14 March 2017 - Senate Finance Committee grills Robert Lighthizer (USTR nominee) on trade and IPR policies

On 14 March 2017, the U.S. Senate Finance Committee held confirmation hearings for Robert Lighthizer, President Donald Trump's appointee for United States Trade Representative. During the Reagan administration, Lighthizer served as Deputy US Trade Representative with the rank of Ambassador (Source: http://www.presidency.ucsb.edu/ws/?pid=41174). Prior to his tenure as Deputy USTR, from 1981 to 1983, Lighthizer served as Chief Counsel for the U.S. Senate Finance Committee. Currently, he is a partner at Skadden Arps. A January 2017 feature on Trump's pick for United States Trade Representative noted,

Robert Lighthizer negotiated with the U.S. on behalf of Brazil in a trade dispute over ethanol in 1985, according to disclosures under the Foreign Agents Registration Act. A decade later, Congress banned anyone who had represented a foreign government in a trade dispute with the U.S. from serving as the nation’s top trade official.

Between 1985 and 1990, Lighthizer represented five foreign clients, which required him to register with the Justice Department and his firm to disclose his work agreements and duties. (Source: Bloomberg, Trump’s Trade Pick May Face Hurdle Over Past Lobbying for Brazil, 25 January 2017).

During his hearing, members of the Senate Finance Committee asked Lighthizer questions related to intellectual property rights, the Canadian softwood lumber dispute, US steel and agricultural interests and the renegotiation of NAFTA. On 17 March 2017, the Senate Finance Committee published a 124 page document entitled "Responses to Questions for the Record". This piece endeavors to walk through the hearing and the written record to glean the Senate Finance Committee's and Lighthizer's perspectives on the management of intellectual property rights (IPRs).

At the hearings, Senator Orrin Hatch (Utah), Chairman of the Finance Committee singled India as a target for USTR enforcement actions in relation to IPRs.

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Hatch: Let me begin the questioning. In the 28 years USTR's has published the Section 301 Report, India has received the worst or second worst designation every year. Similarly, the U.S. Chamber's International IP Index has ranked India worst or second worst every year it has been published. What can you do differently to secure real intellectual property rights protection in the country of India?

Lighthizer: Mr. Chairman, let me say first of all that if I am confirmed, I promise a very robust protection for intellectual property rights. I realize this is very important to the chairman and members of the committee. I think anything less stifles innovation and science and really compromises what is a competitive advantage of the United States. That is to say, innovation science. I think we need a policy that is as aggressive as we can have.

In his written questions, Hatch requested Lighthizer to eliminate price controls, complained about the use of competition rules by Chinese and Korean antitrust authorities to "diminish U.S. intellectual property rights" and expressed concerns about the role played by the United Nations (including the Report of the United Nations Secretary-General's High-Level Panel on Access to Medicines) and the World Health Organization (WHO) in undermining US economic interests.

Question 2

Trade Promotion Authority requires U.S. trade negotiators to “achieve the elimination of government measures such as price controls and reference pricing which deny full market access for United States products” and ensure “that the provisions of any trade agreement governing intellectual property rights . . . reflect a standard of protection similar to that found in United States law.” These disciplines are particularly important for the U.S.
biopharmaceutical industry, which relies on strong IP protections and faces onerous price controls abroad.

Will you ensure that any new U.S. FTAs meet this TPA standard, raising global standards to those that we use here in the United States?

Answer: I recognize the importance of this issue and the efforts that you have made over the years in working to ensure that U.S. pharmaceutical and biopharmaceutical products receive fair treatment in overseas markets and under the government regulatory reimbursement regimes and reference pricing programs of foreign countries. I also recognize the importance attached by Congress in including this provision as a Priority Negotiating Objective in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (TPA). If confirmed, I look forward to working with you to achieve these objectives in trade negotiations and in ongoing bilateral efforts with individual countries.

Question 7

Canada’s creation of a heightened standard for patentable utility for pharmaceutical patents is a serious problem for U.S. innovators. This heightened standard is inconsistent with other countries, and has undermined the ability of U.S. innovators to obtain and enforce patent rights in Canada. It is also inconsistent with Canada’s obligations under the World Trade Organization and under NAFTA.

What will you do to ensure Canada’s patentability standards are in line with its international obligations?

