Info Service on WTO and Trade Issues (May18/21)
30 May 2018
Third World Network
China-South Africa for strengthened TRIPS flexibilities
Published in SUNS #8690 dated 30 May 2018
Geneva, 29 May (D. Ravi Kanth) - China and South Africa have upped
the ante for strengthening the flexibilities in the World Trade Organization's
Trade -Related Aspects of Intellectual Property Rights (TRIPS) agreement
based on the repo rt prepared by the United Nations High-Level Panel
(HLP) on Access to Medicines for ensuring affordable access to vital
Affordable access to vital medicines is a crucial part of Goal 3 of
the Sustainable Development Goals (SDGs) that "aims to ensure
healthy lives and promote the well-being of all people of all ages,"
China and South Africa argued, in their proposal circulated on 24
May at the World Trade Organization.
The two-page proposal of China and South Africa, entitled, "Intellectual
Property and the Public Interest: Promoting Public Health through
Competition Law an d Policy," has laid out a robust case as to
why the WTO members must live up to the UN's HLP report that seeks
to achieve the Goal 3 of the SDGs.
At a time when the WTO's Doha negotiations on rules are especially
focussed only on fisheries subsidies to justify the Goal 14.6 of the
SDGs, it is imperative to tackle the other grave issue, as set out
in Goal 3 of the SDGs, to "ensure healthy lives and promote the
well-being of all people of all ages," said a trade envoy who
asked not to be quoted.
In its report issued last year, the UN's high-level panel persuasively
argued on how to avail of and strengthen the flexibilities in the
TRIPS agreement for ensuring accessible medicines at affordable prices.
China and South Africa said WTO members must achieve the Goal 3 of
the UN Sustainable Development Goals which emphasizes the need for
providing strong health.
"The TRIPS Agreement strikes an appropriate balance between the
interests of right holders and users. Article 7 of the TRIPS Agreement
recognizes that the protection of intellectual property should contribute
to the promotion of technological innovation and to the transfer and
dissemination of technology, to the mutual advantage of users and
producers of technological knowledge and in a manner conducive to
social and economic welfare and to a balance of rights and obligations,"
China and South Africa argued in their proposal circulated on 24 May.
The TRIPS agreement, according to China and South Africa, emphasized
that " the principles of IP protection are based on underlying
public policy objectives".
Besides, there is an urgent need for "formulating or amending
their laws an d regulations, adopt measures necessary to protect public
health and nutrition, and to promote the public interest in sectors
of vital importance to their socio-economic and technological development,
provided that such measures are consistent with the provisions of
this [TRIPS] Agreement," China and South Africa said.
The two countries called on the WTO members to avail of "TRIPS
flexibilitie s that provide transition periods for LDCs (extended
by the WTO until 1 January 2033), differing IP exhaustion regimes,
refining the criteria for grant of a patent (patentability criteria),
pre-grant and post-grant opposition procedures, as well as exceptions
and limitations to patent rights once granted, including regulatory
review exception (the "Bolar" exception in US law) to facilitate
market entry of generics, compulsory licences and government use.
Despite such flexibility, many least developed and developing countries
cannot implement competition regimes due to the lack of capacity to
use competition law to achieve public health objectives."
"Competition law," according to China and South Africa,
"is one of the least discussed flexibilities within the WTO's
"The fundamental objective of competition law is to protect the
integrity of competitive markets against abusive conduct, and to protect
consumers from the effects of such conduct," China and South
Africa pointed out.
"Even though the TRIPS Agreement sets minimum norms for standards
of IP protection that significantly limit Members' discretion on a
large number of IP rights issues, it is not the case with competition
law," the two major developing countries pointed out.
China and South Africa said "members are free to design competition
laws in such a way as to take account of their domestic interests
and needs, including taking account of their respective levels of
development, subject only to the natural limits defined by the territorial
limits of such laws."
Further, various provisions of the TRIPS Agreement, according to China
and South Africa, "are relevant to competition law including
Article 6, Article 31(k) and Article 40."
"As such, these provisions leave broad discretion to Members
in how they apply competition law in respect of the acquisition and
exercise of IP rights," South Africa and China maintained.
More important, several provisions of the TRIPS Agreement provide
(1) Article 6 of the TRIPS Agreement authorizes WTO Members to allow
parallel importation of health technologies, a major pro-competitive
form of activity that can be used to secure the lowest priced products
available on international markets;
(2) Article 31(k) of the TRIPS Agreement confirms the right of Members
to u se such licences as anti-competitive remedies. The only condition
required by Article 31(k) for the grant of this type of compulsory
licence is that the anti-competitive practice needs to have been determined
through a judicial or administrative process. The possible use of
compulsory licences to deal with anti-competitive practices, as explicitly
recognized in Article 31(k) of the TRIPS Agreement, is of particular
importance to protect public health in cases, for instance, of excessive
pricing of health technologies or refusal to grant a licence on reasonable
WTO members must "share their national experiences and examples
of how competition law is used to achieve public health and related
The two countries posed the following questions to be addressed at
the next TRIPS Council meeting.
The issues include:
* What grounds are available in their national laws to pursue competition
law and policy to achieve public health outcomes?
* What are the difficulties faced by WTO Members in using competition
law policy to prevent or deter abusive practices, including capacity
constraints, pressure from other Members and Corporations?
* Unreasonably high royalties may deter the transfer of technology.
What policies have Members established to deal with technology pricing
and other aspects of transfer of technology transactions?
* Compulsory licences have been used by competition authorities in
some countries to restore competition in cases involving the exercise
of IP rights. What are the experiences of Members in using compulsory
licenses, noting the flexibilities inherent in Article 31(k) of the
The proposal by China and South Africa has come at an appropriate
time when major developed countries led by the United States, the
European Union, and Japan are desperately moving the goalposts of
the TRIPS Agreement.
The developed countries are insisting that there must be disciplines
for "supporting and incentivizing innovation" as part of
the intellectual property frameworks in the WTO's TRIPS Agreement.
The US, the EU, Japan and their allies are justifying rules for innovation
so as to improve lives through social and economic growth.
In a proposal circulated to the WTO's TRIPS Council on 24 May, the
US along with Australia, Canada, the European Union, Japan, Korea,
and Switzerland said incentivizing innovation is crucial for rapid
development in sectors such as education and training, creative works,
health, the environment and transport.
The sponsors gave several examples of the central role of innovation
in the education and training sector for students, for protecting
artistic express ions in the creative sector, and for developing new
technologies in the transport sector.
As part of the thematic session - Intellectual Property and Innovation
- The Societal Value of Intellectual Property in the New Economy -
for 2018 at the upcoming TRIPS Council meeting, the US and its allies
want WTO members to share national and regional experiences on the
role of intellectual property and innovation frameworks in improving
The sponsors posed the following questions for members to consider:
i. What are examples of inventions or creations that have benefited
or improved lives that have been made possible by intellectual property
systems? What roles have intellectual property frameworks played in
creating incentives in these areas?
ii. Do Members have any research or studies to share regarding how
intellectual property and innovation frameworks have improved lives?
iii. How has international cooperation in the area of intellectual
property and trade in innovative goods and services contributed to
improving quality of life?
However, a majority of developing countries remain stridently opposed
to any new obligations for innovation in the TRIPS on grounds that
the TRIPS agreement is silent on innovation.
The developing countries, which include India, China, South Africa,
the African Group, and the least-developed countries, repeatedly turned
their back to thematic sessions on innovation.