Updated March 13, 2019
Intellectual Property Rights (IPR) and International Trade
Background
although some estimates of trade in counterfeit and pirated
goods are in the hundreds of billions of dollars per year
What is intellectual property (IP), and how is it
worldwide. Innovation can be costly and time-consuming,
protected? IP is a creation of the mind embodied in
but IPR infringement often has relatively low risk and
physical and digital objects. Intellectual property rights
potentially high profit. The digital environment heightens
(IPR) are legal, private, enforceable rights that governments
such challenges. In a 2012 International Trade Commission
grant to inventors and artists. IPR generally provide time-
survey, about 10% of digitally intensive U.S. firms reported
limited monopolies to right holders to use, commercialize,
experiencing at least one “cyber incident” harming their
and market their creations and to prevent others from doing
network data systems’ confidentiality, integrity, or
the same without their permission (acts referred to as
availability. In FY2017, U.S. Customs and Border
infringements). IPR are intended to encourage innovation
Protection reported seizing $1.2 billion of IPR-infringing
and creative output. After these rights expire, other
goods at U.S. borders, with China the largest source.
inventors, artists, and society at large can build on them.
Trade Policy Tools for IPR
Examples of IPR
How are IPR and international trade related? Goods and
services traded are increasingly IPR-related. Developed
Patents protect new innovations and inventions, such as
countries traditionally have been the source of IP (see
pharmaceutical products, chemical processes, new business
Figure 1), but emerging markets also are becoming
technologies, and computer software.
innovation centers. The use of trade policy to advance IPR
Copyrights protect artistic and literary works, such as
internationally emerged with the North American Free
books, music, and movies.
Trade Agreement (NAFTA) and World Trade Organization
Trademarks protect distinctive commercial names, marks,
(WTO) 1995 Agreement on Trade-Related Aspects of
and symbols.
Intellectual Property Rights (TRIPS Agreement). These
agreements build on IPR treaties, dating to the 1800s,
Trade secrets protect confidential business information that
administered by the World Intellectual Property
is commercially valuable because it is secret, including
Organization (WIPO).
formulas, manufacturing techniques, and customer lists.
Geographical indications (GIs) protect distinctive
“To promote the Progress of Science and useful Arts,
products from a certain region, applying primarily to
by securing for limited Times to Authors and
agricultural products.
Inventors exclusive Right to their respective Writings
and Discoveries” and “To regulate Commerce with
What is the congressional interest? The congressional
foreign Nations” - U.S. Constitution, Article 1, Section
role in IPR and international trade stems from the U.S.
8, stipulating powers of Congress
Constitution. Congress has legislative, oversight, and
appropriations responsibilities in addressing IPR and trade
What is the WTO TRIPS Agreement? The TRIPS
policy. Since 1988, Congress has included IPR as a
principal trade negotiating objective in trade promotion
Agreement sets minimum standards of protection and
enforcement for IPR. It includes provisions on:
authority (TPA). The context for congressional interest may
include policy concerns such as: the role of IPR in the U.S.
WTO nondiscrimination principles;
economy; the impact of IPR infringement on U.S.
application of the WTO’s binding dispute settlement
commercial, health, safety, and security interests; and the
mechanism for IPR disputes;
balance between protecting IPR to stimulate innovation and
a balance of rights and obligations between protecting private
advancing other public policy goals.
right holders and securing broader public benefits; and
What is IP’s role in the U.S. economy? IP is considered
flexibilities for developing countries in implementation and for
important to U.S. economic growth and a comparative
pharmaceutical patent obligations—extended in November
advantage internationally. A range of U.S. industry relies
2015 for least developed countries (LDCs) until January 2033
on IPR protection. A subset of the most IP-intensive
or until they are no longer LDCs, whichever is earlier.
industries were estimated to account for approximately 30%
The 2001 WTO “Doha Declaration” committed members to
of U.S. direct employment and 52% of U.S. merchandise
interpret TRIPS to support public health and access to
exports, and in 2012, about 12.5% of U.S. private services
medicines.
exports (2014 Department of Commerce data). Yet, lawful
limitations to IPR, such as “fair use” copyright exceptions
for media, research, and teaching, may also add value.
What is the extent of IPR infringement? IPR
infringement is difficult to quantify, given its illicit nature,
https://crsreports.congress.gov
Intellectual Property Rights (IPR) and International Trade
Figure 1. IPR Trade for Selected Countries, 2017
The United States may seek to negotiate IPR provisions in
bil ions of U.S. dol ars
the proposed bilateral talks with Japan, the European Union
(EU), and, depending on the outcome of Brexit, the United
Kingdom. While these countries have generally comparable
IPR standards, the United States has potential issues with
each. For example, U.S. negotiators may seek to address the
differing U.S. and EU approaches on GIs and trademarks.
