Development & Aid, Environment, Tierramerica

Sanction Reopens Debate over Piracy in Chile

SANTIAGO, Jan 20 2007 (IPS) - The United States has chastised Chile for failing to protect patents, especially for pharmaceuticals. The European Union also has its eye on the South American nation for possible violations.

Although Chile is its best trade partner in South America, the United States hit the country with sanctions, arguing that Chile is not protecting intellectual property. The move has reignited debate over equitable access to medications and reawakened pressure from the pharmaceutical industry.

Ernesto Benado, director of the non-governmental Chilean consumers' association Conadecus, told Tierramérica this conflict reopens the issue of the validity of long-term patents, which ensure that medications maintain “exorbitant prices”.

On Jan. 8, U.S. Trade Representative Susan Schwab announced that Chile was placed on a “priority watch list” for its lack of effective measures to protect the intellectual property rights of pharmaceutical, music, film and information technology products.

The sanction, which coincides with the third year since the U.S.-Chile free trade agreement took effect, means a downgrade for Chile in the three levels the United States uses: “watch list” for less serious cases, “priority watch list”, for situations of concern, and “priority foreign country” for the most serious cases.

Chile is the only South American country that has a free trade agreement in force with the United States.

Following the U.S. announcement of sanctions came declarations of concern from the European Union, which insists that Chile ratify the Patent Cooperation Treaty, which should have been signed before Jan. 1 but has yet to be sent to Parliament.

In a study by the European Commission, the EU's executive arm, Chile is in 4th place globally in terms of intellectual property violations.

Economy Minister Alejandro Ferreiro asserts that the government of President Michelle Bachelet is complying with Chile's obligations under the treaty and said the U.S. sanctions are “disappointing”.

Carlos Fourche, director of international economic relations at the Foreign Affairs Ministry, told El Mercurio newspaper that there are “differences of interpretation” of the free trade agreement and that the “enormous influence” of the U.S. pharmaceutical industry was “evident” in the George W. Bush government's decision.

Benado, of Conadecus, agrees: “For Chile, when the patent of a (pharmaceutical) product has expired, it is free to be marketed as a generic. But the United States says the patent can be extended by authorizing additional uses.”

“Our organization defends consumers' interests. We believe that developing countries like Chile shouldn't turn in patents because that means medications come out on the market with exorbitant prices,” Benado added.

For Claudio Lara, an economic policy expert at the private University of Arts and Social Sciences (ARCIS), the conflict dates back to late 2003, when the government of then-president Ricardo Lagos (2000-2006) was “very rushed” in signing the free trade agreement with the United States, and did not adequately negotiate the final issue, which was intellectual property.

“The country was left very exposed,” Lara told Tierramérica. But he thinks Bush isn't very concerned about Chile because it's a relatively small market, but rather is using the sanction “to pressure the rest of the countries of Latin America,” especially Brazil and Mexico, to sign onto U.S. standards for patents.

Since the free trade agreement took effect on Jan. 1, 2004, trade between Chile and the United States has grown 134 percent, with the balance favoring Chile. Between January and November 2006 trade totaled 13.33 billion dollars, of which 8.27 billion were Chilean exports.

The use of pharmaceutical patents is one of the most conflict-ridden issues of the Doha Round of World Trade Organization talks, in which countries like Brazil, India and South Africa claim the right to produce generic medicines to treat diseases with heavy social impacts, such as HIV/AIDS.

At a University of Chile law school forum, professor and lawyer Gabriel Zaliasnik argued that the Chilean authorities are effectively protecting intellectual property, but said they should not go overboard, in order to avoid monopolistic abuses, especially in the pharmaceutical industry.

Software, music and film piracy, the other area Schwab mentioned for sanctioning Chile, moves 182 million dollars a year in this country, according to estimates from Conapi, an anti-piracy network of business organizations and artists.

Of that total, the reproduction and legal sales of computer software is the lion's share at 135 million dollars, while pirated music is 30 million and film 17 million dollars.

Sources from Conapi told Tierramérica there are currently about 430 legal cases under way for acts of illegal trade and piracy, which include the illegal printing of copyrighted books.

The commission says Chile loses 160 million dollars a year in uncollected taxes due to illicit trade and piracy, in which otherwise unemployed workers play a big part. The lost taxes could have been used to pay for social programs proposed by the government that had a budget of 140 million dollars, according to Conapi.