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TWN Info Service on WTO and Trade Issues (Apr05/1)

5 April 2005



HEATED DISCUSSION AS TRIPS AND HEALTH DEADLINE IS MISSED 

The World Trade Organisation for the second time missed the deadline for concluding a "permanent solution" to the problem facing countries that have no or inadequate drug manufacturing capacity so that they can have access to affordable medicines.

The deadline of 31 March passed without agreement. It was marked instead by a formal meeting of the TRIPS Council which had heated discussion and highlighted sharp differences and at times acrimony between developing countries and major developed countries.

At the end of the meeting, it was agreed that further consultations will be held to find a solution before the WTO General Council meeting of 26-27 May. At the 31 March meeting of the TRIPS Council, there were heated discussions over the content and legal form of the amendment, and especially on the circumstances in which the 30 August 2003 decision and statement were made.

Below is a report by Sangeeta Shashikant of TWN on the meeting. It was published in the SUNS Bulletin.

With best wishes
Martin Khor
TWN

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Heated discussions as TRIPS and Health Para 6 deadline is missed

By Sangeeta Shashikant (TWN, Geneva 1 April 2005)

The World Trade Organisation has for the second time missed the deadline for concluding a "permanent solution" to the problem facing countries that have no or inadequate drug manufacturing capacity so that they can have access to affordable medicines.

The deadline of 31 March passed without agreement. It was marked instead by a formal meeting of the TRIPS Council which highlighted sharp differences and at times acrimony between developing countries and major developed countries.

At the end of the meeting, the TRIPS Council chairperson, Ambassador Tony Miller of Hong Kong China said that his successor, Ambassador Choi Hyuck of Korea would conduct consultations, with the aim of finding a solution before the WTO General Council meeting of 26-27 May, which has thus become the new target date.

The "permanent solution" requires Members agreeing to an amendment to the TRIPS Agreement, as a follow up to the "interim solution" contained in the General Council's decision of 30 August 2003. That Decision involved a temporary waiver to Article

31 (f) of the TRIPS Agreement. The permanent solution is mandated in paragraph 11 of the August 2003 Decision.

The original deadline for concluding the amendment was the end of June 2004. There have been differences of view, mainly between developing countries led by the African Group, which has submitted a paper with detailed proposals for an amendment to Article 31 (f), and major developed countries that insist that the permanent solution be based on practically the whole of the 30 August 2003 decision and the Chairman's statement that was read when it was adopted.

At the 31 March meeting of the TRIPS Council, there were heated discussions over the content and legal form of the amendment, and especially on the circumstances in which the 30 August 2003 decision and statement were made.

"The African Group which makes up a large portion of the WTO's membership cannot and will not accept an interpretation of paragraph 11 that says the August decision and the Chairman's statement in its entirety should form the amendment" said Ambassador Valentine Rugwabiza of Rwanda, coordinator of the African Group.

The Group said its proposals incorporated the Decision wherever it was appropriate, but it was also necessary to leave out certain parts of the Decision that were redundant, nor should the Chairman's statement be adopted in the permanent solution This contrasted with the view of the United States and the EU that repeated their position that the amendment had to be based on the Decision and the Chairman's statement as otherwise a consensus would be difficult.

The African Group's interpretation of paragraph 11 of the Decision received overwhelming support from developing countries. Zambia (on behalf of LDCs), Benin (on behalf of the ACP countries), Argentina, Brazil, India, Philippines, Sri Lanka and Peru, were in agreement with the African Group's position that the amendment does not need to be a direct transposition of the Decision and the Chairman's statement.

They concurred that the ordinary meaning of the sentence "the amendment will be based, where appropriate, on this Decision" indicates that only the parts of the Decision that are appropriate are to be used in the amendment.

The Decision is in the form of a waiver of Article 31(f) of TRIPS (which mandates that production under compulsory licensing is to be predominantly for the domestic market) to enable countries with manufacturing capacity to export essential medicines to countries with no or insufficient manufacturing capacity.

This Decision and the Chairman's statement contain several conditions and measures which exporting and importing countries have to comply with, raising concerns amongst analysts that they are too cumbersome and thus rendering the "temporary solution" difficult to operate. Paragraph 11 of the Decision directed the TRIPS Council to prepare an amendment to the TRIPS agreement which "will be based, where appropriate, on this Decision."

In a statement to the TRIPS Council, Rwanda, on behalf of the African Group, referring to the Terri Shiavo case in the United States, quoted the US President as saying that "where there are serious questions and substantial doubts, our society, our laws, and our courts should have a presumption in favor of life. It should be our goal as a nation to build a culture of life".

