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Info Service on Intellectual Property Issues (Jul21/06) Geneva, 26 Jul (D. Ravi Kanth) – Trade envoys from many developing countries on 23 July warned that the credibility of the World Trade Organization hangs in the balance at the 12th ministerial conference (MC12) if it fails to deliver on the mandated issues and on the temporary TRIPS waiver aimed at halting the increasing scale of deaths worldwide due to the COVID-19 pandemic, said people familiar with the development. At an informal Doha Trade Negotiations Committee (TNC) meeting on 23 July, the United States, the European Union, and other developed countries drew their “red-lines” on delivering outcomes on the permanent solution for public stockholding programs for food security (PSH), special safeguard mechanism (SSM), and other mandated issues. The US maintained that “there is little scope for negotiated outcomes.” It cautioned against a host of new work plans and working groups on which there is little chance of consensus. Significantly, the US shot down the director-general Ms Ngozi Okonjo-Iweala’s proposed $20 million plan to establish a WTO fund for technical assistance and capacity-building. The EU, which is a strong supporter of the proposed WTO fund, admitted that there are significant gaps in all areas, and called for focused work after the summer break (which takes place in the month of August). The group of developed countries advanced the agenda of plurilateralization of the WTO, with Australia and other members suggesting that they are on the verge of striking an agreement on the Joint Statement Initiative (JSI) on domestic regulation in services, as well as on digital trade, said people familiar with the development. In sharp contrast, the developing countries, including Indonesia, South Africa, India, the ACP (African, Caribbean and Pacific) Group, Barbados on behalf of the CARICOM (Caribbean Community), and the least-developed countries (LDCs) raised their specific concerns regarding what they viewed as an “imbalanced” fisheries subsidies text. They also highlighted the outstanding and unresolved issues in their proposed inclusive and developmental agenda. TNC MEETING SHARPLY POLARIZED The informal TNC meeting was convened to discuss what needs to be accomplished at MC12, to be held in four months’ time in Geneva. There is little common ground, nor convergence, on any of the “deliverables” such as on fisheries subsidies, agriculture, the proposed WTO reforms, special and differential treatment (S&DT), and on the WTO’s response to the COVID-19 pandemic, said people familiar with the meeting. “EXAGGERATED OPTIMISM” Commenting on the somewhat hyperbolic comments made by the WTO director-general (DG) during the press conference after the 15 July ministerial meeting on fisheries subsidies, Russia cautioned her about the dangers of “exaggerated optimism” and how “harmful” and artificially exaggerated expectations of success could undermine MC12. A seemingly aggrieved DG said that “I have to come back directly to optimism and exaggerated optimism” expressed by Russia, saying that her concluding statements were put out on the WTO’s website. Ms Okonjo-Iweala stated that she merely said that ministers have a basis to discuss the text, and that she did not say that they blessed the text, said people familiar with the development. The DG said she cannot be held responsible for the media reports (see SUNS #9390 dated 19 July 2021). However, the claims made by the DG and the chair of the Doha fisheries subsidies negotiations about ministers having agreed to the full text were displayed on YouTube. In her opening statement at the TNC meeting, Ms Okonjo-Iweala urged members to identify “two, three or four areas that we should focus our attention on from now through MC12”. “Either we continue to bring everything to the table, or we see what we can realistically achieve. To the extent we are on the same page, with a shared game plan, the likelier we are to get to meaningful outcomes,” she said. The DG acknowledged that “a lot of gaps remain to be bridged” on the draft negotiating text. She called on trade envoys to operate “with the E.N.D. in mind – Engage, Negotiate and Deliver.” Commenting on the high-level dialogue convened by the WHO-WTO with Big Pharma on 21 July, she said the participants discussed several issues, including the stark and enduring inequities in vaccine access. She said that only 1.5% of people in Africa are vaccinated and a mere 0.3% of people in low-income countries, compared to over 42% in developed countries. She expressed confidence in the General Council-appointed facilitator New Zealand Ambassador David Walker’s work on bringing members’ various pandemic-related proposals into a potential agreement. The DG said that “a WTO framework covering issues such as supply chain openness and monitoring, increased investment in production and intellectual property would be a valuable complement to governments’ ongoing attempts to put in place financing and governance arrangements to be better prepared for future pandemics.” “This is an area where we need to have an outcome not only for now but for the future,” she said. Concerning the TRIPS waiver discussions, she underscored the need to “move with a sense of urgency – people’s lives are at stake”. In the same breadth, the DG expressed hope