Info Service on WTO and Trade Issues (Mar13/01)
11 March 2013
Third World Network
supports LDCs' transition period, North creates obstacles
Published in SUNS #7541 dated 8 March 2013
Geneva, 7 Mar (Simran Gathani) -- The "duly motivated request"
by Least Developed Countries (LDCs) to obtain an exemption from obligations
under the World Trade Organisation's intellectual property rights
agreement, for as long as a country remains an LDC received overwhelming
support from many developing countries.
The Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Agreement explicitly recognises in Article 66.1 the "special
needs and requirements of least-developed country Members, their economic,
financial and administrative constraints, and their need for flexibility
to create a viable technological base".
Accordingly, LDCs are currently not required to apply the provisions
of TRIPS (other than Articles 3 to 5), and upon a duly motivated request
by a LDC Member, the Council "shall" grant extendable transition
This latest request was discussed during the TRIPS Council meeting
in Geneva on 5-6 March.
However, hopes that the Council would decide in favour of the poorest
and most vulnerable segment of the international community by adopting
the draft decision text proposed by the LDC Group were dashed, particularly
as several developed countries backtracked on their legal commitments
under Article 66.1 and resisted adoption of the proposed draft decision
No decision was reached on the matter, and it will be taken up again
at the next TRIPS Council meeting on 11-12 June. In the interim, the
newly appointed Chair of the TRIPS Council, Ambassador Alfredo Suescum
from Panama, will conduct informal consultations.
The LDC Group submitted a "duly motivated request" (IP/C/W/583)
to the TRIPS Council last November.
Annexed to the request is a draft decision text for the consideration
of the TRIPS Council which states: "Least developed country Members
shall not be required to apply the provisions of the Agreement, other
than Articles 3, 4 and 5, until they cease to be a least developed
An extension of the transition period will give LDCs maximum flexibility
in determining the level of intellectual property (IP) protection
and enforcement that should be in place nationally. The TRIPS Agreement
recognises that this flexibility is important for LDCs to address
the developmental needs as well as to develop a viable technological
The previous extension of the transition period contained in IP/C/W/40
granted to LDCs in 2005 comes to an end in June 2013. Unless it is
extended, LDCs will have to fully implement the TRIPS Agreement.
The extension was subject to conditions such as "no-roll-back"
which prevents LDCs from undoing existing IP protections and from
providing reduced protection once its laws contain provisions that
move towards becoming TRIPS compliant. It also contains elements on
technical cooperation for TRIPS implementation, issues not linked
to an extension of the transition period.
At the TRIPS Council meeting, Nepal, on behalf of the LDC Group, officially
presented the request and called on the TRIPS Council to adopt the
proposed decision text.
The LDCs argued for an extension on the basis of their worsening socio-economic
situation, weak innovative and technological capacities, and uncertainty
when LDCs would be able to overcome their constraints and develop
a viable technological base. LDCs also argued that developed countries
had not fully fulfilled their commitments to transfer technology to
LDCs as required by Article 66.2 of the TRIPS Agreement.
They stressed that the TRIPS Agreement mandated an "automatic
extension" once a "duly motivated requested" was submitted
to the TRIPS Council and does not allow other WTO members to condition
the request with clauses such as the "no-roll back clause"
found in the previous extension decision. LDCs also stressed that
WTO Members should not confuse the extension flexibility provided
under Article 66.1 with the technical assistance for implementing
the TRIPS Agreement which is a separate matter under Article 67 of
According to an LDC delegate, the interventions by the US, European
Union, Canada, Switzerland and Japan focused on LDCs' compliance with
the TRIPS obligations, and subjecting any further extension to a series
of conditions, thus effectively limiting the policy space intended
by Article 66.1.
The US, according to sources, said that its support for previous extensions
was "premised on promoting IP protection and enforcement",
adding that it was "essential to preserve" LDCs' implementation
of IP laws and enforcement. It added that it had "questions and
significant concerns" and thus was "not in a position to
support" the LDC request at the TRIPS Council meeting.
