[Ip-health] TWN Info Service - TRIPS Council on Paragraph 6 (June 4-5, 2003)

[Cecilia Oh]

TWN Info Service on WTO Issues (June03/2)
Third World Network
Geneva (June 7, 2003)

Dear friends and colleagues

Re: No decision on Paragraph 6 at TRIPS Council
Meeting (June 4-5, 2003)

The TRIPS Council met on June 4-5 to discuss among
others, the Paragraph 6 issue. No decision was
forthcoming. The Chair of the TRIPS Council in his
concluding remarks, said that he would continue
consultations with Members. He hoped that, at best, a
conclusion could be reached before the WTO=92s General
Council met in July 24 (when it is understood that the
first draft declaration for the Cancun Ministerial
Conference would be ready), or at the very least,
before the conference in Cancun.

We attach a report of the discussion on TRIPS and
public health at the TRIPS Council meeting. We hope
you find it of use.

In another issue of TWN Info Service, we will focus on
the Council discussions on TRIPS and biodiversity,
traditional knowledge and Article 27.3b.


With best wishes,

Cecilia Oh
Third World Network

-----------------------

PARAGRAPH 6 NEGOTIATIONS:  NO END IN SIGHT
Report by Cecilia Oh, Third World Network


The TRIPS Council meeting on June 4-6, in its last
formal session before the Cancun Ministerial
Conference in September, did not make progress towards
agreement on a solution for the Paragraph 6 problem.

Although they had not expected a breakthrough at this
meeting, many developing country negotiators expressed
their frustration at the seemingly unbreakable impasse
in the negotiations. The US had reinforced this
perception by stating that a consensus was not yet
possible, in response to the Kenyan negotiator=92s
comment that there appeared to be no objection to the
December 16 text.

The TRIPS Council considered two submissions, one from
the group of African, Caribbean and Pacific (ACP)
countries, and the other, from the European
Communities (EC).

Letter from the ACP

The TRIPS Council had received a communication from
the African, Caribbean and Pacific Group of States, in
the form of a letter dated May 23, 2003 from the
Deputy Minister of Vanuatu, in his capacity as the
President in office of the ACP Group of states Council
of Ministers.

This communication caused some surprise in the Geneva
missions of the ACP countries, it having been
submitted directly to the WTO Secretariat without
apparently having been first sent to the Geneva
missions.

Expressing grave concern at the impasse in the
negotiations on how to resolve the
difficulties of countries with no or inadequate drug
manufacturing capacity commonly known as the Paragraph
6 problem of the Doha Declaration on TRIPS and
Public Health), the ACP called for a solution that was
=93straightforward and easy to implement=94 and one that
=93should not be made so cumbersome as to be effectively
unworkable=94.  In view of the outbreak of new diseases
such as SARS, said the ACP, a solution was now a
matter of urgency.

Referring to the December 16 text, the ACP expressed
regret that the US had not joined in the consensus to
accept the text as a compromise.  The US withholding
its consensus had meant that the deadline of 31
December 2002 as set out in the Doha Declaration could
not be met.

[The US objection to the December 16 text was based on
the issue of scope of diseases and the reference to
Paragraph 1 of the Doha Declaration which refers to
=93the public health problems afflicting many developing
and least-developed countries, especially those
resulting from HIV/AIDS, tuberculosis, malaria and
other epidemics=94.  The reference to =93public health
problems as recognised in Paragraph 1 of the
Declaration=94 was too broad for the US. The US had then
proposed that the scope of diseases in the December 16
text should be limited to =93HIV/AIDS, malaria,
tuberculosis or other infectious epidemics of
comparable gravity and scale, including those that may
arise the in the future=94. This had been opposed by the
majority of the WTO Members as an attempt to limit the
scope of diseases already agreed to at Doha.]

The ACP criticised the US action and position as =93an
attempt to effectively redefine and limit the scope of
public health problems reflected in the Doha
Declaration=94. According to the ACP, it valued the Doha
Declaration as a significant achievement, and it would
therefore =93not accept any attempts to roll-back the
commitments made in the interest of public health by
all the Ministers at Doha=94.

