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TWN Info Service on Health Issues (Aug08/01)
12 August 2008
Third World Network

IP: Controversy on proposed IP rules at World Customs Organisation
Published in SUNS #6535 dated 11 August 2008

Geneva, 8 Aug (Sangeeta Shashikant) -- A serious controversy has emerged at the World Customs Organisation (WCO) over a proposal pushed by its Secretariat and developed countries to adopt harmonized standards on enforcing intellectual property, particularly to combat counterfeit and pirated goods.

Many developing countries have objected to what they see as manipulative methods of the Secretariat to push through the proposed standards by brushing aside substantive and procedural concerns raised by these countries. One method used is the production of a misleading report asserting that there is consensus on the standards when in fact there are disagreements that the report ignores.

The proposed standards are "TRIPS-Plus", in that they oblige developing countries to take on several obligations that go beyond the WTO's TRIPS Agreement, as pointed out by the South Centre.

A leading generic drug industry association in India has criticized the proposed WCO standards as being another hurdle for access to medicines, which could create barriers even greater than the TRIPS Agreement. A leading trade think-tank in India also warned that the standards will enable customs authorities to seize the shipment of any product which is suspected to be counterfeit, and can be used as a non-tariff barrier to deny legitimate trade for developing countries.

The controversy pertains in particular to the recent process in the WCO on the development of Provisional "Standards to be Employed by Customs for Uniform Rights Enforcement" (SECURE).

Some developing countries have raised concerns about the lack of transparency and accountability on the part of the WCO Secretariat which has been pressing for a quick adoption of the SECURE standards by the governing bodies of the WCO (i. e. the Policy Commission and the Council), notwithstanding the lack of consensus on the SECURE document.

The most recent meetings of the governing bodies, held in June this year, saw several developing countries criticizing the WCO Secretariat.

The SECURE draft document has been discussed thus far only at three WCO Working Group (WG) meetings, with no consensus achieved. The last WG meeting took place on April 24-25, 2008.

The objections by several developing countries has postponed the adoption of the SECURE document. The SECURE document is to be reconsidered by the WG, and this is likely to take place on 30-31 October. The WG is then to report to the WCO Policy Commission in December 2008.

The SECURE draft document contains sections on "IPR Legislative and Enforcement Regime Development (containing 12 Standards as the main elements for the enforcement of IPRs)"; "Cooperation with private sector"; "Risk analysis and intelligence sharing"; "Capacity building for IPR enforcement and international cooperation"; and "follow-up for implementation".

According to a recent South Centre Bulletin, the "proposed scope and the level of enforcement of these standards are far higher than previous international agreements" and they are in "stark contrast to the WIPO Development Agenda which is a landmark achievement by the developing countries to integrate developmental concerns into IP
policies".

The working draft also accords more benefits to the right holders, which is inconsistent with the call for a balance IP protection mechanism for all stakeholders, says the South Centre.

It adds that the WCO is "dominated by a few developed countries and a core group of northern corporate right holders" and these rights holders participate on an equal footing with governments. Participation by developing countries in the WCO meeting is inadequate. They are often represented by officials from Customs Administrations, which have no expertise in IP or development issues.

According to experts, this inadequate representation and participation is a serious problem especially at this juncture as the WCO is pushing forward an agenda on combatting counterfeiting and pirated goods, which places obligations on developing countries that are higher than what they are required to undertake in the WTO's TRIPS Agreement and which are inconsistent with the needs and interests of these countries.

In fact, analysts believe that the WCO is being used by the developed countries to implement their objective of introducing internationally harmonized norms or standards that require developing countries to undertake international border enforcement of IPRs that is "TRIPS-plus", or beyond the requirements of the TRIPS Agreement.

The WCO is a Brussels-based international organisation representing 171 customs administrations. It has since 2005 been active in the area of enforcement of IPRs, for example, by developing best practices, model legislation, training and other tools to enforce IPRs.
Among the tools with the most development implications is the SECURE, which according to the WCO website, includes "provisional standards, procedures and best practices that will prove effective in coordinated global effort to suppress all kind of intellectual property rights infringements".

