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TWN Info Service on WTO and Trade Issues (Jun13/06)
15 June 2013
Third World Network

The members of the World Trade Organisation (WTO) adopted a decision on 11 June for the world's poorest nations to exercise their right to be exempted from implementing the organisation's intellectual property rights agreement.

Below a detailed news report on the contentious points between developed countries and least developed countries, discussions that took place at the TRIPS Council, reactions of NGOs/IGOs to the decision. Also available at http://www.twn.my/title2/intellectual_property/info.service/2013/ipr.info.130606.htm

Regards
Sangeeta Shashikant
Third World Network.
________________________________________

LDC TRIPS exemption approved with mixed reactions
Published in SUNS #7604 dated 13 June 2013 (updated Version)

London, 12 Jun (Sangeeta Shashikant) -- The members of the World Trade Organisation (WTO) adopted a decision on 11 June for the world's poorest nations to exercise their right to be exempted from implementing the organisation's intellectual property rights agreement.

In a hard-won decision, for another eight years, least developed countries (LDCs) shall not be required to apply the provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights

(TRIPS), except for Articles 3, 4 and 5 (which concern national treatment and most favoured nation treatment).

The decision does not include the highly contentious "no-rollback" clause contained in the previous decision concerning the exemption (IP/C/40) taken in 2005 and which expires on 1 July.

This decision brings to an end months of uncertainty over the fate of the "duly motivated request" submitted by Haiti on behalf of the LDCs last November seeking an unconditional extension of the transition period for as long as a country remains a LDC.

The LDC request, while receiving massive support from developing countries, industry, civil society, UN agencies and academics, was fervently opposed by the developed countries led by the United States and the European Union.

The outcome is the result of many sessions of lengthy pressure-packed closed-door negotiations over the last month, facilitated by Ambassador Alfredo Suescum of Panama, the Chair of the TRIPS Council, between rich countries (the US, EU, Japan, Australia, Canada, New Zealand, Switzerland) that opposed the LDCs' formal request and a handful of LDCs. The Chair-led negotiations were preceded by weeks of informal consultations between developed countries and LDCs, facilitated by Australia.

The Chair did hold informal briefings for other WTO members but countries that unreservedly supported the LDCs' formal request were not invited to the closed-door negotiations. Draft texts and proposals under discussion in the closed negotiations were also not circulated to the other WTO members for their consideration.

The deal that was finally concluded between the developed countries and the LDCs received mixed reactions from other members of the WTO, NGOs and intergovernmental organizations (IGOs).

DECISION OF THE TRIPS COUNCIL

The preamble of the Decision contains the following paragraphs:

"The Council for Trade-Related Aspects of Intellectual Property Rights (the "Council for TRIPS"),

"Having regard to the transition period for least developed country Members provided for in paragraph 1 of Article 66 of the TRIPS Agreement (the "Agreement");

"Recalling that this transition period was extended by the Decision of the Council for TRIPS of 30 November 2005 (IP/C/40) until 1 July 2013;

"Having regard to the request from least developed country Members, dated 5 November 2012, for a further extension of this transition period, contained in document IP/C/W/583;

"Recognizing the special needs and requirements of least developed country Members, the economic, financial and administrative constraints that they continue to face, and their need for flexibility to create a viable technological base;

"Recognizing the continuing needs of least developed country Members for technical and financial cooperation so as to enable them to realize the cultural, social, technological and other developmental objectives of intellectual property systems;"

The operative paragraphs of the Decision state the following:

"Decides as follows:

"1. Least developed country Members shall not be required to apply the provisions of the Agreement, other than Articles 3, 4 and 5, until 1 July 2021, or until such a date on which they cease to be a least developed country Member, whichever date is earlier.

"2. Recognizing the progress that least developed country Members have already made towards implementing the TRIPS Agreement, including in accordance with paragraph 5 of IP/C/40, least developed country Members express their determination to preserve and continue the progress towards implementation of the TRIPS Agreement. Nothing in this decision shall prevent least developedcountry Members from making full use of the flexibilities provided by the Agreement to address their needs, including to create a sound and viable technological base and to overcome their capacity constraints supported by, among other steps, implementation of Article 66.2 by developed country Members.