The ACP also said that it could not accept the EC
proposal. In an effort to persuade the US to join the
consensus on the December 16 text, the EC had
suggested that WTO Members could agree on an initial
list of diseases that would be covered by the December
16 text, and any Member wishing to import medicines to
meet a public health concern that was not explicitly
covered in the list would be encouraged to seek WHO
advice on the matter. Although it welcomed the EC's
effort to break the deadlock in negotiations, the ACP
said that its position was that any text that
restricts the agreement (on a Paragraph 6 solution) to
a set list of diseases, even one involving the WHO in
assessing public health concerns, would constitute an
unacceptable attempt to restrict the ACP's use of
compulsory licensing.   =93The scope of diseases was
already extensively discussed in Doha, and the
consensus text included in the Doha Declaration
rejected any limitations=94, said the ACP.

The ACP submission also rejected attempts to confine
the application of the Paragraph
6 solution to national emergencies and other
circumstances of extreme urgency. =94Limiting the
agreement to national emergencies and other
circumstances of extreme urgency would also be
deviating from the content and understanding of the
Doha Declaration=94, the ACP asserted.

This was a reference to the proposal by the previous
Chair of TRIPS Council (Ambassador Perez Motta of
Mexico) that there should be a =93statement of
understanding=94 put on record before the adoption of
the solution to the paragraph 6 problem, as provided
for in the December 16 text. A crucial element of the
Chairman's statement of understanding was that the
applicability of the system proposed in the December
16 text would be restricted only to national
emergencies or other circumstances of extreme urgency.

The ACP submission also highlighted the issue of
national implementation and technical assistance.
=93With regard to other aspects of the Declaration, most
governments of the ACP States need assistance and
support in integrating the TRIPS public interest
safeguards into their legislation. Least-developed
countries need to be provided with advice on how to
take advantage of the extended deadlines for
pharmaceutical patenting, since many   have already
implemented, or are in the process of implementing,
TRIPS-compliant rules.  In so doing, some of the LDCs
have failed, due to lack of capacity, to take
advantage of the extended transition period agreed at
Doha=94, said the ACP.

To this end, the ACP called upon WIPO and WHO, as well
as the WTO, to ensure that all the aspects of the Doha
Declaration are fully integrated within their
technical assistance programmes.

The ACP letter also called on the pharmaceutical
companies to ensure that their patent policies,
practices and lobbying activities are compatible with
the Doha Declaration. In respect of developed country
Members of the WTO, the ACP urged them to adapt their
intellectual property enforcement policies according
to the Doha Declaration.  =93This means respecting the
rights of governments to use the TRIPS public health
safeguards=94, the ACP said.

The EC communication

In its communication, the European Communities asked
WTO Members to focus on the implementation of the Doha
Declaration itself, pending agreement on a solution
for
the Paragraph 6 issue. The paper made little mention
of Paragraph 6 itself but focussed instead on national
implementation of other aspects of the TRIPS Agreement
and the Doha Declaration. In that context, the EC
highlighted four areas:  technical assistance and
capacity building, parallel imports, regional
cooperation and compulsory licensing.

In language rather similar to that in the ACP letter,
the EC highlighted the importance of national
implementation of the Doha Declaration and said that
such implementation =93may require legislative,
administrative or policy adjustments=94 in developing or
least developed countries.  In such instances,
technical assistance and capacity building will be
required to help countries =93recognise and act on the
implications of the TRIPS Agreement and establish
workable law, procedures and practices to give effect
to the Doha Declaration=94.

Sound technical advice, which must be =93balanced,
transparent and unbiased=94, will be
needed to integrate the Doha Declaration into
intellectual property policies and practices. Thus,
the EC called on WIPO and WTO to fully integrate the
Doha Declaration in their technical assistance policy.
=93The WIPO-WTO legal and technical assistance
programmes must therefore integrate fully and
completely the effects of the Doha Declaration and be
geared towards standards appropriate to the specific
needs and level of development of the recipient
country=94, said the EC.

The EC also called on Members to take advantage of the
expertise of the WHO on health matters. The EC noted
that the WHO has been engaged in technical assistance
to help countries develop informed approaches to
addressing the health implications of the multilateral
trade rules.

With regard to exhaustion (of intellectual property
rights) and parallel imports, the EC paper said that
the Members have the freedom to opt for a national,
regional or international exhaustion regime.

However, the EC paper urged that account be taken of
the possible impact of international exhaustion
regimes on the diversion of reduced-price supplies of
pharmaceuticals, since one of the most important means
of low-priced medicines supply is through price
reductions offered by manufacturers. =93An essential
condition for the implementation of effective tiered
pricing policies by companies is that markets need to
be segmented to prevent low priced products from
flowing back to high price markets. Otherwise this may
lead to trade diversion, which will disincentivise
companies to engage in differential pricing=94, said the
EC.

