INTELLECTUAL PROPERTY RIGHTS PROTECTION AND ENFORCEMENT: A PRIORITY FOR CUSTOMS ADMINISTRATIONS IN DEVELOPING COUNTRIES?
A PAPER PRESENTED BY GHANA CUSTOMS ADMINISTRATION TO THE 12TH WCO REGIONAL CONFERENCE HELD IN CAMEROUN
Intellectual Property Rights (IPR) issues are dominating the World Customs Organization (WCO) agenda in recent years. A Framework of Standards will be presented to the 57th Session of the Policy Commission and Council in June 2007 for consideration. The WCO Secretariat has devoted time and committed resources to training and workshops purposely to build the capacity for its members to better fight IPR infringements. Since the G8 called for a concerted global effort to fight the menace in 2005, the WCO has put its hands to the plough and has since not looked back.
The questions one may ask are:
1. Should we in developing countries be concerned about IPR protection and enforcement?
2. Is IPR enforcement and protection a ploy by developed countries to protect their profit margins through monopoly?
3. Shouldn’t we in developing countries concentrate on our core business of collecting much needed revenue for our governments?
In discussing this topic, this paper will focus on the following:
1. Customs - from revenue collector to gatekeeper
2. The role of Customs in economic development and poverty reduction
3. TRIPS and its benefits
4. Effect of IPR infringement on the quality of life
5. Customs in 21st Century
6. IPR in Ghana
1 CUSTOMS - FROM REVENUE COLLECTOR TO GATEKEEPER
The traditional customs role of revenue collection has changed over the years to include protection of society, combating piracy, drug trafficking, money laundering, terrorism and trade facilitation and security of the global supply chain. Though all these multiple customs roles are relevant, emphasis differs from country to country with customs administrations in developing countries focusing mainly on revenue collection. This state of affairs is due to dependence of our economies on revenue from customs duties and other taxes. Since customs administrations in Ghana and many developing countries co llect more than 50% of government revenue, there is over reliance on revenue from customs for financing and balancing government budgets.
At a time when there is pressure from the International Monetary Fund (IMF) and other development partners on governments in developing countries to diversify their revenue base to a more non-distortive tax base, reduce balance of payment deficits and reduce external borrowing, Directors General of customs administrations are assessed by how much revenue they generate into the consolidated fund.
In such an environment, IPR protection and enforcement are not priorities. Or are they? The importance of the role of customs in revenue collection is threatened by the introduction of EPA’s. The impact on the revenue function is grave because most developing countries rely heavily on trade taxes. Less revenue from customs duties would have a devastating effect on an administration whose major focus is the revenue function. One way customs administrations in developing countries can re-assert themselves in the international customs community in the 21st century is to make IPR enforcement a priority because today the trend is towards stronger IPRs. Customs administrations in developing countries should therefore raise the profile of customs by championing the crusade against pirates and counterfeiters.
2. THE ROLE OF CUSTOMS IN ECONOMIC DEVELOPMENT AND POVERTY REDUCTION
Under the New Partnership for Africa’s Development (NEPAD) program, governments in Africa seek to eradicate poverty and ensure sustainable and accelerated economic growth. Under NEPAD, governments also seek to ensure stable market conditions, promote investment, create wealth, reduce domestic debt and attract a critical mass of export oriented firms to kick start export-led growth of the economy. If these are the medium and long term goals of governments, what role must customs play to ensure the realization of these objectives?
Is it possible to achieve middle income growth by the year 2020 if we continue to focus on revenue collection at the expense of safety and development? Can we ensure health for all by the year 2010 if we continue to focus on duties and taxes on medicine rather than the efficacy of the drugs? There is no gainsaying that because of our location at the frontiers, customs is increasingly seen as the gatekeepers. Governments, international organizations and civil society expect that we take on the enhanced role of compliance and enforcement to protect society and ensure fair competition in international trade.
At the 11th Regional Conference in Cote d’Ivoire, a representative of the African Industries Association, drew attention of delegates to the devastating effect of weak IPR regimes on industries in Africa. The high incidence of counterfeiting and piracy, according to him, has led to loss of jobs and loss of turn over. As a result many companies have folded up. We therefore owe it to manufacturers, to protect their investments. In 2005, the government of Ghana was compelled to adopt extreme measures to protect the local textile industries from collapse due to influx of cheap imitation wax prints. Government directed that imported wax prints be cleared from only one designated port.