"3. This Decision is without prejudice to the Decision of the Council for TRIPS of 27 June 2002 on "Extension of the Transition Period under Article 66.1 of the TRIPS Agreement for Least-Developed Country Members for CertainObligations with respect to Pharmaceutical Products" (IP/C/25), and to the right of least developed country Members to seek further extensions of the period provided for in paragraph 1 of Article 66 of the Agreement."

POINTS OF CONTENTION: RICH VS POOR

One of the most contentious points in the informal negotiations was the no-rollback (NRB) clause. This clause, found in paragraph 5 of the previous extension decision (IP/C/40), states: "Least-developed country Members will ensure that any changes in their laws, regulations and practice made during the additional transitional period do not result in a lesser degree of consistency with the provisions of the TRIPS Agreement."

[Note: Under this condition, an LDC would not be able to experiment with IP-legal reforms that are suitable to their development context. For example, if a LDC introduces a TRIPS-compliant obligation on IP-protection, it would no longer be able to reduce that scope of protection, regardless of the fact that the LDC is not required to implement the TRIPS Agreement.]

According to trade sources, the US and EU in particular wished to retain this clause in the current extension decision, while LDCs were opposed to its inclusion, repeatedly arguing that it was antithetical to Article 66.1 of TRIPS. The text of Article 66.1 of TRIPS does not prevent LDCs from undoing/reducing existing IP protections, should they be detrimental to their needs.

[Article 66.1 states: "In view of 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, such Members shall not be required to apply the provisions of this Agreement, other than Articles 3, 4 and 5, for a period of 10 years from the date of application as defined under paragraph 1 of Article 65. The Council for TRIPS shall, upon duly motivated request by a least-developed country Member, accord extensions of this period." ]

Developed countries were generally not in favour of finalising the time-frame of the transition period until discussions on NRB were completed, sources say, and thus a number of different formulations were presented and considered during the informal negotiations before arriving at the final formulation in paragraph 2 of the Decision. LDCs firmly rejected any obligatory NRB.

Thus, the decision only makes a reference to paragraph 5 of Decision IP/C/40, with LDC members expressing their "determination to preserve and continue the progress towards implementation of the TRIPS Agreement." The decision further reinforces that nothing in the decision prevents LDCs from utilising flexibilities available to them under the TRIPS Agreement, which includes the flexibility under Article 66.1 i. e. to not apply provisions of the TRIPS Agreement, thus effectively allowing LDCs to undo existing IP laws and provide reduced protection.

According to trade sources, an earlier formulation presented by the US to the LDC Group, i. e. that "LDCs are encouraged to continue that progress towards (implementation of/compliance with) the TRIPS agreement", was subsequently withdrawn by the US, claiming its proposal was a ³mistake². At a later stage, the US proposed: "LDC Members express commitment to preserving and continuing that progress towards full implementation of the TRIPS Agreement".

This formulation was not agreeable to LDCs, sources say, leading US Ambassador Michael Punke to suggest other alternatives to replace "commitment", such as "dedication" and "resolve", at an Ambassadorial level meeting on the evening of 4 June 2013. Finally, all the countries settled on "determination", a suggestion by the US at that meeting. Proposals by LDCs were not accepted.

The duration of the transition period was also heavily disputed. Throughout the negotiations, developed countries favoured short timeframes with the US going as low as 5 years.

According to trade sources, Australia proposed a slightly longer time frame of 10 years but subject to a TRIPS Council review of the progress made in implementing the TRIPS Agreement. Such a review would have been an additional condition beyond Art. 66.1 and thus was not acceptable by the LDCs. The final duration agreed upon is 8 years, an increase over the previous extension of 7 1?/2 years.