The EC added that regional or sub-regional cooperation
on IP matters was highly instrumental in implementing
the TRIPS Agreement, including the Doha Declaration,
by pooling resources of the participating countries.
According to the EC, regional institutions in Africa,
such as OAPI and ARIPO, have already shown they can
play a vital role in the implementation of the TRIPS
Agreement and could play a similar role as regards
Doha Declaration. =93For instance, the implementation of
an effective compulsory licensing system for
production and import of products to address public
health problems may likely take the form of a regional
arrangement, based on a common patent system=94.
Therefore, the EC encouraged Members to engage into
regional cooperation arrangements.

On compulsory licensing, the EC confirmed the right of
Members to determine the grounds for the grant
compulsory licences, but noted that the procedural
requirements under Article 31 of TRIPS may require
administrative and legal infrastructure that is
absent in many developing and least developed
countries. Technical assistance may therefore, be
needed in developing countries to ensure, among
others, that patent legislation clearly defines the
grounds for the grant of licences, administrative
and/or judicial procedures are transparent and
equitable while avoiding unnecessary delays.
In addition, the EC paper also called for equitable
guideline for setting royalty rates for remuneration
to the right holder.

The EC=92s footnote

It had been pointed out by some negotiators and other
observers that perhaps the most interesting point in
the EC communication was to be found not in the main
body of the paper, but rather in footnote number 3 of
the paper. The footnote, relating to the section
heading entitled =93Specific technical and political
issues raised by the Doha Declaration=94 stated that =93it
should be borne in mind that the principles of the
Doha Declaration can also be carried through to issues
other than compulsory licensing or parallel imports,
such as exceptions to exclusive rights or other policy
options=94.

This reference to exceptions to exclusive rights had a
number of the negotiators speculating as to whether
the EC might be referring to use of exceptions to
patent rights under the Article 30 approach (which had
been proposed by the developing countries, but which
had been opposed by the US and the EC, in favour of
the Article 31 approach).

However, during the discussions the EC negotiator said
it was concerned about the Paragraph 6 deadlock,
stating that the December 16 text was still the best
basis. He welcomed the ACP statement for signalling
the need for a solution.

The issue of alternative approaches to a solution was
raised by Indonesia and the Philippines in their
statements. The Philippines reminded the Council that
it had not been in favour of the December 16 text and
was keeping an open mind in terms of exploring other
possibilities, including making changes to the
December 16 text, in order avoid its rights being
limited. The EC response was that it was dangerous to
take this route as it might unravel the whole text.

In concluding the meeting, TRIPS Council chair,
Ambassador Vanu Gopala Menon of Singapore, told the
meeting that he would continue to hold consultations
in small groups and bilaterally, and that Members
could also consult among themselves. He also asked
members to be prepared for a special meeting of the
TRIPS Council that may be called at short notice. The
Chair said that he was hopeful that a conclusion to
the Paragraph 6 negotiations could be reached before
the Cancun Ministerial Conference or better, by the
General Council meeting on 24 July.

Talk outside

For this TRIPS Council meeting, it seemed that
discussions taking place outside the meeting room
seemed more interesting than the statements made in
the conference room. The absence of the usual posse of
USTR officials from Washington at the TRIPS Council
had been remarked upon, and a developing country
negotiator said that this did not send a good signal
of the US=92 willingness to work towards a consensus
solution.

Another topic of conversation in the coffee shop
outside the conference room was Robert Zoellick=92s
recent remark to the Philippines President Arroyo that
the US did not consider the Philippines eligible to
use the system proposed in the December 16 text. One
negotiator (from a country that had just signed a FTA
with the US) said that Zoellick=92s comment was
unfortunate timing, given the state the negotiations
were in. It would raise the question of whether other
developing countries, particularly middle-income
countries, would be asked (or told) not to use the
system.

While the December 16 text left the determination of
eligibility to the Members themselves (the Annex to
the text provides the criteria by which a Member could
determine whether or not it had sufficient
manufacturing capacity), the USTR=92s move will raise
obvious questions of whether pressure may be applied
to other developing countries not to use the solution.
This could be viewed as another attempt to limit the
scope of the solution proposed in the December 16
text. The first two attempts had been rejected by the
developing countries, highlighted by the ACP in its
communication; namely, the limitation on the scope of
diseases and the restriction of the use of the system
to situations of emergency or extreme urgency.

Another topic of interest was the observation that
both the EC and the ACP statements were much alike in
substance. This, coupled with the fact that the
submission of the ACP had bypassed the Geneva
missions, also raised some eyebrows.


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