USA Pushes Ecuador to Sign
IPR Agreement
Susanne van de Wateringen
Keywords:  Ecuador; United States of America; Intellectual property rights; Biodiversity. 
Correct citation: Wateringen, S. van de (1997), "USA Pushes Ecuador to Sign IPR Agreement." Biotechnology and Development Monitor, No. 33, p. 20­22. 

In the summer of 1996, the ratification of a bilateral agreement between Ecuador and the USA on the protection of intellectual property rights (IPRs) was blocked by an Ecuadorean environmental NGO. The agreement is part of the US strategy to unilaterally push developing countries to broaden the scope of industrial patent law, even beyond the scope that was agreed in GATT. The bilateral agreement could limit the national implementation of the Convention on Biological Diversity.

The US­Ecuadorian agreement covers all types of IPRs, including patents. Signed in 1993 by the ambassador of Ecuador in the USA, the agreement had been pending for ratification by the Ecuadorian congress for a number of years. In July 1996, on the last day of congress before the change of government, proponents of the agreement quietly and unexpectedly tried to ratify the bilateral agreement. Because of a hastily organized sit­in by the non­governmental organization (NGO) Acción Ecológica, and with help from some congress members, the congress session was closed before discussion on the agreement could take place. Consequently, ratification was postponed.
The protest in congress was the culmination of a public discussion on bioprospecting and life patenting. Public indignation was provoked when a newspaper found out about a ten year old US patent on ayahuasca, a sacred plant used in traditional ceremonies by indigenous people in the Amazon region. The ayahuasca patent showed many Ecuadorians that the combination of bioprospecting and broader opportunities for patenting could lead to private appropriation of precious biological material by foreign organizations.
The bilateral IPR agreement has been discussed and criticized in the media by NGOs and national industry. In April 1997, more than thirty organizations sent an open letter to the Ecuadorian congress demanding that the bilateral agreement would not be ratified.

Patent coverage under different IPR agreement

Trade Related Aspects of Intellectual Property Rights (TRIPs)

Article 27, Patentable Subject Matter
"1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. [...]

2. Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or in order to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law.

3. Parties may also exclude from patentability:
i. diagnostic, therapeutic and surgical methods for the treatment of humans or animals;
ii. plants and animals other than micro­organisms, and essentially biological processes for the production of plants or animals other than non­biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement."

Decision 344 of the Andes Pact

Article 7, Not patentable are:
"a) Inventions contrary to the public order and morality or to good manners;
b) Inventions which are evidently contrary to human or animal life or health, to the preservation of plants, or to the preservation of the environment;
c) Animal species and races and essentially biological processes for producing them;
d) Inventions on materials which compose the human body and on the genetic identity of humans; and
e) Inventions related to pharmaceutical products which are included in the list of essential drugs of the WHO."

Comparison with TRIPs and Andes Pact Law
When it comes to ratification of the bilateral agreement, Ecuador has to take into account its obligations under two international IPR arrangements. The first is the Trade Related Aspects of Intellectual Property Rights (TRIPs) agreement, which formed part of the new General Agreement on Tariffs and Trade (GATT), signed in 1994. The second is Decision 344 taken by the Commission of the Cartagena Agreement in 1993. Decision 344 established a common system for the protection of industrial property in the Andes Pact countries, including Bolivia, Colombia, Peru, Venezuela and Ecuador. A comparison of the scope of protection and the transitory arrangements of the three agreements shows five major differences:

In conclusion, with respect to the patent coverage and transitional arrangements, the bilateral agreement with the USA is more demanding than the TRIPs agreement. In comparison with Decision 344 of the Andes Pact, the bilateral agreement provides similar protection for plants but its coverage is broader when it comes to animal species and human genetic material. Moreover, the bilateral agreement has retroactive effect, whereas Decision 344 has not.
Andes Pact regimes related to iprs and biodiversity

Decision 344: Common Regime on Industrial Property (October 1993)
Decision 345: Common Regime for the Protection of Plant Breeders' Rights (October 1993)
Decision 391: Common Regime on Access to Genetic Resources (July 1996)

