Wednesday, August 28, 2019

TRIPS Agreement and Challenges

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By K A Dhananjay,

Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement is a framework which brought a unified Intellectual Property standard across the globe. It is a complementary standard to the existing WTO regime, and tries to accommodate GATT principles in its text. Now, what does TRIPS protect? TRIPS protects copyright and related rights (i.e., the rights of performers, producers of sound recordings and broadcasting organisations); trademarks including service marks, Geographical Indication (G.I), industrial designs; patents including the protection of new varieties of plants, layout-designs of integrated circuits, trade secrets and test data.

When we talk about the legal aspects of TRIPS, it is necessary that we go by the fundamentals. TRIPS has two main pillars — Most Favoured Nation (MFN) principle and National Treatment principle. MFN principle states that there shall be no discrimination and reciprocity shall be binding in trade. It is rather a status given by a country to another country under a condition that the country will provide certain concessions, privileges and immunity in trade agreements. However, it allows for exceptions — preferential trade agreements and regional free trade agreements. On the other hand, National Treatment principle moots no discrimination between foreign and domestic products. It is one of the guiding principles of the TRIPS Agreement and reiterates the position taken by its complementary predecessor, GAAT.

Legally, there are many challenges to the Agreement. However, four are very pertinent to the current trends in Intellectual Property Law per se. They are: How can intellectual persona be acknowledged as a property? Where does traditional property stand? How can Article 23 (Additional Protection for Geographical Indications for Wines and Spirits) be revamped? and Where does compulsory licensing stand in TRIPS and Is it feasible?

Intellectual Property Rights (IPRs) are a new area of law which is booming across the world. Yet, intellectual property has been a debatable issue in itself. Many scholars believe that manifestations of the brain, and its allied organs though which fruitful inventions unravel, cannot be subject to law. Intellectual capacity of an individual cannot be stored or secured, rather it can only be parted, which again is disputed through IPRs. Even though it incentivises new innovations, intellectual property cannot be ascertained as a ‘property’. Left aligned thinkers and critics of IPRs and subsequently TRIPS, view IPRs as a colonial idea of aggrandising their imperial exploits through their ‘home-grown’ products over indigenous ones and a capitalist measure to outpower substitutes, mainly through excessive lobby. Hence, the very existence of TRIPS itself has a challenge, which is very objective and cannot be easily mitigated.

Another issue is traditional property. There are two concerns which are mainly debated under this heading and they are inappropriate patenting and biopiracy. Inappropriate patenting has been a real menace to curb. It involves claimed invention that is not new or does not involve an “inventive step”. This leads to complications as to the origin of the invention as well as its holder. On the other hand, biopiracy has been an ‘unequal’ step to degrade traditional indigenous knowledge belonging to certain ethnic communities. Biopiracy includes the unauthorised use of genetic resources or traditional knowledge (as laid down in the international treaty on biodiversity) without the permission of the countries or communities considered to be the rightful owners. This makes the livelihood of many ethnic communities at stake, given the outpowering tenacity of big corporations. This needs to be seriously addressed.

TRIPS Agreement does not characterise goods and articles in separate concentrations, yet Article 23 is a spot to critique. Article 23 of TRIPS Agreement gives additional protection for GI tag of wines and spirits, but draws flak for not characterising other products and articles. This is discriminating tons of products which are GI protected but do not get sufficient protection as wines and spirits do.

Next comes the most controversial debate on TRIPS — compulsory licensing. Compulsory licensing happens when the authorities license companies or individuals other than the patent owner to use the rights of the patent — to make, use, sell or import a product under patent without the permission of the patent owner. This has been protected by TRIPS and is mainly discussed in terms of medicine exports. However, compulsory licensing is only applicable to domestic markets and not to international markets. This makes it tough for poorer countries to obtain cheaper generic versions of patented medicines by setting aside a provision of the TRIPS Agreement (Article 31(f)), which could hinder exports of pharmaceuticals manufactured under compulsory licences to countries that are unable to produce them. There were many waivers to this effect, yet nothing was done to amend TRIPS. Even at times of amendment, many developed countries did not agree to it due to the powerful lobby existing in their domestic markets.

In conclusion, these challenges are very concerning due to the growing aspects of TRIPS and IPRs laws. Traditional knowledge can be protected by amending TRIPS Agreement in such a way that patent applicants are required to disclose the origin of genetic resources and any traditional knowledge used in the inventions. Governments can create a database so that communities will be provided with extra access and protection. Strict domestic laws should also be introduced to address the issue. As to giving separate protection for wines and spirits, Article 23 can be amended and be inclusive in accommodating other products as well. The best way could be to differentiate various products and characterise them with subheadings. In the case of compulsory licensing, an amendment would be a good initiative to end the deadlock — providing countries with better generic medicines at times of epidemic or a spurt in diseases. The members of TRIPS should also stop creating Anti-Counterfeiting Trade Agreements, which defeat the purpose of TRIPS and rather create a framework within the agreement so that better accountability is achieved. Hence, with the TRIPS Agreement facing these legal challenges, it would be the right time to seek consensus and decide the fate of intellectual property.