The main aim of SECURE appears to be to implement an agenda that goes beyond the TRIPS agreement with regard to enforcement of IPRs by enlarging the powers of the Customs Administrations particularly at the border.

According to sources, the SECURE draft was being pushed by the WCO Secretariat for quick adoption by the WCO Council meeting in June 2008 through manipulative methods. However, there was significant disagreement over the text, resulting in a backlash by developing countries.

Six developing countries (Argentina, Brazil, Cuba, Ecuador, China and Uruguay) issued a document lambasting the WCO Secretariat over its "Report of the SECURE Working Group" (SP0269E1).

This report had been prepared following the working group's meeting in April 2008 and was submitted to the WCO Policy Commission that met on 23-25 June. The WCO Council met from 26-28 June.

According to the developing countries' statement, the Report of the SECURE Working Group "is not the result of discussions within the SECURE Working Group" and it "neither reflects any agreed decision of its members" and "should not constitute a basis for discussion".

The developing countries charged that the document "was produced without previous consultations" and that "at best, it reflects the positions and intentions of the Secretariat with regard to the document SECURE Standards'".

They added: "This very fact is by itself a cause of concern since the Secretariat should remain neutral, in particular when addressing politically sensitive issues such as the one in the agenda of SECURE Working Group... Such precedents undermine the reputation of the Organisation as an entity of a technical nature".

The developing countries further stated that the current state of play within the SECURE Working Group had been "misconstrued" by the Report. This report had said that the WG had reached consensus on almost all points, despite the fact that Members did not have the time to discuss outstanding proposals and that they had signalled the intention to present further proposals on the matter, said the countries.

They added that it is noteworthy that the Report "does not have a single reference to the fact that the Group has not yet agreed on its Terms of Reference".

Moreover, said the developing countries, the Secretariat provides no basis for such an assumption (i. e. that the working group had reached consensus), which, as a matter of fact, runs counter to the positions expressed by many countries during the SECURE WG meetings.

Also, during the Working Group meeting, Members expressed the view that the document "is not ripe for approval" until all concerns are accommodated, said the countries.

They further charged that the Report's request to the WCO Policy Commission for action had not been decided on by the WG. In fact, the WG has not had the time to discuss its future work and this should not be construed as meaning that the WG has decided to seek guidance/endorsement by the Policy Commission on to the proposals that remain on the table.

They insisted that the WG needs "to further discuss these proposals on the technical level, as well as other proposals that might be submitted in the next meetings".

The Report also includes as an attachment a note by an external legal advisor, which the Report said was made at the request of the Secretariat.

The developing countries responded to this note by stating that the request and the note of the legal advisor was made with the objective of seeking to refute the arguments that support the position of some Member states. They said that "there is no decision by any WCO body to the effect that a legal opinion should be sought on the issue of the SECURE WG", and the Members had not been notified at any moment that the Secretariat was asking for the said opinion.

"The measure taken by the Secretariat raises serious concerns because it implies that the issues at stake in the framework of the SECURE WG are limited to and can be settled by legal debates, which is not the case in view of the high political sensitiveness of the issue," said the six countries.

Another group of nine developing countries (i. e. Argentina, Brazil, Cuba, Ecuador, Uruguay, Bolivia, Chile, Colombia and Costa Rica) presented a document proposing Recommendations for consideration by the Policy Commission.

The preamble of this document stated that:

-- The SECURE WG has not yet approved its Terms of Reference and that as agreed on its third meeting, the TOR will be discussed at the beginning stage of the 4th meeting (October, 30-31 2008);

-- The SECURE WG has not reached an agreement on the proposed draft SECURE standards document and on a recommendation for action by the Policy Commission or the Council;
-- Developing countries are still assessing the proposed draft SECURE Standards and it is recognized that further discussion is still needed on this document.

The nine developing countries' document also proposed that the Commission recommend that the WCO Council takes note of the progress reached so far in the discussions within the framework of SECURE Working Group and "requests the Working Group to submit to the Council a proposal for the Terms of Reference and, once agreement has been reached therein, to pursue the discussion of the SECURE Standards with a view to finalizing the document."

