TWN Info Service on WTO Issues (August 03/6)

14 August 2003

Third World Network

Dear friends


Please find below a short report on the latest developments in the TRIPS and public health (Paragraph 6) negotiations.

It is understood that the US has put forward a number of conditions if it is to agree to the December 16 text, which contains the proposed solution to Paragraph 6.

We hope this is of use.

With best wishes,

Cecilia Oh

Third World Network



Pre-conditions by US for agreeing to TRIPS and public health solution

The US has put forward its proposals for pre-condition for agreeing to the TRIPS and Public Health decision on Paragraph 6.

It was understood that the US delegation outlined the US position during a consultation between the US and a number of developing countries earlier this week.

During that meeting, the US spelled out a number of “elements” that the US would want reflected in a document attached to the December 16 text, possibly as the Chair’s understanding of how the solution proposed in the text would be operationalised.

This would be a pre-condition to the US agreeing to the December 16 text, which has already been agreed to by the majority of the WTO Membership, as of December last year. The US has been dragging its feet for the last 8 months, withholding consensus on the draft decision that is intended to enable developing countries to effectively use compulsory licences for the import of cheap generic drugs.

The US proposed four “elements” that could be included in the Chair’s statement.

First, the US wants an understanding that the solution in the December 16 text would only be used for “humanitarian purposes”, and should not be “abused”.  This, it is suggested, could be framed as a statement of intent or purpose that would contextualise the December 16 text. It was also mentioned that this humanitarian context would mean that use of the solution should be for not-for-profit purposes.

The use of the term “humanitarian purposes” may be seen an attempt to narrow or restrict the use of the solution contained in the December 16 text. A previous failed attempt at drafting a Chairman’s understanding of the December 16 text was that proposed by the previous TRIPS Council Chair, Ambassador Perez Motta, which had stated that the December 16 solution would only be used in cases of national emergencies or circumstances of extreme urgency.

The proposed “humanitarian purpose” understanding is less clear, but no less worrying in its intention to limit developing countries’ ability to import cheap drugs produced under compulsory licence. It is even more worrying that there is reference to not-for-profit purposes, since it would raise further questions of whether who would be able to import and export the drugs under the proposed solution.

Secondly, the US wants an “opt-out” clause, which would allow for countries to opt-out of the December 16 text. That is to say, that they will not use the solution as importing countries, or benefit from the proposed solution. It is as yet unclear whether this is in addition to the footnote in the December 16 text, wherein developed countries have stated their intention not to use the solution  as importers.

This proposal does not come as a real surprise given that there have been attempts to question the eligibility of certain developing countries to import cheap generic drugs under the December 16 system. Countries like Philippines and Malaysia have apparently been identified as not being eligible. Most developing countries have not been too enthusiastic about this proposal, as the December 16 text and its annex contains a self-determining test on eligibility and thus, leave it to the individual developing country to decide if they are, in fact, eligible.

Thirdly, the US proposes the establishment of a review mechanism that would monitor the use of the solution in the December 16 text. It is reported that the US envisages the use of the mechanism to require countries to submit information regarding their use of the December 16 solution. It was also mentioned that the review mechanism would assess the effectiveness of the anti-trade-diversion measures put in place as required by the December 16 text.  There was also apparently a reference to the possibility of an eminent persons’ group to evaluate and assess the operation of the system.

There is speculation that such a review mechanism could be used for either one of two purposes. One, it may be used as a means to demonstrate that the solution or system was working well, and thus, doing away with the need for a permanent solution that involves an amendment of the TRIPS Agreement, for which developing countries have been calling, and which developed countries like the US would prefer to avoid.  Alternatively, it can be used to press for even more stringent anti-trade diversion measures.

Another proposal from the US on the issue of trade diversion is its suggestion that the Members or the Chair would explicitly state that it is “feasible” for products produced under compulsory licence to be distinguished, through the use of special packaging/labeling or to have the products be made in a special colour or shape. It is understood the US wants Members to agree that this requirement shall be considered feasible and will not have an adverse impact on prices. This seems to be an attempt to place further conditions on generic manufacturers, and to dis-incentivise them from participating in the solution under the December 16 text, and may also amount to a change in the December 16 text. The December 16 text currently contains a provision that suggests this requirement need not be satisfied it was considered not feasible or that it would have a significant impact on the price of the product.

So far discussions have been held with only a very small group of countries.  More consultations are expected.  The present Chair of the TRIPS Council, Ambassador V.G. Menon, is expected to eventually present a draft of his understanding of the December 16  text to the WTO members.  This could be in the next few days.