According to trade sources, following agreement on the NRB clause, and as discussions proceeded to the duration of the extension decision, the EU emerged with a new proposal that would require the WTO to present after a few years a report on the progress made in the development of intellectual property systems by LDCs and any difficulties they encountered in that regard with the view of providing technical assistance.

This proposal was not acceptable to LDCs and even some developed countries, sources say. Thus, the final decision does not include this point.

However, during the TRIPS Council meeting on 11 June, the EU reiterated a similar proposal but under the agenda item on technical cooperation. The EU reaffirmed its commitment to provide technical cooperation, but added that it needs information. It said that the previous decision required LDCs to provide information on their technical and financial cooperation needs to implement TRIPS but such an exercise was a challenge, so it proposed that the WTO secretariat should prepare a report in 2014 on the progress of LDCs in implementing theTRIPS Agreement and difficulties faced.

Nepal (the LDC coordinator) clarified that the new extension decision does not make reference to needs assessment, and that such an assessment pertains to TRIPS implementation under Article 67 should not be associated with the extension decision under Article 66.1 of the TRIPS Agreement.

It also added that the needs assessment exercise agreed in 2005 did not work well as LDCs that prepared needs assessment received no response. Thus, during the negotiations, there was "mutual agreement" to drop reference to needs assessment as a condition in the new decision on transition period. Nepal stressed that LDCs do not agree to the Secretariat preparing a report, however, also clarifying that it was open to a discussion on capacity building.

India, in supporting Nepal, stressed that Article 66.1, which concerns an extension of the transition period, has no linkages with needs assessment, adding that since on other IP issues, developed countries did not wish to burden the Secretariat, similarly, the Secretariat should not be burdened to prepare areport on LDCs.

India's intervention was supported by Brazil and South Africa. The Chair took note of the statements and added that the TRIPS Council will revert to the matter at the next meeting.

MIXED REACTIONS OF WTO MEMBERS

The deal concluded between the developed countries and the LDCs, adopted by the TRIPS Council, received mixed reactions from Members of the WTO.

Nepal, on behalf of the LDC group, stressed that the transition period provided under TRIPS Article 66.1 is a critical Special & Differential element for LDCs. It is a flexibility provided specifically to LDCs in recognition of their particular situation in terms of their capacity constraints and their need to develop a sound and viable technological base. It added that the LDCs, through their formal request in IP/C/W/583, sought an extension of the transition period as LDCs' situation remains the same in terms of their poor technological base and capacity constraints.

It added that, "Our request received a huge support from Members of this Council, for which we are thankful. Beyond this house, LDCs' duly motivatedrequest enjoyed support from lawmakers, UN development agencies, civil society and academicians. We are thankful to them as well."

It further added that the LDCs engaged in "direct talks with developed country partners" as well as through "Chair-led consultations" and with other Members of the WTO, adding that the outcome is "an accomplishment of months-long, intense negotiations". It is a "compromise outcome we can live with," Nepal said.

It further said, "Now LDCs will have 8 more years of transition period. The years ahead are going to be challenging for LDCs as they aim to advance on the path of development. The Istanbul Programme of Action has set the timeline of 2020 for at least half the number of LDCs to reach the graduation threshold. We sincerely hope that our partners will be forthcoming in providing enhanced support measures to LDCs, including in the areas of trade and transfer of technology. As LDCs' situation improves and as they advance from marginalisation to greater participation in global trade and multilateral trading system, they will find greater incentives for participation in TRIPS provisions."

Haiti, while welcoming the compromise, said that the original LDC request contained "no notion of conditionalities" and the duration was until a country graduates (from being an LDC). It added that the transition period will enable the LDCs to develop a viable technological base and to achieve a certain level of socio-economic development.

India said that it has consistently supported the LDCs' request for an extension of the transition period under Article 66.1 of the TRIPS Agreement without any conditionalities.

