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Trade and Innovation: Public Policy Options

By Federico Mazzella ,
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Innovation and trade are increasingly interconnected. A new approach to the interface between them is needed if we are to develop appropriate policies.

In Trade and Innovation: Policy Options for a New Innovation Landscape, the E15 Expert Group on Trade and Innovation examine the interaction between international trade and innovation. The group was convened by the ICTSD and the Evian Group in partnership with the World Economic Forum.

The paper assesses whether current trade regulatory frameworks, particularly WTO agreements, adequately support innovation as a main policy objective.

What did it find?

  • There is no single overarching WTO agreement that deals with innovation, but rather a variety of agreements that influence innovation.
  • The multilateral trading system has a clear impact on innovation-related policies and decisions on how and where to invest in innovation.
  • Secondary activities such as subsidies, intellectual property, services, technical barriers to trade, investment measures and government procurement also have a direct effect on this field.

What do the authors recommend?

Six Points and Ten Policies That Could Change the World

  1. New rules for digital trade: increase standards and procedures to cover all aspects of digital trade or—a bolder option—create a new Digital Economy Trade Agreement.
  2. New rules for the labor mobility of professionals: eliminate barriers hindering the movement of technically and entrepreneurially skilled persons, research professionals, and innovators across borders. Establish “innovation zones and networks.”
  3. Subsidies and public grants: expand the policy space for governments and the private sector to provide subsidies and grants for R&D. These research grants could be carried out through public agencies, private–public partnerships, universities, foundations or private laboratories with the aim of commercializing the results of the “subsidized” research. In the long term, establish an Agreement on Access to Basic Science and Technology, the fundamental purpose of which would be to preserve and enhance the global commons in science and technology.
  4. Open collaboration: revise the WTO Agreement on Technical Barriers to Trade so as to foster innovation. The WTO concept of standardization could be updated to create more open, transparent standards to promote the development of global public goods.
  5. Internationally coordinated approach to trade secrets: compile, legalize, and standardize national laws and practices in relation to trade secrets, which currently vary greatly from country to country, so as to improve practices relating to patents and intellectual property rights.
  6. Effective measurement: consolidate information architecture on innovation and trade. There is currently no official index compiling information from different countries. The group suggests “better measurements” to improve knowledge. The WTO and the WIPO could encourage national governments to provide official information and develop more appropriate standards, indicators, and instruments for measurement.

What conclusions did they reach?

  • Innovation is a critical component of sustainable development.
  • Intellectual property rights, patents, and TRIPS are the main evidence of innovation.
  • New research is needed in relation to policies, innovation systems, and good practices; the international trading system and plurilateral processes; particular attention to SMEs and intellectual property.

The study identified the need for an international research agenda on innovation.

Curtis, John M. 2016. Trade and Innovation: Policy Options for a New Innovation Landscape. Geneva: ICTSD; WEF.

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