Business-to-business Cooperation in the Formation of International Institution: US, European and Japanese Firms in the Making of the TRIPs Agreement

Abstract

In recent years, a growing number of transnational cooperation among private firms has come to play a significant role in making international public institutions. While much of the recent empirical works on this topic emphasize the increasing impact of private interests in international politics, the process of how they exercise the power remains poorly examined. It is still widely believed that only states make international institutions and that the relationships between states are enough to explain the formation process. However some cases show that a firm in one country cooperates with other firms in foreign countries, aiming to make an international public institution without governments' involvement. Here we can see a new political process, which is different from firms' conventional lobbying to their governments. Why does a firm cooperate with a foreign firm so as to make an international institution instead of relying on its government? Under which conditions does such an involvement influence international institutions? In this article, I address these research questions.
This article provides one hypothesis with respect to the formation of an international institution and firms by focusing on the regulatory process at domestic level: A firm attempts a direct commitment in building international institution, when its government refuses to change its domestic regulation for a new international institution. In other words, when the government is reluctant to change its domestic regulation that the firm sought, the firm cooperates with those in foreign countries to form an international institution without relying on the government, so that it ultimately enables the domestic regulation to be changed. Furthermore I investigate the effect of this business-to-business cooperation in the formation of international institution, by analyzing the government's reaction to regulatory changes the firm sought.
I examine the above hypothesis with one important case: the making process of the 1994 Agreement on Trade-Related Aspects of Intellectual property Rights (TRIPs) administered by the WTO. In this case, there were three private business groups involved; the Intellectual Property Committee (IPC; US), Union of Industrial and Employers' Confederation of Europe (UNICE) and Nippon Keidanren. They cooperated to craft a proposal and presented it to the GATT Secretariat and the governments that participated in the Uruguay Round. Some researchers regard this business-to-business cooperation as the critical factor to the adoption of the TRIPs Agreement. However the existing studies focus only on the behavior of the US industry. The meeting joined by their counterparts in Europe and Japan remains unstudied. Therefore, this article investigates behaviors of both the government and the firms in each country to draw the conclusion that the domestic regulatory change is the critical factor in the relationship between transnational cooperation among firms and the formation of an international institution.