This essay presents a legal and economic analysis of U.S. foreign policy regarding the protection of U.S. intellectual property rights in Latin America. Piracy of U.S. intellectual property in foreign markets costs American businesses up to $80 billion in losses each year. U.S. companies are estimated to lose one dollar to inadequate protection of intellectual property rights for every three dollars of revenue gained from exported products.
First, we explain the forces behind the move to strengthen the protection of intellectual property rights in Latin America. We examine the double-sided problem of intellectual property rights reform: the lack of adequate standards for intellectual property protection and the weakness of enforcement mechanisms (i.e., courts and administrative authorities). We also explain how, under the Uruguay Round of the General Agreement on Tariffs and Trade, Latin American nations have committed to raising their standards of intellectual property protection.
Second, we explore current attempts at reform and the problems impeding further improvements, such as the lack of political stability, corruption within the legislatures, the use of intellectual property as an economic and foreign policy tool, the short-term incentives for politicians facing reelection to support local pirate industries, and the institutional failure of courts and administrative agencies throughout Latin America.
Finally, we outline the implications for U.S. foreign policy. Foreign economic pressures, coupled with regional trade pacts such as Mercosur, can be used to affect the costs and benefits of reform as perceived by Latin American politicians and business leaders. We conclude that although Latin American nations have traditionally considered intellectual property to be "the heritage of humanity" rather than a privately held asset, as they struggle to attract world-class technologies to their shores, Latin American countries are slowly realizing that they must reform their systems of intellectual property rights if they are to succeed in an age of high technology.