TWN Info Service on Health Issues (May18/08)
30 May 2018
Third World Network

China-South Africa for strengthened TRIPS flexibilities
Published in SUNS #8690 dated 30 May 2018

Geneva, 29 May (D. Ravi Kanth) - China and South Africa have upped the ante for strengthening the flexibilities in the World Trade Organization's Trade -Related Aspects of Intellectual Property Rights (TRIPS) agreement based on the repo rt prepared by the United Nations High-Level Panel (HLP) on Access to Medicines for ensuring affordable access to vital medicines.

Affordable access to vital medicines is a crucial part of Goal 3 of the Sustainable Development Goals (SDGs) that "aims to ensure healthy lives and promote the well-being of all people of all ages," China and South Africa argued, in their proposal circulated on 24 May at the World Trade Organization.

The two-page proposal of China and South Africa, entitled, "Intellectual Property and the Public Interest: Promoting Public Health through Competition Law an d Policy," has laid out a robust case as to why the WTO members must live up to the UN's HLP report that seeks to achieve the Goal 3 of the SDGs.

At a time when the WTO's Doha negotiations on rules are especially focussed only on fisheries subsidies to justify the Goal 14.6 of the SDGs, it is imperative to tackle the other grave issue, as set out in Goal 3 of the SDGs, to "ensure healthy lives and promote the well-being of all people of all ages," said a trade envoy who asked not to be quoted.

In its report issued last year, the UN's high-level panel persuasively argued on how to avail of and strengthen the flexibilities in the TRIPS agreement for ensuring accessible medicines at affordable prices.

China and South Africa said WTO members must achieve the Goal 3 of the UN Sustainable Development Goals which emphasizes the need for providing strong health.

"The TRIPS Agreement strikes an appropriate balance between the interests of right holders and users. Article 7 of the TRIPS Agreement recognizes that the protection of intellectual property should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of users and producers of technological knowledge and in a manner conducive to social and economic welfare and to a balance of rights and obligations," China and South Africa argued in their proposal circulated on 24 May.

The TRIPS agreement, according to China and South Africa, emphasized that " the principles of IP protection are based on underlying public policy objectives".

Besides, there is an urgent need for "formulating or amending their laws an d regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this [TRIPS] Agreement," China and South Africa said.

The two countries called on the WTO members to avail of "TRIPS flexibilitie s that provide transition periods for LDCs (extended by the WTO until 1 January 2033), differing IP exhaustion regimes, refining the criteria for grant of a patent (patentability criteria), pre-grant and post-grant opposition procedures, as well as exceptions and limitations to patent rights once granted, including regulatory review exception (the "Bolar" exception in US law) to facilitate market entry of generics, compulsory licences and government use. Despite such flexibility, many least developed and developing countries cannot implement competition regimes due to the lack of capacity to use competition law to achieve public health objectives."

"Competition law," according to China and South Africa, "is one of the least discussed flexibilities within the WTO's TRIPS Agreement."

"The fundamental objective of competition law is to protect the integrity of competitive markets against abusive conduct, and to protect consumers from the effects of such conduct," China and South Africa pointed out.

"Even though the TRIPS Agreement sets minimum norms for standards of IP protection that significantly limit Members' discretion on a large number of IP rights issues, it is not the case with competition law," the two major developing countries pointed out.

China and South Africa said "members are free to design competition laws in such a way as to take account of their domestic interests and needs, including taking account of their respective levels of development, subject only to the natural limits defined by the territorial limits of such laws."

Further, various provisions of the TRIPS Agreement, according to China and South Africa, "are relevant to competition law including Article 6, Article 31(k) and Article 40."

"As such, these provisions leave broad discretion to Members in how they apply competition law in respect of the acquisition and exercise of IP rights," South Africa and China maintained.

More important, several provisions of the TRIPS Agreement provide various flexibilities.

They include:

(1) Article 6 of the TRIPS Agreement authorizes WTO Members to allow parallel importation of health technologies, a major pro-competitive form of activity that can be used to secure the lowest priced products available on international markets;

(2) Article 31(k) of the TRIPS Agreement confirms the right of Members to u se such licences as anti-competitive remedies. The only condition required by Article 31(k) for the grant of this type of compulsory licence is that the anti-competitive practice needs to have been determined through a judicial or administrative process. The possible use of compulsory licences to deal with anti-competitive practices, as explicitly recognized in Article 31(k) of the TRIPS Agreement, is of particular importance to protect public health in cases, for instance, of excessive pricing of health technologies or refusal to grant a licence on reasonable commercial terms.

WTO members must "share their national experiences and examples of how competition law is used to achieve public health and related national objectives."

The two countries posed the following questions to be addressed at the next TRIPS Council meeting.

The issues include:

* What grounds are available in their national laws to pursue competition law and policy to achieve public health outcomes?

* What are the difficulties faced by WTO Members in using competition law policy to prevent or deter abusive practices, including capacity constraints, pressure from other Members and Corporations?

* Unreasonably high royalties may deter the transfer of technology. What policies have Members established to deal with technology pricing and other aspects of transfer of technology transactions?

* Compulsory licences have been used by competition authorities in some countries to restore competition in cases involving the exercise of IP rights. What are the experiences of Members in using compulsory licenses, noting the flexibilities inherent in Article 31(k) of the TRIPS Agreement?

The proposal by China and South Africa has come at an appropriate time when major developed countries led by the United States, the European Union, and Japan are desperately moving the goalposts of the TRIPS Agreement.

The developed countries are insisting that there must be disciplines for "supporting and incentivizing innovation" as part of the intellectual property frameworks in the WTO's TRIPS Agreement.

The US, the EU, Japan and their allies are justifying rules for innovation so as to improve lives through social and economic growth.

In a proposal circulated to the WTO's TRIPS Council on 24 May, the US along with Australia, Canada, the European Union, Japan, Korea, and Switzerland said incentivizing innovation is crucial for rapid development in sectors such as education and training, creative works, health, the environment and transport.

The sponsors gave several examples of the central role of innovation in the education and training sector for students, for protecting artistic express ions in the creative sector, and for developing new technologies in the transport sector.

As part of the thematic session - Intellectual Property and Innovation - The Societal Value of Intellectual Property in the New Economy - for 2018 at the upcoming TRIPS Council meeting, the US and its allies want WTO members to share national and regional experiences on the role of intellectual property and innovation frameworks in improving lives.

The sponsors posed the following questions for members to consider:

i. What are examples of inventions or creations that have benefited or improved lives that have been made possible by intellectual property systems? What roles have intellectual property frameworks played in creating incentives in these areas?

ii. Do Members have any research or studies to share regarding how intellectual property and innovation frameworks have improved lives?

iii. How has international cooperation in the area of intellectual property and trade in innovative goods and services contributed to improving quality of life?

However, a majority of developing countries remain stridently opposed to any new obligations for innovation in the TRIPS on grounds that the TRIPS agreement is silent on innovation.

The developing countries, which include India, China, South Africa, the African Group, and the least-developed countries, repeatedly turned their back to thematic sessions on innovation.