[Ip-health] SUNS: Controversy on proposed IP rules at World Customs Organisation

[Sangeeta]

IP: Controversy on proposed IP rules at World Customs Organisation
Published in SUNS #6535 dated 11 August 2008

Geneva, 8 Aug (Sangeeta Shashikant) -- A serious controversy has emerged at
the World Customs Organisation (WCO) over a proposal pushed by its
Secretariat and developed countries to adopt harmonized standards on
enforcing intellectual property, particularly to combat counterfeit and
pirated goods.

Many developing countries have objected to what they see as manipulative
methods of the Secretariat to push through the proposed standards by
brushing aside substantive and procedural concerns raised by these
countries. One method used is the production of a misleading report
asserting that there is consensus on the standards when in fact there are
disagreements that the report ignores.

The proposed standards are "TRIPS-Plus", in that they oblige developing
countries to take on several obligations that go beyond the WTO's TRIPS
Agreement, as pointed out by the South Centre.

A leading generic drug industry association in India has criticized the
proposed WCO standards as being another hurdle for access to medicines,
which could create barriers even greater than the TRIPS Agreement. A leading
trade think-tank in India also warned that the standards will enable customs
authorities to seize the shipment of any product which is suspected to be
counterfeit, and can be used as a non-tariff barrier to deny legitimate
trade for developing countries.

The controversy pertains in particular to the recent process in the WCO on
the development of Provisional "Standards to be Employed by Customs for
Uniform Rights Enforcement" (SECURE).

Some developing countries have raised concerns about the lack of
transparency and accountability on the part of the WCO Secretariat which has
been pressing for a quick adoption of the SECURE standards by the governing
bodies of the WCO (i. e. the Policy Commission and the Council),
notwithstanding the lack of consensus on the SECURE document.

The most recent meetings of the governing bodies, held in June this year,
saw several developing countries criticizing the WCO Secretariat.

The SECURE draft document has been discussed thus far only at three WCO
Working Group (WG) meetings, with no consensus achieved. The last WG meeting
took place on April 24-25, 2008.

The objections by several developing countries has postponed the adoption of
the SECURE document. The SECURE document is to be reconsidered by the WG,
and this is likely to take place on 30-31 October. The WG is then to report
to the WCO Policy Commission in December 2008.

The SECURE draft document contains sections on "IPR Legislative and
Enforcement Regime Development (containing 12 Standards as the main elements
for the enforcement of IPRs)"; "Cooperation with private sector"; "Risk
analysis and intelligence sharing"; "Capacity building for IPR enforcement
and international cooperation"; and "follow-up for implementation".

According to a recent South Centre Bulletin, the "proposed scope and the
level of enforcement of these standards are far higher than previous
international agreements" and they are in "stark contrast to the WIPO
Development Agenda which is a landmark achievement by the developing
countries to integrate developmental concerns into IP policies".

The working draft also accords more benefits to the right holders, which is
inconsistent with the call for a balance IP protection mechanism for all
stakeholders, says the South Centre.

It adds that the WCO is "dominated by a few developed countries and a core
group of northern corporate right holders" and these rights holders
participate on an equal footing with governments. Participation by
developing countries in the WCO meeting is inadequate. They are often
represented by officials from Customs Administrations, which have no
expertise in IP or development issues.

According to experts, this inadequate representation and participation is a
serious problem especially at this juncture as the WCO is pushing forward an
agenda on combatting counterfeiting and pirated goods, which places
obligations on developing countries that are higher than what they are
required to undertake in the WTO's TRIPS Agreement and which are
inconsistent with the needs and interests of these countries.

In fact, analysts believe that the WCO is being used by the developed
countries to implement their objective of introducing internationally
harmonized norms or standards that require developing countries to undertake
international border enforcement of IPRs that is "TRIPS-plus", or beyond the
requirements of the TRIPS Agreement.

The WCO is a Brussels-based international organisation representing 171
customs administrations. It has since 2005 been active in the area of
enforcement of IPRs, for example, by developing best practices, model
legislation, training and other tools to enforce IPRs.

Among the tools with the most development implications is the SECURE, which
according to the WCO website, includes "provisional standards, procedures
and best practices that will prove effective in coordinated global effort to
suppress all kind of intellectual property rights infringements".

