Rich, and not rich, in the TPP, as regards certain IPR obligations involving medical technologies

On November 28, 2013, I wrote a blog about the problems in using the World Bank’s definition of high income, in the specifc context of a proposal by the United States to use this as a measure of which countries in the TPP should have lower standards for intellectual property rights on medical inventions. (See: https://www.keionline.org/node/1834).

Here a different metric is presented, based upon relative incomes, benchmarked against the five highest income countries in the TPP with a population of more than 1 million persons.

The World Bank definition of high income is suprisingly simple — $8000 per year, in 1987, adjusted annual for inflation only, using the average rate of inflation in Japan, the United Kingdom, the United States and the Euro Zone. In 1987, the World Bank definition for high income was about half the per capita income for the whole group defined as high income. By 2012, the World Bank definition, which does not account for changes in real incomes, had fallen to one third the average.

The TPP negotiators are trying to come up with a metric that can be used to separate the countries that get special treatment, from those who do not. If one excludes Brunei Darussalam, a country with a population under 1 million, there are 11 countries. In 2011, five of the 11 had per capita incomes of $45 to $50 thousand, five had per captia incomes from $1 to $12 thousand, and one country, New Zealand, was in the middle, at $30 thousand. The US proposal for the World Bank definition of high income would only benefit the bottom four countries, and in a couple of years, given the way the World Bank formula works, probably only the bottom two.

We propose consideration of an approach that takes as its basline, the median income of the five highest income TPP members, and then sets the threshold for special treatment at some fraction of that number. How would this work in practice? To calculate the median per capita income for the top five countries, just find the country ranked third. That would have been Canada in 2011, and the United States in 2012. Next, pick a percentage for the cut-off of the special treatment. If you use 50 percent, roughly the cut-off in the World Bank approach in 1987 — year one of their system, the bottom five countries would benefit from the special treatment, and the top six, including New Zealand, would not.

Unlike the World Bank metric, the base will change as real incomes change.