The United States is the world leader in biotechnology, but the country wasn’t always on top, and there’s obviously no guarantee it will stay there.
“France, Germany, the UK. They were the leaders, and now they’re not,” said Nick Shipley, executive vice president and chief advocacy officer of the Biotechnology Innovation Organization (BIO). China is currently following a 10-year plan that “includes a big section on how they’re going to become the number one players in biotech,” he said.
China on May 10 proposed amendments to a suggested waiver of World Trade Organization (WTO) protections for intellectual property (IP) around COVID-19 vaccines, with the apparent objective of furthering their plans for biotech dominance by obtaining access to American-owned technology, according to Shipley.
The U.S. Trade Representative (USTR) has been pushing for the waiver of the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, even though “it’s been pretty well documented at this point” that the waiver will not achieve the stated goal of getting vaccines into developing countries as fast as possible, Shipley said. What the waiver would do is give China access to the IP behind the new mRNA vaccines, he added: “The mRNA technology is a real seismic leap, there’s just no other way to put it. That’s why everyone wants it.”
America’s trade partners in the Indo-Pacific region are likely to be watching the WTO TRIPS waiver negotiations carefully. “When it comes to policy regarding relations with China trade deals, we’re having this conversation at the same time this administration is trying to restart and reengage with the broader Pacific trade theater,” Shipley said. He maintained that the position the USTR assumes on the TRIPS waiver could impact U.S. efforts to show they are ready to take a leadership role in Indo-Pacific trade, and to maintain a consistent approach to China.
China’s ‘bad faith’ on IP
In most industries, the U.S. approach to China is to make their poor record on IP protection a top priority. Given this attitude, Shipley said he does not understand why the Biden Administration favored an IP giveaway in biotech. “It just strikes me as so weird that they go in such a different direction so aggressively with this industry,” he said.
Concerns about China’s lack of respect for IP in areas like semi-conductors has inspired protectionist legislation with strong bipartisan support. And the USTR’s Special 301 Review of global IP rights protection calls out China for violations.
The Special 301 Review, released April 27, puts China on the “Priority Watch List” and mentions concerns about their IP laws being inadequate and poorly enforced, “as well as about long-standing issues like bad faith trademarks, counterfeiting, and online piracy. Also, statements by Chinese officials that tie IP rights to Chinese market dominance,” according to a press release on the review from the USTR.
Yet, that same Special 301 Review includes the following statement: “The Biden Administration supports a waiver of intellectual property protections for COVID-19 vaccines under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).”
An outdated plan
Originally proposed in October 2020 by India and South Africa, the TRIPS waiver was designed to support the global fight against the pandemic by opening up the technology behind COVID-19 vaccines, so that developing countries could manufacture vaccines domestically to ensure they have adequate supplies.
But that is no longer an issue, and the waiver idea has become outdated, Shipley explained.
“The situation around the world has moved far away from the original goal of the waiver, which was noble in its intent. … Now we are at a point where we have met and surpassed a critical mass on vaccine production,” he said. “There are just so many countries that have vaccines that they’re either sending back to manufacturers or there saying this is going to waste. They can’t use it, because they don’t have the distribution capacity, or they just can’t get utilization because of all the misinformation and vaccine skepticism.”
Still, the USTR may be hesitant to back away from the TRIPS waiver proposal, Shipley said. “These kinds of things have inertia, when you’re in a negotiation and owning it,” he explained. “You’ve got people that have been so vested in this waiver process, that now they’re just looking for an outcome, any outcome” when they should be “stopping and saying, ‘Hey does this actually make sense where we are now?’”
China’s proposal gets them IP access
China had expressed general support for the idea though, until recently, development of the proposal had been taken forward by the European Union, India, South Africa and the United States. Under their initial plan, any developing countries exporting more than 10% of the world’s vaccine doses in 2021 would not be eligible to gain access to the IP behind COVID-19 vaccines.
Even that proposal would make it hard to stop China from getting the technology behind mRNA vaccines, according to Shipley.
“If you waive IP, then China’s going to be able to get it. They can buy it from another country,” he said. “Quite frankly, in just about every other context, the U.S. government recognizes that China has a pretty ‘difficult’ respect for intellectual property.”
Instead of needing to buy the IP for mRNA vaccines, China would have direct access to it under the proposal they put forward at the WTO General Council meeting on May 10. China said the waiver must be open to all developing countries, including those that mass export vaccines. China is considered a developing country in the WTO, and would gain access to the IP under this arrangement, though China pledged “it will not avail itself of the flexibilities” of the waiver and it suggested “encouraging those with capacity to export vaccines to opt out,” according to the WTO.
“I would say this is, fundamentally looking at it, a bad deal for the U.S.,” said Shipley. “Counting on the Chinese government to honor this pledge seems like a very dubious proposition, and one that in any other context the government would not go for.”
The proposal is supposed to be brought up for discussion at the next ministerial council at WTO Headquarters in Geneva, Switzerland from June 12-15. Questions about Russia’s continued trade status, and even their membership in the WTO, may change the tenor of that gathering, according to a report by The Hill.
Avoiding a shock
Between now and June, we are awaiting further negotiations on the plan, and waiting to hear the USTR’s position on China’s proposal, Shipley said.
“I would have argued the original waiver itself would have been clearly a bad deal for the U.S., so I am probably not the best judge of how the USTR will look at these things,” he said. “I just don’t know if I can guess what USTR and the broader U.S. government will do with this.”
Shipley said he hoped the USTR understands that maintaining a leading position in biotech is not just an economic issue, but also vital for our ability to face future crises. The U.S. response to COVID-19 was a shining example of our biotechnology industry working the way it should, but policymakers are not protecting that industry, Shipley said. He suggested that we learn from France, a country that lost its biotech leadership.
“When vaccines were finally made, they were not at the front of the line. They had no internal capacity to build and buy those vaccines,” according to Shipley. “France was shocked.”
The United States should avoid a similar shock and be prepared for the next pandemic by protecting our biotech, he said.
“There’s no entitlement to having these industries in your backyard,” Shipley said. “There’s no guarantee.”