3. TRIPS AGREEMENT AND ITS BENEFITS
If our countries are to attract that critical mass of export oriented firms to kick start export led growth and if our countries are to attract Foreign Direct Investment [FDI] and technology transfer, customs administrations have a significant role to play in IPR enforcement. The basic objectives of the TRIPS Agreement are that, the protection and enforcement of IPR would contribute to the promotion of technology transfer, innovation and dissemination of technology. Strong IPR regime also provides incentives for research and development. It has been established that a country with weak IPR regime risks losing investors. Though there is little empirical evidence that strong IPR leads to transfer of technology and Foreign Direct Investment, a strong IPR regime is one of the many factors influencing decision of producers and firms to transfer technology or invest in a country, as they are sure to reap the benefits of their investments. It therefore behoves on us as customs authorities in developing countries to be more responsive and improve the quality of our controls to combat the menace. As members of the WTO our countries are signatories to the TRIPS Agreement. The Agreement requires that all members align their laws on copyrights, patents, trademarks etc. to the TRIPS Agreement and provide ways of enforcing the laws to effectively deal with IPR infringements. The coming into force of the TRIPS imposes additional responsibility on customs as border agencies to use our competencies and authority to examine inbound and out bound cargo as well as detention of goods, to enforce the law.
As emerging economies, attracting foreign direct investment remains an integral part of our economic recovery process. Our development partners should therefore have confidence in our countries as enforcers of the rule of law and for that matter IPR. Developing countries have misgivings about IPR protection and enforcement. Opponents of strong IPR regimes argue that IPR enforcement impedes technology transfer and restricts the production, sale, import and use of patented goods, drugs, etc. The result is highly priced goods and medicine which are beyond the reach of majority of our people.
They argue that strong IPR does not benefit developing countries. Rather, relaxing patent rules would increase access of the poor to drugs. Public interest in IPR is varied. For us as customs administrations, we should see ourselves as law enforcing agencies.
4. EFFECT OF IPR INFRINGEMENT ON THE QUALITY OF LIFE
The introduction to the draft Customs Kit on counterfeiting presented to the 56th Session of the Policy Commission reveals that counterfeited and pirated goods are being diverted to countries with weak IPR enforcement regimes. There is evidence that more than 50% of drugs imported into developing countries are counterfeited and the efficacy of the drugs cannot be guaranteed . The 2006 report by the UN drugs watchdog, International Narcotics Control Board has warned that fake prescription medicines are flooding markets in developing countries with disastrous consequences.
Reports indicate that in developing countries, the most counterfeited medicines are those used to treat life threatening conditions such as malaria, infectious diseases and HIV/AIDS. In Ghana the Food and Drugs Board reports of increase in the counterfeiting of food supplements, sex stimulants and blood tonics. Globally, expensive drugs such as anti cancer drugs and drugs in high demand such as anti-retrovirals are counterfeited. These drugs are mislabeled to make them appear genuine. Reports by the Pharmaceutical Security Institute, reveals that in 1995, over 2,500 people died in Niger after being vaccinated with fake meningitis vaccines. In 2003, 2 children died in Venezuela after being administered with fake anesthetic. Two children died in Nigeria in 2003 after being administered with fake medicines after heart surgery. In 2004, at least 13 children died after their parents had unknowingly fed them with infant baby food made of sugar and starch.
Customs authorities therefore have a prime role to play in ensuring health security of our people. Counterfeited imported drugs, electrical goods, spare parts of vehicles and airplanes are imported into our countries and these are killing our people.
5. CUSTOMS IN THE 21ST CENTURY
Production in the 21st Century is knowledge-based. IPR protection is therefore increasingly becoming a major issue in international trade as it is necessary for the protection of knowledge-based products. The WCO’s environmental scan document reveals that IPR enforcement and protection is a priority of the WCO of which we are members.
In the 21st Century, Customs administrations are required to apply border regulatory controls to cross border movement of goods. Customs as an integral part of the world trading system should be responsive to its environment.
The modern economy is dependent on investments in inventions and innovation. Business can only grow and operate in an environment where there is the rule of law: where rights are protected and outlaws and economic saboteurs are exposed and punished. Today’s business operates in a highly competitive environment where market conditions are always creating winners and losers mergers and takeovers. The 21st Century business therefore needs the support of operators in the international trade supply chain to remain in business. Customs administrations in developed countries have taken on the challenge. Customs in developing countries should also be seen by the international business community to be promoting legitimate trade.