Answer: If confirmed, I will place a high priority on ensuring strong intellectual property protection and enforcement by our trading partners. This is necessary for future innovation, and it protects a competitive advantage of the United States in the global market. I look forward to working with you to address your concerns about patent protection in Canada and how best to use all appropriate trade tools to address those concerns.

Question 10

Many industries in the United States are increasingly concerned about a number of activities sponsored by international organizations such as the United Nations and the World Health Organization that propose the use of government action that undermine core U.S. economic interests and appear to raise trade barriers. Last year’s U.N. High-Level Panel on Access to Medicines is one regrettable example.

Under your leadership, how would USTR work with other agencies to protect U.S. interests and values at the U.N., and push back against trade-distorting initiatives that undermine U.S. competitiveness?

Answer: If confirmed, I will ensure that USTR works closely with other agencies to stand up for U.S. trade interests in the United Nations, World Health Organization, and other relevant fora, including with respect to the U.N. High-Level Panel on Access to Medicines report.

Question 15B

In reauthorizing Trade Promotion Authority in 2015, Congress made clear that a major objective of U.S. trade negotiations should be “preventing or eliminating discrimination with respect to matters affecting the availability, acquisition, scope, maintenance, use, and enforcement of intellectual property rights.” Many foreign antitrust investigations by China and Korea are directed at forcing U.S. companies to license their U.S. patents on terms favorable to their domestic companies, essentially weakening the value of U.S. patents. The U.S. patent system has been central to U.S. leadership in the global innovation economy, and many innovative companies rely on patent licensing to disseminate and commercialize their inventions.

Can U.S. companies count on the Administration, and your office in particular, if you are confirmed, to ensure that U.S. patent rights are respected abroad?

Answer: Intellectual property-intensive industries make a very substantial contribution to the U.S. economy and U.S. competitiveness, supporting millions of U.S. jobs and a large portion of U.S. merchandise exports. Accordingly, I am concerned by any attempt by foreign countries to weaken the protection and enforcement of intellectual property rights held by U.S. companies. No law should be diverted from its proper focus and used to pursue unrelated industrial policy goals. The concern you raise is one of many that, if confirmed, I will monitor very closely and address through appropriate channels.

Senator Patrick Toomey (Pennsylvania) singled out India asking Lighthizer how he planned on defending U.S. IPR assets in India.

Question 2

India has a myriad of non-tariff barriers that infringe upon the intellectual property rights of American firms that do business there. This is particularly true for pharmaceutical companies. Will you examine strengthening intellectual property protections for U.S. companies in India?

Answer: India’s protection and enforcement of U.S. Intellectual Property Rights (IPR), including with respect to the pharmaceutical sector, are areas of substantial concern. If confirmed, I intend to address and work closely with the Committee on these issues.

Senator Maria Cantwell (Washington) posed a number of written questions related to IPRs. In her written questions, Cantwell highlighted what she perceived as the lack of patent enforcement in key US trading partners including Australia, Canada and Colombia.

Question 1

America leads the world in biomedical research and discovery. But weak intellectual property protections and a growing array of localization barriers abroad are threatening innovative medicine exports and the many jobs they support here at home. China has never lived up to the intellectual property commitments it made to the United States and other WTO members 15 years ago. Despite free trade agreements, U.S. inventors can’t get and keep patents in Australia, Canada, Colombia and other countries. India and Indonesia enjoy one-way duty-free access to our market under GSP, but don’t provide a level playing field for products made in the USA.

If confirmed, what will you do to ensure American innovations and jobs are valued and protected in overseas markets?

Answer: I agree that we need to do more to enforce the IPR provisions of our trade agreements. If confirmed, I will seek to use all appropriate trade tools to ensure that U.S. rights holders have a full and fair opportunity to use and profit from their intellectual property rights. Ensuring strong intellectual property protection and enforcement by our trading partners will be a top trade priority.

Question 2

Intellectual property is crucial to the well-being of our economy. More money is spent on R&D in the U.S. than in any other country in the world. In fact, 30% of the American workforce is employed directly or indirectly in IP-intensive industries. But in order to continue accelerating the pace of innovation in our economy, our trading partners must all play by the same rules with respect to market access and protecting intellectual property.
How can the United States use new and existing trade agreements, including enforcement tools, to ensure U.S. businesses benefit from strong intellectual property protections and greater access to global markets?

Answer: I believe that innovation is the central nervous system of the U.S. economy and the key to our comparative advantage in many sectors. If confirmed, I will seek to use all appropriate trade tools to ensure that U.S. rights holders have a full and fair opportunity to use and profit from their intellectual property rights. Ensuring strong intellectual property protection and enforcement by our trading partners will be a top trade priority.