that delegations would look at the continuum from additional flexibilities to compulsory licences, voluntary licences, waivers and other intellectual property options and make enough progress by the end of July to provide a sense of what might be achievable. Effectively, she chose to confound the options for the WTO’s response to the pandemic, said several people, who asked not to be quoted. “The outside world expects us to come up with a practical and forward-looking solution to these issues,” the DG said. She also spoke about the need to make progress on the G90 proposals to make special and differential treatment simple and effective, as well as on agriculture and WTO reforms. At the meeting, the chairs of the negotiations on fisheries subsidies, S&DT improvements, and agriculture made their respective reports. “A positive conclusion of the fisheries subsidies negotiations is within reach,” said Ambassador Santiago Wills from Colombia, the chair of these negotiations. He suggested that members have two options: act according to comfort zone of failure or working boldly with responsibility. Ambassador Wills said members must work with the second option. Without mentioning the Joint Statement Initiatives, the DG referred to the advanced discussions on micro, small and medium-sized enterprises (MSMEs), trade and gender, e-commerce, trade and environment issues, services domestic regulation, and investment facilitation. DEVELOPMENTAL AGENDA FOR MC12 In sharply nuanced statements, the developing countries highlighted their inclusive and developmental agenda. Indonesia’s trade envoy Ambassador Syamsul Bahri Siregar drove home a strong message for an urgent solution on the TRIPS waiver, citing the devastating pandemic in his country. He said that options like export restrictions, removing impediments in global value chains, and voluntary licensing agreements may not yield the anticipated results like the temporary TRIPS waiver. On fisheries subsidies, Ambassador Siregar said members need to do much work because the draft consolidated text issued by the chair Ambassador Wills is “imbalanced” and “much work needs to be done to resolve imbalances and other technical issues to move forward with the negotiations.” Ambassador Siregar argued that “respecting the principle of common but differentiated responsibility in this discipline is a key ingredient to achieve a balanced discipline.” Ambassador Siregar called for outcomes on the critically mandated issues such as the permanent solution for public stockholding programs for food security and special safeguard mechanism. Commenting on the 1998 e-commerce work program, he said Indonesia strongly believes that “the outcome on the e-commerce moratorium at MC12 will depend on our ability to clarify the scope and definition of electronic transmissions.” He said the pandemic has created massive fiscal and economic crises that compels members to have a fresh look on the moratorium and its impact on customs duties. According to an UNCTAD study in 2019, the loss of revenue suffered by the developing countries due to the moratorium on customs duties on e-commerce is to the tune of $10 billion annually. SOUTH AFRICA CALLS FOR RESOLUTION OF OUTSTANDING ISSUES In a nuanced statement, South Africa emphasized on the resolution of long-outstanding issues, particularly the need to deliver on “the WTO developmental imperatives.” It reiterated that “the development agenda from which the TNC derives its mandate should remain the cornerstone of our work towards MC12.” South Africa said the “vaccine inequity is resulting in a two-track recovery process”, with low economic growth of 2.1% in African countries. South Africa’s trade envoy Ambassador Xolelwa Mlumbi-Peter said that “the hardest hit are resource-dependent regions of Africa.” She said that “Africa must build better by prioritizing health outcomes and economic recovery that is centered on structural transformation.” She said that “the long-outstanding issues must remain the focus for the membership and the Secretariat if we are to achieve the Ministerial mandates and deliver on the WTO developmental imperatives.” Given the economic and social crises following the pandemic, South Africa said that “the road to recovery is going to be difficult.” “To get meaningful and credible outcomes at MC12, we must get our priorities right,” she said. TRIPS WAIVER & PEOPLE-CENTRED APPROACH Ambassador Xolelwa said that “for South Africa, the WTO response to COVID-19 is key,” while expressing disappointment that members “are still not in solution mode in the text-based negotiations on the TRIPS Waiver.” She said the TRIPS waiver “is a necessary temporary, targeted and proportionate component for any outcome on a WTO response to COVID-19.” Ambassador Xolelwa reiterated that “the cost of inaction by the WTO is measured in human lives.” She underscored the need to “move beyond ideological debates towards a balanced outcome underpinned by a people-centered approach.” To make progress, she said members “must focus on (i) how to come up with a Waiver that addresses the interests and concerns of all, and (ii) get out of the binary between the Waiver and the EU CL [compulsory license] proposal.” Ambassador Xolelwa said “the two are not substitutes but contribute from different perspectives and should both be welcomed with a view to finding landing zones on