[Ip-health] Impasse on TRIPS Health permanent solution

[Martin Khor]

TWN Info Service on WTO and Trade Issues (Oct 2005)
28 October 2005
Third World Network
www.twnside.org.sg



Impasse on talks on TRIPS and Health "permanent solution"


An impasse became evident on negotiations on the major remaining
issue relating to the TRIPS Agreement and Public Health when some key
WTO members appeared far apart on a solution, and disagreed
even on how the process of consultations is going on, during a meeting of
the TRIPS Council on 25 October.

Some developing countries, particularly Brazil and India, complained that
they had been left out of consultations taking place between a few
countries. They also reiterated their support for the proposal by the
African Group as a good basis for negotiations towards a solution.

African countries indicated that they were prepared to engage with others,
and quoted a declaration by the African Health Ministers for the need to
find a permanent solution that removes all constraints and procedural
requirements to the export and import of generic medicines.

The US was adamant that a solution must include the statement of the Chair
of the General Council before the adoption of a decision on 30 August 2003.
However, India, Brazil and other developing countries did not want a
solution in which the Chairman's statement is upgraded to a higher legal
status than what it now has.

The issue at hand is the TRIPS Council's search for a "permanent solution"
to ensuring access to medicines for countries that have no or inadequate
drug manufacturing capacity.

Below is a report of the issue and the TRIPS Council meeting.

With best wishes
Martin Khor
TWN

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Impasse on talks on TRIPS and Health "permanent solution"

By Martin Khor (TWN) Geneva, 26 Oct 2005


An impasse became evident on negotiations on the major remaining
issue  relating to the TRIPS Agreement and Public Health when some
key members appeared far apart on a solution, and disagreed even on
how the process of  consultations is going on, during a meeting of the
TRIPS Council on 25 October.

Some developing countries, particularly Brazil and India, complained that
they had been left out of consultations taking place between a few
countries, indicating that they are parties interested in the issue and
would have to be involved if an agreement is to be reached.

They also reiterated their support for the proposal by the African Group as
a good basis for negotiations towards a solution.

African countries indicated that they were prepared to engage with others,
and quoted a declaration by the African Health Ministers for the need to
find a permanent solution that removes all constraints and procedural
requirements to the export and import of generic medicines.

The US was adamant that a solution must include the statement of the Chair
of the General Council before the adoption of a decision on 30 August 2003.
However, India, Brazil and other developing countries did not want a
solution in which the Chairman's statement is upgraded to a higher legal
status than what it now has.

The issue at hand is the TRIPS Council's search for a "permanent solution"
to ensuring access to medicines for countries that have no or inadequate
drug manufacturing capacity.

The Doha Declaration on TRIPS and Public Health in its paragraph 6 had
recognised that these countries face difficulties in making effective use of
compulsory licensing and mandated the TRIPS Council to find a solution to
this problem and report to the General Council.

Under Article 31(f) of the TRIPS Agreement, production of generic drugs
under compulsory license has to be predominantly for the supply of the
domestic market, thus limiting exports and constraining the supply of
medicines to countries that are unable to produce.

The General Council on 30 August 2003 adopted a decision enabling the
producing countries to have a waiver from the constraint of producing under
compulsory license predominantly for the domestic market. However, the
decision included several procedures, and a Chairman's statement read out
before the decision's adoption added several more procedural constraints.

The members however agreed that the decision was only a temporary solution
and mandated the TRIPS Council to find a "permanent solution", that would
involve an amendment to the TRIPS Agreement.

The African Group submitted a detailed proposal involving some changes to
the decision, and this was supported by several other developing countries
as a good basis for negotiations. The African Group as well as others also
did not want to give a legal status to the Chairman's statement that is
higher than what it now has, as this statement obliges the importers and
exporters of the generic drugs to undertake more cumbersome procedures that
hinder the use of the Decision and thus affect access to medicines.

