10 to 20 percent of medicines that begin clinical trials are approved.
Surrendering the IP rights of American manufacturers will undermine this system and threaten the next generation of vaccines. There is no reason for this proposal. There is no shortage of vaccines thanks to the extensive investment in production, increased competition and slowing demand. In India, manufacturers have slowed down the manufacture of new vaccines because they created an overproduction of 200 million doses — far more than was needed.
IP supports millions of high-paying jobs across the country. According to the United States Patent and Trademark Office (USPTO), IP-intensive industries accounted for $7.8 trillion in GDP in 2019; 41 percent of the economy. These industries accounted for 47.2 million jobs or 33 percent of total U.S. employment.
Medical innovation is no exception — it directly or indirectly accounts for over 4 million jobs across the U.S and in every state, according to research by TEconomy Partners, LLC. The average annual wage of a pharmaceutical worker in 2017 was $126,587, which is more than double the average private-sector wage of $60,705.
While this will harm U.S. workers and businesses, it will help America’s rivals like Communist China who could use this proposal to seize IP and trade secrets. China has an extensive record of violating property rights, costing the U.S. $225 billion to $600 billion each year in counterfeit goods, pirated software, and theft of trade secrets.
There is nothing in the WTO proposal to stop further IP theft — although the draft proposal “encourages” countries like China to opt out of the waiver if they do not need vaccines, every country would be eligible to participate in the waiver if they so choose. Even if a more geographically restricted waiver were implemented, China would still acquire U.S. trade secrets and technology via other countries.
Given that this proposal harms American businesses and workers and helps foreign rivals, it should be alarming that the Biden administration has been rushing it through. In fact, the administration has even failed to properly consult Congress as noted by a bipartisan group of senators including Senate Finance Committee Chairman Ron Wyden (D-Ore.), Ranking Member Mike Crapo (R-Idaho), and Sens. Bob Menendez (D-N.J), Chuck Grassley (R-Iowa), Catherine Cortez Masto (D-Nev.), and Ben Sasse (R-Neb.).
They recently sent a letter to the U.S. Trade Representatives (USTR) urging the office to improve transparency and consultation with Congress on pending trade negotiations including the proposed WTO IP waiver.
The Biden administration should withdraw its support for the proposal to undermine IP rights of COVID-19 vaccines. This would undermine the efforts of American innovation and high-paying jobs that rely on IP. Instead, it would help foreign governments like China and serve as an implicit endorsement of the rampant theft of American IP.
Grover Norquist is the president of Americans for Tax Reform.