The main aim of SECURE appears to be to implement an agenda that goes beyond
the TRIPS agreement with regard to enforcement of IPRs by enlarging the
powers of the Customs Administrations particularly at the border.

According to sources, the SECURE draft was being pushed by the WCO
Secretariat for quick adoption by the WCO Council meeting in June 2008
through manipulative methods. However, there was significant disagreement
over the text, resulting in a backlash by developing countries.

Six developing countries (Argentina, Brazil, Cuba, Ecuador, China and
Uruguay) issued a document lambasting the WCO Secretariat over its "Report
of the SECURE Working Group" (SP0269E1).

This report had been prepared following the working group's meeting in April
2008 and was submitted to the WCO Policy Commission that met on 23-25 June.
The WCO Council met from 26-28 June.

According to the developing countries' statement, the Report of the SECURE
Working Group "is not the result of discussions within the SECURE Working
Group" and it "neither reflects any agreed decision of its members" and
"should not constitute a basis for discussion".

The developing countries charged that the document "was produced without
previous consultations" and that "at best, it reflects the positions and
intentions of the Secretariat with regard to the document SECURE
Standards'".

They added: "This very fact is by itself a cause of concern since the
Secretariat should remain neutral, in particular when addressing politically
sensitive issues such as the one in the agenda of SECURE Working Group...
Such precedents undermine the reputation of the Organisation as an entity of
a technical nature".

The developing countries further stated that the current state of play
within the SECURE Working Group had been "misconstrued" by the Report. This
report had said that the WG had reached consensus on almost all points,
despite the fact that Members did not have the time to discuss outstanding
proposals and that they had signalled the intention to present further
proposals on the matter, said the countries.

They added that it is noteworthy that the Report "does not have a single
reference to the fact that the Group has not yet agreed on its Terms of
Reference".

Moreover, said the developing countries, the Secretariat provides no basis
for such an assumption (i. e. that the working group had reached consensus),
which, as a matter of fact, runs counter to the positions expressed by many
countries during the SECURE WG meetings.

Also, during the Working Group meeting, Members expressed the view that the
document "is not ripe for approval" until all concerns are accommodated,
said the countries.

They further charged that the Report's request to the WCO Policy Commission
for action had not been decided on by the WG. In fact, the WG has not had
the time to discuss its future work and this should not be construed as
meaning that the WG has decided to seek guidance/endorsement by the Policy
Commission on to the proposals that remain on the table.

They insisted that the WG needs "to further discuss these proposals on the
technical level, as well as other proposals that might be submitted in the
next meetings".

The Report also includes as an attachment a note by an external legal
advisor, which the Report said was made at the request of the Secretariat.

The developing countries responded to this note by stating that the request
and the note of the legal advisor was made with the objective of seeking to
refute the arguments that support the position of some Member states. They
said that "there is no decision by any WCO body to the effect that a legal
opinion should be sought on the issue of the SECURE WG", and the Members had
not been notified at any moment that the Secretariat was asking for the said
opinion.

"The measure taken by the Secretariat raises serious concerns because it
implies that the issues at stake in the framework of the SECURE WG are
limited to and can be settled by legal debates, which is not the case in
view of the high political sensitiveness of the issue," said the six
countries.

Another group of nine developing countries (i. e. Argentina, Brazil, Cuba,
Ecuador, Uruguay, Bolivia, Chile, Colombia and Costa Rica) presented a
document proposing Recommendations for consideration by the Policy
Commission.

The preamble of this document stated that:

-- The SECURE WG has not yet approved its Terms of Reference and that as
agreed on its third meeting, the TOR will be discussed at the beginning
stage of the 4th meeting (October, 30-31 2008);

-- The SECURE WG has not reached an agreement on the proposed draft SECURE
standards document and on a recommendation for action by the Policy
Commission or the Council;

-- Developing countries are still assessing the proposed draft SECURE
Standards and it is recognized that further discussion is still needed on
this document.

The nine developing countries' document also proposed that the Commission
recommend that the WCO Council takes note of the progress reached so far in
the discussions within the framework of SECURE Working Group and "requests
the Working Group to submit to the Council a proposal for the Terms of
Reference and, once agreement has been reached therein, to pursue the
discussion of the SECURE Standards with a view to finalizing the document."