Question 3

We have seen a disturbing trend in recent years whereby some of our trading partners have ignored their international commitments, particularly with respect to intellectual property protection, either by failing to fully implement agreements or by flouting the rules in order to give their businesses an unfair advantage. These decisions are short-sighted and ultimately discourage innovation, investment and job growth.

What can your agency do to ensure our trading partners are enforcing existing commitments and deter countries from weakening such standards in their own IP regimes?

Answer: I believe that innovation is the central nervous system of the U.S. economy. If confirmed, I will seek to use all appropriate trade tools to ensure that U.S. rights holders have a full and fair opportunity to use and profit from their intellectual property rights. Ensuring strong intellectual property protection and enforcement by our trading partners will be a top trade priority.

Question 4

IP and innovation drive productivity, employment, and economic growth, particularly for industries like U.S. biopharmaceutical industry, which supports approximately 4 million U.S. jobs.

In your view, how does the monitoring and enforcement of trade agreements impact the sustainability and growth of IP-intensive industries such as the biopharmaceutical sector?

Answer: If confirmed, I will seek to use all appropriate trade tools to ensure that U.S. rights holders have a full and fair opportunity to use and profit from their intellectual property rights. As the global trading system expands, monitoring and enforcement becomes increasingly important, especially with respect to IP-intensive industries. American intellectual property must be respected and monitoring and enforcement of our existing trade agreements are key to this effort. Ensuring strong intellectual property protection and enforcement by our trading partners will be a top trade priority.

Question 5

What should the Administration be doing to stand up for free and fair trade and strong protections for the intellectual property rights that drive U.S. economic growth and a U.S. comparative advantage in global trade?

Answer: If confirmed, I will seek to use all appropriate trade tools to ensure that U.S. rights holders have a full and fair opportunity to use and profit from their intellectual property rights. Ensuring strong intellectual property protection and enforcement by our trading partners will be a top trade priority

At the hearing, Senator Robert Menendez (New Jersey) described his home state of New Jersey as the medicine cabinet of the world and echoed Hatch's concerns in relation to India's policies on pharmaceuticals and biologics. Sen. Menendez requested Lighthizer pursue trade policies equivalent to US standards, including "12 years of data protection for biologics".

Senator Menendez: I know that the Chairman raised India with you. I want to echo his concerns. I think it's a great opportunity for us to build greater economic ties with India, but I have a real problem with their lack of protection of intellectual property rights and for the United States that's a critical element whether in the technology field or in my home state of New Jersey which is the medicine cabinet to the world...on multiple occasions, I have raised the issue of ensuring regulatory protections of biologics in the trade agreements. We require U.S. trade negotiators to ensure that the provisions of any trade agreement governing intellectual property rights reflect a standard of protection similar to that found in the United States...Will you ensure that U.S. trade agreements meet this trade promotion requirement, raising standards to those of the United States?

Lighthizer: I am familiar with the issue and that's certainly my position. I'll do whatever I can to have new trade agreements reflect that standard.

Menendez: I appreciate that. Given the U.S. law provides 12 years of data protection for biologics, would you commit to pursuing an equivalent level of protection in future trade agreements?

Lighthizer: I had conversations with several members. I know there is a split on this and I am certainly with the chairman on this issue which is to say yes, that would be my objective.

In his written questions, Menendez echoed Hatch's complaints about the UN High-Level Panel on Access to Medicines undermining "core U.S. economic interests, values and leadership".

Question 15

The United States has long promoted a fair, stable, and rules-based international system through organizations such as the United Nations and its sub-agencies, to promote U.S. national and economic interests and values around the world. Yet, manufacturers in the United States are seeing a rising tide of activities sponsored by these organizations – such as the disappointing findings with regard to intellectual property found in last year's U.N. High-Level Panel on Access to Medicines – that undermine core U.S. economic interests, values, and leadership. Such recommendations and related activities matter, particularly when they are adopted by national governments to the detriment of companies and workers here in the United States.

How would you address this issue in dialogue with international organizations like the United Nations and World Health Organization?

Answer: If confirmed, USTR will work closely with other agencies to stand up for U.S. trade interests in the United Nations, World Health Organization, and other relevant fora, including with respect to the U.N. High-Level Panel on Access to Medicines report.

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