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TWN Info Service on WTO and Trade Issues (Nov14/01)
3 November 2014
Third World Network
 

TRIPS Council takes up plain packaging, non-violation cases issues
Published in SUNS #7906 dated 31 October 2014
 
Geneva, 30 Oct (Kanaga Raja) -- A regular WTO TRIPS Council meeting of 28-29 October discussed a number of issues ranging from Australia's plain packaging requirements for tobacco products to non-violation and situation complaints under the TRIPS Agreement.
 
On the last while the US and Switzerland pressed for allowing non-violation complaints, some 18 members plus the African Group opposed non-violation complaints. India made a detailed intervention on why non-violation complaints should not be permitted.
 
The Council also conducted its annual review of the decision on the implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health.
 
Under the agenda item of concerns with respect to measures related to plain packaging of tobacco products and their compatibility with the TRIPS Agreement, which was requested by Ukraine, the five countries involved in disputes with Australia over its plain packaging requirements for tobacco products - Ukraine, Honduras, Dominican Republic, Cuba and Indonesia - urged other members that are planning similar measures to Australia's to wait until the panel rulings are published before introducing their own laws.
 
[In a communication dated 10 October, the Chairperson of the panel hearing the disputes said that the panel (which was composed on 5 May 2014) expects to issue its final report to the parties not before the first half of 2016.]
 
According to trade officials, at the TRIPS Council meeting, Ukraine made a reference to a bill currently in New Zealand's parliament, as well as notified or reported plans for similar rules in Ireland, the United Kingdom, France and Finland.
 
The five countries involved in the dispute with Australia noted that the panel examining the disputes has announced that it will not be able to publish its conclusions at least until the second half of 2016.
 
They were of the view that plain packaging is excessive and that it fails to reduce smoking. Citing new studies, they said that these show that the effect in Australia has been to encourage smokers to switch to down-market or smuggled products instead of smoking less.
 
According to trade officials, Ukraine and Indonesia said: "It is not working and it is not likely to work."
 
Ukraine said that if individual trademarks had been assessed to see whether those individual trademarks have characteristics that encourage smoking, that might be justified, but a blanket ban on all trademarks violates the intellectual property rights agreement.
 
Zimbabwe and Nicaragua expressed their support.
 
According to trade officials, Australia said that it will not comment on the dispute. It however said that countries should not have to wait for the ruling before introducing their own laws. It encouraged them to go ahead and do so.
 
It further said that plain packaging is legitimate and is supported by institutions such as the World Health Organisation and a large body of peer-reviewed research.
 
According to trade officials, support for plain packaging came from New Zealand, Norway, Canada, Uruguay, the World Health Organisation and the European Union.
 
The EU reported on notifications from Ireland and the UK to the WTO and to the EU, and the consultations that they have been holding.
 
The five complainants in the dispute with Australia also announced that they have filed their first submissions to the panel.
 
The TRIPS Council also discussed the issue of non-violation and situation complaints under the TRIPS Agreement, with members' positions remaining unchanged.
 
According to trade officials, the US and Switzerland reiterated that non-violation cases should be allowed and that a consensus is only needed to extend the current moratorium (the most recent two-year extension was agreed at the Bali Ministerial Conference in 2013).
 
Trade officials said that a number of other countries continued to hold the view that non-violation cases have no place in intellectual property because it is not about market access.
 
Some of them also said that a consensus was needed on how to handle non-violation cases (on the "scope and modalities") before the moratorium can end.
 
According to trade officials, those that disagreed with having non-violation cases were Venezuela, Brazil, India, Cuba, Ecuador, Colombia, China, Argentina, Chile, Bolivia, Republic of Korea, Chinese Taipei, Canada, New Zealand, Bangladesh, Egypt, the African Group (Nigeria speaking), Hong Kong-China, and Nepal.
 
Japan reiterated that members should examine the "scope and modalities" based on facts before deciding what to do.
 
In its statement under this agenda item, India, referring to a communication circulated by the US in June 2014 on this issue (IP/C/W/599), said that the US paper does not address the fundamental concerns that India and several other WTO members have raised with regard to non-violation complaints under the TRIPS Agreement.
 
India reiterated its position on non-violation complaints under the TRIPS Agreement while also addressing some of the issues that have been raised by the US.
 
