US holds up decision on implementing Doha health declaration

After the TRIPS Council Chairman had put forward his draft decision on paragraph 6 on 16 December, many countries indicated that they could reach a consensus on the text. The most notable exception was the US, which stubbornly insisted on limiting the diseases to which the decision would apply.

by Chakravarthi Raghavan

GENEVA: An informal meeting of the TRIPS Council on 17 December heard further views from members on the Chairman’s draft text for a decision on implementing paragraph 6 of the Doha Ministerial Declaration on the TRIPS Agreement and Public Health, but there was no consensus.

The United States still remained opposed to the Chairman’s draft and insisted on a restrictive definition of the scope. And few expect the US to change its view. (The text of the draft is reproduced on pp. 7-9.)

Several trade diplomats, speaking on a non-attributive basis, said that the conditions being demanded of both importing and exporting members are such that in practical terms it won’t work.

However, the entire discussions had now become an exercise by countries to ensure that the blame for failure to implement the Doha Ministerial mandate on paragraph 6 is not shifted to their shoulders.

On 16 December, the TRIPS Council had met informally and was given a new revised text by Chairman Eduardo Perez Motta of Mexico. A number of delegations at that meeting had given their preliminary comments or reserved their views pending instructions from their capitals.

Several of them spoke on 17 December, with a larger number of countries agreeing to the revised text or at least not opposed, while the US did not change its stand. With no consensus, the meeting was suspended again, until 20 December morning.

Trade officials said that at the 17 December meeting more countries announced they could join a consensus even though they had problems with some parts of the text. Despite their reservations, they recognized that the text was the best that could be achieved now.

Many of them also said that it was important to send a good signal to the world by meeting the mandate and deadline of the Doha Declaration on TRIPS and Public Health. Several also warned that if others sought changes to the draft, they would also seek changes, which would unravel the text.

A number of countries who had not spoken on 16 December or were not ready to join a consensus pending advice from their capitals, spoke the following day indicating they would join a consensus. Among these were: Turkey, Colombia, Poland, Hong Kong China, New Zealand, Australia, Israel, Senegal, Romania, Thailand, Malaysia, Singapore, India, Brazil, Peru and Nigeria.

Kenya, in a statement on behalf of the African Group, felt that the draft text could have included a number of points (which it listed) and omitted others. Among these last was the requirement in the current text that products supplied under this system (of implementing paragraph 6) should have a different colour and shape. This, the African Group said, would raise costs, and a distinctive labelling requirement ought to be a good compromise.

Nevertheless, said the African Group, it could join a consensus on the text as it stands.

A few delegations said they could not join a consensus, among them the United States, which repeated its preference for a restrictive disease coverage - the decision to apply only for HIV/AIDS, malaria, tuberculosis, or other infectious epidemics of comparable gravity and scale, including those that may arise in the future.

Japan said that it was aiming for consensus within the deadline, but was aware that at the moment there was no consensus because of concern about diseases covered (including the question of asthma and obesity), which should be clarified.

The Philippines still sought a more flexible text on importing countries implementing safeguards against diversion (“shall endeavour” instead of “shall”).

Indonesia supported this although it said it would not block consensus.

Argentina, Cuba and China were among the countries saying they were still consulting their capitals.

In opening the meeting, Chairman Motta said that the “time is up” for decision. He warned that changes to the text would disturb the balance and unravel it.

At the end Motta summed up the discussions by observing that a large majority were willing to accept the text as it was, at least under certain conditions. He asked those delegations that still had problems to go along with it because the current text was the best possible option open to members.

Spirit of compromise

The statement by Kenya on behalf of the African Group, made available to the media later, said the group had consistently made clear that any solution must be “stable, permanent and of a long-term nature”, and that it should “squarely address the restrictions in paragraph (f) of Article 31” of the TRIPS Agreement. (Article 31(f) provides that production under compulsory licence shall be authorized predominantly for the supply of the domestic market of the member issuing the licence.)

Towards this end, the African Group with others had suggested a “fairly simple and straightforward” amendment which ought to have been put forward for the consideration of the Council. The African Group regretted that though proposed at various stages of the discussion, it had not been substantively considered at the TRIPS Council meeting. Even if the amendment proposed to the text could not be adopted now, it should be included in an annex to the decision to serve as a working document for the work ahead.

In a spirit of compromise, the African Group was willing to join a consensus; but if there be no consensus or if the text is to be reopened, particularly on the scope of the disease coverage, the African Group would make it absolutely clear that any proposals to reduce the rights and flexibility in this context would be unacceptable.

In the group’s view, some minor improvements could be made to the text without upsetting the overall balance.

The group welcomed footnote 2 to the Chairman’s draft, which states that there would be no precondition that any notification by a country to the TRIPS Council that it would avail itself of the importing facility would need to be approved by any WTO body. In Africa’s view, the language of paragraph 2(a) of the draft decision should be clearly consistent with this idea and should explicitly state that the notifications are to be made “for information-sharing purposes only.” A sentence should be added to the footnote that “there shall be no particular format for the notification, and it may take the form of a simple communication.”

The requirements about an importing member issuing a compulsory licence before using the system should not in any way affect the rights and obligations of members in terms of paragraph (b) of Article 31 of the TRIPS Agreement on national emergencies and other circumstances of extreme urgency or for public non-commercial use or governmental use.

The African Group had not favoured conditions on the shaping and colouring of drugs under the decision, since this would increase the cost of the pharmaceutical product, but had been willing to accept special labelling requirements, even though the proponents had made no case even for such a safeguard.

While welcoming the inclusion of the possibility of regional trade agreements being domestic markets for the decision, the language was not clear. It should be made clear that the paragraph on this would not prejudice Article 4 bis of the Paris Convention.