Agreements on biological diversity
Apart from other international IPR obligations, Ecuador has commitments in protecting its biological diversity. The country has ratified the CBD, under which it has the obligation to "respect, preserve and maintain knowledge, innovations and practices of indigenous and local communities" relevant to biodiversity. It is not clear to what extent the bilateral agreement with the US impedes implementation of this obligation. This also counts for the transfer of technology, which is an important aspect in the CBD and for Ecuador's economy, but not mentioned in the bilateral agreement.
The CBD provides that genetic resources originating in the country belong to the national patrimony. Decision 391 of the Andes Pact stipulates explicitly that these genetic resources are inalienable, if not contradicting with the property regime which is applicable to biological resources. Human genetic resources do not fall under the scope of the Decision, however.
Despite the Andes Pact legislative framework, existing laws in Ecuador are not at all sufficient for the preservation of its biological resources and protection against their exploitation. Hardly any barriers are put in the way of users, from 'biopirates' on the one side, to ethically­sound investigators on the other, and all the groups in between. Environmental NGOs try to fill the gap in government policies, but they cannot compensate for the absence of forceful public control. A weak point in the NGO structure is that almost all of them are based in Ecuador's capital Quito, whereas biodiversity can be found primarily in other parts of the country. The blame should not be put in the hands of Ecuador alone, however.

Foreign US IPR strategy
There is reason for concern that the USA, which has not ratified the CBD itself, is trying to limit the impact of the Convention. By negotiating bilateral IPR agreements, the USA continues its tradition of using trade pressure to make developing countries, such as Thailand, India, Pakistan and Ecuador, raise IPR protection. Such level of IPR protection could also impede the implementation of the CBD's intention to achieve a fair and equitable sharing of benefits arising out of the utilization of genetic resources.
Due to the difference between the two countries in industrial, technological, economic and scientific development, one can hardly speak of reciprocal interests in the bilateral agreement. Ecuador is one of the developing countries with extreme richness in biodiversity, but has not the biotechnological industry that could take advantage of that. In reality, the IPR agreement, together with Decisions 344 and 345 and the TRIPs agreement, merely offer opportunities for American and European industries to extend the territory of their patent rights.
In June 1997, more than 200 NGOs worldwide signed a letter to the US Secretary of State Madeleine Albright. The NGOs state that the USA has no right to use economic sanctions to intervene in the national affairs and democratic processes of foreign countries to enforce legislation.
Nevertheless, the US embassy in Ecuador has urged the country to sign the bilateral agreement and referred to trade sanctions that could otherwise be imposed. Argentina recently lost trade benefits for 4000 products under the General System of Preferences (GSP) for similar reasons. The senior trade secretary of the embassy said the same could happen with Ecuadorian exports. Under the Andes Law of Preferences, around 6000 products, including flowers and tuna­fish, are exported to the USA under preferential terms. Its objective is to help Andes countries to fight the production of coca, a raw material for cocaine production.
A trade conflict was recently prevented, however. The Financial Times of September 2, 1997 reported that the USA dropped the threat to impose sanctions on Ecuador for failing to ratify the IPR bilateral agreement, because Ecuador yielded to US demands in another trade area. US companies were subjected to multi­million dollar compensation claims in Ecuadorian court for terminating agreements with their Ecuadorian representatives. The threat of sanctions was lifted after top­level meetings, prompting the congress of Ecuador to repeal the legislation under which former Ecuadorian representatives of multinationals could seek compensation. The Financial Times also suggests that changes to the bilateral IPR agreement may be negotiated in order to improve the chances of ratification by the Ecuadorian congress.
Susanne van de Wateringen

Research Fellow, WIMM, University of Amsterdam, Roetersstraat 11, 1018 WB Amsterdam,
the Netherlands.

Justine Newsome (1997), "US Sanctions lifted." Financial Times, September 2, 1997.

"Entrevista con David Nolan, Embajada de los EE.UU." El Comercio, May 12, 1997.

Acuerdo entre el Gobierno del Ecuador y el Gobierno de los Estados Unidos de América sobre la Protección y el Cumplimiento de los Derechos de Propiedad Intelectual.

Contributions to the Biotechnology and Development Monitor are not covered by any copyright. Exerpts may be translated or reproduced without prior permission (with exception of parts reproduced from third sources), with acknowledgement of source.


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