Referring to a submission that was made in 2002 (IP/C/W/385), India said that this submission gives details of its systemic concerns and reasons why there should be no application of non-violation and situation complaints to the TRIPS Agreement.
 
India said that it had contended that non-violation complaints can upset the delicate balance of rights and obligations in the TRIPS Agreement. This can also limit use of the flexibilities inherent in the TRIPS Agreement to secure objectives relating to public health, nutrition, transfer of technology and other issues of public interest in sectors of vital importance to socio-economic and technological development.
 
India went on to address some of the points raised by the US under three broad pillars.
 
Firstly, on the nature of the TRIPS Agreement, India said that it is important to recognise that the TRIPS Agreement is a unique, "sui generis" agreement and is distinct from the GATT and GATS, contrary to the assertion made in the US communication.
 
In the GATT/WTO legal framework, said India, the establishment of the non-violation procedure aims primarily to prevent the tariff concessions or specific commitments on trade in services from being adversely distorted by the additional trade measures taken. With the gradual evolution of comprehensive trade agreements addressing a wide range of issues, it does not make any logical sense to extend the same concern of circumvention/dilution of trade obligations in the context of agreements such as the TRIPS Agreement.
 
India explained that when it comes to the GATT and the GATS as market access agreements, the non-violation complaint is an additional tool with which to balance the rights and obligations concerning market access in the GATT and GATS respectively. Fundamentally differing from the GATT and the GATS, the TRIPS Agreement is not "about reciprocal market access rights of governments". While IPRs might facilitate trade and investment, the obligations under the TRIPS Agreement cannot be characterised as market access concessions.
 
Secondly, on the issue of flexibility under the TRIPS Agreement, India noted that the Preamble to the TRIPS Agreement recognises the inherent policy flexibility of WTO Members when it states that the TRIPS Agreement recognises "the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives."
 
It is widely acknowledged that the TRIPS Agreement put in place global minimum standards for IPRs, and left room for policy flexibilities for WTO Members to enact their laws so long as they meet the TRIPS minimum standards, said India, adding that it is concerned that the application of non-violation complaints would not only threaten to undermine regulatory authority but would infringe sovereign rights. Flexibilities that the TRIPS Agreement provides would be severely curtailed by non-violation complaints.
 
According to India, Members' rights to introduce new and vital socio-economic, health, environmental and cultural measures, including the measures on the basis of the Doha Declaration on Public Health, would be severely curtailed and would undermine the enjoyment of WTO Members' sovereign right to develop new laws to protect the public interest. Any measure under Article 8 would thus encourage unilateral pressure and speculative claims to force countries to raise protection beyond minimum requirements or to refrain from using TRIPS-consistent measures. Inevitably, non-violation complaints will make it harder for Members to rely on the agreed text of the TRIPS Agreement.
 
India noted that the United States, in its communication, is of the view "that the availability of non-violation complaints will protect Members from intentional evasions of obligations under the TRIPS Agreement while preserving the ability of any Member to implement legitimate social, economic development, health, environmental and cultural policies. Non-violation complaints will only be successful if they could not have been foreseen when the Uruguay Round negotiations were underway. Because there are a number of ways to implement social and cultural policy goals, a Member may take this element of non-violation complaints into consideration when crafting measures to protect these goals."
 
India said that its concern with this reasoning of the US communication is that ‘any intentional evasion of a TRIPS obligation' can be challenged as a violation of that obligation itself; and there is no need for the ‘non-violation' route to address the same.
 
India's concern is that what is more likely to be questioned in a non-violation complaint is the exercise of available policy flexibility. In fact, the US communication admits as much in the same paragraph when it implies that what is likely to be questioned in a non-violation complaint is the manner in which policy objectives are sought to be achieved. The US notes that "because there are a number of ways to implement social and cultural policy goals, a Member may take this element of non-violation complaints into consideration when crafting measures to protect these goals."
 
Thus, said India, the concerns over curtailment of flexible policy space provided by the TRIPS Agreement through the applicability of non-violation complaints is a genuine and serious one.
 
Thirdly, on the issue of inadequate guidance on non-violation complaints under the TRIPS Agreement, India said this issue continues to be a cause of concern.
 