Paragraph 10 of the draft against raising disputes should include any violation disputes and not merely non-violation disputes as proposed. The majority of disputes raised have been under Article XXIII.1(a) of GATT 1994, and very few under the non-violation provisions of Article XXIII.1(b) and (c).

There should also be a clear time-frame to ensure that the actual work on amending Article 31(f) of the TRIPS Agreement did not drag on endlessly. The amendment should be finalized and adopted within six months of initiating the work in the TRIPS Council.

Rejection recommendation

Meanwhile, Consumer Project on Technology (CPTech), a US-based international NGO and advocacy group, has asked WTO members to reject the Chairman’s draft, among other reasons because it restricted the scope of diseases to those in paragraph 1 of the Doha declaration.

The Director of CPTech James Love, in a note to members, has said that the US Trade Representative (USTR) would likely use the draft as a green light to limit the remit of the declaration to the diseases mentioned in paragraph 1 and exclude others, and would also focus on the “gravity” language: “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics” (paragraph 1).

There is no legitimate reason to focus on paragraph 1 of the Doha declaration in terms of the mandate to implement paragraph 6, excepting for the desire of the United States, Japan, Canada, Australia and the European Union to renegotiate the entire declaration and limit the paragraph 6 ‘solution’ in ways not provided in paragraph 4 of the declaration, CPTech said.

(Ministers agreed in paragraph 4 that the TRIPS Agreement “does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all. In this connection, we reaffirm the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.”)

The scope of diseases for paragraph 6, CPTech said, should be the same as those relevant to paragraph 5 regarding compulsory licensing, namely, the text of paragraph 4 of the Doha declaration.

“It is dead certain that countries will regret ever having agreed that the Doha Declaration is restricted to the public health problems as recognized in paragraph 1 of the Declaration,” CPTech said.

The US and PhRMA, with the backing of Japan, the EC, Canada and Australia, will hammer away at a solution until it is limited in application to the diseases specifically mentioned in the last part of paragraph 1, CPTech warned.

The lack of clarity in the draft has not been useful for developing countries, and whatever is unclear will work against them, CPTech said.

The CPTech also viewed as “highly protectionist” footnote 3 of the draft decision, which in effect says that the developing countries will not be able to supply the generic pharmaceutical products to the rich countries even when the rich country is buying from a generic supplier. This will work against technology transfer in very profound ways.

CPTech also viewed the safeguards in the decision on imports and exports as inappropriate, particularly those that require notification to the TRIPS Council. The information required to be provided to the TRIPS Council will be used to increase bilateral pressure on weak countries on both the importing and exporting sides. The WTO will have an explicit mandate to monitor individual licences and become deeply involved in issues now left to national discretion under Article 1 of the TRIPS Agreement. This is a major change in the role of the WTO and major loss of sovereignty, CPTech complained.

On the issue of compensation, the draft requires compensation to be determined in the exporting country, which is contrary to any logical analysis of who should determine affordability, a loss of national sovereignty for the importing country, and may undermine compulsory licensing as a means to promote affordable medicines.

The safeguards on re-importation to other countries will be costly for developing countries, and would be used to discourage the use of compulsory licensing. “There is no evidence that generic drugs are being re-imported in the rich countries in any significant amount.”

CPTech also viewed the regional trade agreement provision as totally biased.

The European Union has told CPTech that it intends to have its proposed community patent system to overcome its own regional Article 31(f) problem. But the draft decision would greatly limit such use in the developing world, because of the requirement that at least half the members of the particular regional trade agreement be least developed countries. “Europe of course is not made up of poor countries!”

Paragraph 7 of the Chairman’s draft on technology transfer is insultingly weak, CPTech said, and is undermined by the rest of the text, such as footnote 3, and also quite importantly in the way the capacity issue is defined.

CPTech asked whether paragraph 9 of the draft would prejudice a unilateral Article 30 (limited exception to enjoyment of patent rights) case modelled after the EU Amendment 196 (proposed by the EU Parliament). The draft decision text should clarify this issue. CPTech had asked for such clarification, but this had not been done. It showed how desperate the US and the EC were to stop an Article 30 case from succeeding.

The annexed provisions  of the draft on “assessment of  manufacturing capacities in the pharmaceutical sector” are also very narrow, said  CPTech, and will likely be  used  against Nigeria, South Africa, Kenya, Ghana, Brazil, Korea, Thailand and nearly any other country that has  any  level of  economic development.

“What is so appalling about this section and so important is that the problems should never have been framed in terms of capacity. Canada, the United States, the EU, Japan and others understood intimately that the real issue concerns economies of scale. Last summer, USTR was willing to discuss economies of scale, but then PhRMA took over the US position. In this draft, ‘any’ economic development in the area of pharmaceuticals will eliminate the usefulness of this ‘solution’.”

It should be obvious that the US, EU, Japan, Canada and Australia delegates are controlled by PhRMA interests, said CPTech, and further, that this proposal is designed to limit the importance of the Doha declaration, prejudice more fundamental and sustainable fixes to the Article 31(f) problems, create more and not less uncertainty regarding what can and cannot be done, and give the US and the EU a big public relations bonanza which will be cruelly used as the basis for more bilateral pressure against the use of compulsory licences and against better export strategies, as well as a basis to leverage additional concessions from developing countries in other WTO negotiations.

“No developing country needs this deal. There is already a 15-year window for exports in Paragraph 7 [of the Doha declaration] and other strategies such as Article 31(k) [of the TRIPS Agreement] and possibly Article 30 that are better. This ‘deal’ will be used against developing countries for many, many years.” (SUNS5258)                                            

From Third World Economics No. 297 (16-31 January 2003)