It further said that, "The compromise decision reached today, to grant an extension of 8 years, is far removed from the legitimate request of the LDCs for a transition period for as long as they remain LDCs. This would have allowed the LDCs much needed time to address the extensive development and technological challenges facing them. Regrettably, despite overwhelming support from developing countries and a few developed countries, an outcome has been negotiated which is a derogation from the provisions of Article 66.1."

It said India would join the consensus to adopt the extension decision "since the compromise decision represented a step forward from the 2005 decision".

It also stressed its "systemic concern about the process adopted in reaching this decision which was negotiated between a small group of countries, to the exclusion of the larger membership. This would no doubt have broaderimplications for negotiations in other areas as well and is something that is best avoided in the interest of the system and its membership."

India expressed hope that "any future request by the LDCs for extending the transition period for pharmaceuticals which will expire in 2016, would be looked at in a positive manner without any conditionalities being imposed on them."

Brazil welcomed the result but said that it shared the systemic concern voiced by India, stressing that future consultations should aim at including a broader membership in the negotiation process.

South Africa aligned itself with the statements made by India and Brazil. It said that it was not satisfied with the duration but could live with it. Italso stressed that the outcome is far removed from the legitimate request of the LDCs despite widespread support the request received. However, it said that it could join the consensus since the decision is a "step forward from the 2005 decision".

China welcomed the "compromise decision", expressing its understanding that the outcome is not easily achieved. It recognised that the no-rollback clause was not included in the decision, and the right of LDCs to make full use of the flexibilities, adding that no conditionality should beattached to LDCs in as far as treaty language does not require so. It echoed the views of Brazil, India and South Africa that encouraged more inclusive negotiations.

Lesotho said that in the decision, LDC Members declared their determination to move towards TRIPS compliance, however, this "determination is importantly hinged on the acquirement of capacity by the LDCs to meet their developmental needs including: economic, financial, and administrative needs and also theneed for the creation of viable technological base".

"It is this Oneeds-based approach' that is key to ensuring that LDCs are integrated into the Multilateral Trading System in a true sense of the phrase, OIntegration into the MTS'", Lesotho added.

On the timeframe, Lesotho said that "while a much longer timeframe would have been desirable ... the arrival at 8 years' timeframe is a decisive expression by Members that the needs of the LDCs are key determinants of the extension timeframe".

It also stressed that the extension decision "highlights the centrality of the impending need to preserve the flexibilities of the LDCs, be they those in the TRIPs Agreement itself or those in the WTO agreements", adding that reference to flexibilities in the Decision "is a resounding reassurance by Members that quells any doubt concerning the ability of LDCs to use the available policy space provided by such flexibilities".

Rwanda thanked all stakeholders that supported the LDCs. It reiterated the rationale of Article 66.1 and expressed hope that during the transition period, LDCs will take the advantage to build a sound technological base and overcome structural constraints.

Developed countries supported the outcome. The US simply supported adoption of the outcome reached with the LDCs. Japan said that the decision supports the needs of LDCs and will assure the private sector.

New Zealand said that the decision is in keeping with the spirit of Article66.1 of TRIPS, adding it had always supported a meaningful extension, and it was a "positive outcome on the whole."

The EU welcomed the decision, stressing that the decision recognises that IP is good for development and provides LDCs more time to implement TRIPS. In itspress release, EU continues to read the TRIPS Council Decision as preventing LDCs from rolling back its laws, though the general understanding of NGO, IGOs and others of the Decision is otherwise.

NGO/IGO REACTION

NGOs and the South Centre, an intergovernmental organization of developing countries generally welcomed the decision, since it was an improvement over the previous extension decision, but also highlighting that the decision does not deliver the full legitimate demands of LDCs to the TRIPS Council due to the opposition of developed countries.

In its statement, South Centre states: ³The best outcome would have been that the LDC Group¹s request had been fully agreed to by the TRIPS Council. Nonetheless, given the circumstances, the 11 June 2013 decision to extend the transition period is to be welcomed as it is a gain for the LDCs.² It calls LDC Group¹s request ³justified² in view of Article 66.1 and ³the low level of economic and social development² and time needed ³ to develop a viable technological base and to experiment with domestic IP legislation before being obliged to implement the TRIPS Agreement². ³However, the LDC Group¹s request was unfortunately not acceptable to many of the developed country members of the WTO.², it added.

