BY MIKE MAGEE
This week’s Tom Friedman Opinion article in the New York Times had an unmistakable title: “China’s bullying is becoming a threat to the world and itself.” The editors have a lot to recommend. But the point that caught my eye was Friedman’s unreserved endorsement of Taiwan’s “the world’s most advanced microchip maker”. Semiconductor manufacturer in Taiwan (TSMC).
TSMC owns 50% of the global microchip manufacturing market and, along with Samsung of South Korea, is one of only two companies currently manufacturing the ultra-small 5-nanometer chips. For the next year, TSMC will be the sole owner of the lead with a 3-nanometer chip. In this area, the following applies: the smaller, the better. (For comparison: the majority of Chinese production is 14 to 28 nanometers.)
US Silicon Valley companies such as Apple, Qualcomm, Nvidia, AMD and, more recently, Intel sign contracts with TSMC instead of making chips themselves. In addition, the major machinery and chemicals required to manufacture the chips are supplied to TSMC by US and European manufacturers. TSMC’s secret sauce, according to Friedman, is “trust”. As he writes, “Over the years TSMC has built an amazing ecosystem of trusted partners who share their intellectual property with TSMC to build their proprietary chips.”
“Trust me” is not a term that is often associated with intellectual property. For example, consider The Washington Post reporting on the same day as Friedmans under the banner: “In secret vaccine deals with governments, Pfizer went hard for profit, the report says.” The article reveals documents in a Public Citizen report confirming that Pfizer has maximized its vaccine profits “behind a veil of strict secrecy and poor public scrutiny … even as demand increased …”.
As I describe in my book “Code Blue: Inside the Medical Industrial Complex” (Grove 2020) Pfizer’s focus on intellectual property as a commercial weapon has a history that goes back half a century.
In the 1980s, Ed Pratt, Pfizer CEO, was ideally positioned to lead global responsibility for protecting intellectual property (IP). Pratt chaired the influential US Business Roundtable and was also a formal advisor to Reagan’s US sales representative, Bill Brock. Pratt’s first step was to form an intellectual property working group with his key ally, IBM CEO John Opel. Her recommendation to Brock to create a position as director of international investment and intellectual property in the office of the US Trade Representative sailed through.
The challenge continued to be to link the protection of intellectual property with the ongoing multilateral trade negotiations, in which 123 nations are currently involved. This was a leap as trade deals usually helped prevent monopolies, while protecting intellectual property was viewed by many nations as helping monopoly corporations. Rather than fighting the battle head-on, Pratt and his supporters refined the whole discussion by advocating the creation of a set of regulatory guidelines that outlaw piracy.
In 1983, Pratt and Opel reached out to the executives of ten other large US-based multinationals, including General Electric, General Motors, DuPont, Johnson & Johnson, and Monsanto, requesting their participation on the Intellectual Property and Creation Committee a uniform front across all industries.
At the request of Bill Brocks, Pratt worked tirelessly to build a global, multi-sector coalition of big business to engage the United Nations and the World Trade Organization. In Germany he worked in chambers of commerce, works councils, economic committees and trade associations. One analyst said, “With each such registration, it has become increasingly difficult for governments to withstand the business power behind such an approach.”
During Reagan’s first term as president, the term “piracy” became popular and associated with American ideas stolen from greedy foreign nations and denied “rightful rewards” to companies like Pfizer and IBM. The message was reinforced by the generous underwriting of well-funded think tanks across the political spectrum, from the American Enterprise Institute to the Brookings Institution. Pfizer supported a comprehensive public affairs strategy with press releases, speeches, white papers, conferences, comments and special briefings to strengthen the link between free trade and intellectual property.
It took more than a decade to achieve this goal, but when the eighth round of the General Agreement on Tariffs and Trade was signed in 1994, it had 123 signatories and created the World Trade Organization with intellectual property protection for multinational companies. Over the years that the battle has been waged, Pfizer has developed government relations, investor relations, media relations, public affairs and shareholder relations resources that will continue to enable maximizing profitability, even now amid their current Covid vaccine a global pandemic.
Mike Magee, MD is a medical historian and health economist and the author of Code Blue: Inside the Medical Industrial Complex.
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