The EU said that it was "willing to consider an extension"
but it is important to consider "where are we now" and "where
we are going". It said that a study on LDCs' progress in implementing
IP systems could be a "valuable starting point for our discussion
and the question of what challenges are outstanding regarding TRIPS
implementation." The study is financed by the Swedish government
and facilitated by the WTO Secretariat.
It added that the LDC proposal "lacks both a clear and predictable
perspective and remain silent on how IP and the TRIPS Agreement could
specifically help LDCs in building a viable technological base".
Switzerland, according to sources, countered the LDC request, stating
that it had "systemic implications" for the WTO, while questioning
whether the transition period will benefit LDCs. Canada and Australia
also questioned the parameters of the LDC request.
[Commenting on the outcome, Professor Brook K. Baker, from Northeastern
University School of Law, said: "There's no excuse for the TRIPS
Council having failed at its March meeting to grant what is a mandatory
extension of the LDC transition period pursuant to LDC's proper motivation.
Granting monopolies to transnational IP companies in the poorest countries
in the world is guaranteed to slow development in both technology
and human capacity. Access to medicines, educational, informational,
and cultural resources, agricultural inputs, and green technologies
is critical to human rights and survival in these countries. The efforts
of the US and EU to pare down and conditionalise this extension-of-right
must be condemned."]
Ambassador Shanker Das Bairangi from Nepal, on behalf of the LDC Group,
in officially presenting the LDC request and draft decision text to
the TRIPS Council, said the extendable transition period was "an
important flexibility" granted to LDCs.
Nepal argued that "LDCs need the continuation of flexibility
as their situation has not changed significantly over the years",
"their marginalisation continues", and "they have not
been able to develop their productive capacities which limit their
meaningful integration into the world economy".
"LDCs continue to be characterised by multiple structural constraints
that include low per capita income, low level of human development
and extreme vulnerabilities to external shocks. LDCs are home to more
than 50 per cent of over a billion people who live in extreme poverty.
These countries are the most off-track in the achievement of the internationally
agreed development goals, including the Millennium Development Goals.
They bear considerable health burdens - of both communicable and non-communicable
diseases. In 2011, according to UNAIDS, some 9.7 million of the 34
million people living with HIV worldwide lived in the LDCs. Of these
people, only 2.5 million had access to antiretroviral treatment",
Nepal also said "LDCs' economic indicators have not changed since
2005. Trade in goods and services has not improved much - in fact
trade deficit in both goods and services have increased; per capita
GDP growth has fallen".
Nepal further said: "All LDCs are net payers of royalties. These
countries have not been able to spend even a small fraction of their
national budget to research and development as they have to concentrate
more on basics like health and education. The developmental schemes
for transfer of technology provided in TRIPS Article 66.2 have not
effectively and adequately materialised".
Nepal also argued, "The level of technological development in
the LDCs has remained low. In UNDP's Technological Achievement Index,
LDCs are at the bottom. So are they in UNIDO's Competitive Industrial
Performance Index and UNCTAD's Innovation Capability Index. Numbers
from WIPO reports indicate that LDCs have not been able to enter the
race of technology and innovation".
"In Istanbul Programme of Action, we all recognised that LDCs
are lagging behind in the critical areas of science, technology and
innovation. Unless LDCs have flexibilities to adopt policies to stimulate
technological catch-up with the rest of the world, they will continue
to fall behind other countries and face deepening marginalisation",
"In terms of future outlook, the 2012 UNTACD LDCs report has
noted that ‘LDCs have to prepare for a relatively prolonged period
of uncertainty, with possible escalation of financial tensions and
real economic downturn'", Nepal added.
Nepal further argued that the transition period has been granted in
consideration of LDCs' special situation and it is not possible to
predict when LDCs will be able to overcome their constraints. It added
that TRIPS recognises in its preambular language that LDCs have "special
needs" and thus need "maximum flexibility in the domestic
implementation of laws and regulations in order to enable them to
create a sound and viable technological base".
Nepal argued that in its view "the most logical and predictable
approach is not to set an artificial timeframe". "Our proposed
approach gives more certainty and predictability - once you graduate,
you need to comply. We find precedence of such exemption in Article
15(2) of the Agreement on Agriculture", Nepal added.
