CRS Report for Congress, Washington DC, Order Code RL33205

Intellectual Property and the Free Trade Agreements: Innovation Policy Issues

December 21, 2005

John R. Thomas
Visiting Researcher
Resources, Science and Industry Division

Summary

The United States has recently entered into a number of Free Trade Agreements,
or FTAs, with Australia, Chile, Singapore, and other trading partners. Negotiations
are currently ongoing with respect to the establishment of additional FTAs. In
keeping with a congressional directive established in the Bipartisan Trade Promotion
Act of 2002, P.L. 107-210, one objective of forming the FTAs is to establish “a
standard of [intellectual property] protection similar to that found in United States
law.” As a result, most of the FTAs stipulate minimum levels of protection with
respect to copyrights, data protection, patents, trademarks, and other forms of
intellectual property. These standards relate to such provisions as the term of
protection, scope of rights, and mechanisms by which these intellectual property
rights are acquired and enforced.

The different FTAs vary in their comprehensiveness and level of detail. Each
of these agreements has nonetheless been drafted in a manner that complies with
current U.S. law. As a result, the effect of each FTA is to obligate signatories to such
agreements to amend their intellectual property laws to match or resemble those of
the United States.

The FTAs have been described as an effective mechanism for advancing U.S.
interests in securing intellectual property protection. Increased levels of intellectual
property protection with respect to computer software, music, motion pictures, and
pharmaceuticals may promote a more favorable balance of trade for U.S. industry,
decrease domestic prices for innovative goods and services, and serve other policy
goals. The FTA framework has at times proven to be a more advantageous forum for
achieving the intellectual property goals of the United States than multilateral
settings.

Nonetheless, concerns have arisen over the intellectual property provisions of
the FTAs. Some observers believe that certain FTA provisions may lock the United
States into current intellectual property policies, inhibiting opportunities for future
reform. Other commentators are concerned that under existing multilateral
agreements, in particular those of the World Trade Organization, the intellectual
property obligations found within one FTA may extend beyond that particular treaty
partner. Finally, some observers perceive the FTAs to be an inappropriate and unfair
vehicle for international intellectual property reforms due to the strong bargaining
position of the United States. The scope of these potential consequences counsels
continued congressional attention towards the FTAs that the United States has
already formed, as well as those FTAs that are planned for the future.