According to a Summary report of the Policy Commission: "Following a
discussion, the Chairperson of the SECURE Working Group indicated that in
the event that the Policy Commission decided to send the document back to
the SECURE WG, it should provide clear guidance in order to assist the
Working Group and not slow down its work".

The Summary further states that "In conclusion, the Chairperson: emphasized
the importance of the file; and on the basis of the positions expressed by
the delegates, indicated that the Council would be asked to instruct the
SECURE Working Group to continue its examination of the Provisional SECURE
Standards document, reporting to the Policy Commission in December 2008".

Thus, the next step in this matter will be a meeting of the SECURE WG,
expected to be on 30-31 October, at which the SECURE standards document will
be examined again, with a goal of submitting recommendations to the Policy
Commission in December.

According to diplomatic sources, the developing countries in the WCO have at
least two major concerns: the process in which the meetings are conducted
and the reports are written, and the content of the proposed SECURE
standards, which contain obligations that are TRIPS-Plus.

According to Xuan Li from the South Centre, the SECURE document (as of April
2008) goes beyond the TRIPS Agreement in many ways, including:

-- extending the scope of import (Art. 51 of TRIPS) to export, transit,
warehouses, trans-shipment, free zones etc. (Std. 1 of SECURE);

-- extending the protection from trademark and copyright (Article 51 of
TRIPS) to all other types of intellectual property rights (Std. 2 of
SECURE);

-- expanding the right of the customs authority to take action upon its own
initiatives but removing the obligations from remedial measures when they do
not act in good faith (Std 7, SECURE)

-- giving the right holders the right to make requests, but on the other
hand shrinking the importer's minimum right of being notified promptly (Std
7, SECURE).

-- under TRIPS, it is the obligation of the right holder to provide evidence
and satisfy the customs authority that it should take action (Art. 52, 58),
but the SECURE standard reverses the burden to provide evidence from the
right holder to the customs administration (Std. 8)

-- under TRIPS, the importer and the applicant shall be promptly notified of
the suspension of release of goods (Art. 54) but no such safeguard is
available under SECURE (Std. 9)

-- under SECURE, the Custom administration has the authority to detain,
move, or seize IPR infringing goods but without placing an unreasonable
burden of storage and destruction fees on right holders (Std 11)

-- under TRIPS, Members shall provide for criminal procedurals and penalties
for trademark counterfeiting and copyright piracy on a commercial scale.
Under SECURE, Custom administration has legal authority to impose deterrent
penalties against entities knowingly involved in the importation/exportation
of goods under Customs control which violate any IPR laws (Std 12).

According to Li, although the Standards are termed as being voluntary, they
are "likely to evolve into mandatory standards as happened in the case of
the model provisions of framework of standards to secure and facilitate
global trade (SAFE) adopted in 1995 and revised in 2001 and 2004".

Also, once adopted by the WCO, the Standards can also be expected to be
promoted in other fora such as in the Universal Postal Union, WTO and WIPO
as well as in regional and bilateral negotiations such as EPAs.

The Business Standard (India) has reported that the "Provisional Global
Customs Standards" to counter IPR violations go much beyond the definition
of "Counterfeits" discussed by the World Health Assembly in May.

Mr. D. G. Shah, Secretary-General of the Indian Pharmaceutical Alliance
(representing generic drug companies) was reported as saying that the
measures in the SECURE document goes beyond the TRIPS Agreement, and that
"unless properly addressed, it could be yet one more hurdle for access to
medicines". He added that it has the "potential to create barriers which are
even greater than the TRIPS Agreement".

Indian researcher Nirmalya Syam of the Centre for Trade and Development
(CENTAD) was quoted by The Standard as saying that the application of SECURE
provisions in the current form "will enable states to interdict and seize
the shipment of any product which is suspected to be counterfeit... Such
powers may be used as non-tariff barriers to deny market access from
developing countries like India to the markets of other countries."

Viviana Munoz from the South Centre also cautions that "to increase reliance
on border measures for the enforcement of IPRs is a policy choice that
requires careful ex ante assessments. The system cost, complexity and
potential negative impact on trade are too often understated." +