Keep the faith

Over the past 20 years, WTO members have made great progress in reducing barriers to trade in sectors as diverse as agriculture and IT. One aspect the WTO has been routinely, but unfairly, criticised for is healthcare. The source of that criticism can be traced back to 1995 when the WTO ratified its agreement on Trade-Related Aspects of Intellectual Property (TRIPS).

It set a global requirement for the first time for WTO members, apart from the poorest countries, to grant inventors basic forms of intellectual property such as patents. The major global offensive on HIV in the mid-1990s prompted dire warnings from NGOs that forcing developing countries to respect patents would make medicines unaffordable and cost lives.

It’s not played out like that. Access to HIV medicines in lower and middle income countries has increased dramatically. In 2003, only 400,000 people living with HIV had access to HIV medicines; today the figure is over 15.8 million. Prices actually dropped 95 per cent between 1995 and 2000, as donor governments committed billions for purchasing the medicines, creating new markets and economies of scale.

That said, arguments about WTO patent rules and health persist. The latest controversy is around the affordability of the new generation of cures for Hepatitis C. This debilitating liver disease is highly prevalent in developing countries.

But TRIPS has fuelled progress here too. Working within the framework, owners of these medicines have entered into licensing agreements with Indian drug makers. They allow the medicines to be distributed cheaply in 101 developing countries to reach more than 100 million people, or half the total global infected population. These licences are a win-win. They give more people access to new medicines and preserve the incentives to invest in researching new treatments — the reason IP rules exist.

Patents don’t dictate healthcare though. Weak health infrastructure and shortages of medical staff and financial resources mean large numbers of people still don’t have access to essential medicines, most of whose patents have long expired.

India itself, home to 3,000 pharmaceutical companies and 10,500 drugs factories, struggles to make even the most basic medicines available to its citizens. One recent survey showed that in New Delhi, essential medicines are available in only a quarter of State government facilities.

Overall, the story of trade and health is enormously positive. From the early 1990s, successive Indian governments pursued trade and investment liberalisationUnder WTO membership, these policies have only been accelerated. As national borders opened, life expectancy rocketed as citizens became wealthier and enjoyed better healthcare. The WTO’s influence remains vital and its legally-binding rules prevent members sliding back towards protectionism and economic autarky.

Perhaps after 20 years the WTO has had its day. Future effective trade liberalisation could belong to regional trade agreements. After all, fewer negotiating partners make deals easier to strike. But as the talks in Nairobi begins, ministers should remember there are enormous benefits to be gained by removing trade barriers, not reinforcing them.

Venkataraman is a professor at Mahindra Ecole Centrale. Stevens is the director of Geneva Network