The Rwanda Ambassador said the dedication "to build a culture of life" should be stronger, more urgent and immediate in the TRIPS Council which has been mandated to find a permanent solution on how to ensure sustainable supply of essential generic medicines to the millions of people dying everyday, particularly in Africa. Unfortunately, this dedication and determination seems to be lacking, as four years have passed since this issue had been raised but Members were not moving closer to finding a permanent solution to this problem, said the Ambassador.

She added that the African Group had submitted a proposal on how to incorporate the temporary waiver into TRIPS, with detailed explanations including why certain parts of the Decision were redundant and should not form any part in the permanent solution. However, it appeared that some members are not engaging constructively in the discussion; for instance, they acknowledge that some parts of the waiver are redundant but to date no concrete proposal had been tabled by any of them.

She refreshed the memory of Members of the circumstances prevailing prior to and at the time the Decision was agreed to. Many options had been proposed by the African Group, which allowed countries to export and import affordable generic medicines to satisfy the public health needs of people worldwide. However, "we faced a lot of pressure from some Members which imposed many conditions that were difficult to meet", she added.

The African Group and many other developing and least developed countries were never entirely happy with the interim solution and this was made very clear during the TRIPS Council meetings, said the Ambassador. Recalling the understanding that was reached by Members on the Decision, she said: "We agreed to this "interim solution" on the understanding precisely that it was only an interim solution, while discussions to find a permanent solution would continue. This understanding is reflected in paragraph 11 of the Decision".

The Chairman's statement, she said, was read when the Decision was adopted more as an attempt to provide comfort language to assuage the concerns of the pharmaceutical industries that generic manufacturers would gain a strong foothold in the pharmaceutical market and so this Statement has to be put in its proper context. She also added that during the informal TRIPS Council meetings, some developing and least developed countries' delegates had expressed their reservations over the content of the Statement and this clearly indicated that the Statement was never intended to form any part of the permanent solution.

The African Group said the main reason the Statement was allowed to be read by countries with reservations is because they felt an urgent need to make a contribution to the success of the Cancun Ministerial Conference. There was a strong feeling then that a solution, even if it was an interim one, had to be concluded before Cancun so that the meeting could focus on other issues and thus have a better chance of success.

It was felt at that time that a Chairman's statement would help facilitate the quick conclusion to the interim solution, but with the understanding that a permanent solution would require more careful consideration, taking into account all the aspects, including how the mechanism chosen could be operationalized in practice.

Thus, the Chairman's statement should be seen as a facility that served a particular purpose at that time, mainly to meet the deadline of having a temporary settlement before the Cancun meeting. The circumstances no longer exist, she said.

The African Group then sought clarification about a footnote referring to the Chairman's statement that it said had been added to the Decision without the express consent of the Members. According to the African Group, when the Decision in document IP/C/W/405 was agreed to, there was no reference to the Chairman's statement.

A senior official of the intellectual property division at the WTO, clarified that Members had not agreed to include that footnote in the Decision, and that was why the footnote uses an asterisk (unlike the decision, which uses numbers), and it is in the introduction, not the decision itself. Therefore, including or excluding the footnote does not affect the decision or the legal status of the chairperson's statement, he said. It was included because readers might find the information helpful. According to trade diplomats, the Secretariat official added that the Decision could be reissued without the footnote, if Members wished.

The workability of the Decision in practice was also questioned by the African Group. It referred to a recent African Union Workshop on Patents and Access to Medicines attended by policy makers from 35 African countries, which had expressed concern that the Decision imposes several conditions on importers and exporters who wish to make use of the waiver and which thus may affect the countries' ability to supply generic medicines to countries with insufficient or no manufacturing capacity.

The Rwanda Ambassador elaborated that the African policy makers had thus expressed concerns about the workability of the "interim solution" and called for "a more appropriate 'permanent solution' that revises TRIPS and that removes the Article

31(f) constraint without placing new constraints so that the export and import of generic medicines can be smoothly facilitated." They had also expressed support for the position of the African Group in the WTO in seeking a permanent solution.

The Rwanda Ambassador said it was evident that policy makers at the national level consider the interim solution as containing shortcomings that may affect the operational effectiveness to meet the goal of supplying affordable medicines and so an appropriate permanent solution is urgently required.

Recalling the commitment of Member States in the Doha Declaration "to interpret and implement the TRIPS Agreement in a manner supportive of WTO Member's right to protect public health and, in particular, to promote access to medicines for all", the African Group said, "we are not convinced that the 30 August 2003 decision together with the Chairman's statement as it stands today will fulfill the commitment to protect public health and promote access to medicines for all".

It also expressed the wish to seek a solution that is "permanent, sustainable, secure and predictable". The Ambassador said the Group has put forward a proposal based on the appropriate elements of the decision, complete with detailed explanation about the proposal. The Group urged all Members to share their interpretation of paragraph

11 of the Decision and to engage constructively with the intention of resolving expeditiously the Doha Declaration's paragraph 6 problem, in favour of supplying affordable medicines to those who are most in need.

