Separating Fact from Fiction in the TPP

This weekend, trade ministers from the 12 nations negotiating the Trans-Pacific Partnership (TPP) trade agreement will gather in Australia for yet another round of high-level talks. When finalized, the TPP could play an important role in further integrating the economies of the participating countries, which include the U.S. and 11 of its trading partners in the Pacific region, by increasing the flow of products and services among participating nations through reduced trade barriers, supporting increased economic innovation and economic growth throughout member countries. Because of its size and scope, the TPP will set a precedent for all future trade negotiations and the rules and systems it creates could form the foundation of an effective and efficient global trading system.

However, some important issues remain to be decided within the TPP that could substantially affect its ultimate positive impact. Chief among these is an ongoing debate surrounding intellectual property (IP) rights. IP plays a critical role in establishing ecosystems of innovation that propel economic growth and competitiveness in developed and developing economies. Laws that protect IP lead to not only increased foreign direct investment (especially critical for developing nations), but also to continued innovation. When equipped with proper protections, a country's innovators have incentives to continue pursuing new endeavors and discoveries, knowing that their hard work will not simply be taken by competitors. This in turn attracts investors, who can incur the significant risks of research and development (R&D) funding, secure in the knowledge that they are competing on a level playing field. When empowered by robust IP protections, innovation truly begets innovation.

As outlined in the Information Technology and Innovation Foundation's report Ensuring the Trans-Pacific Partnership Becomes a Gold Standard Trade Agreement, the TPP will only be fully effective if negotiators successfully craft a solid IP framework within the agreement. And considering the benefits that strong IP laws have bestowed upon the U.S., including technological advances and groundbreaking cures for diseases, American IP standards, which are also followed by numerous other nations around the world, should serve as the basis for the TPP's IP standards.

Unfortunately, many groups and individuals who are against any and all trade agreements have been engaging in misinformation campaigns to derail or severely weaken the TPP and particularly its IP provisions. For example, in the case of IP protections for biopharmaceuticals, the various anti-trade constituencies believe the appropriate amount of protection is near-zero, believing that this is the best way to get needed treatments to people, especially in lower-income nations. But this view ignores the fact that despite important and continuous new drug discoveries, mankind needs continued and rapid improvements in R&D so that the next generation of health challenges can be overcome. And achieving this won't be free. In fact, new treatments for cancer and other diseases are only possible through enormous investments of time (over a decade) and money (upwards of $1.4 billion). Robust IP protection makes it possible for innovators to take the risk of investing these sizeable sums. Moreover, even though the U.S. far outpaces the rest of the world in new drug development, generics nevertheless comprise approximately 85 percent of the U.S. market for medicines, a prime example of how innovation and access are not mutually exclusive.

When the negotiators meet this weekend in Australia, it would behoove them to take a moment to separate fact from fiction before discussing the agreement's IP chapter. Innovation is integral to a growing share of industries in the TPP economies, from agriculture to information technology to biomedicine. Failure to recognize these facts within a trade deal as monumental and revolutionary as the TPP could be devastating for not only the participating countries but also the prospects of continued global innovation writ large.

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