(K A Dhananjay was a Research Intern at Centre for Public Policy Research. Views expressed by the author is personal and need not reflect or represent the views of Centre for Public Policy Research)

Monday, August 26, 2019

Refugee Resettlement: Humanitarian Governance vs the Politics of Refugee Protection

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By Jacob Thamarapally

The term ‘Refugee’ is one that is often misrepresented in political discourse. As per the United Nations High Commission for Refugees (UNHCR), a refugee is a person fleeing armed conflict or persecution. The situation in this person’s country of origin is often so perilous and intolerable that they cross national borders to seek safety in nearby countries. These people have a well-founded fear of persecution for reasons of race, religion, nationality, political opinion or membership in a particular group. As per this definition, there are currently more than 21.3 million refugees worldwide. Out of these, more than 1.4 million refugees need resettlement right now. These refugees still in need of resettlement mostly come from Syria. In fact, two-thirds of all refugees come from just five countries: Syria, Afghanistan, South Sudan, Myanmar and Somalia.

Although all countries are obligated by the UNHCR to take in refugees seeking asylum, in reality, the distribution of refugees is highly skewed. The countries that host the most number of refugees are Turkey, Jordan, Lebanon, Pakistan and Uganda. It is also interesting to note that 80 per cent of all refugees are hosted in developing regions, and a third of all refugees, i.e. 6.7 million people are hosted by the world’s poorest countries. Only 16 per cent of all refugees are settled in Europe. Once a refugee is resettled, the status provided by the resettlement state ensures protection against refoulment and provides a resettled refugee and his or her family with access to civil, political, economic, social and cultural rights similar to those enjoyed by nationals.

The rights that refugees are entitled to today came about as a result of the 1951 Refugee Convention. The Convention clearly spelt out who a refugee is, and what kind of legal protection and other assistance and social rights he or she should receive from the countries who have signed the document. Initially, it focused mainly on European countries, but the 1967 protocol expanded the scope of the Convention. As of July 2014, there were 145 parties to the Convention and 146 for the Protocol. It should be noted that several groups have built upon the 1951 Convention to create more objective definitions. For instance, the Cartagena Declaration was signed by 14 Latin American countries, which broadened the definition of who a refugee is.

The equal intake of refugees by different countries is an important part of the refugee resettlement and the resolution of the refugee problem. Common policy in the field of asylum, migration and borders should be based on solidarity and fair sharing of responsibility including its financial implications and closer practical co-operation among member states. According to Astri Suhrke, a researcher at Michelsen Institute, refugee protection has important public good characteristics. A public good is a good that is non-excludable and non-rivalrous; for instance, the air we breathe. She argues that the increased security that comes from refugee resettlement can be regarded as the principal (non-excludable and non-rival benefit), as accommodation of displaced persons can be expected to reduce the risk of them fuelling and spreading the conflict they are fleeing from. However, this makes it possible for free riding to occur; i.e., some countries might benefit from other countries taking in refugees, despite not taking in any themselves.

However, Suhrke has further expanded the scope of her model arguing that refugee protection provides a spectrum of outputs ranging from purely public to private or country-specific outputs. What is often regarded as a public good has, in fact, excludable (private) benefits to a country. “The joint product model” suggests that a country’s contributions to the provision of refugee protection (with its public and private characteristics) will be positively related to the proportion of excludable benefits occurring to that country. Thus, a market-based sharing mechanism needs to be explored further and that such market-driven policies when combined with policy harmonisation and quota-based initiatives are likely to contribute to a more equitable, efficient and effective refugee burden-sharing system.

However, with the rise of right-wing populism in many European countries, the unequal intake of refugees from these countries has been especially prominent. While local conflicts involving newly arrived refugees break out in European countries, many commentators jump to a declaration of an existential threat to Europe. This erases the fact that Europe has long been a secular continent and moreover, Europeans in the past have been one of the largest populations of economic migrants.

