20th November 2002

INCHING TOWARDS COMPROMISE ON MEDICINES AFTER SYDNEY MINI-MINISTERIAL

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On 19 November, the Chairman of the WTO Council for Trade-related Aspects of Intellectual Property Rights (TRIPs) released draft legal language for a decision by the General Council on the implementation of paragraph 6 of the Doha Declaration on the TRIPs Agreement and Public Health. The release of the draft followed discussions on this issue at the ‘mini-Ministerial’ in Sydney on 14-15 November and at an informal session of the TRIPs Council on 18 November. While most countries stated at the meetings that they could accept the Chair’s preferred legal solution (i.e. a long-term waiver until an amendment to TRIPs comes into force), disagreements remained on some of the elements of the solution, including the coverage, eligible countries and safeguards against diversion.

According to paragraph 6 of the Doha Declaration on the TRIPs Agreement and Public Health, the TRIPs Council must find an expeditious solution to the problems countries may face in making use of compulsory licensing (i.e. allowing the use of a patent without the consent of the patent-holder under certain conditions) if they have insufficient or no pharmaceutical manufacturing capacity. The TRIPs Council is mandated to report to the WTO General Council on this by the end of 2002. Article 31 (f) of the TRIPs Agreement indicates that production under compulsory licensing should be predominantly for the domestic market. However, many developing countries facing public health problems are unable to produce pharmaceuticals with their existing domestic capacity.

Chair proposes moratorium-plus-amendment solution

TRIPs Council Chair Ambassador Eduardo Pérez Motta (Mexico) has forwarded to Members draft legal language for an eventual General Council Decision on para. 6. The draft language includes a moratorium on disputes regarding any measure taken in conformity with the provisions of a possible waiver. This moratorium would remain in force until an amendment to the TRIPs Agreement has been accepted by all Members. The draft language does not include a deadline by which the amendment would need to be in place, leading one observer to note that this omission runs counter to the mandate defined in the Doha Declaration, which instructs the TRIPs Council to find an expeditious solution by the end of 2002. Furthermore, the language only refers to an amendment in general, thereby on the one hand limiting the scope of possibilities (i.e. no interpretation as called for by Brazil and others), while on the other hand providing flexibility regarding which Article to amend (i.e. Articles 30 or 31).

The Chair had chosen the moratorium-plus-amendment solution from three possible legal options he had identified in a 10 November note: an amendment of article 31(f) combined with an interim waiver or moratorium until an amendment comes into force; an agreed interpretation of Article 30; or a waiver of the obligation in Article 31(f) of long duration.

While most countries signalled their willingness to accept the moratorium-plus-amendment solution, they differed over the timeframe and need for an amendment. In a paper circulated prior to the Sydney mini-Ministerial, the EC indicated its support for a waiver, but only in conjunction with a political agreement on the content and scope of an amendment, which it said should be adopted as soon as possible (at the latest with the final agreement of the current trade round). For its part, Switzerland during the 18 November TRIPs Council session favoured a waiver, followed by considerations over whether anything else was needed. The US also supported the waiver approach until an amendment was in place, but did not specify whether the amendment should be agreed now or later.

Brazil — reflecting the position of developing country generic producers — expressed its willingness to consider the waiver plus amendment solution, but said it would nevertheless prefer an interpretation of Article 30. The Africa Group in its 14 November submission (IP/C/W/389. searchable at http://docsonline.wto.org/) also included a long-term waiver as part of a possible solution, which they said should stay in place until all Members accepted the amendment to Article 31(f). Some developing countries furthermore stated that they would not accept negotiations on an amendment that would be linked to other Doha negotiations.

Coverage, eligibility and other matters

Regarding product and disease coverage, the draft language covers those public health problems referred to in paragraph 1 of the Doha Declaration on TRIPs and health (i.e. HIV/AIDS, tuberculosis, malaria and other epidemics). Most Members supported this reference, with some noting that it should not be understood to limit the diseases to the three listed in the Declaration. The draft furthermore states that coverage should also include “the active ingredients used in their manufacture as well as diagnostic kits needed for their use”, as repeatedly called for by some developing countries, in particular the Africa Group.

According to the Chair’s draft, all least-developed countries would automatically be eligible as importers, while all other Members would be eligible following a once-off notification to the WTO. The proposal does not differentiate between high-income and low-income developing countries, nor does it exclude developed countries from eligibility, as called for by the EC. Also, all Members would be eligible to supply other Member countries under the system, but would need to notify the WTO. The compulsory licence would be subject to certain conditions, including limiting the amount produced to that needed by the importing Member, clearly identifying the products produced under the licence and posting relevant information on a website. Notifications would also need to be submitted by importing countries. Several countries expressed concern that these notification procedures might be overly burdensome, in particular for small countries.

Other issues of interest are safeguards to prevent flow-back of generics to developed country markets, which saw Members divided over whether the TRIPs Agreement was sufficient to deal with this issue or whether additional measures, such as packaging or labelling requirements, were needed. According to the draft legal language, eligible importing Members would take “reasonable measures proportionate to their administrative capacities and to the risk of trade diversion” to prevent diversion. Members to which products might be diverted would need to ensure effective legal means to prevent importation.

Technology transfer

The Africa Group, in its submission, reiterated the need for a long- term solution that would include the building of manufacturing capacity. This latter point was not expanded upon by the legal language proposed. Only a general call to give special attention on technology transfer work under article 66.2 of the TRIPs Agreement dealing with technical transfer to least-developed countries and in the Working Group on Trade and Technology Transfer was included.

Mini-Ministerial symbolic rather than substantive

The TRIPs and health discussion appears to have dominated the talks at the mini-Ministerial in Sydney, followed by other development-related issues, including implementation, special & differential treatment and trade-related technical assistance. Also on the agenda were discussions on market access (agricultural products and industrial goods), a notification system for geographical indications (to be finalised by 2003), the “Singapore issues” (competition, investment, trade facilitation and government procurement), trade and environment, WTO rules (in particular anti-dumping) and the ‘road to Cancun’ (including deadlines and Ministers’ involvement in the process). Rather than focusing on substance, Ministers used the short meeting to engage in a frank, off-the-record discussion and share their broader, political views on these matters.

Countries that took part in the meeting included Australia, Brazil, Canada, China, Colombia, Egypt, the EU,, Hong Kong, India, Indonesia, Japan, Kenya, Korea, Lesotho, Malaysia, Mexico, new Zealand, Nigeria, Senegal, Singapore, South Africa, Switzerland, Thailand, Trinidad and Tobago, and the US. Japan is reportedly considering holding another mini-Ministerial in the coming months.

The next informal session of the TRIPs Council will be held on 21 November. The next regular session is scheduled for 25-27 November.

ICTSD reporting.