Washington D.C. (January 6, 2014) -As an increasing number of countries seek to grow their economies through innovation, many are turning to "innovation mercantilism," a strategy that sees increased exports and reduced imports of technology-based goods and services as the key to economic success and uses distorted and protectionist tactics to achieve that goal.
To highlight the rapid growth of these destructive practices the Information Technology and Innovation Foundation (ITIF) has released The 10 Worst Innovation Mercantilist Policies of 2013. The report reviews the introduction of innovation mercantilist practices or proposals in 2013 and selects what it believes are the ten most egregious, with no more than one from a particular country.
"By raising costs, reducing revenues or weakening intellectual property protections, innovation mercantilist policies damage the global production of innovation." notes Michelle Wein, trade policy analyst at ITIF and co-author of the report. "Through highlighting the most egregious uses of protectionism and their negative effects, both on domestic economies and globally, we hope to illustrate the need for new policy approaches that focus on maximizing long-term, broad-based growth."
The ten worst mercantilist policies of the year are:
- China: Scuttled the Information Technology Agreement through a refusal to compromise.
- Vietnam: Implemented localization requirements on Internet service companies.
- Argentina: Expanded its "trade balancing" policies to promote domestic industries at the expense of foreign companies.
- Brazil: Proposed local data storage requirements for Internet service companies.
- Uruguay: Implemented local content requirements for the construction of wind farms.
- Russia: Initiated local content requirements for pharmaceutical production.
- India: Issued a patent denial for Glivec and a revocation for Tykerb, both cancer drugs.
- Australia: Prohibited overseas storage of electronic health records.
- Canada: Invalidated a host of life science patents for failure to fulfill "utility" requirement.
- Ukraine: Listed as a Priority Foreign Country on the United States Trade Representative's Special 301 Report, which tracks lax IP protections.
The authors argue that instead of innovation mercantilism, nations should promote policies that focus on ensuring innovation and productivity in all industries in an economy, not just "innovation industries."
"As the global economy becomes increasingly intertwined, innovation mercantilism will become more damaging to the overall trade ecosystem," adds Stephen Ezell, Senior Analyst at ITIF and co-author of the report. "Instead, to truly promote growth domestically and globally, nations need to put in place policies that promote open market access, receptivity to foreign direct investment and respect for intellectual property."
The report builds on a previous ITIF study which provided a comprehensive analysis of the use of localization barriers to trade, a key innovation mercantilist practice that is increasingly prevalent around the world.
The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at www.itif.org.