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TWN Info Service on WTO and Trade Issues (Jun22/11)
11 June 2022
Third World Network


WTO: Anti-diversion provision in waiver decision text emerges as the next flash point

Geneva, 10 June (TWN) – The anti-diversion clause which prohibits the re-exportation of COVID-19 vaccines produced under the draft TRIPS decision to another developing country has emerged as the next flash point between developing countries and developed countries in the ongoing negotiations.

Paragraph 3(d) of the WTO Director-General’s text tabled on 3 May contains this controversial “TRIPS plus” provision: “Eligible Members shall undertake all reasonable efforts to prevent the re-exportation of the COVID-19 vaccine that has been imported into their territories under this Decision. All Members shall ensure the availability of effective legal remedies to prevent the importation into, their territories of COVID-19 vaccines produced under, and diverted to their markets inconsistently with this Decision”

It creates two obligations on WTO Members. First, it obligates all eligible Members, i.e. the countries that are entitled to use this decision, to prevent the re-exportation of COVID-19 vaccines imported into their territories under the decision. Secondly, it imposes an obligation on all WTO Members to provide legal remedies to prevent the importation of the diverted COVID- 19 vaccines produced under this decision.

Obligation against re-exportation is problematic in a health emergency situation when many developing countries face vaccine shortages. If an eligible Member imports under the decision, that Member cannot re-export any vaccine doses including donate unused vaccine doses to any other eligible Member. It also adversely impacts South-South cooperation including vaccine donations as well as pooled procurement among developing countries that is essential to achieve economies of scale and to reduce prices.

[Pooled procurement is also already happening, e.g. the World Health Organization (WHO) gives examples of pooled procurement already occurring in Eastern Caribbean States, Southern Africa, Europe and the Arab states of the Gulf. This has also been managed through third‑party funds, such as UNICEF, The Global Fund, and the PAHO Regional Revolving Fund].

So far about 33 WTO Members which are developing, or least developed countries (LDCs) have donated COVID-19 vaccines to other developing countries/LDCs. These countries (excluding China and India) have already donated at least 53 million COVID-19 vaccine doses.

The WHO Director-General has also stressed that “The G20 countries must fulfil their dose-sharing commitments immediately”. The G20 includes developing countries such as Argentina, Brazil, Indonesia, Republic of Korea, Mexico, Saudi Arabia, South Africa and Turkey.

The anti-diversion measure in Paragraph 3(d) also raises concerns as to consistency with Paragraph 3(c) of the text which allows supply to international and regional initiatives (e.g. COVAX). During the drafting group negotiations Brazil proposed to limit the prohibition on re-exportation only to non-eligible countries.

Eligible Members shall undertake all reasonable efforts to prevent the re- exportation [to non-eligible Members] of the COVID-19 vaccine that has been imported into their territories under this Decision. Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products produced under this Decision, and diverted to their markets inconsistently with its provisions, using the means already required to be available under the TRIPS Agreement.[If any Member considers that such measures are proving insufficient for this purpose, that matter may be reviewed in the Council for TRIPS at the request of that Member” (Text as at 20 May 2022)

However, reference to “non-eligible Members” was removed in the 25 May text.

In subsequent meetings of the drafting group, paragraph 3(d) was re-bracketed in its entirety at the request of Argentina supported by several other developing countries including the Africa Group and the least developed country group (LDC Group).

During an open-ended informal session on 1 June, Tunisia said “permitting re-exports in the waiver would be necessary to enable making use of rationalized procurements and for sharing unused doses, a practise that proved to be helpful for better access to addressing the pandemic”.

Bolivia also echoed the opposition calling paragraph 3(d) another TRIPS-plus condition that does not exist when a compulsory license is issued under Article 31, adding that many countries, including Bolivia, are recipients of unused vaccines and rely on pooled procurement mechanisms to facilitate access and that it is unjustified from a public health perspective.

During a Heads of Delegation meeting of a few select countries on the TRIPS text, Sri Lanka (excluded from the meeting) also expressed its opposition (through another delegation): “While noting that the entire draft text has not attracted the concurrence of all members due to the reasons that are of significant delicate to them, Sri Lanka would like to take this opportunity to express its serious concern with respect to paragraph 3(d) of the text that prevents re-exportation of COVID-19 vaccines, even among eligible Members inconsistent with the objective of the Decision to facilitate supply of COVID-19 vaccines. It is also an additional obligation which is TRIPS-plus and goes beyond the existing rights and obligations of the importing countries. In fact, the …paragraph 3(d) actually hinders, rather than promotes supply to vaccines for it requires Members to make available effective legal means to prevent the importation of COVID-19 vaccines even by eligible Members”.

Since then, it is understood that developed countries in particular the EU and UK have sought to expand the scope of the re-export prohibition which could result in disruption of the supply chain supporting production of vaccines.

The negotiating text of Paragraph 3(d) as at 8 June states:

“Eligible Members shall undertake all reasonable efforts to prevent the re- exportation[to non-eligible Members] of the [authorized use][COVID-19 vaccine produced under the authorization in accordance with this Decision] that has been imported into their territories under this Decision[from eligible Members][Fn]. Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of COVID-19 vaccines produced under this Decision, and diverted to their markets inconsistently with its provisions, using the means already required to be available under the TRIPS Agreement.

Suggested Footnote (Fn):

Nothing in this provision shall be understood to prevent eligible Member[s] from re-exporting COVID-19 vaccines to eligible Members for humanitarian and not-for-profit purposes.

Phrases “authorised use” and “products manufactured under the authorization in accordance with this Decision” introduced on 9th June) further restricts re-exportation not only of vaccines but also the ingredients to produce vaccines. Further, the footnote provides a very narrow exception that may be insufficient to safeguard the procurement practices in developing countries.

 


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