It said that LDCs' request has been motivated by the need for policy
space to "conserve the autonomy to determine appropriate development,
innovation, and technological promotion polices, according to local
circumstances and priorities", quoting from a UNDP policy brief
on the matter.
"They need such space to ensure access to various technologies,
educational resources, medicines and tools necessary for development.
Most IP-protected goods and services are simply beyond the purchasing
power of least developed countries and their people", Nepal stressed.
It also quoted UNAIDS Executive Director Michel Sidibe who stated,
"An extension would allow the world's poorest nations to ensure
sustained access to medicines, build up viable technology bases, and
manufacture or import the medicines they need".
Nepal highlighted that Article 66.1 of the TRIPS Agreement "specifies
an obligation to grant extensions" once the TRIPS Council receives
a duly motivated request from LDCs. It also referred to paragraph
2(iii) of the Uruguay Round Decision on Measures in Favour of LDCs,
which states that, "sympathetic consideration shall be given
to specific and motivated concerns raised by the least-developed countries
in the appropriate Councils and Committees".
Nepal recalled the statement of UN Secretary-General Ban Ki-moon in
2007 at the opening of the ECOSOC session which said "The rules
of intellectual property rights need to be reformed, so as to strengthen
technological progress and to ensure that the poor have better access
to new technologies and products", adding that "What LDCs
are seeking today does not go to the extent of reform of IPR. We are
simply asking for the continuation of flexibility already agreed in
1995 - with reasons".
Nepal also highlighted that the LDC request and draft decision text
has received strong support from the UN development agencies, civil
society as well as from industry.
Nepal called on WTO Members to extend support to the LDCs' request,
which is duly motivated and to adopt the draft decision contained
in the annex of IP/C/W/583.
Cambodia, a member of the LDC Group, stressed that an extension of
the transition period "will preserve the policy space and autonomy
to determine policies and to develop the necessary policy and law
to balance IP".
It said that Cambodia had benefited from the exemption to exclude
pharmaceutical product patents, giving an example of generic medicines
that are now $140 compared to $10,000. This extension will definitely
benefit LDCs to gain access to affordable generic medicines. It sought
full support for the LDC request and draft decision.
Solomon Islands, also a member of the LDC Group, said that it found
it extremely difficult to take on TRIPS compliance, adding that it
does not have the capacity or infrastructure to implement IP let alone
to ensure compliance. It also said that R&D is not even on the
agenda of its institutions, adding that the level of education of
its people is quite basic.
It also pointed out that developed countries had yet to fulfill their
technology commitments under Article 66.2 of the TRIPS Agreement,
adding that developed countries had yet to agree to the reporting
format on its technology transfer commitments. It stressed that LDCs
needed the continuation of flexibility as the LDC situation had not
On the issue of the duration of the transition period, Solomon Islands
stressed that the proposed period was "the most realistic, predictable
and transparent criteria", adding that the "process of graduation
is a gradual process. It does not happen overnight. To opt for a given
time frame is an arbitrary option with no basis".
Morocco, on behalf of the African Group, said that it fully supported
the cause of LDCs, adding that Article 66.1 does foresee the possibility
of renewing the transition period based on economic and financial
Ambassador Wayne McCook from Jamaica, on behalf of the African, Caribbean
and Pacific States (ACP Group), expressed strong support for the LDC
request, adding that once LDCs submit a request, Article 66.1 states
that the "Council of TRIPS shall accord" the extension,
adding also that there can be no question that the extension must
remain as long as LDCs face constraints.
Brazil said it was ready to support the LDC request and the draft
decision text proposed by LDCs. It explained its support for three
(i) special and differential treatment provisions to be found in the
various agreements that form the "acquis" of the WTO, including
the TRIPS agreement, are an important systemic component. The role
performed by this systemic component is to ensure that the international
trading system be an effective instrument of social and economic development
for all Member States;
(ii) it supports the principle that the international IP system should
have policy space for countries to adjust and calibrate their national
legislation in accordance with their respective stages of social and
(iii) the incorporation of developing countries, in particular the
least developed ones, into the so-called knowledge economy has proved
to be a daunting challenge, the complexity of which could barely be
assessed almost twenty years ago, when the Uruguay Round was completed.
