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Executive Summary

GATT TALKS: INTELLECTUAL PROPERTY RIGHTS DRAFT DOCUMENT detailing "five key elements" needed to hammer out a comprehensive prehensive agreement should be prepared as a starting point for the General Agreement on Tariff and Trade (GATT) talks, Pfizer VP and General Counsel C.L. Clemente told the Senate Finance Committee April 20. In prepared testimony, Clemente said the U.S. should "put together a detailed draft negotiating document" which "could be used to develop a consensus . . . on the stucture and scope of a document that could then be tabled in the TRIPS negotiating group." By having a document ready for the Trade Related Aspects of Intellectual Property Rights (TRIPS) talks, the U.S. would be in position of strength to negotiate for a final agreement to be included in the GATT, Clemente indicated. GATT currently does not include intellectual property rights. "Once tabled," he said, "the document, even if it were bracketed, would quickly focus the negotiations on the five key elements of the comprehensive agreement that we believe will effectively deal with the trade distortions resulting from inadequate and ineffective intellectual property protection." Testifying on behalf of the Intellectual Property Committee (IPC), Clemente explained that the five "key elements" of the IPC proposal are: "adequate substantive fundamental principles of intellectual property protection; effective internal and border enforcement measures; multilateral consultation and dispute settlement resolution procedures; basic GATT principles such as transparency and national treatment; and transitional arrangements and technical assistance provisions." In addition to Pfizer, the three-year old IPC is comprised of Bristol-Myers, Johnson & Johnson, Merck, Monsanto and Dupont, as well as General Electric, Hewlett-Packard, IBM, Rockwell International, Warner Communications and FMC, a chemical, machinery and defense systems conglomerate. The recently reached intellectual property rights midterm agreement on the "framework" for the remainder of the Uruguay round of GATT, according to Clemente, "revealed support for a comprehensive agreement among countries that have a stake in the international trading system." The U.S. should "move quickly," Clemente said, "to translate that support on procedure to a consensus on substantive details." A detail draft negotiating document would provide that push, he indicated. Clemente also urged carefully targeted use of Section 301 trade sanctions as a tool to compel countries to comply with U.S. patent protection standards. Discussing the usefulness of U.S. Section 301 trade sanctions on countries ignoring patent rights, Clemente urged United States Trade Representative Ambassador Carla Hills to "take into account how such a designation can move the TRIPS negotiations forward." Clemente added: "Creatively used, the designation process could provide incentives to gain the support of key countries in the GATT negotiations while directly improving intellectual property protection in those countries." Clemente pointed to countries such as Brazil and India, which were opponents of a strong framework agreement, as likely to interfere and try to delay the second half of the TRIPS talks. Brazil is currently appealing to GATT for trade sanctions that were imposed against it in the summer of 1988 for ignoring U.S. patents. At a recent PMA meeting, former U.S. trade representative William Brock predicted that the U.S. would probably lose the case ("The Pink Sheet" April 10, p. 14). Hills, at an April 11 House Ways & Means/Trade Subcommittee hearing, said that she has given that application of Section 301 a "great deal of thought" and agreed that imposing sanctions in areas unrelated to intellectual property could force compliance with U.S. standards ("The Pink Sheet" April 17, T&G-4).

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