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Info Service on Intellectual Property Issues (Dec23/02) Geneva, 6 Dec (D. Ravi Kanth) — The fate of two mandated decisions of the World Trade Organization’s 12th ministerial conference (MC12) concerning the extension of the Ministerial Decision on the TRIPS Agreement to cover COVID-19 diagnostics and therapeutics and the proposed termination of the moratorium on customs duties on electronic transmissions is expected to dominate the proceedings at the upcoming WTO’s General Council (GC) meeting on 14-15 December. Failure to reach decisions as per the MC12 mandates at next week’s GC meeting could cast a dark shadow on the WTO’s 13th ministerial conference (MC13), scheduled to get underway in Abu Dhabi on 26 February 2024, said people familiar with the development. While the opponents of the termination of the current moratorium on customs duties on electronic transmissions, in effect since 1998, want its continuation for two more years, they, particularly Switzerland and the United Kingdom, remain opposed to the extension of the Ministerial Decision on the TRIPS Agreement to COVID-19 diagnostics and therapeutics as mandated by trade ministers at MC12 last June. The MC12 Ministerial Decision on the Work Programme on Electronic Commerce (WT/MIN(22)/32) unambiguously stated: “We agree to maintain the current practice of not imposing customs duties on electronic transmissions until MC13, which should ordinarily be held by 31 December 2023. Should MC13 be delayed beyond 31 March 2024, the moratorium will expire on that date unless Ministers or the General Council take a decision to extend.” Meanwhile, paragraph eight of the MC12 Ministerial Decision on the TRIPS Agreement (WT/MIN(22)/30) clearly spelled out that: “No later than six months from the date of this Decision, Members will decide on its extension to cover the production and supply of COVID-19 diagnostics and therapeutics.” The Ministerial Decision on the TRIPS Agreement ought to have been implemented by 17 December 2022, as per the MC12 mandate. However, a group of countries, including Switzerland, the United Kingdom, as well as the United States, seemingly adopted “diversionary” tactics on extraneous grounds to delay the outcome, said people who asked not to be quoted. In effect, while the opponents of the termination of the moratorium on customs duties on electronic transmissions upped the ante for its continuation for two more years, some of them seem to be stalling any decision on paragraph eight of the Ministerial Decision on the TRIPS Agreement, said people engaged in the discussions. E-COMMERCE MORATORIUM The opponents to the MC12 decision proposing the termination of the current moratorium on customs duties on electronic transmissions, who are now seeking an extension for two more years include Australia, Canada, Chile, Costa Rica, Georgia, Hong Kong (China), Iceland, Israel, Korea, Liechtenstein, Moldova, Montenegro, Norway, New Zealand, Paraguay, Peru, Singapore, Switzerland, Chinese Taipei, Ukraine, and the United Kingdom. In a proposal (WT/GC/W/909) circulated on 1 December, the opponents echoed their oft-repeated position that the moratorium on customs duties on electronic transmissions provided “certainty and predictability for business and consumers.” The opponents to the termination of the moratorium want to “continue the work under the Work Programme on Electronic Commerce, based on the mandate as set out in WT/L/274.” They also set a time-line for the General Council “to hold periodic reviews of the Work Programme in its sessions of July and December 2024 and July 2025 based on the reports that may be submitted by the relevant WTO bodies and report to the next session of the Ministerial Conference.” In short, the opponents called to “maintain the current practice of not imposing customs duties on electronic transmissions until the 14th Ministerial Conference (to be held in 2026).” SUPPORTERS OF E-COM DECISION In sharp contrast, the supporters of the MC12 Ministerial Decision on the Work Programme on Electronic Commerce that include many developing countries, stated unambiguously that the moratorium on customs duties on electronic transmissions must be terminated at MC13. South Africa, on behalf of several supporters of the MC12 Ministerial Decision, circulated a proposal on 1 December stating why the moratorium has to be terminated at MC13. Given the paucity of time for the submission of the proposal for the General Council meeting that begins on 14 December, several supporters including India, Indonesia and others could not include their names in time in the South African proposal, said a negotiator from the supporters’ group, preferring anonymity. In