However, the US has insisted that the "permanent solution" be a technical
exercise of transposing the 30 August decision and the Chairman's statement
into the TRIPS Agreement as the amendment.

Some diplomats and legal experts point out that there are two articles on
treaty interpretation in the Vienna Convention Law of Treaties that are
relevant to the discussion. Article 31 is on the General rule of
interpretation while Article 32 is on supplementary means of interpretation.
Article 31 has a higher level than Article 32 in the hierarchy of importance
as an instrument of interpretation of a treaty.

Documents that fall under the criteria listed under Article 31 are used
first when a treaty needs to be interpreted, and documents under Article 32
are referred to only when further clarification is required.

Article 31 says a treaty shall be interpreted in accordance with the
ordinary meaning to be given to the terms of the treaty in their context and
in the light of its object and purpose.

On the other hand, Article 32 says recourse may be had to supplementary
means of interpretation, including preparatory work of the treaty and the
circumstances of its conclusion to confirm or determine the meaning.

According to the diplomats and experts, the manner in which the amendment to
the TRIPS is drafted, and the language used, could determine whether the
Chairman's statement is taken to be a treaty interpretation instrument under
Article 31 or Article 32.

Concerns of developing countries that the legal status of the Chairman's
statement may be "upgraded" are thus really concerns on whether the text of
the TRIPS amendment would result in the Statement shifting from falling
under the criteria of Article 32 and moving to meet the criteria of Article
31. The choice of terms such as "context" and "in the light of" could have
an implication in this regard.

The previous and present Chairs of the TRIPS Council have been holding
consultations, but so far failed to come up with an agreed permanent
solution, despite the passing of several deadlines.

During previous meetings, Brazil, India and the African Group had also
complained that an asterisk with a note had been added to the front page of
the Secretariat document (WT/L/540) containing the 30 August decision. The
asterisked note had not been agreed to by members. The note said the
decision was adopted by the General Council "in the light of a statement
read out by the Chairman."

The developing countries expressed concerns that this note may raise the
legal status of the Chairman's statement, and asked for its removal from the
document containing the Decision.

Up to now the asterisk with note has not been removed. However, a
Corrigendum was issued by the Secretariat on 29 July 2005, by adding to the
note that this is a "secretariat note for information purposes only and
without prejudice to Members' legal rights and obligations."

The developing countries are concerned that the developed countries are
attempting to raise the legal status of the Chairman's statement. In recent
weeks, consultations have also been held among the US, EU and some African
countries.

According to some diplomats, the developed countries have broadly advocated
the acceptance of the whole 30 August decision as the amendment, together
with what they consider an appropriate reference to the Chairman's
statement, and some may even want a reproduction of that Statement in the
amended TRIPS agreement.

At Tuesday's TRIPS Council meeting, Brazil spoke strongly on the manner in
which consultations were taking place. It said that Brazil is an interested
party in the issue, as medicines is a high budget item and access to drugs
is an important public issue. The consultation process was not transparent
as it was only with a few delegations, and the how countries were selected
was not known.

Brazil added that the 30 August Decision agreed upon has no reference to the
Chair's text. It supported delegations that have asked the Secretariat to
remove the asterisked note. The Corrigendum in the August Decision does not
solve the problem. It requested that the Decision be brought back to its
original condition.

Referring to the African Group proposal to amend the TRIPS, Brazil
reiterated its position that the proposal provides a good basis for an
amendment. It is the only proposal on the table and Brazil was happy with
the approach taken by it, including the suggestion of removing some
redundancies from the text.

Brazil was also unhappy with the way some countries referred to the Decision
as a "package" which seems to suggest that it should include the Chairman's
statement.

Nigeria, on behalf of the African Group, said it would like to have a viable
solution before Hong Kong, and that it would remain engaged in the process.

