[Ip-health] Inside US Trade: African Group and US Discuss Possible TRIPS and Health Solution

[Mike Palmedo]

AFRICAN GROUP, U.S. DISCUSS POSSIBLE TRIPS AND HEALTH SOLUTION

Inside U.S. Trade
Date: October 28, 2005

The African group for the first time has signaled a willingness to move
toward the U.S. position in a fight over how to draft an amendment to
World Trade Organization rules on intellectual property rights that
would make it easier for poor countries to import cheap, generic
versions of patented drugs manufactured under a compulsory license in
another country, according to sources. However, the African group said
it could accept a key U.S. demand on this issue only if other African
demands are met.

Informed sources said that in the most recent discussions, the African
group said it would consider including in the amendment language that
refers to a 2003 statement from the chairman of the General Council.
That controversial statement mentioned voluntary commitments by 11
developing members such as Hong Kong and Korea not to use the Agreement
on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
decision except in an emergency, and it also placed certain restrictions
on its use, including that it be used for public health and not
commercial or industrial policy objectives.

The chairman=92s statement allowed the U.S. to agree to the 2003 decision
allowing poor countries to import generic versions of drugs when they
lack the manufacturing capacity to produce these drugs on their own. As
such, the U.S. has insisted that any amendment to the TRIPS that cements
the 2003 decision must include a reference to the chairman=92s statement.

While African countries and the European Union have both argued that
referencing the statement in the amendment would raise the legal status
of the statement, African groups now say they could consider this U.S.
demand as long as other demands of African countries were met. These
demands involve including certain parts of the 2003 decision in the
actual language of TRIPS, and not in an annex to TRIPS, where most of
the decision would be place. The Africans have also proposed that some
parts of the TRIPS decision be dropped completely from the amendment,
according to sources.

These consultations are continuing, and sources said it is not clear
whether they will result in a deal. For now, the African group has not
agreed to a reference to the chairman=92s statement, and the U.S. has not
agreed to dropping any parts of the TRIPS decision from a possible
amendment, sources said.

Members hope to reach an agreement on the amendment before the Hong Kong
ministerial, which begins on Dec. 13, to ensure the TRIPS issue is not a
distraction from other issues. The U.S.-EU-African group discussions
started earlier this month in advance of this week=92s TRIPS Council
meeting, but sources said they were unable to close their differences in
time for this meeting.

There are no more formal meetings of the TRIPS Council scheduled before
Hong Kong, but sources said a meeting could be held in early December if
members were close to a deal.

At this week=92s TRIPS Council meeting, India and Brazil, which have not
been involved in the informal consultations, said all interested WTO
members should be included in any consultations led by the chair.
Several other developing countries including Jamaica, Zambia, Brazil,
India and the Philippines said the chairman=92s statement should not have
any legal status. Countries listed in that statement as opting to not
use it also cautioned against elevating its legal status, although
Singapore, one of the 11 countries listed, said the statement also
cannot be ignored.

In the informal discussions, the U.S. asked for a reference to the
chairman=92s statement, which could be included either in TRIPS or in the
annex to TRIPS, that states that the annex should be interpreted in the
context of the statement read by the General Council chairman when the
2003 decision was adopted, according to sources familiar with the talks.
The key for the U.S., these sources said, is to ensure that the
chairman=92s statement would be a part of the context of the new TRIPS
language.

The African group did not reject this possibility in discussions late
last week, but the group is still asking for assurances from the U.S.
that including such a reference in the actual TRIPS agreement would not
upgrade the legal status of the chairman=92s statement.

Some observers suggested this would be difficult because any reference
to the chairman=92s statement in the actual TRIPS or the annex to TRIPS
would automatically increase the statement=92s legal status. One of these
sources said including a reference would make the chairman=92s statement
an integral part of the TRIPS decision, and that even if the Africans
won some of the changes they seek, the U.S. would get the better end of
the deal.