its proposal (WT/GC/W/911), South Africa proposed a draft ministerial decision to be adopted at MC13. In its proposal, South Africa expressed concern over “the deep digital and technological divide afflicting developing countries including least-developed countries (LDCs).” It said that developing and least-developed countries remain concerned “by the impact of the moratorium on customs duties on electronic transmissions which provides the global tech firms with a distinct unfair tax advantage over local competitors in developing countries and hampers digital industrialisation.” Moreover, it said the “transactions of most global platforms are channelled through to a global entity, thus depriving the importing country of corporate tax revenue, hindering developing countries in their efforts to support digital industrialisation initiatives.” South Africa stressed that “the OECD/G20 initiative to address the tax challenges, whilst a useful step, will not result in developing countries individually benefiting to any material extent and does not resolve the fundamental problem generated primarily by the lack of digital tariffs which can enable more sustainable promotion of investment in developing countries.” While acknowledging “the importance of work under the Work Programme in examining trade-related issues relating to global electronic commerce, taking into account the economic, financial, and development needs of developing countries,” South Africa emphasized on the need to preserve “policy tools to promote digital industrialisation and inclusive participation in the digital economy.” It called on the trade ministers participating in MC13 to “terminate the moratorium on the imposition of customs duties on electronic transmissions.” South Africa further urged the trade ministers “to re-invigorate the work under the Work Programme on Electronic Commerce, including the development-related issues under it, based on the mandate set out” in the 1998 e-commerce work programme. More importantly, South Africa said that trade ministers must “instruct the General Council to deliver concrete outcomes on the implementation of the Work Programme on all the issues allocated to the relevant WTO bodies by December 2024.” Similar to the creation of the Fisheries Funding Mechanism that was agreed at MC12, South Africa emphasized that trade ministers must “establish a Fund that accepts voluntary contributions from developed countries and developing countries in a position to do so to provide developing countries including LDC Members with targeted support to address the digital divide and promote investments in developing domestic SME platforms in developing countries.” Lastly, South Africa said that “all leading platforms must promote greater levels of participation and promotion of historically disadvantaged SMEs on digital infrastructure through among others, funding via fee rebates for on-boarding and subscription, and ad credits or targeted promotions and to improve the visibility of developing countries including LDCs apps through a local app curation and provision of ad credits, as well as through promoting technology transfer.” The proposals of both the opponents and supporters of the MC12 Ministerial Decision are expected to come up for discussion at the GC meeting on 14 December. The meeting will likely continue into 15 December given the long list of issues to be decided, including the WTO budget for 2024. COVID-19 DIAGNOSTICS & THERAPEUTICS Meanwhile, at an informal TRIPS Council meeting on 29 November, it became somewhat clear that a group of industrialized countries seems determined to stall an outcome on the extension of the MC12 Ministerial Decision on the TRIPS Agreement to cover COVID-19 diagnostics and therapeutics. The opponents such as Switzerland, the United Kingdom, Japan, the European Union, and even the United States suggested that since there was no intellectual property (IP)-related barriers to accessing COVID-19 diagnostics and therapeutics, there was no basis for any extension of the Decision, as agreed by trade ministers in Geneva last June. The opponents also maintained that the MC12 Ministerial Decision was rather broad and undefined. At the meeting, the opponents said they remain flexible on the extension, noting, however, that consensus was unlikely. In a sharp response at the meeting, the supporters of the MC12 Ministerial Decision said that an outcome under paragraph eight was long overdue and a decision should be taken at the General Council meeting in December, adding that this would also complement and support the work of the WHO on a pandemic treaty. South Africa, India, Indonesia, and Brazil appear to have reiterated that the COVID-19 pandemic is still alive