[Ip-health] Inside US Trade: African Group Rejects EU TRIPS Amendment Proposal

[Mike Palmedo]

AFRICAN GROUP REJECTS EU TRIPS AMENDMENT PROPOSAL

Inside US Trade
October 7, 2005

The African group of World Trade Organization members has spurned the
European Union=92s request for it to endorse an EU proposal for a
controversial amendment to WTO rules covering the production and export
of cheap, generic copies of patented drugs, although the two sides are
likely to continue talking, according to Geneva-based sources.

The EU proposal, which is opposed by the U.S. for different reasons than
the African countries, is still under discussion with the African group,
but those countries would like the EU to accept several modifications
that the European Commission believes would make the proposal
unacceptable to other WTO members, delegation sources said. Without
those changes, sources close to the African group said, they would not
join the EU proposal.

This complicates efforts to reach an agreement on the proposed amendment
to the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS) before the Hong Kong ministerial, which is something the
EU had hoped its proposal would make possible, according to government
sources. An agreement on this issue would clear one potential
distraction to other talks on agriculture, services and industrial
market access in Hong Kong, these sources said.

At issue are negotiations on converting a 2003 decision adopted by the
WTO=92s General Council into an amendment to TRIPS. The decision grants a
waiver from TRIPS rules so that poor countries can import generic copies
of patented drugs that are produced under a compulsory license in
another country. WTO members committed to adopting the amendment when
they agreed to the decision, but have so far been unable to agree on how
to do this.

The EU offered a proposal last summer to amend Article 31 of TRIPS to
introduce a reference to a new annex to TRIPS. Under the proposal, that
annex would include the August 2003 decision virtually word for word,
with two minor exceptions (Inside U.S. Trade, Aug. 5, p. 8).

The African group has asked that the EU proposal be modified so that
some parts of the decision are reflected in the actual text of the
amendment, and not in the annex, according to two sources close to the
African group.

For example, paragraph 3 of the TRIPS decision states that compensation
to a patent holder of a drug produced under a compulsory license for
export should be paid by the country exporting the drug and also waives
any requirement on the importing country to pay compensation provided
compensation is paid by the exporting country. African group countries
want similar language in the text of the amendment.

One developing country delegation source said the EU saw the possibility
of including this language in the TRIPS agreement instead of in the
annex with the rest of the 2003 decision as opening the door to new
negotiations on issues that should have been settled during lengthy
talks on the TRIPS decision. Delegation sources said the African group
was not proposing a word for word inclusion of paragraph 3 of the
decision in TRIPS, although one developing country source said it was
=93almost=94 a word for word repetition.

This source also said the annex and the TRIPS agreement have the same
legal standing, as the source said the EU and other WTO members have
said, it should not matter if some parts of the decision are included in
the agreement while some of the decision is in the annex.

But another source said it would be politically difficult to break off
bits of the decision for inclusion in the actual TRIPS agreement while
leaving the rest of the decision in the annex, even though technically
the annex and TRIPS should have the same legal standing. =93I don=92t see
why there should be a pick and choose, where some would be in the
article and some in the annex. What justification would there be?=94 this
source said.

Some observers of the talks have charged that some members of the
African group appear to be trying to use these negotiations to win
victories on points that were lost in the initial negotiations on the
decision, and that this could be one reason why they are pushing for
some parts of the decision to be placed in the TRIPS.

Another reason for demanding changes to the EU proposal could be that
this would make it more likely that a final decision would not be made
until the Hong Kong ministerial, a developed country government source
said. However, African group sources said they would like to reach an
agreement before the Hong Kong ministerial.

A second modification proposed by the African group deals with paragraph
6 of the TRIPS decision, which allows generic drugs produced under a
compulsory license for export to be shipped by that importing country to
other countries with which it shares a regional trade agreement,
provided those countries share the same health problem being addressed
by the imported medicine. This is intended to allow groups of least
developed countries to pool resources to meet the hurdles of issuing a
compulsory license and it provides a waiver from TRIPS Article 31(f),
which requires a compulsory license to be issued predominantly for the
domestic supply of the country issuing the license. Paragraph 6 states
that this waiver should not prejudice the =93territorial nature=94 of the
patent rights in question.

The African group also proposed that this waiver be included in the
amendment proposed by the EU, and not in the annex.

The most controversial part of the EU proposal from the U.S. perspective
is its call for a chairman=92s statement, read at the time of the
decision=92s adoption and placing certain restrictions on the ability of
advanced developing countries to use it, not to be included as even a
footnote to the annex. The EU proposed that the chairman=92s statement
just be re-read when the amendment is adopted, but the U.S. has insisted
that there must be some reference to the chairman=92s statement in the
actual amendment to TRIPS.

The U.S. has argued that WTO members could make statements after the
chairman=92s statement is read that would undermine the amendment.