Noting that the US communication states that the GATT and WTO panels and the Appellate Body have provided extensive guidance regarding non-violation complaints, India however pointed out that the nature of non- violation complaints being an "exceptional remedy" does not address the fundamental inappropriateness of the remedy itself in the context of the TRIPS Agreement.
 
The US has also argued that non-violation complaints will be successful only when these could not have been "foreseen when the Uruguay Round negotiations were underway".
 
According to India, the practical effect of this approach could be to require developing countries to compensate for measures that adversely affect foreign holders of intellectual property rights, and that were not foreseen during the Uruguay Round. Such an approach would arguably bring within its fold a large number of national laws and domestic measures, and may undermine the TRIPS Agreement's preambular goal of ensuring maximum flexibility in the domestic implementation of laws and regulations.
 
Thus, India remained concerned about the ambiguities in the applicability of non-violation complaints to the TRIPS Agreement.
 
Noting that Article 64.1 of the TRIPS Agreement establishes that GATT Article XXIII applies to the TRIPS Agreement except as otherwise provided in Articles 64.2 and 64.3, India said that notwithstanding the expiry of the time-period under Article 64.2, non-violation and situation complaints only apply to the TRIPS Agreement in accordance with the procedure established under Article 64.3.
 
Complying with this procedure, the importance of which Ministers reaffirmed through their adoption of the Decision on Implementation-Related Issues and Concerns, should be a matter of priority for the TRIPS Council.
 
The Decision directed the TRIPS Council to "continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to the Fifth Session of the Ministerial Conference."
 
It also agreed that, in the meantime, members will not initiate such complaints under the TRIPS Agreement. Thus, the assertion that the expiry of the time-period under Article 64.2 makes non-violation and situation complaints automatically applicable to the TRIPS Agreement is, in India's view, incorrect.
 
The absence of non-violation complaints in the TRIPS context does not in any manner threaten or dilute the enforceability of TRIPS-related rights and obligations, India underlined.
 
On the contrary, the application of non-violation complaints in the TRIPS context could potentially present issues relating to rights of Intellectual Property Right holders versus the legitimate exercise of regulatory policy choice by Governments.
 
According to India, introducing non-violation and situation complaints into the TRIPS Agreement is unnecessary and inconsistent with the interests of the WTO members. Any benefits arising from the Agreement can be adequately protected by applying the text of the Agreement in accordance with accepted principles of international law, and without introducing the legally uncertain notion of non-violation and situation complaints, it added.
 
The TRIPS Council also took up the annual review of the decision on the implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health.
 
The "Paragraph 6" solution is aimed at helping developing countries with insufficient or no manufacturing capacities in the pharmaceutical sector to import cheaper generic medicines produced under compulsory licensing, and the Council annually reviews how well the Paragraph 6 system is working.
 
According to trade officials, members broadly reiterated their positions on the Para 6 system. Some voiced the view that the conditions are too cumbersome, resulting in the system only being used once - generic medicines made in Canada and exported to Rwanda. Some of them reiterated their call for a workshop to be held involving a range of participants.
 
According to trade officials, there is still no consensus on holding the workshop, with opposition to this coming from a number of developed countries.
 
In its statement under this agenda item, India said that it attaches high importance to the Doha Declaration on Public Health, the Paragraph 6 System as established under the 2003 waiver decision and the Protocol (amending the TRIPS Agreement).
 
Congratulating Uruguay, Botswana, Turkey and the Central African Republic for depositing their instruments of acceptance of the Protocol during the last year, India said that in spite of the fourth extension of the period for acceptance until 31 December 2015, only 53 Members have accepted the Protocol so far. The fact that there is still a long way to go for it to enter into force, as acceptance by two thirds of the membership is required, is not a positive signal.
 
India said that it has always been of the view that the Doha Declaration on TRIPS and Public Health constituted a major landmark in the short history of the WTO because it recognised the primacy of public health needs and the preparedness of the Organisation to take up the problems faced by the poor in developing countries.
 
It may have sounded prophetic at that time when India voiced certain apprehensions in the General Council meeting of August 2003. It had sounded a word of caution while expressing hope that "the results accruing from this mechanism should not be negated by the creation of cumbersome systems that would lead to huge delays in getting medicines across at reasonable cost to those that needed them or discourage Members from using the system for the benefit of the people. In order to make this system successful, a sincere collective effort was required on the part of all Members and the entire pharmaceutical industry."
 