India supported the motivated request, and said that the LDC request
was a comprehensive one, highlighting the vulnerability of their poor
population, the marginal role their economies still play in the world
trade and the very limited productive capacity and technological infrastructure
that they possess.
It added that the framers of the TRIPS Agreement rightly understood
the special needs of the LDC Members and their need for maximum flexibility
in the domestic implementation of laws and regulations in order to
enable them to create a sound and viable technological base.
Article 66.1 of TRIPS therefore mandates the TRIPS Council to grant
them an extension from the obligations of the Agreement on the basis
of a motivated request. The provisions of Article 66.1 are precise
and do not provide discretion to the TRIPS Council to either deny
the request or impose any further conditions on the LDCs, India stressed.
It noted that the link between Article 66.1 and Article 67 "was
unnecessary and had created confusion", adding that there is
absolutely no relation between the transition period which is meant
to assist the LDCs in developing a viable technological base and Article
67 which is an obligation on the developed countries to provide technical
assistance to the LDCs to help them implement the TRIPS Agreement.
India also emphasised that the no-roll-back provision in the previous
extension decision has no place in the TRIPS Agreement and had in
fact reduced the policy space for the LDCs in utilising the TRIPS
flexibilities during the transition period to engage in technological
development and ensuring access to affordable goods to its citizens.
China said that it recognised that LDCs faced constraints and needed
maximum flexibility to meet their developmental challenges, expressing
hope that the extension will give maximum flexibility to LDCs, to
address access to essential goods that would allow them to participate
more effectively in the global trading system.
South Africa, in expressing support for the transition period, said
that the circumstances that gave rise to the transition period had
not changed and that LDCs face resource and human constraints, weak
innovative capacities, adding that this makes a strong case for an
extension which should remain in force as long as a country remains
Bolivia also expressed support for the LDC request and draft decision
text on the basis that it was reasonable as the data showed that LDCs'
situation had worsened. It also pointed out that intergovernmental
organisations and NGOs had expressed their support for the transition
period. It stressed that the issue of extension should not be considered
as part of the package of issues that will be held at the WTO Ministerial
Conference in Bali (in December 2013), adding that the issue pertains
to the regular work of the TRIPS Council.
Cuba also supported the LDC request. It similarly stressed that it
was not an issue that should be linked to the WTO Ministerial Conference
Rwanda, a member of the LDC Group, reiterated that the economic situation
of LDCs had not changed, the technological base has not been developed
due to lack of technological infrastructure, qualified personnel,
necessary skills and lack of technology transfer. This is evidenced
by the composition of exports which is dominated by a handful of commodities
without any technological and skills intensive products, adding that
the share of LDCs in total trade was 3% in 1954 compared to the current
share of only 1%!
Referring to the language of Article 66.1 of TRIPS, Rwanda said that,
"all WTO Members including developed countries have a legal obligation
to accept the proposed decision text."
It stressed that conditions attached to the previous extension in
IP/C/40 especially the no-roll-back clause "should and shall
not" be attached to the current decision text, adding that the
LDC group's request is a new request under Article 66.1 and thus LDCs
are NOT bound by the conditions of the previous decision. The "no-roll-back"
clause severely hindered use of the flexibilities by LDCs, Rwanda
said, adding that such a provision was provided for in TRIPS Article
65.5 but it pertained only to developing countries, and not to LDCs.
Rwanda also stressed that the transition period provided by Article
66.1 is to address the special needs of LDCs and to develop the technological
base and not for TRIPS compliance, adding that the issue of technical
assistance is a separate issue under Article 67 of TRIPS.
