[Random-bits] No gift to the poor: Strategies used by US and EC to protect big pharma in WTO TRIPS negotiations

[James Love]

http://workingagenda.blogspot.com/2005/12/no-gift-to-poor-strategies-
used-by-us.html

Working Agenda
Thursday, December 01, 2005
No gift to the poor: Strategies used by US and EC to protect big
pharma in WTO TRIPS negotiations

On Friday, the WTO TRIPS council will apparently meet again to try to
agree upon a permanent amendment to the TRIPS agreement, in theory to
make it easier to export medicines manufactured under a compulsory
license. There is a lot of drama over this negotiation, and it
illustrates the way a WTO negotiation can turn the whole notion of
free trade upside down, how it can promote protectionism, and how
firmly the big drug companies are in control of the US and EU
negotiators, and how closely they work with WTO DG Pascal Lamy,the
former top EC trade official.

In 2001, the WTO adapted a very good declaration on TRIPS and public
health. This declaration has seven sections (referred to somewhat
inaccurately as paragraphs), which among other things, says that WTO
members should implement the TRIPS obligations in =93a manner that
promotes access to medicines for all.=94 Ever since then, big
pharmaceutical companies have tried to undermine if not overturn this
declaration. The main vehicle for this mischief has been the one
paragraph (para 6), which promised a =93solution=94 to one of the obvious
flaws of the TRIPS agreement -- the restrictions on exports of
products manufactured under a compulsory license.

The source of this problem, Article 31.f of the TRIPS, limits exports
to less than half of production. This is a big problem for countries
with small domestic markets, because they just won=92t have the
economies of scale for efficient production if they can=92t export. It
is also a problem for big countries, even the United States, if they
lack the capacity to manufacture a product -- such as the case today
for Tamiflu, the drug for treatment of avian flu, because countries
big or small will not be able to find foreign suppliers of needed
generic medicines.

Trade officials in the US and the EC understand perfectly well that
if they make the system of compulsory licensing of medicines
inefficient enough, it won=92t be used much. So they focused on the
para 6 implementation with the intention of making it work poorly.
They also decided they could use this negotiation to introduce all
sorts of new precedents within the TRIPS, that never existed before,
such as WTO oversight and reporting for each compulsory license, new
procedures for issuing licenses that make it more risky and
burdensome for generic suppliers, and creating new opportunities to
trigger bilateral pressure on countries to prevent them from actually
using compulsory licenses.

They also tried in 2002 and 2003, unsuccessfully, to restrict the
diseases that would be covered by the agreement, seeking to undermine
the broader nature of the 2001 agreement.

When head of DG-Trade, Pascal Lamy was the main architect of this
strategy for the EC.

Policy in the US was dictated at the highest levels of the White
House, out of the office of Karl Rove, in close consultation with big
pharma companies, and particularly Pfizer CEO Hank McKinnnell, who
helps raise a lot of money for Rove=92s various political projects.

On 30 August 2003, a "temporary" solution to para 6 of the Doha
Declaration on TRIPS and Public Health was announced. It was a very
complex and limited set of procedures for overcoming the 31.f
restriction, which actually made consumers everywhere worse off,
because it not only created new precedent for burdensome procedures,
but it had the practical effect of making two other possible legal
mechanisms for authorizing exports less feasible, on political if not
legal grounds. It was widely criticized by virtually all public
health, consumer and development NGOs following the negotiations.

Worse than the text of the 30 August 2003 decisionwas a long
Chairman's Statement which, if gave a restrictive interpretation of
the agreement, and further narrowed the utility of the 30 August 2003
decision. The "Chairman's statement, which was read at the WTO by
General Council chairperson Carlos P=E9rez del Castillo, Uruguay=92s
ambassador to the WTO, was approved by Pfizer CEO McKinnell and Karl
Rove's office.

(In 2005, Castillo ran for the position of DG of the WTO, but was
defeated by Lamy, who now holds the post).

The negotiations over para 6 of the Doha Declaration on TRIPS and
Public Health were widely considered a disaster by the public health
community, and also by many developing country delegates. The US and
EC obtained the deal by relentlessly focusing on the African
negotiators, and pressuring them to keep the Asian and Latin American
countries from having any meaningful role in the final negotiations.
Enormous pressure was applied to African countries, and in the end,
they agreed to a package that was not only complicated and
restrictive, but also highly protectionist -- by design.

The African countries were promised they could use the agreement to
keep the Asian and Latin American producers out of the African
market, which would have been more relevant if the African generic
producers actually had the capacity to efficiently manufacture the
active pharmaceutical ingredients (APIs) that were key to the
manufacturing of medicines. The US and the Europeans were also given
the right to "opt-out" of the agreement as importing countries, so
they could favor domestic producers even in cases where they issued a
compulsory license. So much for free trade.

Despite its twisted outcome, the WTO trumpeted the 2003 deal as a
great gift to the poor, partly to mask the paucity of progress on
development issues, such as agricultural subsidies.

Now a little more than two years later, with the Hong Kong
Ministerial having made no visible progress on real development
issues, Lamy, the EC and the US are again pushing hard on the same
issue -- this time to make the temporary waiver of 31.f permanent. At
the same time, they are seeking to elevate the legal status of the
2003 Chairman=92s Text -- actually making consumers worse off.

There are many aspects of this, and here are just a few. The Africa
Group made a very good proposal in February 2005 for a much better
permanent amendment. It was opposed by the US and the EC. The EC and
then the US then focused once more on the African negotiators, and
apparently succeeded in completely taking off-the-table the highly
regarded February proposal, and replacing it with something that
would simply make the 2003 agreement permanent. The US and the EC are
also pushing to elevate the legal status of the 2002 Chairman=92s
Statement, which would make generic producers and consumers worse off.

There is little information about what is going on in terms of the
trade-offs, but it is clear that the US and the EC have decided they
can use the African negotiators to undermine the positions advocated
by Asian and Latin American negotiators.

Bird Flu debate

Meanwhile, the global debate over access to medicines for a possible
avian flu pandemic have raised awarness of some of the more obvious
reasons a country would not want to "opt-out" as a possible importer
of this mechanism.

The 30 August 2003 decision lists some 23 countries that say they
will opt-out of the mechanism, even in cases of a public health
emergency or pandemic. The Chairman's statement expanded that list,
to now include:

Australia, Austria, Belgium, Canada, Czech Republic, Cyprus, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland,
Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Netherlands, New
Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain,
Sweden, Switzerland, United Kingdom and United States of America.

None of these countries can currently obtain enough generic versions
of Tamiflu to fill national stockpiles, and only a couple could
actually manufacture the vaccines they would want should a pandemic
break out. There has been no press coverage of this at all in the
mainstream US press, and almost nothing in Europe either.

(I have written about this on two occasions in the Huffington Post
(1,2).

Meanwhile, the US and the EC both refuse to meet with public health
groups to discuss the obvious risk to public health of opting out of
the decision, and they are rushing to make this opt-out permanent
before the December Hong Kong WTO meeting.

Earlier this week the US, the EC and the WTO DG Lamy were able to
announce a new deal on a related TRIPS issues -- the requested
extension for Least Developed Countries to comply with TRIPS. In 2004
these countries had an average per capita income of less than $1 per
day. The LDCs wanted a 15-year extension. They got half that, but
with several strings, including a requirement for extra cooperation
beginning in 2008 to implement the TRIPS agreement, and most
important, a pledge that there will be no =93backtracking=94 for
countries that have already implemented the TRIPS obligations --
which most have. This too was presented as gift to the poor.

---------------------------------
James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org /
tel. +1.202.332.2670 / mobile +1.202.361.3040