Intellectual Property Rights
Expanded Boundaries

By Ravi K. Rauniyar

AS NEPAL considers the pros and cons of its entry into the WTO, its implication on long-term economic development, poverty alleviation and public health needs a thorough debate. With the opening of the international market and the increased ease with which goods, capital and ideas flow around the world, new opportunities for growth and development have emerged for developing countries. These changes are not smooth and without problems. The far-reaching Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPS, has become a topic of heated debate worldwide and threatens to undermine the legitimate right of WTO members to formulate their own public health policies and implement them by adopting measures to protect public health.

Patent Protection

Several factors have led to the emergence of this debate. Particularly, the obligation TRIPS imposes on member countries of the WTO to recognize and strengthen patent protection on pharmaceuticals denying patients in developing countries like ours, access to life-saving essential medicines. The issues at the core of this debate are not new. The legislation in many countries, like the French law of 1844, excluded pharmaceuticals from patent protection because it was feared that the legal monopolies that such protections confer might have a negative impact on the widespread affordable access to medicines. The model of the French law was followed by many countries, including German, Italy, Japan and Spain, which began to introduce patent proection for pharmaceuticals only after the 1960s. Traditionally, laws governing the protection of intellectual property rights (IPRs) have extended only to the national boundaries of a nation where the patent was filed. However, with increasing globalization, nations have attempted to expand the protection of intellectual property rights for their own nationals beyond the boundaries of its own territories and into the international marketplace.

During the negotiations that led to the WTO, the pharmaceutical industry lobbied hard to have patent protection extended to cover pharmaceuticals. This was accepted with certain important safeguards that governments could use to help them balance public interest with the claims of patent holders. For example, ‘compulsory licensing’ allows governments to exploit a patent without the owner’s consent if it is justified by public interest. The Brazilian AIDS policy, which includes providing free drugs to people with HIV/AIDS has been highly successful because of Brazil’s ability to manufacture affordable medicines through compulsory licensing. However, a country needs to have a reasonably sophisticated pharmaceutical industry in order to produce the required medicines and must be able to achieve economies of scale to bring the prices down to affordable levels. Nepal, like the great majority of developing countries and smaller economies, fails on both counts. Such countries that lack the required infrastructure to make available locally produced pharmaceuticals could import generic drugs from the cheapest source by what is called ‘parallel importing.’ The option of parallel importing from a generic manufacturer in a large country is restricted unless compulsory license has also been issued in the exporting country to manufacture the product. It therefore becomes important for Nepal that member countries have the flexibility to grant compulsory licenses to supply foreign markets and be free to determine the grounds upon which to issue such licenses.

In the past, even when countries have acted within the scope of existing trade agreements to ensure public health for their nationals, they have been met with strong oppositions from the developed countries, particularly the United States and its powerful pharmaceutical lobby. For instance, the American government strong-armed the Thais into signing an undertaking not to allow compulsory licensing by imposing import duties on wood jewerely and other Thai good the main source of foreign exchange for Thailand. United States complaint at WTO against Brazilian patent law threatened to handicap the highly successful Brazilian AIDS control program. The American government pressure on South Africa to stop ‘parallel importing’ and the lawsuit brought by the pharmaceutical industry against the government of South Africa even in the light of a ‘national AIDS emergency’ is another example of how the safeguard mechanisms in the TRIPS Agreement have been bypassed to protect commercial interests by threatening unilateral trade sanctions. Strong public opinion both within and outside the United States led to the withdrawal of this lawsuit, thereby illustrating that public opinion is seriously concerned that intellectual property rights may be interpreted and implemented in a manner that runs counter to the promotion of public health policies.

The developed countries have argued that the provisions in the TRIPS Agreement will actually lead to positive results in terms of an increase in the flow of technology transfer and foreign direct investment (FDI) leading to an increase in the resources devoted to R&D of needed new drugs. This, they claim, ensures a dynamic pharmaceutical industry to the benefit of the developing countries. The end of ‘brain drain’ from developing countries to industrialized ones caused by the absence of patent protection in developing countries has also been pointed out. However, truth cannot be further away than this. Market forces alone are not enough to address the need for affordable medicines or to stimulate R&D for neglected diseases. A market for life saving drugs simply does not exist in the developing countries despite the fact that 90 per cent of all deaths and suffering from infectious diseases occur here. Out of the 1,223 new drugs brought into the market between 1975 and 1997, only 13 were for tropical diseases. This is a clear indication that markets do not serve the poor population. For many tropical illnesses and other disease that affect the poor, low income levels deter private investors. The positive effects in terms of increased FDI, technology transfer or R&D have not so far materialized in countries where pharmaceutical patents were introduced at the beginning of the 1990s. For instance, not only have there been no increase in FDI in pharmaceuticals but many plants have been closed down, as, for example, in Colombia where the number of formulation plants has dropped from 32 to 17. On the contrary, since the developed countries and their multinationals corporations are the main users of patent protection (only 3 per cent of world patents are owned by
inventors in the developing countries) they will also be the major beneficiaries of the strict patent laws in developing countries. Some experts have warned that this will likely lead to a transfer of income from the less developed countries to the developed countries, thereby further widening the income disparities between the two.

