[Ip-health] Inside US Trade: WTO MEMBERS MAKE NO HEADWAY ON TRIPS AS EU PROPOSAL STILL HELD UP

[Mike Palmedo]

WTO MEMBERS MAKE NO HEADWAY ON TRIPS AS EU PROPOSAL STILL HELD UP

Inside US Trade
June 17, 2005

World Trade Organization members meeting this week in the Council on
Trade-Related Aspects of Intellectual Property Rights (TRIPS) made no
progress on agreeing to an amendment to TRIPS that would make it easier
for developing countries to import cheap, generic versions of patented
drugs, as the European Union was unable to table its expected proposal
on the amendment, according to sources.

The EU at the June 14-15 TRIPS Council meeting said it would submit its
proposal soon, but sources said it continues to be held up by an
objection from Germany. The other 24 EU member states support the
proposal and the European Commission had hoped to have an agreement by
this week, but sources said Germany did not lift its objection during
meetings early this week.

African countries, the loudest advocates for an amendment, said at the
June 15 meeting they still hoped an agreement on the amendment could be
reached before the end of July, when the WTO takes a one-month break
from meetings. But delegation sources said this is highly unlikely since
the U.S. and other WTO members including Japan and Switzerland oppose
the EU proposal as it has been described by sources familiar with it.

The chair of the TRIPS Council also indicated this is unlikely by
stating that the discussion should be continued at the next TRIPS
Council, which does not take place until October, a delegation source
said. However, the chair also said he would continue consultations on
the issue, according to a Geneva source.

Members currently are working under no formal deadline for reaching an
amendment, as they did not set a new one after a previous deadline in
March passed.

African countries this week indicated they might not agree to the EU
proposal, which EU officials this week in Geneva described as a
=93technical conversion=94 of a waiver agreed in 2003 into an amendment,
according to a Geneva source. The 2003 waiver gives developing countries
the right to produce generic versions of patented drugs under a
compulsory license for export, and waives rules that require the
production of drugs under a compulsory license to be primarily for
domestic use. This allows developing countries that lack the capacity to
produce their own generic drugs to import them when they are produced in
another country.

This waiver was only agreed after the chairman of the General Council
read a statement that had been subject to lengthy negotiations, and was
key to the U.S. agreeing to the waiver. That statement, mentioned in a
footnote in the waiver, includes pledges by 11 developing countries that
they would not use the waiver, and said members recognized it should be
used for public health and not commercial or industrial policy objectives.

The issue of whether the statement will be directly reflected in an
amendment is the key issue in the talks about converting the waiver into
an amendment, which WTO members committed to do when they approved the
waiver. Under the EU proposal, the waiver would essentially be added
word for word as an annex to TRIPS, and the chairman=92s statement would
be read at the time of the adoption of the amendment. The statement
would not be reflected in writing in the annex or in the TRIPS agreement.

African countries this week contested the idea that converting a waiver
into an amendment was a technical exercise, according to a delegation
source. The African Group has proposed an amendment that would eliminate
what it views as redundancies from the waiver, but what other WTO
members think could include significant provisions (Inside U.S. Trade,
Dec. 3. p. 8).

Rwanda, speaking for the group, also said that while it welcomed the
idea of a new proposal, it did not like the idea of a last-minute
submission, which they said could hinder the process of agreeing to an
amendment, according to a delegation source.

One informed source said the dilemma for the U.S. and other members is
that it will be very difficult to find a compromise on the issue of
reflecting the chairman=92s statement in the amendment because of legal
interpretations of such an amendment, and of an amendment with no
reflection of the chairman=92s statement.

African countries have argued that reflecting the chairman=92s statement
in the amendment would effectively raise the legal status of the
statement to the level of the waiver, which is something they could not
agree to. However, U.S. pharmaceutical companies believe the chairman=92s
statement=92s legal status would be downgraded if it were not reflected in
an amendment, according to an informed source.

Specifically, if a country were to be brought to the WTO=92s dispute
settlement body for violating the terms of the waiver, this source said
lawyers believe the statement would now be considered as part of the
context for the waiver, which would give the statement some political
weight.

In contrast, in a similar dispute settlement case, if the chairman=92s
statement were not reflected in a TRIPS amendment, the statement would
be seen as mere preparatory work for the amendment, the informed source
said. This would undercut the political weight of the statement in a
potential dispute settlement fight.