[Ip-health] Inside US Trade: US Cool to Compromise Aimed at Resolving TRIPS and Health Fight

[Mike Palmedo]

U.S. COOL TO COMPROMISE AIMED AT RESOLVING TRIPS AND HEALTH FIGHT

Inside U.S. Trade
May 27, 2005

U.S. officials have indicated that they are cool to a proposal from the
chairman of the World Trade Organization=92s Council on Trade-Related
Aspects of Intellectual Property Rights (TRIPS) that is aimed at
resolving the fight over how to amend WTO rules in way that would expand
access to generic drugs for developing countries.

Chairman Choi Hyuck of Korea this week said he had floated a possible
compromise on how to amend the TRIPS agreement to reflect the 2003
decision that made it easier for developing countries that lack the
capacity to produce their own generic drugs to import cheap, generic
versions of drugs under patent that are produced in a third country
under a compulsory license. Under the proposal tested by Choi, the
amendment would not include language that was read by the chairman of
the WTO General Council at the time the decision was adopted. That
language stated that members agreeing to the decision recognize it
should be used for public health and not commercial or industrial policy
objectives, and that reasonable measures should be taken to prevent the
diversion of products supplied under the decision to third markets.

This is a key point for the U.S., which only agreed to accept the
decision after months of negotiations that led to the reading of the
chairman=92s statement. As a result, the U.S. has demanded that any TRIPS
amendment at least include a reference to this language.

As a possible compromise, Choi proposed the idea of re-reading the
chairman=92s statement at the same time the WTO General Council adopts the
TRIPS amendment, in a nod to WTO members who feel the statement is a
critical component of the agreement. However, in a May 23 statement at
an informal TRIPS Council meeting, Choi indicated that the U.S. and
other developed members opposed this idea.

More specifically, Choi said one of the problems expressed was whether
the re-reading of the chairman=92s statement could be =93handled in a
sufficiently flawless way,=94 according to one delegation source. Sources
said this reflects the view of the U.S., which believes some WTO members
might make oral statements expressing reservations about the chairman=92s
statement, which could undermine the statement=92s effectiveness.

Delegation and private-sector sources said the U.S. is the key country
with doubts about this process, but that Switzerland, Japan and Canada
have also called for a direct reference to be made to the chairman=92s
statement in the amendment. One informed source said the U.S. had not
changed its position at all, and that it had signaled continued
opposition to any amendment that did not directly reflect the chairman=92s
statement.

The chairman=92s statement also includes commitments from 11 WTO members
not to use the decision except in cases of =93national emergency or other
circumstances of extreme urgency.=94 Those members include Israel, Hong
Kong, Mexico, Taiwan, Turkey, Korea and Singapore.

In contrast to the U.S. position, other WTO members have argued that
including the statement in the amendment would unfairly elevate the
chairman=92s statement to the importance of the decision itself. Choi
signaled that a majority of WTO members agree with this view by stating
in his written statement that there is a wide view that the most
straightforward and expeditious way forward would be an amendment that
is neutral and that does not alter the substance of what is contained in
the decision or the relationship between the decision and the chairman=92s
statement.

The approach that Choi said he has heard most often for how to convert
the decision into an amendment would be to make a short addition to
Article 31 combined with an annex containing the details of the
paragraph 6 mechanism.

The proposed amendment would be to TRIPS Article 31, which sets out the
rights of WTO members to use patented material without the authorization
of the patent holder under certain circumstances. For example, Article
31(f) states that any such use shall be authorized predominantly for the
supply of the domestic market of the member authorizing the use of the
patented material.

The August 2003 decision waives this obligation, and authorizes
production that would not be predominantly for the domestic market of
the member authorizing the production of the patented product. Until a
TRIPS amendment is put into force in a WTO member country, the August
2003 decision waiving the conditions of Article 31(f) are to be in
effect in that country.

Choi=92s statement follows the European Commission=92s submission to member
states of a proposal that would also amend the TRIPS agreement without
referencing the chairman=92s statement. A government source said the EU
feels this is the most neutral and objective way of changing the
decision into a TRIPS amendment, as WTO members agreed to do as part of
the August 2003 decision.

The EU government source said the commission proposal would add language
to TRIPS Article 31 that would have this article interpreted in light of
an annex that would be attached to TRIPS. That annex would include the
entire written decision agreed to by WTO members in August 2003, but not
the chairman=92s statement.

Member states in the EU were to discuss the proposal today at a meeting
of the 133 Committee on Trade. The EU hopes to submit the proposal to
the WTO by the TRIPS Council meeting June 14-15.

One informed source said U.S. officials were irritated by the proposal,
particularly since they were not aware that the commission was set to
take this step.