In addition, all three potential partners may seek to address
trade secret theft.
What are other trade policy tools to support IPR?
The “Special 301” report, by the Office of the U.S. Trade
Representative pursuant to the Trade Act of 1974 as amended,
identifies countries with inadequate IPR regimes on “watch
lists.” Trade secret theft, including through cybercrime, is a
growing focus.
Section 337 of the amended Tariff Act of 1930 authorizes the
International Trade Commission (ITC) to prohibit U.S.
imports that infringe on U.S. IPR. Section 337 cases have been
Source: World Trade Organization, 2016.
largely patent-focused.
Note: Charges for use of IP include proprietary rights and licenses.
Under U.S. trade preference programs, such as the Generalized
What are U.S. IPR trade negotiating objectives? Since
System of Preferences (GSP), the United States may consider
the advent of TRIPS in 1995, U.S. IPR trade negotiating
a developing country’s IPR policies and practices as a basis for
objectives have been to ensure that U.S. FTAs “reflect a
offering or suspending duty-free entry to certain products from
standard of protection similar to that found in U.S. law”
the country.
(“TRIPS-plus”), and to apply existing IPR protection to
Issues for Congress
digital media through adherence to the WIPO “Internet
Treaties.” These objectives have evolved through Trade
Why are IPR trade issues actively debated? U.S. trade
Promotion Authority (TPA), renewed in June 2015 (P.L.
policy promotes IPR. Yet, IPR and trade issues involve a
114-26). The 2015 TPA largely incorporates the 2002
range of stakeholder interests. Some view IPR as beneficial
TPA’s IPR objectives, as well as includes new objectives
to countries of all economic levels, while others argue that
on addressing cyber theft and protecting trade secrets and
stringent IPR policies may limit economic growth in less
proprietary information. While the 2015 TPA has an
advanced countries. IPR provisions in the proposed
objective of ensuring that agreements negotiated “foster
USMCA and other trade negotiations can spark debate on
innovation and access to medicines,” it does not specifically
the role of patents and data exclusivity in incentivizing
include the pharmaceutical provisions of the so-called May
innovations and supporting affordable access to medicines.
10, 2007 Understanding, which modified, in part, patent
As digital trade grows, copyright issues intersect with
provisions to enhance access to medicines in then-pending
debates about ISP liability, cross-border data flows, data
U.S. FTAs with Peru, Panama, and Colombia.
privacy, and cyber theft of trade secrets, which the United
What IPR issues are on the U.S. trade negotiating
States has sought to incorporate its latest trade agreements.
agenda? The United States has 14 FTAs with 20 countries
How effectively are IPR commitments enforced? The
in force with protections that exceed TRIPS. In January
Trump Administration is committed to strengthening
2017, President Donald Trump announced his intent to
enforcement of existing IPR obligations. For example, the
withdraw from the Trans-Pacific Partnership (TPP), signed
Administration imposed Section 301 tariffs on China in part
in February 2016, upon taking office, which would have
due to China’s lack of respect for IPR and forced
achieved a higher level (WTO-plus) of IPR commitments.
technology transfer obligations. Congress may consider
Similar provisions are in the proposed United States-
whether this is an effective strategy to address IPR issues.
Mexico-Canada (USMCA) trade agreement, such as:
How should the United States address IPR issues with
pharmaceutical patent protections, with measures to protect
emerging economies? Emerging economies, such as
public health, consistent with TRIPS;
China, India, and Brazil, present significant IPR concerns.
data exclusivity periods for biologics—USMCA provides a
U.S. Section 301 action with regard to China is one way to
10-year period, less than the 12 years granted in U.S. law
address this issue. In other emerging markets, the United
(higher than the TPP);
States has sought bilateral and multilateral engagement to
copyright protections, penalties for circumventing
revise TRIPS; other trade policy tools (e.g., bilateral
technological protection measures, online intermediary
investment treaty negotiations, Special 301) to further
liability limitations (“safe harbor”), and “fair use” goals;
encourage IPR-related reforms; and greater trade
enhanced trademark protection and disciplines for GIs, with
enforcement in the WTO. See CRS Report RL34292,
measures to ensure that widely used geographic terms are
Intellectual Property Rights and International Trade.
available for generic use; and
enforcement through civil, criminal, and border measures,
Shayerah Ilias Akhtar, Specialist in International Trade
including new criminal penalties for trade secret cyber theft,
and Finance
clarification that criminal penalties apply to infringement in
Ian F. Fergusson, Specialist in International Trade and
the digital environment, and ex officio authority for customs
Finance
agents to seize counterfeit and pirated goods.
https://crsreports.congress.gov
Intellectual Property Rights (IPR) and International Trade
IF10033
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF10033 · VERSION 12 · UPDATED