Kenya said it hoped for a solution before Hong Kong. However, the previous
statements was a clear indication that "we are not yet at an agreement." It
quoted from the Declaration of the African Union's Conference of Health
Ministers (on 13-14 October), in which the Ministers "called upon the
Ministers of Trade to seek a more appropriate permanent solution at the WTO
that revises the TRIPS agreement and removes all constraints, including
procedural requirements, relating to the export and import of generic
medicines."

India stated that the African Group proposal is the only proposal on the
table and is a good basis for discussion. India has a two-fold interest in
the issue, as a producer for domestic needs, and as a supplier of medicines
to other countries. It added that the amendment should preserve
flexibilities of the Doha Declaration and the TRIPS Agreement.

It also said the Chairman's Statement is not part of the Decision and its
status should not be changed. It supported Brazil on the need to remove the
asterisked footnote.

India appreciated that any member may hold consultations with other members
but had concerns if there is involvement of the Chair in consultations in
which only a few members are involved. It had concerns with characterization
of sets of members as "most interested" or "key" or just members. India is
available for consultations that would be undertaken in whatever form.

Zambia said the issue of access to medicines was very important to African
countries and supported the statements of Brazil, India and Kenya.

Argentina also said that the African Group's proposal should be the basis
for the amendments. The elements to be included require careful attention.
Some elements of the Decision are not relevant for amending the text.

Argentina also had concerns relating to the Chair's statement. The legal
aspects and status of the Chairman's statement should not be changed. It
also did not agree that the statement of the Chair forms part of the
Decision. The asterisked note should be removed and the text should stand as
it was formulated.

It also said there is a need for a greater degree of transparency and
inclusiveness in the consultation process.

The Philippines also agreed that the African Group proposal is an important
basis for discussion, and it was ready to participate in any consultation.
China hoped the TRIPS Council could push ahead with the work to amend TRIPS
in order to provide legal certainty. Malaysia also did not want any
upgrading of the Chairman's statement and agreed it was better not to have a
solution yet, if it was a bad solution.

Many developed countries indicated that they wanted the Decision in its
entirety to constitute the content of the amendment, and several also stated
the Chairman's Statement should be an integral part of the amendment.

The US said the amendment needs to have express reference to the Decision
and the Chairman's Statement. It added that no further work on the asterisk
is necessary by the Secretariat.

Japan said that without the Chair's statement, there could not have been a
Decision. The amendment should be a technical exercise.

The EC said that the Chair's statement was read and the Decision adopted in
August 2003, and it saw no reason why this cannot be done again. The
amendment should remain technical and reflect what is in the August
Decision. The status of the Chairman's text should not be elevated and it
should continue to be the context in interpreting the Decision.

Korea said the amendment is a technical exercise that does not change the
legal status of the Chairman's text. Singapore said the EC proposal is
balanced and could be the basis to move forward and was one way of
preserving the Chair's text and the August Decision.

Switzerland said the Chair's statement is an integral part of the solution
and should consequently be reflected in the amendment.

Australia considered that the amendment should be a technical exercise and
wanted to preserve the agreement in its entirety. New Zealand said the
amendment is a technical exercise. The statement should represent an
understanding of members and a basis for amendment. It will provide
"context" for amendment and interpretation.

India responded that the Chairman's statement should not be taken as
"context" for interpretation, within the meaning of the Vienna Convention
Law of Treaties.

Jamaica stressed that access to medicines is an important issue to it. The
Chair's statement is not an integral part of the solution. The Decision is
the only basis for the amendment exercise.

Brazil expressed concern that references were being made to documents that
have not been submitted. For example, the EC proposal is floating around and
consultations taking place on it although it was not submitted to the WTO.
It said consultations are taking place among only a few members, so how can
it be expected that the outcome is agreed by others. It stressed that
consultations should involve all interested parties. While it is urgent to
find a solution, said Brazil, having no solution yet is better than having a
bad solution.

The TRIPS Council Chair, Ambassador Choi Hyuck of Korea, said he would take
note of all the statements and hoped that an agreement can be reached before
Hong Kong.

(* With inputs from Sangeeta Shashikant.) +