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TWN Info Service on WTO Issues

Geneva: October 26, 2001

UPDATE ON MINISTERIAL DECLARATION ON TRIPS AND PUBLIC HEALTH

As you know, the first draft Ministerial Declaration on the issues related to TRIPS, public health and access to medicines is expected to be issued late in the evening today, Friday, October 26. For the past month or so, there have been intense consultations on this matter, over which developing country negotiators have expressed deep frustration. Many of the developing country negotiators attribute the lack of progress largely to the US, which initially attempted to block consensus for a declaration, and later, switched to restricting the scope of a declaration.

The General Council Chairman, Stuart Harbinson, has issued a document dated October 21, 2001, entitled 'Elements for a Draft Declaration on Intellectual Property and [Access to Medicines][Public Health]'. The square brackets denote a lack of consensus on whether the declaration should be on TRIPS and access to medicines, a more restrictive approach favoured by countries like US and Switzerland, or the approach proposed by the developing countries to address the broader concerns of TRIPS and public health.

A proposal from the US, on extension of transition periods and a moratorium on dispute settlement action - which was floated in the recent Singapore meeting - has also been circulated to the Members. The proposal offers an extension of transition periods to LDCs until 2016 for patents on pharmaceutical products. A moratorium on disputes is offered to sub-Saharan African countries, which do not fall within the LDC grouping, and covers laws, regulations and other measures that improve access to patented medicines for HIV/AIDS and other pandemics'. These proposals have been viewed with much consternation, as observers have said that this was essentially a 'divide and conquer' strategy employed by the US, to break the cohesion and determination of the developing countries, which had thus far, been acting on a co-ordinated basis.

Below is a short commentary on the draft elements, and its implications. We hope you find it of use.

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AN UPDATE ON THE PROGRESS OF CONSULTATIONS ON THE PROPOSED MINISTERIAL DECLARATION ON TRIPS AND PUBLIC HEALTH

REPORT BY CECILIA OH (THIRD WORLD NETWORK),  GENEVA 26 OCTOBER 2001

1.  GENERAL BACKGROUND

The General Council Chairman issued a document, entitled 'Elements for Draft Declaration on Intellectual Property and [Access to Medicines][Public Health]' on October 21, 2001. It is understood that the document identifies some (not all) of the elements, that are intended to be the basis upon which Members would develop the standalone Ministerial Declaration on TRIPS and Public Health. However, square brackets in the title of the declaration around the words 'access to medicines' and 'public health' means there is still no agreement, even on the title of the declaration.

This non-agreement on the title is indicative of the difficulties with the rest of the document. Developing country negotiators have expressed deep frustration, singling out the US as the main obstacle in consultations on the content of the declaration. The US, with the support of a number of other developed countries, have at different times, said that it would only accept a 'political' declaration, as opposed to a 'technical' one; essentially meaning that it would have problems with clarifying and interpreting the TRIPS Agreement. The US has also advocated for a declaration of limited scope; that is to say, one which deals only with TRIPS and access to medicines, and not one which seeks to address TRIPS and public health, as favoured by the majority of developing countries.

It had also been reported that the US had, during the recent Singapore meeting of a small and select group of Members, floated a proposal for the extension of transition periods for LDCs in respect of TRIPS provisions related to pharmaceutical products. For sub-Saharan African countries, which are not LDCs, the US offered a moratorium on dispute settlement action in cases related to patents on pharmaceutical products. Now, this proposal has been circulated to the WTO Membership, as draft language for inclusion in the declaration.

This proposal has caused stirrings of concern amongst the developing countries, which had hitherto negotiated as a coordinated bloc. The developing countries, particularly the 50-odd countries, which have been spearheading the process submitting joint proposals and statements on this issue, include least-developed, African, as well as some Asian, Caribbean and Latin American countries. The US proposal is seen by some as a divisive tactic, designed break up the developing country coalition, particularly as between African countries and countries like Brazil and India. More importantly, some observers have said that the proposals themselves, on closer scrutiny, are not as attractive or generous as they appear to be. The proposals are discussed in further detail below.

It has been reported that some of the developing country negotiators had suggested rejecting a Ministerial Declaration altogether, on the basis that a weak declaration that does not adequately clarify the provisions will not advance their cause, but will instead only be a public relations exercise. The idea appears to be that if the US strategy succeeds, the developing countries would not be able to stand as firm as a coalition, as they have done thus far, to demand a strong Ministerial Declaration.

2.  ELEMENTS FOR DRAFT DECLARATION

The elements document is supposed to reflect the points of convergence in the consultations thus far. However, many of the developing country negotiators are unhappy with the document, as it has not taken on board their clear and oft-articulated concerns.

The document has 6 paragraphs, 3 of which relate to the clarification and interpretation of the TRIPS Agreement. 2 other issues remain without text; that is, the issue on the situation of countries with limited domestic manufacturing capacity in making effective use of compulsory licensing, and the issue of transition period.