(Jacob Thamarapally was a Research Intern at Centre for Public Policy Research. Views expressed by the author is personal and need not reflect or represent the views of Centre for Public Policy Research)

Friday, August 16, 2019

Strengthening India’s Bond Market

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By Pavithra Manoj,

The bond market in India is still not completely developed, even after several committees being formed throughout the years to augment the bond market. This means that the bond market is unable to share the credit burden that the banking system in India is currently facing. Since there is an absence of a well functioning bond market in the country, it is the banks and the government that take on the task of financing infrastructural projects like roads, airports, bridges and ports. This puts the banks under pressure, since they are buying into long-term assets such as bridges or highways that have a long gestation period, while they entertain short-term liabilities such as deposits of 3–5 years. This invariably creates an asset liability mismatch. This in turn leads to inefficient resource allocations on the banks’ part and ultimately weakens their balance sheet. This pressure, then, is reflected in the increase in bad loans among the banks. This whole scenario is part of the Twin Balance Sheet problem prevailing in the country, where, on one side, the companies are weighed down by high debt, and on the other, the balance sheets of PSU banks are weakened because of alarmingly high bad loans in the form of non-performing assets (NPAs), eventually causing a slowdown in the credit cycle.

It is not that companies have not tried resorting to non-bank sources of financing such as External Commercial Borrowings (ECBs), Commercial Papers (CPs), and so on. India’s share of non-bank credit to total new debt did rise from around 20 per cent in 2015 to 53 per cent in 2016. Prior to 2012, most of the non-bank credit came from ECBs. But after the rupee depreciated and weakened, the source of financing was shifted to CPs. Commercial Papers are not a long-term source of financing, but rather a short-term source, and so, Corporate Bonds were determined to be the most suitable source of long-term financing for projects with long gestation periods. Therefore, the bond market in India should be strong enough to be a source of long-term financing. But what exactly are corporate bonds? Corporate Bonds are a form of debt financing. They are debt securities issued by both private and public corporations as a major source of capital. But, for a company to be able to issue corporate bond at a reasonable and favourable enough coupon rate, it has to have some sort of consistent earnings potential. Each company has a credit rating attached to it. If a company’s rating is high (BBB or higher), then the bond issued by it is an investment grade corporate bond. These bonds are deemed less likely to default and therefore will fetch the investors a lower interest rate as compared to high yield bonds with lower credit ratings (BB or lower), as they carry a higher risk of defaulting, but have the potential for higher income.

The Indian corporate bond market has failed to take off due to the fact that, for years, the investor base in the corporate bond market just included banks, insurance companies, pension retirement funds and mutual funds. And most of these investors do not trade in corporate bonds, but rather hold them until maturity resulting in very little liquidity in the market. Also,most of the corporate bonds issued by the companies are issued through the private placement route, which means that they are privately paced with a select few investors rather than through a public issue in India. This is mainly done to save time and because it involves fewer disclosures and low costs of issuance, and is much faster as compared to issuing it publicly. This ultimately does nothing to strengthen the bond market as bonds are being issued through private routes. Several measures have been taken over the years in an attempt to amp up the bond market in India. In 2016, RBI made it mandatory for large companies to raise at least 25 per cent of their fresh borrowings from the bond market and also companies those plan to debt finance over Rs 200 crore to execute it on an electronic platform to ensure transparency. It was also made clear that there is a need for bonds to be acquired easily, either with foreign investors being allowed to trade directly without involving brokers or maybe with retail investors encouraged to trade more in the bond market. Another way to expand the market was to increase the liquidity prevailing in trading in bonds by allowing brokers to take part in the bond repo market. Banks were also encouraged to issue new bonds, such as masala bonds to increase the size of the market and the volume of trading in the market. Banks were also suggested to be roped in to ensure the bonds were made less risky by extending the Partial Credit Enhancement (PCE) scheme which allowed the banks to extend a line of credit along with an issue of a bond, so that companies can meet commitment in case they are not able to meet interest payments. But there are a few conditions set in order to extend this facility, such as the bond rating should already be a BBB minus or better in order to be eligible, and that the total PCE cannot exceed 50 per cent of the issue size of the bond. The
main aim of PCE is to eventually reduce risk and enhance the overall rating of the corporate bond.

The 2019 Budget too included mentions about measures to deepen the Indian corporate bond market and to increase the depth of the secondary bond market in order to help it function better. Nirmala Sitharaman has stated that the Central Government would be working with RBI and SEBI to allow AA rated bonds to be eligible to be considered as collateral in the RBI under its Liquidity Adjustment Facility (LAF), a monetary tool, especially overnight operations, as risks would be minimal. This will in turn ensure there is higher liquidity in the market. She also announced that a Credit Guarantee Enhancement Corporation will soon be set up this year to further deepen the bond market. Whether these measures, announced as a part of the current budget, will be different from the ones made in the previous budgets which were consequently faced with lukewarm responses can only be witnessed as the year progresses.

(Pavithra Manoj was a Research Intern at Centre for Public Policy Research. Views expressed by the author is personal and need not reflect or represent the views of Centre for Public Policy Research)

Tuesday, August 13, 2019

Can Strict Laws Rein in Social Media during Polls?