Regrettably, India said that it has been proven right. The export of HIV/AIDS medicines by the Canadian pharmaceutical company Apotex to Rwanda in September 2008 had been the first and only use of the system so far.
 
India went on to cite the trilateral study by the WTO, WHO and WIPO on "Promoting Access to Medical Technologies and Innovation: Intersections between public health, intellectual property and trade" (2013), which has summarised the diverse observations of the WTO Members on whether the paragraph system is fulfilling its intended objectives into six points:
 
"(1) By 2012, the System was only used once, and it took three years before the shipments in question proceeded. The System is too complex and administratively unwieldy for further use, and a multistakeholder workshop is needed in order to discuss the operation of the System. It is essential to clarify whether constraints on its use were built into the System, thus necessitating its reform, or whether such constraints were a consequence of how individual countries chose to implement it.
 
"(2) Potential users of the System may be deterred by concerns about political or trade ramifications associated with the use of compulsory licensing.
 
"(3) The Canada's Access to Medicines Regime (CAMR) was successfully utilized, and only a very small portion of the three-year time period was taken up with procedures associated with the System. Much of the time that elapsed between the regulatory review of the medicine in question and the actual shipments was attributable to other factors.
 
"(4) The limited use of the System is not an appropriate measure of its success, as no delegation demonstrated evidence of obstacles to its use when such use was required. A single case demonstrated that the System could work when necessary, and that it could play a supportive role in the wider effort to improve access to essential medicines, given that alternative ways of procuring the needed medicines are often available.
 
"(5) The System is not a panacea to solve all public health related problems. Rather, it is part of a broader picture which includes other important aspects that have an impact on innovation and access, such as infrastructure, tariffs, innovative financing mechanisms, partnerships and cooperation (including at the regional level), and regulatory frameworks.
 
"(6) Implementation of full patent protection for pharmaceutical products in India, coupled with the approaching expiry of transition periods in LDCs, could make it more difficult in the future to procure generic versions of new medicines. Under such circumstances, the Paragraph 6 System might assume a greater significance."
 
According to India, the TRIPS Council has been reviewing the Para 6 Mechanism for the last several years and its delegation feels that the review mechanism has become ritualistic in nature and it will not serve any purpose "if we go on repeating the similar questions and get similar replies" as summarised by the trilateral study done by the WTO, WIPO and WHO.
 
The implementation of the Para 6 Mechanism involves several stakeholders and the discussions would not be effective if the discussion is restricted to this level, said India.
 
It noted that the WTO, WHO and WIPO are holding a technical symposium on "Innovation and access to medical technologies: challenges and opportunities for middle-income countries" on 5 November 2014 at the WTO.
 
As part of the trilateral cooperation between the WHO, WIPO and the WTO on innovation and access to medicines, it requested these organisations to organise a dedicated workshop involving all stakeholders to expand the scope of the discussion on the question of making effective use of the paragraph 6 system, including alternatives to the paragraph 6 system.
 
According to trade officials, Brazil supported India's call for holding a workshop.
 
Under the agenda items of review of the provisions of Article 27.3 (b), the relationship between the TRIPS Agreement and the Convention on Biological Diversity, and the protection of traditional knowledge and folklore, trade officials said that members' positions on these ‘triplet' of issues remain unchanged.
 
Meanwhile, under the agenda item of intellectual property and innovation, trade officials said that members continued a series of discussions on this issue, describing their experiences in promoting innovation.
 
This time, the emphasis was on how universities, other institutions, inventors and companies can work together to produce goods and services that are socially and environmentally useful, including for developing countries.
 
The discussion was also linked to an innovation fair that was organised at the WTO by Switzerland, the EU, the US and Mexico.
 
Among those that shared their experiences in promoting innovation at the TRIPS Council meeting were Ecuador, Panama, Japan, Chile, Canada, Hong Kong-China, Chinese Taipei, El Salvador and Australia.
 
According to trade officials, apart from describing their own promotion programmes, India and Brazil also focused on what they considered to be the downside of the cost of using patents, profit and monopoly rights as an incentive to innovate. +

 


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