both.” She emphasized that “a WTO response to COVID-19 is fundamental to a meaningful outcome at MC12.” “The credibility of the outcome will be judged on the basis of whether it is boosting and diversifying production across the world,” she emphasized. On agriculture, she said members “need to work on a food security and livelihoods package and in this regard, our views are well articulated in the submissions that the African Group recently tabled.” South Africa said the outcome at MC12 “cannot be limited to transparency and a work programme.” She said South Africa “will continue to advocate for substantial reform of Trade Distorting Domestic Support, including on Cotton, as well as PSH and SSM.” She said that S&DT “must be integral to any outcome on agriculture, and must preserve policy space, including under Art 6.2.” (Under Article 6.2 of the WTO’s Agreement on Agriculture, developing countries are allowed to continue to provide input and irrigation subsidies.) Commenting on the fisheries subsidies negotiations, she said “the Chair’s text could form basis of an outcome but remains unbalanced in respect of various elements.” Ambassador Xolelwa said, “in order to make progress, the text needs to be re-configured to more closely align to the mandate to address harmful subsidies and to provide appropriate SDT.” She said the “flexibilities provided to big subsidizers under the sustainability approach is extraordinarily wide, while SDT flexibilities that are mandated are narrow in application.” “Common but differentiated responsibility is going to be critical,” she said, adding that “the disciplines must target large-scale fishing and the biggest subsidizers must take the greatest responsibility.” On special and differential treatment, she said members “must preserve the principles that underpin the WTO both in terms of consensus decision making and S&D,” arguing that “multilateralism is important now more than ever.” She emphasized that S&D “is a treaty embedded right and remains important in ensuring fair and equitable outcomes in the WTO.” She urged the chair of the Doha Committee on Development Ambassador K. Hassan of Djibouti to “deliver on its mandate on the G90 ASPs (agreement-specific proposals) if we are to move forward.” She expressed concern about the lack of constructive engagement on the G90’s agreement-specific proposals, suggesting that “the level of ambition cannot be lowered further.” Commenting on development, South Africa reaffirmed “the importance of implementing WTO Ministerial and GC Decisions, that keep development at the centre of the work program.” On e-commerce, she said that “the multilaterally mandated work is the work programme and the outcome on the e-commerce moratorium at MC12 will depend on clarifications with regard to the scope and definition of ET (electronic transmissions).” She also reiterated South Africa’s position “on the TRIPS NVC moratorium.” She expressed concern over “the dysfunctionality of the Appellate Body (AB)”, saying that it remains a concern. South Africa said that “MC12 must agree on a framework or at least a pathway towards urgent resolution of this.” “This will need to be in its own track given its systemic nature and not be linked to WTO reform discussions,” she said, adding that “a dysfunctional AB renders the further negotiations pointless since new and current outcomes cannot be enforced.” South Africa said “in relation to WTO reform, the paper on Strengthening the WTO to promote development and inclusivity (WT/GC/W/778/Rev.3) remains our departure point.” She said that “trade is not an end in itself, it is a means to enhance livelihoods, employment and sustainable development.” South Africa emphasized that “WTO reform does not mean accepting either inherited inequities or new proposals that would worsen imbalances. Reforms must be premised on the principles of inclusivity and development.” On the issue of JSIs, especially the paper (WT/GC/W/819) on the “The legal status of JSIs and their negotiated outcomes”, she said it “captures our views, including the new systemic challenges presented by JSIs.” In conclusion, she said, “success at MC12 will depend on delivery of multilateral outcomes.” INDIA’S GRAVE CONCERNS India expressed grave concern about the mutating SARS-CoV-2 virus that is producing “new deadly variants and unfortunately it is not going on vacation.” Commenting on the WTO’s response to the pandemic, Ambassador Brajendra Navnit from India said that members must deliver on some of the proposals on the table, and not try to “push market access agenda and take away policy space available for Members and impose cumbersome obligations that serve to benefit a few in the name of the pandemic.” He said “doing away with the legitimate policy instrument of export restrictions or aiming for making temporary elimination of tariffs a permanent measure or calling for stringent transparency obligations will not guarantee access to vaccines, therapeutics or diagnostics, and access to food for the most vulnerable.” Referring to the waiver proposal for suspending certain TRIPS provisions relating to copyrights, industrial designs, patents and protection of undisclosed information, he said that “it is unfortunate that a few members have failed to engage in the text-based negotiation.” Without naming the countries, he said “a few Members ensured that we are unable