TWN Info Service on WTO and Trade Issues (May10/09)
21 May 2010
Third World Network

India, Brazil raise dispute over EU drug seizures
Published in SUNS #6924 dated 17 May 2010

Geneva, 12 May (Kanaga Raja) -- Both India and Brazil on Wednesday have taken the first step towards raising a dispute at the World Trade Organization against the European Union and Netherlands over the seizure of generic medicines by customs authorities in EU member-countries, while the medicines are in transit to other developing countries.

As the first step in the dispute process, India and Brazil have sought consultations with the EU and Netherlands on this issue.

The request for consultations, under the WTO Dispute Settlement Mechanism, is the first step in the possible establishment of a panel at the Dispute Settlement Body (DSB). The parties have 60 days to consult, and if the consultations fail to resolve the dispute, the complaining countries could move the DSB for the establishment of a panel.

Speaking at a press briefing at the WTO Wednesday afternoon, Ambassador Ujal Singh Bhatia of India said that both India and Brazil have been concerned for quite some time now about the "repeated seizures of generic medicine consignments mainly originating from India, which are in transit in various European ports and meant for various destinations" in Latin America and Africa.

He said that they have been concerned primarily over two considerations. Firstly, he said, these seizures seem to emanate from complaints made by patent holders in Europe. The position is that these are generic drugs that are perfectly legitimate under WTO rules in the source country as well as in the country of destination.

They only happen to be in transit in the European Union, he said, adding: "And yet, the European authorities have accepted such complaints and seized such consignments."

He noted that most of these seizures have taken place in the Netherlands, adding that "our first concern is that intellectual property issues are being raised on drug consignments while they are absolutely not merited and that the fact that international transit guarantees are being violated by entertaining such claims."

He said that the second issue is a broader one and that has to do with the efforts to "confuse the IPR issues with those of substandard or spurious medicines. This we have seen to be a pattern, not only through such seizures here in the European Union but also when issues like this are raised in a number of international organizations like the WHO, WIPO, World Customs Organization, UPU etc."

"There seems to be a concerted effort to put together a TRIPS-plus enforcement agenda which does away with the flexibilities that are guaranteed to developing countries" under the TRIPS regime, the Indian envoy said.

Ambassador Bhatia said that the bulk of these consignments originate from India. "We have repeatedly raised this issue with the European Union and we have repeatedly sought details of these seizures...", he said, adding "we have not received a detailed list of such seizures as of now."

"However, we did receive sometime back a brief list of some of these seizures, and interestingly, while the European Union has been maintaining that there were issues of substandard medicines, all these seizures, the details of which have been provided to India, relate to alleged IP violations, not about quality," he said.

He further said that these issues have a huge implication, mentioning in this context, the principle of universal access to medicines. By seizing such consignments which are meant for poor countries, certainly this principle is violated.

He also highlighted the issue of limited national budgets in developing countries for public health, and by denying access to generic medicines to such countries, obvious problems are created. He also pointed to the use of TRIPS flexibilities by developing countries, and said that the seizures violate those accepted principles.

He said: "We believe that these seizures are entirely misconstrued. We believe that the regulation on which most of these seizures have depended, which is (EU) Regulation 1383 of 2003, is deeply flawed. It is in conflict with the rights and obligations of Members in the WTO, and needs to be urgently amended to bring it in compliance."

He expressed hope that the consultations with the EU and Netherlands will bear fruit.

Ambassador Roberto Azevedo of Brazil said that Brazil is clearly of the view that these seizures, due to alleged patent infringements in the country of transit, "are a clear violation of WTO disciplines on the freedom of transit, which is one of the cornerstones of the multilateral trading system. This is even clearer... when there is no doubt on the lack of patent protection for the goods either in the exporting country or in the importing country."

"These measures in general have a highly negative systemic impact on legitimate commerce, on South-South trade and on national health policies in developing countries. In addition, some programmes sponsored by international aid agencies are also being disrupted by these seizures of generic medicines," he added.

He said that since early 2009, when the particular case of the medicine Losartan was made public, Brazil raised this issue in different fora, as well as bilaterally with the EU. Despite all these efforts, Regulation 1383 of 2003 that provides the legal basis for seizures remains in force, unchanged. This situation causes lack of predictability, and increased costs of medicines at the destination markets, he added.

"So far, we haven't received from the European Union any guarantees that this legal framework will be changed in a way that does away with this unpredictability factor," he said.

Asked as to what provisions (in the WTO agreements) have been targeted in this dispute, Ambassador Azevedo pointed to the TRIPS Agreement and the GATT.

As far as Brazil is concerned in its request, he said that it is mentioning Articles 5.1, 5.2, 5.3, 5.4, 5.5, 5.7 and 10.3 of the GATT, as well as possible violations under Articles 1.1, 2, 28, 31, 41.1, 41.2, 42, 49, 50.3, 50.7, 50.8, 51, 52, 53.1, 53.2, 54, 55, 58 (b) and 59 of the TRIPS Agreement and Article 4bis of the Paris Convention of 1967. He also mentioned Article 16.4 of the WTO Agreement.

"As you can imagine, it will be a very comprehensive dispute," he said.

In response to another question, Ambassador Bhatia said that "as long as the Regulation 1383 remains, the Damocles Sword keeps hanging on us." +