The TRIPS Agreement and Access to Medicine

The Trade Related Aspects of Intellectual Property (TRIPS) agreement is an undertaking by members of the World Trade Organisation (WTO) to respect each others’ property rights.  At its inception, its main purpose was to protect the intellectual property rights (IPRs) of Northern firms, who have historically tended to be the main innovators, in Southern markets where imitation was prevalent.  It was granted as a quid pro quo for easier entry of Southern products into Northern markets.  Two main issues have arisen as a result of the introduction of TRIPS.  One concerns the effect on Southern industrial development, and whether this is made more difficult in the face of more stringent intellectual property protection.  The other is the effect on Southern consumers, particularly with regard to their access to medicine.  In both cases, the policy interactions can be quite intricate.  For example, even with the TRIPS agreement in place, Northern governments still have control over whether exhaustion of IPR protection is national or international, essentially governing whether Northern retailers can sell goods on in other markets that they have bought at home.  Under an amendment to the TRIPS agreement, Southern governments can license products to local producers on a compulsory basis.  And firms can decide which markets they serve.  The interaction of these policies and entry decisions has a critical bearing on the welfare implications.
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