In his message to the international customs community at this year’s international customs day, the WCO Secretary General noted that the value of trade in counterfeited goods is estimated at over 500 billion Euros annually. The bulk of these goods end up in developing countries. As members of emerging economies, it behoves on customs to join other anti piracy agencies to fight the menace. We should not support these saboteurs to reap where they have not sown. Weak IPR regimes do not only lead to huge economic losses to business but also leads to closure of companies producing genuine goods.
It is significant to note that whereas customs administrations in developed countries are responsible for the seizure of about 70% of all counterfeited goods; same cannot be said about their counterparts in developing countries. IPR enforcement is not the priority of our administrations but the trend must change.
6. IPR IN GHANA
Ghana currently has an updated copyright law which meets the minimum requirements of international treaties such as TRIPS, Berne and the WIPO Internet treaties. The new Copyright Act of 2005, (Act 690) provides maximum fine of $120,000 or 3 year jail sentence or both to any person who is convicted of Piracy or counterfeiting under the law. Parliament has also given approval to government to ratify the WIPO internet treaties. That IPR protection is a priority for Government, is reflected in Ghana’s Trade Policy. In the trade policy statement published in 2004, government identifies new inventions innovative ideas, designs and creativity as major contributors to the social and economic development of any country. Government policy objective therefore is to stimulate innovation and technology development in Ghana through provision of effective rules to protect IPR and ensure effective administration and protection of copyright and industrial rights. The policy framework has been approved by parliament. It is time for implementation. It is worth mentioning here that special courts have been established to deal expeditiously with IPR cases. Customs must therefore be equipped and competencies of officers enhanced for effective protection and enforcement of IPR. We therefore call on members in the region to embrace the WCO framework on IPR [when it is presented to council in June] with the same enthusiasm with which we adopted the SAFE framework of standard.
Establish a coalition of anti piracy agencies to develop and implement coherent and coordinated action plan and strategy on IPR protection.
Identify decision makers who are well informed in IPR issues and who understand the importance of IPR for national development both in the private sector and the public sector as well as civil society and let them support the campaign.
Use WCO model legislation to identify gaps in the national customs legislation, [In Ghana, the law review committee will be reviewing its code of instructions to make it compliant with international best practices with regards IPR and the WCO modellegislation.]
Ensure regulations on proper labeling of imported goods indicating country of origin and other specified trade descriptions.
Set up Units for IPR enforcement which must serve as contact points for other anti-piracy agencies.
Promote public education of consumers, policy makers, manufacturers and importers and create awareness among rights holders.
Develop and implement Regional Action Plan on IPR enforcement.
Make use of RILO for information exchange.
Develop regional strategy for implementation of WCO framework on IPR
Conduct regional pilot project on IPR enforcement in collaboration with stakeholders and the WCO.
Raise the issue of IPR at the AU Sub Committee on Directors General of customs and also at the Africa Union, ECOWAS and CEMAC for political support.
Encourage private sector partnership in joint anti piracy campaigns and workshops at national and regional level.
The development of economies in the modern world depends on sustained efforts to tap and exploit market opportunities for growth. It is essential for sustainable economic development of people and business that are willing to play by the rules, that customs stay ahead of and support other anti - piracy agencies to bring to book the international piracy networks. It is obvious that, for sustainable economic development, IPR should not be treated as a peripheral issue by customs administrations in developing countries.
Therefore it is essential for customs administrations in the 21st century to link up and make major in- roads in the fight against these international criminals and economic saboteurs.
1. UNCTAD – ICTSD Project on IPR and Sustainable Development
2. Literature Survey on Intellectual Property Rights in developing countries and sustainable development by Graham Dutfield
3. Exceptions to patent rights in developing countries by Christopher Garrison
4. Ghana Trade Policy 2004
5. International Narcotics Control Board Report for 2006
6. TRIPS Agreement
7. Maintaining Good Medicines through advanced anti-counterfeiting measures by Ashley How, European Director, Pharmaceutical Security Institute
8. Solidarity message from UNILIVER Ghana limited, delivered by Yaw Nsarkoh, Marketing Manager, at the 2007 International Customs Day, in Accra.