On the duration proposed by LDCs, Rwanda said it was specific and
practical and any shorter period would not be practical, adding that
the last negotiated extension of 7.5 years was absolutely inadequate
for LDCs to deal with its development challenges and to develop a
viable technological base. Such a limited time-frame is of limited
practical value to LDCs and creates uncertainty as to whether LDCs
will obtain another transition period, making it impossible for LDCs
to maximise use of the policy space available during the transition
The time-frame is also insufficient to develop a technological base,
it added. Developed countries also get predictability and certainty
as they are clear that as a LDC nears graduation they will comply
TRIPS obligations, Rwanda said.
Rwanda also highlighted that the LDC request and draft decision text
received very strong support from civil society groups, certain UN
agencies, as well as from industry. Letters and statements in support
have been received from more than 375 civil society organizations
including trade unions, from around the world representing millions
of people, from UNDP and UNAIDS, from the Electronic Information for
Libraries (EIFL) that works with libraries worldwide to enable access
to digital information in developing countries and from the Computer
and Communications Industry Association (CCIA), an organisation that
represents the interests of a wide range of companies in the computer,
Internet, information technology, and telecommunications industries
such as Google, Facebook, Yahoo.
Rwanda mentioned that the CCIA in its press statement notes that the
implementation of TRIPS Agreement would be counterproductive adding
costs to Public Health systems and other administrative burdens at
a moment when these countries are contending with human and technological
barriers to modernisation. It referred to the statement by the President
and CEO of CCIA, Mr. Ed Black that, "we look forward to the day
when there are no more LDCs. But as long as any country's people are
living on two dollars a day, they should have complete flexibility
in IP protection". This statement is in line with the preamble
of the TRIPS Agreement and consistent with the empirical evidence.
Angola called on the WTO membership to support the LDC proposal, stressing
that LDCs represent the poorest and face many challenges, suffer high
disease burden, inadequate sanitation, and low agricultural productivity.
The situation of LDCs had not changed since 2005, adding that LDCs'
productive capacities continue to be limited and they face serious
problems in infrastructure and technology transfer.
Zambia said that the LDC request has been necessitated by the multiple
difficulties LDCs had to deal with over the past transition periods,
to develop the necessary national conditions that would ensure the
minimum levels of IP protection, while facilitating access, assimilation,
adaptation and enforcement issues in the face of weak institutional
capacities and limited but often competing financial resource needs.
It is clear from the 2005 extension, that the challenges faced by
our countries requires timeframe that is not arbitrarily determined,
but one that takes into account the prevailing economic, financial
and administrative constraints faced to ensure that IP facilitates
the creation of a sound and viable technological base, added Zambia.
It further said that the LDC economies are faced with economic, financial
and administrative constraints as well as special needs and requirements
that necessitate the need for maximum flexibilities under the TRIPS
Agreement to enable us to build the necessary conditions that would
facilitate the effective protection of IP while maximising economic
benefits from exploitation of IP.
"The need for maximum flexibility is not an invention of our
own. This is something acknowledged in the preamble of the TRIPS Agreement
and the objective is clear. To enable LDCs create a sound and viable
technological base." Zambia said, adding that it looked forward
to Members' positive consideration of the Group's request.
Tanzania said that no country wants to remain a LDC. Short extensions
will not give LDCs the time to overcome capacity constraints and to
develop a viable and competitive technological base. Overcoming these
problems takes contextually specific strategies, policy flexibility,
greater financial resources, but it also takes time - decades not
Bangladesh explained that LDCs are not asking for full autonomy. Even
under the transition period, LDCs will need to implement Articles
3, 4, and 5 of the Agreement. The idea behind the flexibility is to
create a sound and viable technological base, and not for LDCs to
become TRIPS compliant.
It stressed that the extension anticipated by Article 66.1 was "automatic"
as it states "shall" and there is no way of interpreting
it otherwise. The last extension was granted 7 years ago. Out of this,
for 4 years LDCs suffered financial and food crisis. LDCs were hardest
hit. Their marginalisation increased. Imports rose more than exports,
adding that no technology transfer took place from developed countries.
Thus, it is only natural that LDCs are assisted by this extension.
According to sources, other countries that supported the LDC request
for an extension of the transition period are Saudi Arabia, Argentina,
Mexico and Sri Lanka. +