[Ip-health] Principale Administrator of EC DG Trade on WTO Decision of 6 December 2005 on the Amendment of the TRIPs Agreement

[Mike Palmedo]

WTO Decision of 6 December 2005 on the Amendment of the TRIPs Agreement

Patrick Ravillard
Know IP - Stockholm Network Monthly Bulletin on IPRS
Vol.2: Issue.4, May 2006

After more than two years of intensive debate about how to make
permanent and transpose a provisional decision originally adopted on 30
August 2003 into the TRIPs Agreement, the WTO Members agreed on 6
December 2005 to amend the TRIPs Agreement. This allowed the granting of
compulsory licences for the purposes of manufacturing of pharmaceutical
products for export to countries facing public health problems.

The WTO General Council has submitted the proposed amendment to the WTO
Members for acceptance. Once accepted and in force, this amendment will
complete a process that began in 2001 with the ministerial Declaration
on the TRIPs Agreement and Public Health. This is the first time that a
core WTO agreement has been amended.

The Doha Declaration on TRIPs and Public Health

On 14 November 2001, at Doha, the WTO Ministerial Conference adopted the
Declaration on the TRIPs Agreement and Public Health. The ministers
instructed the TRIPs Council to find an expeditious solution to the
problem faced by the Members with insufficient or no manufacturing
capacities in the pharmaceutical sector and which also could not import
the medicines they needed. The TRIPs Agreement indeed provides that
compulsory licences on patents1 can only be authorised predominantly for
the supply of the domestic market.

The waiver Decision of 30 August 2003

On 30 August 2003, the WTO General Council adopted the provisional
Decision allowing WTO Members to export patented medicines to third
countries with insufficient or no manufacturing capacities in the
pharmaceutical sector, by making use of compulsory licences. To give
comfort to the US, this Decision was accompanied by a Statement made by
the chair of the WTO General Council, describing Members' 'shared
understanding' on how the decision is interpreted and implemented. The
Decision takes the form of a provisional 'waiver' and provides for its
replacement by an amendment to the TRIPs Agreement, on which work was to
be completed by mid 2004.

Following the adoption of the waiver Decision, the European Commission
(EC) presented a proposal for a Regulation of the European Parliament
and of the Council, on 29 October 2004, on compulsory licensing of
patents relating to the manufacture of pharmaceutical products for
export to countries with public health problems. The objective is to
create a legal basis, at the EU level, to enable the relevant
authorities of the EU Member States to grant compulsory licences for the
production of pharmaceuticals and their export to eligible importing
countries. The Regulation was definitively adopted on 27 April 2006.

The negotiations on the amendment

The negotiations on the amendment were more difficult than expected. WTO
Members were unable to respect the deadline scheduled in the waiver
Decision. Indeed, certain Members attempted to re-open discussions on
substantive issues. The debate focused on the legal form and content of
the future amendment.

 From the outset, the EC took the view that the nature of the amendment
process should remain essentially technical, precisely in order not to
reopen the discussions on substantive issues[2]. The amendment should
faithfully reflect what was agreed on in the waiver Decision because it
is the result of a delicate balance that was difficult to strike. In any
event, for the EC, the fact that the TRIPs Agreement should be amended
meant that textual changes should have to be made to the TRIPs Agreement
itself, in order to transpose the relevant paragraphs of the decision
into TRIPs language. As to the WTO General Council Statement, the EC
said that the relationship between the waiver decision and the Statement
should be preserved but the legal status of the Statement should not be
upgraded.

The African Group saw an opportunity in the amendment exercise to
re-open the discussions on substantive issues and tabled a proposal for
an amendment in December 2004. They adopted a 'pick-and-choose'
approach, i.e. their proposal did not take up several provisions of the
waiver Decision while redrafting others. The rationale was that a number
of the Decision=92s provisions would be either redundant in the context of
an amendment or would be otherwise served by existing TRIPs provisions
on compulsory licences and enforcement.

Other developing countries generally welcomed the African proposal as a
good basis for further discussion. Their main concern was the status of
the Statement that they all did not want to involve in the amendment
process.