3.  TITLE OF DECLARATION AND PREAMBULAR LANGUAGE

As mentioned before, the title for the Ministerial Declaration remains in square brackets. However, it has already been made clear by the majority of the developing countries that they wished the declaration to be one on the TRIPS Agreement and the broad, overarching public interests in protecting public health.

The developing-country proposal (which was earlier circulated as a non-paper at the TRIPS Council Special Discussion on September 19) to the General Council, submitted by 52 countries on October 4, had spelled out the content of a Ministerial Declaration and made it clear it was to be entitled Ministerial Declaration on the TRIPS Agreement and Public Health. Thus, even this is not adequately reflected in the Chairman's document, which talks of 'intellectual property', instead of the TRIPS Agreement.

The first 3 paragraphs of the document appear to be preambular in nature; referring to the public health crises especially that of HIV/AIDS and other pandemics, afflicting developing and least-developed countries, and the need for TRIPS to be implemented and interpreted so as to be part of the wider national and international actions to address these problems. The effect of these paragraphs would seem to place the HIV/AIDS crises as the main problem to be addressed in the declaration. This is quite different from the demand of developing countries for the Ministerial Declaration to interpret and clarify the provisions of TRIPS, in order to guarantee them the flexibility of taking measures to address public health crises, which includes, but is clearly not limited to, the HIV/AIDS crisis.

Paragraph 3, with its focus on the importance of intellectual property protection for development of new drugs, does not properly reflect the key concerns of developing countries; which is that patent protection has adversely affect prices of medicines, and thus, their affordability and accessibility. The paragraph states the need for an appropriate balance to be achieved between 'the public health objectives of promoting new medicines and of maximising access to existing medicines', and of 'the need for measures under intellectual property systems to facilitate access to existing medicines'.

The developing-country proposal emphasises that intellectual property protection should encourage the development of new medicines and the international transfer of, and access to, technology to promote the development and maintenance of sustainable domestic manufacturing capacities for medicines and other healthcare products. Therefore, the appropriate balance should be between meeting public health objectives and intellectual property protection. The use of the phrase "existing medicines" in paragraph 3 is also of concern. Would it mean limiting the measures to facilitate access only to existing medicines and not for new medicines?

4. "RE-STATING THE TRIPS AGREEMENT": INTERPRETATION AND CLARIFICATION OF TRIPS PROVISIONS

The operative part of the text contains 3 paragraphs, which relate to how TRIPS should be interpreted or clarified. Paragraph 4 talks of governments being permitted to take measures to protect public health and 'the right of Members to use, to the full, the provisions in the TRIPS Agreement which provide flexibility for this purpose', but this is also coupled with a proviso which would have the Members reaffirm their commitment to the TRIPS Agreement as a whole.

This formulation significantly dilutes the developing countries' key proposition throughout the process - that is, to have the Ministers affirm the common understanding that 'nothing in the TRIPS Agreement prevents Members from taking measures to protect public health'. This has been the main sticking point in the consultations, during which US and its small group of supporters, have insisted that they cannot accept such a proposition. It would seem that the demand of 52 countries in the WTO have been drowned out by the voices of a small group of Members.

Paragraph 5, begins with a chapeau which speaks of facilitating flexibility by providing legal certainty, then provides a 'clarification' of several TRIPS provisions. The first so-called clarification refers to the use of Articles 7 and 8. However, the clarification is obfuscated with a reference to the customary rules of interpretation as set out in the Vienna Convention on the Law of Treaties. A relevant provision of the Vienna Convention is Article 31, which states that a treaty shall be interpreted in good faith, and that words shall be given their ordinary meaning, within the context of the treaty, and in light of its objective and purpose. It also states that any subsequent agreement between parties regarding the interpretation of the treaty or application of its provisions shall also be taken into account when interpreting it.

Generally, when the intention of the parties are not clear, the Vienna Convention is of help in interpreting the meaning of the provisions. In this case, the Ministerial Declaration is precisely intended to clarify the meaning of the provisions. The Ministers, as provided for in the WTO Agreement, are vested with the mandate of interpreting the WTO agreements. Therefore, where the Ministerial Declaration gives a clear direction on how TRIPS should be interpreted, there need not be reference to the Vienna Convention.

The Africa Group, in a separate proposal for amendments to the TRIPS section in the Ministerial Declaration, has said that each provision of the TRIPS Agreement shall be interpreted and read in the light of Articles 7 and 8 (see Africa Group proposal on TRIPS on the TWN website). It is understood that the Like-Minded Group of countries has also submitted a proposal, which supports this proposition. Therefore, the text in the TRIPS and public health declaration should reflect this. It may also be helpful to state clearly that the TRIPS provisions should be interepreted in light of the overarching principles and objectives of promoting technological innovation and transfer of technology, of protecting public health and nutrition, and promoting  public interest in sectors of vital socio-economic and technological importance, as contained in Articles 7 and 8. Explicitly spelling out these objectives would indicate that these objectives have pre-eminence, thereby addressing the problem of the 'consistency test' contained in the proviso in Article 8.1 (which states that " ... Members may take measures to protect public health ... etc., provided that such measures are consistent with the provisions of this Agreement).