and that the risk of new variants emerging remains real. The developing countries said the WTO’s relevance and credibility depend on implementing the decisions agreed by trade ministers. The supporters said that they have provided substantial evidence stating forcefully that the decision on paragraph eight was a standalone issue and is not linked to other negotiating issues, adding that this “yes-or-no” decision should be taken at the General Council in December. To bolster their case, the supporters circulated a proposal on 1 December for consideration at next week’s GC meeting. In their proposal (WT/GC/W/913, IP/C/W/694/Rev.1), the supporters including South Africa, India, Indonesia, Pakistan, Bangladesh, Egypt, Bolivia, and Venezuela referred to the Ministerial Decision on the TRIPS Agreement adopted at MC12 last June. They contended that the MC12 Decision “is far removed from the comprehensive TRIPS waiver proposal contained in documents IP/C/W/669 and IP/C/W/669/Rev.1 (“original TRIPS waiver proposal”) co-sponsored by 65 WTO Members (co-sponsors).” According to the proponents, “A more comprehensive waiver decision as envisaged in the original TRIPS waiver proposal would support the efforts to ensure timely, equitable and universal access to safe, affordable and effective therapeutics and diagnostics, ramping up of production and expanding supply options.” Further, they said “the MC12 Ministerial Decision on the TRIPS Agreement (document WT/MIN(22)/30) is the result of over one and a half years of arduous and lengthy discussions on the original TRIPS waiver proposal and intense negotiations heading towards the 12th Ministerial Conference in the midst of a global crisis. It is of limited scope covering only vaccines.” Given the growing importance of COVID-19 diagnostics and therapeutics, the proponents warned that: “Omitting these vital tools will deter the effectiveness of the decision that aims [at] timely and affordable access to effective vaccines against the ongoing COVID-19 pandemic.” The proponents said, “At a minimum, the extension of the policy tools provided in document WT/MIN(22)/30 to therapeutics and diagnostics will result in a holistic approach to enable developing countries to address those IP barriers that prevent the expansion and diversification of production and increase accessibility to crucial life- saving COVID-19 tools.” More importantly, according to the proponents, “the current outcome represents a narrow conditioned Decision due to demands of some WTO Members, requiring significant compromises on the part of the co-sponsors that had hoped for greater solidarity among WTO Members during a public health emergency and consequently a more comprehensive waiver decision as envisaged in the original TRIPS waiver proposal that would support ramping up of production and expanding supply options.” In conclusion, the proponents emphasized the importance of paragraph eight of the Ministerial Decision, and called on the “General Council to immediately extend the 17 June TRIPS Decision adopted by the Ministers by consensus after long protracted negotiations, mutatis mutandis to therapeutics and diagnostics.” By adopting a decision at the upcoming General Council meeting, the “WTO Members have an opportunity to show they can act promptly to respond to the ongoing COVID-19 pandemic and the challenge of inequitable access to therapeutics and diagnostics and respond to the criticism that the Decision on vaccines came too little too late,” the proponents stressed. The proponents urged the General Council “to immediately adopt the annexed decision” to their submission. The annexed decision is as follows: “General Council Decision on Extension of the 17 June 2022 Ministerial Decision to COVID-19 Therapeutics and Diagnostics (hereafter referred to as “Therapeutics and Diagnostics Decision”) The General Council Having regard to the 17 June 2022 Ministerial Decision on the TRIPS Agreement, document WT/MIN(22)/30 Decides as follows: The MC12 Decision on the TRIPS Agreement is extended mutatis mutandis for the production and supply of COVID-19 therapeutics and diagnostics. An eligible Member may apply the provisions of this Therapeutics and Diagnostics Decision until 5 years from the date of this Decision. Any extension of the MC12 Decision on the TRIPS Agreement pursuant to paragraph 6 shall apply to this Decision as well.” It remains to be seen whether the opponents or supporters of the termination of the moratorium on customs duties on electronic transmissions and the extension of the MC12 Ministerial Decision on the TRIPS Agreement to COVID-19 diagnostics and therapeutics will succeed at the General Council meeting.+
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