According to a Summary report of the Policy Commission: "Following a discussion, the Chairperson of the SECURE Working Group indicated that in the event that the Policy Commission decided to send the document back to the SECURE WG, it should provide clear guidance in order to assist the Working Group and not slow down its work".

The Summary further states that "In conclusion, the Chairperson: emphasized the importance of the file; and on the basis of the positions expressed by the delegates, indicated that the Council would be asked to instruct the SECURE Working Group to continue its examination of the Provisional SECURE Standards document, reporting to the Policy Commission in December 2008".

Thus, the next step in this matter will be a meeting of the SECURE WG, expected to be on 30-31 October, at which the SECURE standards document will be examined again, with a goal of submitting recommendations to the Policy Commission in December.

According to diplomatic sources, the developing countries in the WCO have at least two major concerns: the process in which the meetings are conducted and the reports are written, and the content of the proposed SECURE standards, which contain obligations that are TRIPS-Plus.

According to Xuan Li from the South Centre, the SECURE document (as of April 2008) goes beyond the TRIPS Agreement in many ways, including:

-- extending the scope of import (Art. 51 of TRIPS) to export, transit, warehouses, trans-shipment, free zones etc. (Std. 1 of SECURE);

-- extending the protection from trademark and copyright (Article 51 of TRIPS) to all other types of intellectual property rights (Std. 2 of SECURE);

-- expanding the right of the customs authority to take action upon its own initiatives but removing the obligations from remedial measures when they do not act in good faith (Std 7, SECURE)

-- giving the right holders the right to make requests, but on the other hand shrinking the importer's minimum right of being notified promptly (Std 7, SECURE).

-- under TRIPS, it is the obligation of the right holder to provide evidence and satisfy the customs authority that it should take action (Art. 52, 58), but the SECURE standard reverses the burden to provide evidence from the right holder to the customs administration (Std. 8)

-- under TRIPS, the importer and the applicant shall be promptly notified of the suspension of release of goods (Art. 54) but no such safeguard is available under SECURE (Std. 9)

-- under SECURE, the Custom administration has the authority to detain, move, or seize IPR infringing goods but without placing an unreasonable burden of storage and destruction fees on right holders (Std 11)

-- under TRIPS, Members shall provide for criminal procedurals and penalties for trademark counterfeiting and copyright piracy on a commercial scale. Under SECURE, Custom administration has legal authority to impose deterrent penalties against entities knowingly involved in the importation/exportation of goods under Customs control which violate any IPR laws (Std 12).

According to Li, although the Standards are termed as being voluntary, they are "likely to evolve into mandatory standards as happened in the case of the model provisions of framework of standards to secure and facilitate global trade (SAFE) adopted in 1995 and revised in 2001 and 2004".

Also, once adopted by the WCO, the Standards can also be expected to be promoted in other fora such as in the Universal Postal Union, WTO and WIPO as well as in regional and bilateral negotiations such as EPAs.

The Business Standard (India) has reported that the "Provisional Global Customs Standards" to counter IPR violations go much beyond the definition of "Counterfeits" discussed by the World Health Assembly in May.

Mr. D. G. Shah, Secretary-General of the Indian Pharmaceutical Alliance (representing generic drug companies) was reported as saying that the measures in the SECURE document goes beyond the TRIPS Agreement, and that "unless properly addressed, it could be yet one more hurdle for access to medicines". He added that it has the "potential to create barriers which are even greater than the TRIPS Agreement".

Indian researcher Nirmalya Syam of the Centre for Trade and Development (CENTAD) was quoted by The Standard as saying that the application of SECURE provisions in the current form "will enable states to interdict and seize the shipment of any product which is suspected to be counterfeit... Such powers may be used as non-tariff barriers to deny market access from developing countries like India to the markets of other countries."

Viviana Munoz from the South Centre also cautions that "to increase reliance on border measures for the enforcement of IPRs is a policy choice that requires careful ex ante assessments. The system cost, complexity and potential negative impact on trade are too often understated." +

 


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