Balancing the global intellectual property system with development
ContextTrade deals are increasingly being used to ensure stronger patent protection and continued unfair profits for MNCs.India must reopen the discussion on balancing the global intellectual property system. What are the problems associated with trade deals? Deals - The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was signed in 1995 with the backing of WTO.For the first time, it embodied an international regulatory regime for Intellectual Property Rights (IPR) in 1995.Many nations have since promoted excessive protection of private investor interests through bilateral trade agreements. Lobbying - Corporate lobbies have continued to pressure both home governments & abroad for increased protection of IPRs. Countires like US have also been using bilateral trade agreements to ensure that its companies have strong IP protections abroad. These moves have often gone against the wider public interests. Evolving Designs - While patent protection is getting stronger, the conditions for its grant are becoming greatly relaxed. Consequently, with little show of original effort, patents can now be claimed on all possible inventions that are of relevance. Therefore, a successful firm of today is not one with the greatest technological breakthroughs but one that has a large IP portfolio, and thrives on licensing revenues.What is the view of The United Nations Conference on Trade and Development (UNCTAD)?The UN Conference on Trade and Development's recent “Trade and Development Report” calls for stronger measures to protect sectors against the undue domination of large companies.It argues that high profits attributed to the present IP regime may be a sign of a sickness and calls for reforms.The report also warns against trade deals that seek to protect the status quo and has identified patents as an instrument of unfair market power across markets.It shows that patent reforms have led to significant increases in the rates of return to affiliate companies of foreign MNCs when compared to locally headquartered companiesWhy India is concerned?For India, the fate of its pharmaceutical and software sectors swings in the balance, and guaranteeing fair and unfettered competition will be critical.The United Nations Conference on Trade and Development (UNCTAD)’s recent Trade and Development Report calls for stronger measures to protect domestic sectors against the undue domination of large companies, particularly in high-profit sectors such as pharmaceuticals, media and information and communications technology (ICT).Warning against trade deals that seek to protect the status quo, the report identifies patents as an instrument of unfair market power across markets.The report uses data for U.S. multinational companies (MNCs) and their foreign affiliates in India to show that patent reforms have led to significant increases in the rates of return to affiliates of American companies by enabling monopoly profits when compared to publicly listed and locally headquartered companies, which are increasingly being left behind.India’s high-technology sectors are already taking a beating because they operate in a volatile global environment.Supporting IP standards that simply follow a ‘winner takes all’ ideology without emphasis on technological advancement and competitive markets will be a regrettable mistakeWhat are the US concerns?For the U.S., trade agreements are a prime vehicle to supplant its strong domestic standards of IP protection in partner countries, in a bid to ensure the same level of privileges for its companies abroad.Over the past 20 years, the American strategy has been a neat one: to pursue bilateral agreements with individual countries one by one to ensure stronger IP protection across markets, by sidestepping the multilateral regimeWhat is happening in the globalized world?But in an inter-connected and highly globalized world, what goes around comes around quite fast and often with drastic consequences for all. While patent protection is getting stronger in all sectors in a large number of countries, the conditions for its grant are becoming greatly relaxed.Not only do such lax patenting requirements allow companies to claim patents more broadly or consecutively, with little show of original effort as in the case of evergreening — but also patents can be claimed on all possible inventions (and discoveries) that are of relevance to the present, and even to the future.A large number of countries have already foregone many degrees of policy freedom by signing up to ‘TRIPS-Plus’ standards of protection. This, in conjunction with other trade measures, is disintegrating existing markets and rigging established rules of the game.At the global level, these sectors are stratified, with profits neatly split up between large corporations and new kinds of non-innovator firms that simply amass patents speculatively in upcoming, promising technologies for spurious returns.The non-innovator companies are the patriciates of the system: when they hit the technology jackpot, they control the market and have the power to shift wealth and control competition.The Way ForwardFair Stance - India needs a clear and tough stance on intellectual property both in domestic policy and at the multilateral level.Support for innovation has to be accompanied with instruments that guard local companies against the misuse of market power, coercive bargaining and aggressive acquisition strategies.WTO conference - The WTO Ministerial Conference that is coming up in Argentina this December is expected to take up patents issues in a big way.There are ongoing attempts by big businesses to push for new rules in areas such as e-commerce.Other proposals being made will largely involve limiting the ability of governments to constrain corporate behaviour.India in WTO - We need therefore to drop our pretence regarding IP and return to old-fashioned pragmatism.This would clearly show that India recognises the fallacy of the current IP system and that it desires to broker a new global deal.India should also take up the forgotten issues of the Doha Round.