The US, while agreeing on the technical approach, sought to incorporate
- or to refer to - the Statement into the TRIPs Agreement. In
particular, they suggested that a reference to the Statement could be
made in a footnote of the TRIPs Agreement. In March 2005 they circulated
a submission in which they asked to preserve a reference to the
Statement explicitly in the amendment or the principles included therein
while arguing that they did not seek to elevate the legal status of the
Statement.

Due to a lack of real progress, the EC, as an honest broker, informally
circulated a paper in the WTO in September 2005 putting on paper its
ideas on how the waiver Decision should be transposed into the TRIPs
Agreement. This initiative injected new momentum in the discussion.
Technically, the amendment should consist of the insertion of an
exception to Article 31(f) allowing WTO Members to issue compulsory
licences for export under the conditions agreed in August 2003. These
conditions would be inserted in an annex to the TRIPs Agreement, so as
not to overload the body text of the TRIPs Agreement. As to the
Statement, the EC proposed that the statement should be reiterated by
the Chairman of the General Council at the time of adopting the amendment.

While the EC proposal was not formally submitted to the TRIPs Council,
it actually served as a basis for further consultations conducted by the
Chairman of the TRIPs Council. Consultations also took place between the
EC, the African Group and the US in order to narrow down differences in
the respective approaches. The EC and the African Group had very similar
positions on the amendment and both wished to find a solution to clear
the ground before the Hong Kong Ministerial Conference scheduled in
December 2005.

The decision of 6 December 2005

Work intensified in the run-up to the Hong Kong meeting and finally WTO
Members reached an agreement on 6 December 2005. The new rules will
allow any WTO Member to export medicines made under compulsory licence
for the purpose of supplying developing countries in need. They will be
formally incorporated into the TRIPs Agreement. The amendment takes
effect for the WTO Members that have accepted it when two thirds of the
WTO Members accepted the amendment and thereafter for each other Member
upon acceptance by it. WTO Members have set themselves until 1 December
2007 to do this. The waiver Decision remains in force for each Member
until the amendment becomes effective for that Member.

Contents of the amendment

The amendment is designed to stick to the waiver Decision as closely as
possible. The contents of the amendment are therefore the same as that
of the waiver Decision. The amendment itself is composed of three parts.
First of all, five paragraphs come under Article 31bis of the TRIPs
Agreement (i.e. an additional article after Article 31), in particular
the one which allows pharmaceutical products made under compulsory
licence to be exported to developing countries in need. Other paragraphs
deal with avoiding double remuneration to the patent owner, regional
trade agreements involving least-developed countries, non-violation and
situation complaints, and retaining all existing flexibilities under the
TRIPs Agreement.

A further seven paragraphs are in a new annex to the TRIPs Agreement.
These set out terms and conditions for using the system. Finally, an
appendix to the annex deals with assessing the lack of manufacturing
capacities in the importing country. This was originally an annex to the
waiver Decision. In order to preserve the legal meaning and weight, and
the relationship between the Statement and the new rules, the Statement
has not been incorporated in the amendment but was reiterated by the
Chairman of the WTO General Council prior to the adoption of the
proposal for an amendment. This reflects the approach that the EC had
defended during the negotiations.

A group of developed countries, including the EC, has announced that
they would not use the system to import. High income developing
countries announced separately that if they used the system as importers
it would only be for emergencies or extremely urgent situations. All WTO
Members have the right to act as exporters.

Acceptance of the amendment by the EC

The EC played an important role in these negotiations. As the EC is
competent to conclude agreements in the field of commercial aspects of
intellectual property, the amendment has to be accepted on behalf of the
EC. On 27 April 2006, the European Commission presented a proposal for a
Council Decision accepting, on behalf of the EC, the amendment. This new
initiative, together with the newly adopted Regulation on compulsory
licences of patents relating to the manufacture of pharmaceutical
products for export to countries with public health problems,
demonstrate the commitment of the EC to the WTO process and confirm its
willingness to really facilitate access to medicines for poor countries.

FOOTNOTES:

1 . A compulsory licence is an authorisation granted by government to an
economic operator to use a patent protected technology, without the
consent of the right holder.

2 IP/C/W/416 of 21 November 2003.

AUTHOR:

* Patrick Ravillard is Principal Administrator, Directorate-General for
Trade of the European Commission (Brussels). He is responsible for TRIPs
matters, including TRIPs and Public Health.

The views expressed in this article are those of the author and do not
necessarily represent the views of the European Commission