to a much wider array of influences than those flowing solely from the international IPR regime. The point made by Armstrong in Chapter 8 concerning globalization really concerns the growing importance of access to markets, access to sources of technology, and proximity to customers. Most of these motives operate independently of the IPR regime, and few of them will be altered significantly by the strengthening of IPRs. Some shift may occur in the mix of destinations for certain types of foreign investment, along the lines suggested in Chapter 5, but I think that on the whole the effect will be modest.
A final reason to think that a Uruguay Round agreement covering IPRs may have modest effects on direct foreign investment is the fact that these effects will be heavily influenced by the results of other negotiating groups on closely related issues, particularly those affecting direct foreign investment. The negotiations over Trade Related Investment Measures (TRIMS), antidumping policy, and rules of origin, all are likely to have effects on direct foreign investment flows that are at least as significant as those exerted by an IPR agreement. Stronger IPRs could place smaller firms in a more advantageous position with respect to foreign exploitation of their intellectual property because of the possibility that this stronger protection could facilitate technology licensing, but that is an extremely speculative hypothesis.
Let me say a few words about how a GATT-based IPR agreement might affect the thrust and some of the modalities of U.S. policy. Not only are the effects of a multilateral GATT-based IPR agreement likely to be modest, but also the United States will likely continue to rely on bilateral (gentle and not so gentle) forms of persuasion.
As suggested by Gorlin in Chapter 7, the existing provisions covering IPRs in the "Dunkel draft" contain very important advances, but they also contain major loopholes, particularly with respect to enforcement and the speed with which individual developing countries will adopt the provisions. One can pledge to observe these commitments and still invest very little in enforcement. As a result, the United States will likely continue its bilateral vigilance and pressure, and other industrial economies probably will also.
A second and more important challenge to a GATT-based IPR agreement is an issue raised by David in Chapter 2 that arises throughout this report. Any IPR regime is subject to constant challenge from the evolution of technology. These pressures have operated with considerable force in the U.S. domestic intellectual property system. Sui generis and other forms of protection have been invented, extended, stretched, or otherwise recut to accommodate—sometimes perfectly, sometimes imperfectly—the ever-changing demands of technology.
The adaptation of IPRs to new technologies has not been easy in the U.S. domestic policy arena, in Congress, or in the courts. I would submit