Developmental Responses to the International Trade Legal Game

Abstract

The paper departs from two cases dealing with the impacts of the global trade regime rules, implemented with the creation of the World Trade Organization (WTO) and its assembled agreements, in domestic regulation in Brazil, and the succeeding alternative development strategies undertaken by the country either at the national or the international levels. The selected examples are about intellectual property regulation and public health, and public institutional arrangements on trade finance to the civil aircraft sector. The WTO rules applied in these fields – trade related intellectual property rights and subsidies rules – have been condemned as the most restrictive ones to developing countries’ policy spaces. The concerned agreements impose high standards of regulation focusing on the level playing field for world exporters, limiting governments’ intervention in those areas. Flexibilities, however, were also admitted by the WTO system, although most of them were not self-evident. The two stories reported in this paper account for the public and private struggle in Brazil that led to modifications in the Brazilian legal system as a reaction to WTO restrictions. The purpose of the paper is to go beyond the argument that the WTO trade regime limits developmental policies by demonstrating how the changes in the international regulation has provoked new creative arrangements inside a country like Brazil, and how it has changed the strategies of Brazil before other international fora. Brazilian legal reforms and development policies better not be taken solely as “models” to be replicated, but examples that may provide with legal ideas and tools to international legal constraints to developing countries in the trade game. Key-words: international trade; law and development; intellectual property rights; right to health; subsidies; export credit; civil aircraft sector. Version for discussion only. Please do not cite. LANDS meeting, Sao Paulo, May 12-13, 2011. 2 DEVELOPMENTAL RESPONSES TO THE INTERNATIONAL TRADE LEGAL GAME Examples of intellectual property and export credit law reforms in Brazil Michelle Ratton Sanchez Badin Professor at FGV Sao Paulo School of Law (Direito GV) Research collaborator at the Brazilian Center for Analysis and Planning (CEBRAP) A. INTRODUCTION _______________________________________________________ 3 1. What is at stake? _________________________________________________________ 3 2. The law and development perspective over Brazilian trade policy __________________ 6 B. KEY REFORMS ON THE TRADE FIELD IN BRAZIL ________________________ 9 C. “FAIR” TALES? ABOUT INTELLECTUAL PROPERTY RIGHTS & PUBLIC HEALTH AND PUBLIC TRADE FINANCE TO THE CIVIL AIRCRAFT SECTOR __ 16 3. Intellectual property: top-down alignment versus bottom-up resistance ____________ 16 3.a The particularities of intellectual property rights in the pharmaceutical market in Brazil ___________________________________________________________________ 17 3.b International standards on IP protection for the pharmaceutical sector incorporated into the Brazilian legal system _______________________________________________ 18 3.c The resistance catalyzed by the HIV movements______________________________ 21 3.d Brazilian foreign policy review and spillovers at the international level ___________ 27 3.e Are there development lessons to be taken from this case?______________________ 33 4. Trade finance facing national and international challenges _____________________ 35 4.a The particularities of trade finance to the civil aircraft industry in a developing market ________________________________________________________________________ 35 4.b Embraer elected as the national champion in a period of no industrial policy ______ 39 4.c The Embraer case in the WTO and the hidden limits to the multilateral trade system and developing countries ___________________________________________________ 44 4.d Are there development lessons to be taken from this case?______________________ 52 D. FINAL REMARKS _____________________________________________________ 53 Version for discussion only. Please do not cite. LANDS meeting, Sao Paulo, May 12-13, 2011. 3 DEVELOPMENTAL RESPONSES TO THE INTERNATIONAL TRADE LEGAL GAME Examples of intellectual property and export credit law reforms in Brazil Michelle Ratton Sanchez Badin