On the no-rollback clause, the South Centre stresses that the new extension decision removed the no-rollback condition introduced in the earlier 2005 decision adding that ³This time, the LDC Group rightly insisted that any reference to a ³no roll-back² binding commitment could not be included in the new decision².

It views paragraph 2 of the new decision which states LDCs express their determination to preserve and continue the progress towards implementation of the TRIPS Agreement as ³a compromiseS. equivalent to a ³best endeavour²², stressing that ³it is not a binding commitment on LDCs and in no way can this be understood, in accordance with the interpretation principles applied in WTO, as preventing LDCs from rolling back IP legislation as required to meet their particular needs². It adds that the gain in policy space is reinforced by the sentence in paragraph 2 of the new decision that nothing in the decision affects LDCs¹ flexibilities under the TRIPS Agreement. It also adds the TRIPS Council decision ³provides assurance that LDCs retain their policy space and continue to have the full flexibilities intended by Article 66.1 to overcome their capacity constraints and develop a sound and viable technological base².

Medecins Sans Frontieres (MSF) welcomed the LDC efforts but said that the outcome was ³unsatisfactory² since it is time-bound, adding that ³by refusing to grant them [LDCs] a longer and more complete extension, the US and EU are deliberately ignoring the health challenges faced by LDCs². It also notes ³[p]ositively, however, LDCs are now in a position to roll-back existing level of IP protection to meet domestic policy objectives, and should do this in the years ahead².

Oxfam spokesperson Mohga Kamal-Yanni said: "This is better than nothing but short time extension does not allow LDCs to build up their own technological and knowledge base, and the laws and regulations necessary for implementation of the TRIPS agreement let alone to benefit from such implementation. We supported LDCs¹ request because they need the space to implement intellectual property systems appropriate for their development needs. ³It is shameful that rich countries opposed the fair request of the LDCs. We hope that this position is not repeated when the special waiver on medicines expire in January 2016.²

Primah Kwagala, Policy Advocacy manager for CEHURD (a Uganda NGO) said ³We are glad to see that our governments stood up to pressure, and fought for the right to pro-development policies², adding that ³In Uganda, the EU emphasizes human rights,² ³But their tactics in Geneva show that they conveniently ignored the human right to health when it mattered most.²

Matthew Kavanagh of Health GAP called the pressure by US and EU ³outrageous and hypocritical² adding that ³The US government has called for achievement of an AIDS Free Generation and global goals on education and climate technologies in poor countries, this vision cannot be attained.²

Our World Is Not For Sale (OWINFS) congratulated the LDCs on their perseverance and ³condemned the unconsionable anti-development stance of developed countries particularly the US and EU throughout the negotiation process, to undermine the valid legal rights of the poorest nations². It also expressed concerns with the ³non-transparent negotiation process facilitated by the Chair of the TRIPS Council, Ambassador Suescum of Panama, often in a way that was prejudicial to the LDCs².

Among the NGOs there was unanimous agreement that LDCs had won back policy space to reduce their current levels of IP protection.

Professor Brook Baker of Health GAP called on LDCs ³to use the policy space they have fought for and won,² adding that ³Virtually all the theoretical and empirical evidence finds that IP impedes, rather than helps, development projects in low income countries. Many LDCs, though, still need to enact IP reforms that allow unrestricted access to essential public goods. They can be selective, but they should not simply maintain the colonial IP systems that they inherited, norshould the follow the siren song of WIPO and other IP fundamentalists who claim that IP is good for you Teresa Hackett from Electronic Information from Libraries (EIFL) said ³The decision gives LDCs more breathing space. By all accounts, it was an extraordinarilyhard won gain. LDCs should now review their policy options for how best to maximise access to knowledge resources for education, research and development in order to make effective use of the transition period.²

 


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