Corporate Interest

Nepal with a population of 23 million and per capita income of US$210 per annum is among the world’s poorest nations. Even though the government of Nepal spends 42% of its national health budget on drugs, most Nepalis are unable to afford essential medicines. With public health being threatened by new diseases and drug resistant varieties of old killers, WTO patent rules is likely to further reduce access to modern medicines for the poor. By restricting the right of governments to allow the production, marketing and import of generic drugs, competition will be restricted leading to price increases and further reduction in the already limited access of poor population to vital medicines. As it stands today, the management of the international trading system puts corporate interest before poverty reduction and public health. As developing countries formulate their pharmaceutical and health policies their foremost objective should be to ensure that public health rather than commercial interest of the developed countries have primacy. In this respect, developing countries should implement the TRIPS agreement in ways that best accommodate the protection of health policies in national legislation.

While Nepal cannot remain aloof from the multilateral trade regime, it needs to build the adequate domestic infrastructure to strengthen the country’s legal frameworks, which is necessary to meet the public health challenges posed by globalization.

For Stability And Good Governance

By Nishchal Nath Pandey

"GOOD economics and good governance prompt bad election results", said P. Chidambaram, India’s former union minister known for his oratory and donor friendly economic approaches. True to his words, while trying best to implement the prescriptions set by the donor countries including those of the multi-lateral agencies has invariably become the order of the day, it has at the same time proved difficult for individual governments to satisfy the rising demands of the populace that vote them to power. For instance, while increasing the electricity tariff may be good for economics but a very bad politics especially during election times. Accountability, transparency and legitimacy –the three chosen crucial tenets of good governance mantra coupled with ensuring corruption-free government machinery have been the buzzwords in today’s world where even aid/grant and loans have been difficult due to resource crunch and economic recession.

Dr. Dev Raj Dahal, in his book "The Challenge of Good Governance: Decentralization and Development in Nepal" coherently elaborates, "in the days to come, there will be unusual pressure on the ability of the government to govern. Internally, the pressure will be exerted by the special interest groups, such as media, ecological activists, women’s bodies, social movements, professional organizations etc. and externally by the regional and international institutions for a transmutation of the nation-state."

Slipshod

While rooting out corruption and red-tapism from the government machinery is a must, it is also apparent that when instability in politics becomes the order of the day it is natural that interest groups have their own influence over the various equations that get formed thereby resulting in various slipshod to take place.

An unstable government cannot provide good governance. Neither can it be widely-felt under a circumstance when rebels threaten and loot public and private property and the government has to transfer a substantial amount of the development budget to counter the menaces of a violent campaign. Therefore, efforts must be directed towards stability which naturally under a democratic polity like ours will encourage all the wings of the government to act swiftly, transparently and without leakages. After all, what the donors are saying is ultimately what the electorate also want to see. Fortunately, Nepal is today enjoying relative stability with the Nepali Congress in a comfortable majority in the Lower House. The present government has accentuated prompt and effective government services while a high level judicial committee to investigate property of leaders and senior employees has also been formed.

Nepal’s economy has lately been compared to a boat amidst thunder-storm facing enormous challenges. Primarily because of the on-going Maoist insurgency, the government has had to reallocate extra budget to the security agencies courageously battling out the uprising from the nook and corners of the kingdom. Prime Minister Sher Bahadur Deuba has himself remarked that the fight against terrorism is always long and hard. Hence, all possible cooperation from friendly countries to combat this menace is a felt-need in our country, both to ensure the safety and security of the people and guaranteeing their fundamental rights.

Finance Minister Dr. Ram Sharan Mahat speaking before the NDF meet in Kathmandu two months ago had said, "The skyrocketing security expenses prompted by the state of emergency has compelled the government to cut some of the development expenditures". The whopping surge in the regular expenditure anchored by a soar in security expenses has swallowed up a large chunk of the national revenues collection, which has put the government in a difficult position, he added.

