Donald Trump – President elect of the USA
The presidential elections in the United States of America have now concluded with Republican Presidential nominee Donald J. Trump winning a closely contested election. Trump’s election campaign has been unprecedented in the history of the United States. Despite being accused of sexual assault, tax evasion, fraud, draft dodging, bigotry, mocking the disabled and a list of other political sins that were considered unpardonable, Trump still managed to defeat Democratic candidate Hillary Clinton in a close contest.
One of the reasons attributed for Trump’s victory is that he managed to tap into a growing resentment in the “forgotten people” of America, especially the working class who are frustrated with the ‘Washington establishment’. His campaign speeches harped on an economic policy which would “return jobs” to America and he has promised to punish trading partners who he has accused of stealing jobs under the guise of free trade treaties. In the words of his manifesto, the Donald will “Negotiate fair trade deals that create American jobs, increase American wages, and reduce America’s trade deficit.” As a part of this strategy, the Donald has promised to “Appoint tough and smart trade negotiators to fight on behalf of American workers”. The manifesto also promises to “Direct the Secretary of Commerce to identify every violation of trade agreements a foreign country is currently using to harm our workers, and also direct all appropriate agencies to use every tool under American and international law to end these abuses”.
On the specific issue of intellectual property policy, his manifesto targets China. In particular it promises to “Use every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets – including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962”.
So what does all of this mean for India, which has had a long and contentious history with the United States on the issue of IP? To begin with Trump has had a personal experience of suing over the use of the “Trump name” in India. This article in the ToI (h/t Shamnad) speaks of a case where Trump sued Kotak Mahindra for offering a credit card under the name “Kotak Trump Card”. I looked up the lawsuit on the Delhi High Court’s website and it was filed through Lall & Sethi. The suit eventually settled after three years of negotiations although it is highly unlikely that Trump would have ever won the lawsuit. His personal litigation aside, Trump’s promise to take a hard line on trade will likely mean tightening the screws on IP issues.
The last time the United States was facing a massive trade deficit, during the Reagan years, it put forth the idea of TRIPS at the Uruguay Round of Talks in 1986. Domestically, the US enacted the Omnibus Trade and Competitiveness Act, 1988. This legislation required the United State Trade Representative (USTR) to prepare Special 301 reports after studying the IP policies of all of America’s trading partners and recommend action against those not doing enough to protect American IP assets. Once a country is named by the USTR as being on the watch-list, it is required to negotiate with the USTR and amend its national laws failing which the US President is authorised to impose trading sanctions. The then USTR Carla Hills successfully used the Special 301 shaming process coupled with the threat of trade sanctions to force smaller economies like South Korea and Taiwan to amend their IP laws. At the time the USTR first placed India on the priority list in 1989 and then followed it up with mild sanctions a few years later. The end goal in this case was to force India to sign up to TRIPS and the US succeeded in that goal.
After India signed TRIPS as a part of the WTO Agreement, it began a long and painful process of amending its national patent law to reintroduce pharmaceutical patents. It is no secret, that in the recent years, the United States is not happy with India’s revised patent laws. The USTR has complained Section 3(d) and compulsory licensing in virtually every report. The TPP, which promised to be one of the new “bigly” treaties, reportedly had provisions that would neutralise the “efficacy” requirement in Section 3(d). Trump has however promised to walk out of TPP because of fears that it will rob the US of more jobs. But given his promise to get tough on trading partners, coupled with the fact that IP is the most valuable American export, it is likely his administration will take a tough line against India on IP issues.
The WTO restricts the room for the US to impose unilateral trade sanctions on its trading partners but given the mood of the American electorate, the Donald will be under pressure to show that he is doing something to protect America’s interests. This could mean either complaints before the WTO’s Dispute Settlement Body (DSB) against Indian patent law or worse, unilateral trade sanctions in defiance of the WTO. At this point we simply don’t know what to expect because the Trump campaign has not released too many details on his proposed policies.
However it plays out, it should be remembered that the India of 2016 isn’t the same India from the eighties and nineties when Carla Hills successfully arm-twisted India. Hopefully the Donald and his USTR will not issue ugly trade threats to India on the issue of IP.