Questions about the GST cess
ContextGST Compensation Cess intended to compensate the losses of states for the first 5 years of GST doesn’t stand on strong constitutional ground.What is a Cess?A cess is a tax on tax, levied by the government for a specific purpose.The contributor and beneficiary of a cess must be relatable.Under Article 270 of the Constitution, proceeds of a cess can be retained exclusively by the Union and need not be shared with States.The objective is to ensure that expenditure goes for that specific purposeWhat is GST compensation cess?As part of the GST reforms, this Cess has been introduced through the GST (Compensation to States) Act, 2017.It is levied on inter- and intra-State supply of notified goods such as aerated drinks, coal, tobacco, automobiles for 5 years.The proceeds will be distributed to loss-incurring States on the basis of a prescribed formula as compensation.What are the loopholes?Once the money is transferred to State governments, it can be used to fund any scheme.It may even be used to fill the government’s fiscal deficit.Further, there is no relation between the persons contributing to the cess and the recipients, the State governments.The goods earmarked for the cess, such as aerated drinks, coal, tobacco, automobiles and “other supplies”, do not form a distinct category deserving the liability to pay this cess.The sin goods argument also fails as the luxury goods & jewellery are not covered.The term “other supplies” leaves much to the discretion of the government.What is the constitutionality of the cess?The 122nd Constitution Amendment Bill initially proposed a 1% additional tax to compensate States but this was later withdrawn.Article 271 has been amended to state that an additional tax/surcharge cannot be imposed over and above the GST rates.The GST Council’s power to recommend a special rate is confined to raising resources only during any natural calamity or disaster.So this cess cannot be justified under such power either.
New policy may help revive interest in coal bed methane
ContextNew policies such as the OALP and HELP may increase investment in Coal Bed MethaneIndia’s production of Coal Bed Methane, a clean energy source grew more than 44 percent last financial year to around 565 million standard cubic metresWhat is Coal Bed Methane (CBM)?Coal Bed Methane (CBM) is natural gas found in coal seams.It mainly consists of Methane (CH4) with minor amounts of nitrogen, carbon dioxide and heavier hydrocarbons like ethane.What is the present status of CBM resources in India?The government has identified 26,000 square km of area for CBM operation with total estimated CBM Resources of 2,600 billion cubic meters (91.8 TCF).India has fourth largest proven coal reserves in the world.It has significant prospects for exploiting CBM.The Ministry of Petroleum and Natural Gas in consultation with Ministry of Coal has identified around 26,000 sq.km area for the operation of CBMWhat is Open Acreage License Policy (OALP)?OALP was introduced vide a Cabinet decision of the Government in 10th March 2016as part of the HELP or Hydrocarbon Exploration and Licensing PolicyUnder Open Acreage Licensing Policy (OALP), a bidder intending to explore hydrocarbons like oil and gas, coal bed methane, gas may apply to the Government seeking exploration of any new block. Open Acreage Licensing Policy (OALP) gives an option to a company to select the exploration blocks on its own without waiting for the formal bid round from the Government.OALP is part of the strategy to make India a business and investor friendly destination and cut import dependence by 10%. Achieve the goal to double the existing oil production from current 80 million metric tons to about 150-155 million metric tons by 2022. What are Hydrocarbon Exploration and Licensing Policy (HELP)?The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the Hydrocarbon Exploration and Licensing Policy (HELP).Under HELP, the companies will be able to tap other hydrocarbons including shale gas.Four main facets of this policy are:1Uniform license for exploration and production of all forms of hydrocarbon,2An open acreage policy,3Easy to administer revenue sharing model and4Marketing and pricing freedom for the crude oil and natural gas produced.What are the advantages of CBM as a fuel?CBM is an environmentally safe gas: Methane has been labelled as a Green House Gas (GHG) by United Nations Framework Convention on Climate Change (UNFCCC).Using CBM as a fuel will halt methane emission into environment and thus reducing emission of greenhouse gas from coal mining.Extraction of CBM prior to coal mining activities makes mining activities safer by degassing the coal seams.Extraction of CBM would help in increasing the domestic gas production. Currently, contribution of CBM to domestic natural gas production is 1.6%What are the Issues related to Coal Bed Methane?Despite the huge reserves, a mismatch exists between estimated resources and gas in-place.The following are some of the issues with respect to the simultaneous operations of Coal Bed Methane and coal mining by multiple owners:There is a possibility of damage of gas wells resulting in explosive atmosphere in coal mines during simultaneous extraction of coal and CBM in the same vertical boundary by two different owners.Multiple ownership for simultaneous exploitation may not be desirable for the life, health and safety of the workers employed in such mines.Simultaneous operation over the same leasehold area requires the development of Safe Operating Procedures (SOP) for each operation based on assessments of risks