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By Deepit Mudaliar,

In India, there are nearly 400 million Internet users who are easily accessible to the political party campaigners through Facebook and WhatsApp. There is a huge potential for social media to alter the course of election campaigns. A sensational content stirs the mind and can help false news spread in no time.

Even a minor swing of over two per cent is enough to influence the electoral outcome. The recently held general elections were greatly influenced by the use of social media during campaigning. The Election Commission (EC) of India had to dig deep into the existing legislations to provide for adequate measures to control and prevent the misuse of the medium.

Social media as a tool of empowerment has been used by major political parties who have unleashed media campaigns all over the world. For example, Donald Trump’s controversial but highly effective digital campaign for the 2016 presidential elections. The BJP’s social media election campaign in 2014 swayed the youth, mostly first-time voters in the age group of 18–23 and comprising around 150 million voters. This had a direct effect on nearly 40 per cent of the seats in the 2014 elections and more than 60 per cent in the 2019 elections.

Social media is extensively used as a hate tool for circulating videos and fake manufactured news items. The Dadri mob lynching in 2015 is a sad example of how social media was used to instigate hate.

Two international events worth mentioning are the manipulative techniques used through WhatsApp for targeting opponents and supporting the presidential candidate in Brazil and the Russian government interference in the US presidential elections of 2016.

In India, the EC has certain legislations to curb the ill-effects of social media. The Information Technology Act, 2000 is the primary law dealing with cybercrime and e-commerce. Some controversial sections of the Act, like the Section 66A which prescribes punishment for sending offensive messages, was found to be unconstitutional and repealed in 2016. Section 69 of the Act gave -authorities the power of interception, monitoring or decryption of any information through any computer resource. While this is seen as a violation of the fundamental right to privacy by some, the Ministry of Home Affairs has claimed its validity on the grounds of national security. Implementation aspects of this act are still unclear, especially handling end-to-end encryption and decryption at device level in WhatsApp and Blackberry messages. A draft amendment has been issued by the Ministry of Electronics and Information Technology (MeitY) and is being evaluated.

The National Cyber Security Policy of 2013 aims at creating a secure computing environment for electronic transactions, for protecting the public and private infrastructure from cyber-attacks and safeguard personal, financial and banking information. It also encourages wider usage of Public Key
Infrastructure (PKI) for trusted communication and transactions. However, there is no mechanism yet in place for obtaining strategic information regarding threats to the infrastructure. There is no development on public- private partnerships and on greater civil-military cooperation. Cyber security,
privacy and civil rights are not clearly dealt with within the policy framework. Data collection and processing procedures too are not clearly mentioned. A well-crafted, long-term cyber security policy is a critical part of Indian electioneering.

The EC should also address the issue of re-designating its election infrastructure to “critical information infrastructure” (CII) under the Information Technology Act, 2000. This will also help enable regular coordination between the national security establishment and the cyber security advisories.

The poll body did begin well in dealing with the social media at the onset of the Lok Sabha election campaigning. It insisted pre-certification for any political advisory during the campaign duration and published a social media code of ethics in consultation with top social media companies like Google, Facebook and Twitter for the elections. It also launched a smartphone app cVIGIL to capture code of conduct. Yet, major challenges like monitoring fake news in local languages and dealing with the overwhelming number of social media users remain. Even if the EC had taken enough measures to curb social media usage, a sudden burst of inflammatory messages over a matter of a week
would have been difficult to restrict considering the sheer volume (200 million WhatsApp users).

The EC as well as other regulatory bodies will have to adopt the use of some superior artificial intelligence-based technology where detection and intervention is much faster and effective. Also, for the proper implementation of the Cyber Security Policy, the gaps should be identified first and filled in a timely manner. The existing Information Technology Act, 2000 and the National Cyber Security Policy, 2013 need to be reviewed for the provisions, their sufficiency and relevance with rapidly changing technology.

Technology is only set to improve, and along with it come challenges and threats. The need to keep a constant check, proper security measures and strengthening the legislations must be a continuous process for the sake of a healthy democracy and a robust election mechanism.

(Deepit Mudaliar was a Research Intern at Centre for Public Policy Research. Views expressed by the author is personal and need not reflect or represent the views of Centre for Public Policy Research)

1. Tikku, Aloke. September 2016. SC scrapped it, but thousands held last year under dead cyber law. news/despite-sc-order-thousands-booked-under-scrapped-section-66a- of-it-act/.
2. Patil, Sameer. 18 April2019. The cyber security imperative for India’s elections.
3. Nalon, Tai. 1 November 2018. Did WhatsApp help Bolsonaro win the Brazilian presidency?
4. Alarming lessons from Facebook's push to stop fake news in India. May 2019. lessons-from-facebooks-push-to-stop-fake-news-in-india/.
5. Comments/suggestions invited on Draft of “The Information Technology [Intermediary Guidelines (Amendment) Rules]. 2018.