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Info Service on WTO and Trade Issues (Jul23/07) New Delhi, 11 Jul (D. Ravi Kanth) — The African Group has exposed the alleged failings of the World Trade Organization’s TRIPS Agreement in combating the COVID-19 pandemic, underscoring the need for “policy space” in grappling with the unaddressed issues so as to ensure that the same mistakes are not repeated in future health emergencies, said people familiar with the development. Under the overall rubric of WTO reforms as mandated by trade ministers in the Outcome Document of the WTO’s 12th ministerial conference (MC12) last June, the African Group has brought certain fundamental issues centering on “re-balancing” the WTO rules to the TRIPS negotiating table. As reported in SUNS #9819 dated 11 July 2023, the African Group seems to have turned the tables on a range of issues concerning industrialization and the “re-balancing” of the WTO rules to be decided at the WTO’s 13th ministerial conference (MC13), to be held in Abu Dhabi, in February 2024. In a proposal (WT/GC/W/884), titled, “The Role of Transfer of Technology in Resilience Building: the TRIPS Agreement,” and circulated on 3 July, the African Group said that “existing mechanisms of technology transfer have not adequately boosted the productive capacities of developing countries in a broad-based fashion.” As opposed to changing the WTO rules in an attempt to do away with the principle of consensus-based decision- making and bringing in plurilateral negotiations as part of the WTO reforms proposed by the Northern countries, the African Group has raised some fundamental issues concerning “policy space for industrial development.” The group, comprising more than 50 developing countries, made the case for “re-balancing trade rules to promote industrialization and to address emerging challenges such as climate change, the concentration of production and digital industrialization”. In this context, the African Group has tabled submissions “on Agreement-specific issues as [they] pertain to industrial development in general, including the role, towards that end, of transfer of technology and trade.” TRIPS AGREEMENT The TRIPS Agreement has always been seen as the proverbial “eye sore” of the Uruguay Round Agreements, in which “Big Pharma”, aided and abetted by the Northern countries, particularly the United States, secured its main goals in an iron-clad agreement. The TRIPS Agreement, which according to several studies, has no place in global trade rules, provided a “monopoly” shield for “Big Pharma” with weak provisions on flexibilities. During the Uruguay Round Agreement negotiations, the developing countries were apparently forced to “swallow” the agreement, after initially opposing it, said a former TRIPS negotiator, who preferred not to be quoted. It is against this backdrop that the African Group noted in its proposal that: “The preamble and Articles 7 and 8 of the TRIPS Agreement set out the general goals, objectives, and principles of the Agreement.” The African Group argued that “Article 7 entitled “OBJECTIVES” reflects the search for a balanced approach to IP protection in the societal interest since IP protection is expected to contribute not only to the promotion of technology but also to the transfer and dissemination of technology in a way that benefits both its producers and users and that respects a balance of rights and obligations, with the overall goal of promoting social and economic welfare.” According to the African Group, “Article 8, entitled “Principles”, recognizes the rights of Members to adopt measures for public health and other public interest reasons and to prevent the abuse of IPRs, provided that such measures are consistent with the provisions of the TRIPS Agreement.” Even though the WTO’s dispute settlement panels repeatedly said that Articles 7 and 8 “are to be borne in mind when the substantive rules of the Agreement are being examined,” including the 2001 Doha Declaration on TRIPS and Public Health, it is not clear whether the industrialized countries have followed these provisions. The African Group noted that Paragraph 15 of the MC12 Declaration on the WTO Response to the COVID-19 Pandemic and Preparedness for Future Pandemics (WT/MIN(22)/31) recognizes that “increasing the level of global preparedness to COVID-19 and future pandemics requires strengthened productive, scientific and technological capacity across the world. We also recognize that such capacity is instrumental for developing solutions to public health crises beyond COVID-19, including those relating to HIV/AIDS, tuberculosis, malaria, and other epidemics, as well as neglected tropical diseases, and for diversifying manufacturing locations. In line with WTO rules, we underscore the importance of promoting technology transfer that contributes to building capacity in related sectors”. The African Group proposal gave an account of “numerous market-related channels through which technology may be transferred across international boundaries”, such as trade in goods, especially capital goods and technological inputs, and foreign direct investment, as well as important non-market channels for technology transfer. INADEQUATE TECHNOLOGY TRANSFER The African Group issued a strong message that the failure to boost the productive capacities of the countries in the African region is one of the telling phenomena of COVID-19, creating more problems for African countries during the past three years. “This is particularly true of African countries which severely hampered the continent’s ability to respond to the COVID-19 pandemic and other health emergencies, as well as other pressing challenges such as food insecurity and the impact of climate change.” “Shortcomings of existing mechanisms for technology transfer include, among others: restrictive contractual terms in licensing agreements; information asymmetries related to R&D and pricing; and market concentration,” the African Group pointed out in its proposal. Further, it said, “Pricing strategies are based on determinants such as, inter alia, the cost of R&D, costs of production or financial returns to incentivize future R&D programs”. It said that the “true costs of R&D, especially for pharmaceuticals, are often unknown and highly variable, while the contribution made by public and non-profit-making sectors is not always accounted for.” Worse still, “the lack of transparency in the true cost of technologies, how public funding is taken into account and determinants of the market price contributes to concerns about inaccessibility of key technologies, especially those that contribute to the global commons,” it argued. The African Group said it is time that WTO members “engage on the role of the private sector and mechanisms that need to be put in place to ensure better accountability by the private sector in relation to technology transfer, especially in promoting affordable access to key technologies required to address global commons such as public health and green technologies to fight climate change.” It said the key objective of the discussions should be to enable countries in Africa to “harness the potential of WTO instruments to render technologies accessible and affordable on fair and reasonable terms.” It said that the reinvigoration of the discussions needs to be centred around the following issues and questions, proposing that “each theme or sub-theme will be thoroughly analyzed and discussed among Members, with a view to making recommendations to Trade Ministers for adoption at MC13.” The African Group urged members to discuss the following issues in the TRIPS Council: a. How have the flexibilities contained in the TRIPS Agreement contributed to technology transfer to developing countries and in particular to LDCs? How developed countries have allowed for compulsory licensing in their national legislation? b. In light of the Paragraph 6 system, following the Doha Declaration on TRIPS and Public Health, how have member countries addressed the problem of countries with insufficient or no manufacturing capacities in the pharmaceutical sector? c. How have compulsory licensing and the Paragraph 6 system contributed to the issue of technology transfer in the pharmaceutical sector? d. What kind of flexibilities are needed to promote the transfer of technology in the industrial sector more generally, and in particular for the benefit of Small and Medium Sized Enterprises in developing countries, including LDCs? e. How can TRIPS provisions be utilized to boost industrial development and productive capacities? f. What kind of flexibilities are required, and which TRIPS provisions are relevant to support climate change mitigation and adaptation efforts, green industrialization, and integration of developing countries, including LDCs in global value chains in the green economy? g. How can existing mechanisms of technology transfer be improved within the context of the multilateral trading system and the TRIPS Agreement, in particular, to ensure equitable and affordable access? h. The participation of developing countries in R&D takes many forms, including clinical trials – how can this be leveraged to ensure better terms of accessibility and affordability to medical products from this contribution? i. What are the mechanisms that can be put in place to encourage greater transparency on the true cost of R&D with a view to ensuring affordable access to key technologies? In short, the African Group has highlighted some difficult issues that need to be addressed in the run-up to MC13. It remains to be seen whether the US and other industrialized countries would address the above issues with a degree of sincerity, said a trade negotiator, who asked not to be quoted. +
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