Fortunately, the assistance from different countries have been overwhelming proving that friends are with Nepal through rain or shine. While we received two scout helicopters from the Government of India, A Memorandum of Understanding (MOU) was signed on April 12, 2002 between the Government of India and His Majesty’s Government of Nepal, for cooperation in the telecommunications sector in Nepal. The MOU envisages setting up of an Optical Fibre Cable (OFC) based Information Super Highway along the East West Highway in Nepal. This OFC backbone of approximately 1000 kms. in length shall run right from Bhadrapur in the East upto Nepalganj in the West, and cover 81 important cities and towns of Nepal which account for a very large part of the total population and telecom users in Nepal.

The US government has also continued its assistance focusing on principal areas of health and education. Annual bilateral negotiations on development cooperation between Nepal and Germany began was also held in Kathmandu. The bilateral consultations are expected to explore possible future areas of cooperation between the two countries. A move that might act as a catalyst in reducing the trade deficit between Nepal and China, the visiting Chairman of the Tibet Autonomous region (TAR) of China has likewise informed that the provision of licenses for importing Nepali goods will be done away with. Mr. Lek Chok is the Chairman of a region that has a long traditional business linkage with Nepal.

Imperative

All in all, it is imperative that the current problem that Nepal is how facing is duly resolved as soon as possible. It is also important that the development works undertaken do not get discontinued for the very reason that resources cannot be met. The vicious circle then gets complete with the people not getting to see the light of development in their villages taking the resort of guns and violence. This quagmire can only be appropriately tackled with the support and assistance of friends in need.

Glimpses Of Medieval Nepal III

By Guna Dev Bhattarai

THE kings of medieval Nepal invested with all the legislative, executive and judiciary powers commanded the highest position in the society. Kings were not proud of their position, power and prestige. They would personally participate in religious and social ceremonies. The people were encouraged to point out the flaws and lapses of the kings and the latter were always ready to redress the grievances of the people. Some kings of Bhadgaon, Rana Jitmalla in particular, would seek the opinions of the people wherever the state needed them. The people would not lag behind in criticising the kings when the affairs of the state were in a bad shape. The life of the king was protected at any cost.

Kings were undoubtedly absolute but their absolutism would not hamper the interests of the people. Though there were no provisions of a constitution, kings were guided by traditions, precedents and practices and, above all, religious sentiments.

Though the Valley kings fought among themselves, the senior most king would perform the act of putting the crown on the head of the successor of the deceased king. The death of any king of the Valley was mourned by other kings irrespective of their rivalry and without any hesitation they attended the funeral ceremony of the deceased king.

Most of the rulers of the Valley were patrons of art and literature. Jagajyotir Malla and Bhupatindra Malla of Bhadgaon, Sidhinarasimha Malla and Sriniwas Malla of Patan and Pratap Malla of Kathmandu and some others were learned king.

The Malla rulers were not rich enough to lead a life of ease and extravagance. The resources of the state were not exploited by them.

The rulers of the Nepal Valley were influenced by the renowned scholars of the Indian sub-continent.

The Rajguru was the spiritual head of the state. He was known as Rajopadhya. He was often consulted by the king on several important matters. Whenever pious deeds were to be performed the king would invariably consult the Rajguru. Rajguru was known as Dyabhaju. It was stated that the Rajopadhyas had come to Nepal from Kanaiy (Kanya) Kubja). The Brahmins who had come to settle in Nepal in the seventeenth century were proud of themselves being the pure ones. The Mithila Brahmins might have settled in the Nepal Valley before the coming of the Purbiya Brahmins.

Kathmandu, Patan and Bhadgaon were the capital cities of the Malla rulers. Each of the rulers for the sake of convenience formed a panel of ministers, advisers and the like for the proper functioning of the state administration. There was a chief minister who was later called Chautara. There were some other persons functioning as ministers who were entitled to be called Pramanas.

In the courses of time the post of Kazi akin of a minister was created. The appointment of chief minister, Pramanas or Kazi was followed by a ceremony in which the king would adore each of them with a headdress.

In case of a younger ruler the Chautara had a big role to play. Even the queen mothers would play a major role until the minor ruler came of age.

There was no high sounding designation pertaining to the state army, the police and the like until the second half of the eighteenth century when

the Omrao came into existence. The Omrao was a military as well as civil authority in small divisions of the state. Generally the Omraos were officers who commanded the irregular militia. The Kotwal and Duare would preserve law and order in the rural and urban areas respectively. The Khasas and the Magars were recruited as the bodyguards of the kings of the Valley.

The Malla rulers made alliances among themselves but such alliances were often short lived. In the second half of the eighteenth century the conditions of the Nepal Valley became miserable because of rivalry among the Malla rulers. Finally Prithivinarayan Shah, the ruler of Gorkha, exploited the prevailing circumstances and conquered the Nepal Valley in 1769 A.D.