An African delegation source acknowledged he had no answer so far to the
question of whether it was possible to include a reference to the
chairman=92s statement and not upgrade its status. The African group wants
to =93sit down with the U.S. and have them show us=94 how it would not
upgrade the statement=92s legal status, this source said. =93To me, it
already upgrades it, but we don=92t want to dismiss their approach.=94

In return, the African group is asking for three parts of the 2003
decision that provide various waivers from TRIPS to be included within
TRIPS, while the rest of the decision would be placed in an annex to
TRIPS. This is different from an informal EU proposal, which would
create a new annex to house the entire 2003 decision, and then add a
reference in TRIPS to this annex.

The three changes requested by the African group would ensure that the
actual waivers from TRIPS Article 31 (f) and (h) included in the 2003
decision would be included in the body of TRIPS. Article 31(f) requires
that production under a compulsory license by primarily for the supply
of the domestic market, while Article 31(h) states that the patent right
holder be paid adequate remuneration by the country using the compulsory
license. Paragraph 2 of the 2003 decision waives Article 31(f), while
paragraph 3 of the decision waives the adequate remuneration requirement
on the country that would be importing the generic drugs produced in
another country under the compulsory license. The waiver from Article
31(h) is intended to prevent double remuneration, as the exporting
country would still have to pay adequate remuneration under the new
rules to the patent right holder.

The third part of the TRIPS decision that the African group wants
reflected in TRIPS is in paragraph 6 of the 2003 decision. This
paragraph also waives Article 31(f) so that generic versions of a drug
imported by one least developed country can by shipped to other similar
countries with which it shares a regional trade agreement. The paragraph
requires that at least 50 percent of the regional trade agreement=92s
members be LDCs to use this waiver.

The African group also wants two paragraphs of the 2003 decision not to
be included in the TRIPS or the new annex. The first is paragraph 6.2 of
the decision, which calls for the promotion of regional patents. One
delegation source, explaining why the African group thinks this
paragraph should not be included, said this language is purely advisory
and does not place a condition on the use of the decision.

The second is paragraph 8, which calls for an annual review of the TRIPS
decision. A delegation source said an annual review should not be
necessary once an amendment is agreed.

Separately, Zambia last week requested a 15-year extension of a
transition period set to run out on Jan. 1, 2006 for LDCs to implement
TRIPS. The extension would cover all intellectual property, and would
have the effect of extending a transition period granted to LDCs at the
Doha ministerial that strictly covered pharmaceutical patents.

The request by Zambia was on the agenda for this week=92s TRIPS Council
and could be discussed today, according to a Geneva source. However, at
informal discussions last week, neither the U.S. nor the EU signaled
acceptance of a transition, sources said.

Instead, both signaled that an extension would probably have to be
considered on a case-by-case basis, instead of as a blanket exemption
from TRIPS.

The copyright industry would likely oppose a blanket 15-year extension
of the transition period, an industry source said. This source said
TRIPS Article 66.1, which allows for LDCs to request an extension, was
intended to be used by LDCs who had difficulty implementing a specific
part of TRIPS.

If a specific LDC needs more time to implement a specific part of TRIPS,
industry would likely be willing to negotiate on this basis, the
copyright source said. But the intention of TRIPS and Article 66.1 was
not that this transition period would last forever.

In addition, the source noted that Internet businesses that allow
copyright material to be easily transferred have often been housed in
LDCs. For example, the Kazaa web site that allows visitors to download
music is housed in Vanuatu, the source said.

LDCs were granted a 10-year exemption from TRIPS under Article 66.1,
which also states that the TRIPS Council =93shall, upon duly motivated
request by a least developed member, accord extensions of this period.=94
The exemption was originally provided because of the =93special needs and
requirements=94 of LDCs and their economic, financial and administrative
constraints. Zambia=92s request said these needs prevented these countries
from immediately observing all the TRIPS obligations.