The African Group was of the view that a permanent solution is within reach if members act in accordance with the letter and spirit of paragraph 11 of the Decision. It hoped that further consultations will finalise the amendment so that a Decision can be adopted at the General Council meeting in May.

Many other developing countries, including India, Brazil, Philippines, Sri Lanka, Argentina, and Peru expressed agreement with and support for the position adopted by the African Group.

On behalf of the LDCs, the Ambassador of Zambia also fully supported the statement made by Rwanda. He said that it was the understanding of the LDC Group that the intention never was that the August decision would be regarded as the "consensus solution". It was, and is, only an interim solution" and paragraph 11 is indicative of the intention of Member States, he continued.

The group of LDCs also stressed that they always had reservations over the content and the status of the Chairman's statement and expressed the view that there was never an agreement or any kind of understanding amongst Member States that all elements of the Statement will form part of the amendment.

At the height of discussions over how to resolve the paragraph 6 problem, many promises were made by major developed countries to other Member states, to obtain their support for the Decision and the reading of a Chairman's statement, said Zambia, supporting the African Group's version of the circumstances prevailing at that time. He added that "we were informed that the 30 August decision was only an interim solution and that discussions to finding a permanent solution by amending TRIPS would continue," quoting paragraph 11 of the decision as to how the discussions would proceed.

The LDCs stressed that the view held by some members, that certain Groups of countries wish to reopen the debate that was conclusively ended in August of 2003, simply has no basis and is not supported by paragraph 11 of the Decision. The Zambian Ambassador called on Members to refrain from making statements that misinterpret the circumstances prevailing and the understanding reached at the time the Decision was adopted.

He added that the African Group proposal is consistent with para 11 of the Decision and that the Group had selected the most appropriate elements of the decision to form the amendment, and the LDC Group would like to have the proposal discussed positively and built upon. "We underline the urgency of the issue, and this is not a matter of procedural debate for us but rather an emergency, on which depends the lives of millions of our people. We urge Members to work for a permanent solution by the General Council meeting of May 2005."

Kenya said there were certain things in common between Britain and Africa, in that Britain treats its written and unwritten laws with equal weight, and Africa similarly treats the written and unwritten promises equally. The Kenyan delegate asserted that oral promises made behind the scenes have to be honored and had to be brought back to the table for discussion.

Kenya said that "we were promised that any problems we had with the Decision would be sorted out at the amendment stage." He requested Members to learn a lesson from the words of an African elder, "Since we can't go back in time and reverse the damage that has been done, you can take action now, to make it better for the future."

In contrast to the positions taken by developing countries, the US, EU and Switzerland repeated their argument that the Decision struck a balance between a range of concerns felt by different groups of members, and was the result of difficult negotiations, according to trade officials. They said a consensus on an amendment will be difficult to achieve if the substance of the waiver is renegotiated. They also repeated their position that the General Council Chairperson's statement was part of the consensus.

Switzerland said it is currently revising its laws so that its companies can export generics under the Decision and this revision will be endangered if the substance of the waiver is going to be renegotiated.

The US representative called the issue of "unwritten promises" raised by the African Group as "perceived promises". According to trade officials, the US said it was concerned to hear unsubstantiated accusations, and as far as it was concerned there were no behind the scenes promises made, and its negotiators at that time had been transparent.

In response to this, the Kenyan representative stood his ground, saying that he had prepared a statement that was to be read at the General Council on 30 August 2003 but he was prevailed upon by delegations of the developed countries not to do so. He added that they had made promises to his delegation and high officials in his capital to reassure them, so that he would not have to make the statement he had prepared, at the General Council meeting when the Chairman's statement was read out and the Decision adopted.

The Kenyan delegate also made reference to a conversation in a lift and phone calls between capitals.

Kenya also made reference to some parts of a statement made by Canada on the eve of the adoption of the Decision in August 2003. Kenya said that the Canada statement might remind Members of the pressures facing the developing countries, particularly the African Group at that time.

At an informal meeting of the Heads of Delegations on 29 August 2003, Canada said, "The final thank you goes to all my African colleagues. It was their countries and their citizens who were always recognized as the primary beneficiaries of the Declaration on TRIPS and Public Health. It was their people who had the most need. And yet, they have demonstrated remarkable patience with us, on such a "life and death" issue. I am not sure many of us, in similar circumstances, would have acted as honourably."

This statement made by Canada that it is indeed an issue of "life and death" has been emphasized in the African Group's present statement, said Kenya.

The meeting ended with no agreement on the amendment to the TRIPS Agreement. The chairperson Tony Miller said that consultations would be carried on by his successor Ambassador Choi Hyuck with the aim of reaching agreement by the General Council meeting of 26-27 May 2005, as proposed by the African Group.

 


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