to meet the deadline set by the TRIPS Council Chair for reaching the necessary landing zone by end-July.” To restore the credibility of the WTO in terms of its response to the pandemic, he said the TRIPS waiver is an integral part. “Therefore, it is high time this organization prioritizes saving human lives and livelihoods over all other priorities.” Ambassador Navnit said the World Health Organization director-general brought three areas to focus during the high-level dialogue. They include (1) technology transfer, (2) supply chain resilience, and (3) IP waiver. He expressed concern that, during the TRIPS Council consultations, “while we continue to hear importance of rules-based organization, what we are seeing (is) that the rules and procedures are conveniently and selectively interpreted.” He warned that “doing so, may help a few Members on a particular subject, but these selective interpretations are creating precedence which may also be used by other Members.” On the agriculture “deliverables” at MC12, the Indian trade envoy said “a simple, efficient, and permanent solution on extending PSH for food security purposes to new programs and new products is therefore a key deliverable.” Ambassador Navnit pressed for speedy and efficient movement of “healthcare professionals – a multilateral outcome in this regard will be appreciated, particularly in view of the current pandemic.” India supported the G90’s ten agreement-specific proposals for simple and effective S&DT. On fisheries subsidies, Ambassador Navnit reminded the DG about the 15 July ministerial meeting where more than 80 ministers called for appropriate and effective S&DT. He said that India disapproved of the idea of restricting S&DT only to artisanal fishing within 12 nautical miles. According to the Indian trade envoy, ministers (from developing countries) “demanded the text should provide sufficient policy space for developing their future fishing capacities for achieving equitable growth.” The Indian envoy argued that “Ministers/Members emphasized that, if this agreement is about sustainability, based on the principle of common but differentiated responsibilities, the biggest subsidizers who are responsible for the present state of marine resources should take greater responsibility and reduce their subsidies and fishing capacities.” In conclusion, he emphasized that “the WTO must act as a catalyst to minimize the loss of life and livelihood and aid in acceleration of global economic recovery.” Ambassador Navnit said “MC12 must deliver on critical areas like permanent solution on PSH, TRIPS waiver and a balanced outcome on fish subsidies.” “This balanced agenda will ensure that while we rebuild and recover, we also restore the waning credibility of this institution,” he argued. THE PLURILATERAL AGENDA The US called for a targeted approach to the WTO’s response to recovery from the pandemic. It stressed on “a manageable set” of institutional issues. According to the US, the specific MC12 outcomes could include accelerating the implementation of the Trade Facilitation Agreement and proposals on transparency and notifications, including SPS (sanitary and phytosanitary) Agreement. Commenting on the proposed fisheries subsidies agreement, the US said it wants a meaningful agreement, while claiming that the current draft consolidated text does not contain elements to reach consensus. A targeted approach to fisheries subsidies, according to the US, is to ensure and address the issue of forced labour. The US said S&DT should not contain any carve-outs, particularly for some big developing countries (China) to self-designate the recourse to S&DT. EU’S FOUR-FOLD PRIORITIES With four months left for MC12, the EU said members remain divided on key issues. The EU said it wants “a path towards a deep reform of the rule-based system.” The EU outlined its four-fold priorities for MC12. They include: (1) concluding the fisheries subsidies negotiations; (2) achieving an outcome on trade and health (that seems to exclude the TRIPS waiver proposal to which Brussels remains fiercely opposed); (3) finding some progress on agriculture; and (4) improving the overall functioning of the negotiating pillar, the implementation pillar, and the two-stage dispute settlement pillar. The EU, which has repeatedly called for the restoration of the Appellate Body since 2019, has now changed its position by indicating its support for a working group and early restoration of the AB next year, said people present at the meeting. It called for a “flexible rule path to reform”, which appears to be a form of “cherry-picking” issues of its interest or a kind of “organ-trading”, said a person, who asked not to be quoted. Australia, Brazil, Singapore, Korea, and other members of the JSIs spoke about an agreement on domestic regulation in services as well as other initiatives such as digital trade, investment facilitation, and disciplines for MSMEs among others. Members of the Carins Group led by Australia underscored the need for establishing a working group on domestic support at MC12, while seemingly turning their back to the permanent solution for public stockholding programs for food security. In short, the meeting failed to provide any clear direction on what needs to be accomplished at MC12, to be held in Geneva in four months’ time.
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