The other 3 issues relate to compulsory licences and parallel imports. The criticism of the compulsory licence paragraphs is that they simply re-state the TRIPS Agreement. First, by stating that the Members have the freedom to determine the grounds upon which compulsory licence may be granted, and by re-stating the provisions of Article 31(b). In cases of emergency, circumstances of extreme urgency and for public non-commercial use - it is clear from Article 31(b) that no prior efforts to obtain voluntary licence need to be undertaken.

The value-added of this paragraph is the fact that it does state that, whilst public health crises including those relating to HIV/AIDS and other epidemics, can represent a national emergency or circumstances of national emergency, it does not prejudice the right of Members to determine what other circumstances may constitute a national emergency or circumstance of extreme urgency. That this is the case has been amply demonstrated by Canadian and US actions in relation to the recent anthrax scare in the US.

The parallel import text does not mention parallel imports. It refers to the exhaustion of intellectual property rights, and states that the effect of the relevant provisions of TRIPS leaves each Member free to establish its own regime for exhaustion. Although it would seem to accept that Members are free to adopt its own exhaustion regime, it does refer to other provisions of TRIPS, bringing to mind the previous attempts to link Article 28.1 to Article 6, to limit parallel import measures.

A separate paragraph is devoted to the issue of preferential pricing. Referring to 'medicines at dicounted prices or under aid schemes' the paragraph would have the Ministers 'encourage Members to take measures to prevent diversion of such medicines from those for whom they are intended into other markets'. Although it is a toned-down version of what the EU and US had previously suggested during consultations (which sought to limit the rights of Members to parallel import), this matter has been much-discussed. Developing countries had already made it abundantly clear (several times) that the issue of differential pricing was not within the ambit of the TRIPS discussions. The paragraph is admittedly in square brackets, but should be deleted altogether.

5.  "DIVIDE AND CONQUER": US PROPOSALS ON TRANSITION PERIOD AND MORATORIUM ON DISPUTE SETTLEMENT ACTIONS

The US proposals have caused consternation among the developing countries negotiators, many of whom had privately expressed the view that it was a strategy of 'divide and conquer'. Divisions as between least-developed countries, sub-Saharan African countries and the other developing countries would endanger the cohesion of the developing countries. Early on in the process, the US and Switzerland had already tried to persuade the LDCs and African countries that they would not gain much from a declaration, but rather it would be those countries like Brazil and India that would have most to gain.

Thus, the 'sweetener' in the form of a 10-year extension of transition periods being offered to the least-developed countries, and for the non-LDC sub-Saharan African countries, a 5-year moratorium on dispute actions. It may be the US strategy that, in exchange for these offerings, the LDCs and African countries will accept a weakened declaration.

It must be noted that the acceptance of these 'sweeteners' would not help in the reform of the TRIPS Agreement, nor does it address the problem of bilateral and regional pressures (and any other ex-WTO pressures) that could be applied on the LDCs and African countries to implement TRIPS and TRIPS-plus measures. It is widely acknowledged that these pressures are being applied, and it is the view of many that Ministerial Declaration that clearly and firmly clarifies the TRIPS provisions will be a safeguard against such pressures.

Furthermore, on closer examination, some flaws can be detected in the US proposals. On the extension of transition periods for LDCs, the US proposal covers only Sections 5 and 7 of Part II of TRIPS (i.e., patents and protection of undisclosed information) as they apply to pharmaceutical products. Under Article 66.1, the TRIPS Council is already required to give extensions to LDCs upon their request, and such extension would not be limited only to Sections 5 and 7. Therefore, it would appear that the US proposal is more restrictive than TRIPS itself, insofar as the coverage of provisions is concerned. It is true however, that TRIPS does not specify a time frame for the extensions, and LDCs would have to request for the extensions.

On the moratorium proposal, critics have said that it is empty of content. It is understood that a number of developing country delegates have questioned the intent to divide sub-Saharan African countries from the other developing countries. Some developing country negotiators have also raised questions about the effectiveness of the moratorium. They raise a number of points.

First, what is meant by non-discriminatory intellectual property laws? Secondly, the phrase 'law, regulation or other measures ... that improves access to patented pharmaceutical products' also requires further clarification. There is a concern that the use of the phrase, may in fact, mean that sub-Saharan African countries would have to prove that they have satisfied the test or criteria, that only laws that actually (and in fact) improve access to patented pharmaceuticals would be excluded from dispute actions. This would mean to say that the moratorium would only apply to those measures, which pass the test or criteria of improving access to patented pharmaceutical products.

Note too, that the US proposal speaks only of 'patented pharmaceutical products'. It may imply that measures to promote the import, production and access to, generic pharmaceutical products would not be covered by the so-called moratorium. The moratorium is yet further limited by the reference to 'patented pharmaceutical products used in the treatment of HIV/AIDS and other pandemics'. It would seem therefore, that the moratorium covers only patented medicines for pandemics, but not other diseases for which affordable medicines are greatly needed.

 


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