TWN Info Service on WTO and Trade Issues (June10/06)
21 June 2010
Third World Network

ACTA comes in for criticism at TRIPS Council
Published in SUNS #6945 dated 16 June 2010

Geneva, 15 Jun (Kanaga Raja) -- The moves for the Anti-Counterfeiting Trade Agreement (ACTA) came in for sharp criticism at the meeting of the TRIPS Council last week, with China and India arguing that it went beyond the obligations established under the TRIPS Agreement on enforcement, as well as undermining the flexibilities contained in the TRIPS Agreement and creating trade barriers.

The criticisms voiced by China and India at the regular TRIPS Council meeting on
8-9 June was supported by a number of developing countries. The Chinese and Indian concerns surfaced at the TRIPS Council meeting under the agenda item of enforcement trends that was included on the agenda at the request of China and India.

According to trade officials, China and India called for the issue of enforcement trends to be discussed, as they were concerned about provisions on enforcement going beyond the standards of the TRIPS Agreement, and found in or sought to be incorporated in bilateral, regional and plurilateral agreements, particularly ACTA.

ACTA is currently being negotiated by Australia, Canada, the EU (and its 27 Member States), Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland, and the United States.

According to trade officials, China and India, in detailed statements, argued that ACTA and other agreements could conflict with the TRIPS Agreement (in reference to Article 1.1) and other WTO agreements, causing legal uncertainty; distort trade or create trade barriers, and disrupt goods in transit; undermine the flexibilities built into the TRIPS Agreement; undermine governments' freedom to allocate resources on intellectual property by forcing them to focus on enforcement; and set a precedent that would require regional and other agreements to follow suit.

They also argued that the focus on enforcement did not take into account a country's level of development.

Broadly supporting China and India were Mauritius, Peru, Cuba, Bolivia, Ecuador, Egypt, South Africa, Brazil, and the African Group (Nigeria speaking).

According to trade officials, China said that there is a potential legal conflict and uncertainty as a result of having tougher standards on enforcement than prescribed under the TRIPS Agreement. It is concerned that these TRIPS-plus measures could be barriers to legitimate trade, as well as that it will break the balance that was carefully negotiated in the TRIPS Agreement, which is a balance with the various agreements and within the TRIPS Agreement.

In the case of TRIPS, it is flexibilities as well as balance between the TRIPS Agreement and the GATT and GATS, said China, expressing concern about the effect it may have on the flexibilities contained in TRIPS.

In its statement, India said that although the TRIPS Agreement is usually considered to be a minimum levels agreement, enforcement levels cannot be raised to the extent that they contravene the TRIPS Agreement. TRIPS-plus measures cannot be justified on the basis of Art 1:1 since the same provision also states that more extensive protection may only be granted "provided that such protection does not contravene the provisions of this Agreement".

In addition to laying certain minimum standards, the TRIPS Agreement also provides "ceilings", some of which are mandatory and clearly specified in the TRIPS Agreement. Moreover, the TRIPS Agreement has achieved a very careful balance of the interests of the right-holders on the one hand, and societal interests, including development-oriented concerns, on the other.

Enforcement measures cannot be viewed in isolation of the Objectives contained in Art 7, which says "The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations."

According to India, TRIPS-plus enforcement measures can have a trade-distorting effect. The chapeau provisions of the enforcement section of TRIPS in Art 41.1 states that "These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse." The TRIPS-plus standards envisaged in RTAs (regional trade agreements) and plurilateral initiatives like ACTA could short-change the legal process, impede legitimate competition and shift the escalated costs of enforcing private commercial rights to governments, consumers and taxpayers.

Referring to the issue of resource allocation in respect of the limited resources of developing countries to enforce IPR laws relative to other laws that might call for more urgent priority, India said that Art 41.5 is cognizant of the capacity constraints of Members, and therefore, creates no obligation with respect to the distribution of resources as between the enforcement of IPRs and the enforcement of law in general.

"We are clear that IPRs are private rights and it is not the responsibility of governments to defend each right but rather to provide means for individuals and firms to enforce such rights. TRIPS Agreement elaborates such means which are necessary."

Another systemic concern highlighted by India is that IPR negotiations in RTAs and plurilateral processes like ACTA completely bypass the existing multilateral processes. While GATT and GATS provisions allow for further liberalising trade in goods and services through RTAs, there are also provisions to monitor regional and plurilateral initiatives by the WTO. It is a lacuna in TRIPS that there are no similar systemic checks with regard to IPR aspects of RTAs and plurilateral agreements. "Therefore, it is even more important to discuss IPR dimensions of regional and plurilateral initiatives in this Council so that they do not undermine TRIPS Agreement," said India.

India noted that a systemic impact Members should be aware of is that even if some Members are not a party to plurilateral initiatives like ACTA, they could still have to enforce ACTA provisions due to cross-referencing. As an example, in accordance with commitments under the EU-CARIFORUM EPA, the CARIFORUM members might be obliged to enforce ACTA provisions which may require additional resource allocation and may be incompatible with the level of economic development of CARIFORUM Members.

Turning to ACTA provisions relating to transit, India said that it is aware that several provisions are still in square brackets, which actually means that their inclusion is well within the realm of possibility. The ACTA text requires that countries provide procedures for the customs seizure of goods "suspected" of infringing trademarks, copyrights and other IPRs against goods "in-transit". According to the ACTA text, "In-transit" includes "customs transit" and "transhipment". Seizures would be allowed even where there is a mere "prima facie" case of IPR infringement.

In view of the recent seizures of generic drug consignments, provisions relating to "in-transit" in all likelihood would create barriers to access to essential generic medicines, as well as access to critical climate change technologies, said India, adding that these provisions could concretise the legal framework the European Union has already instituted through its Council Regulation 1383/2003, which has been responsible for empowering customs and border officials to seize legitimate generic medicines exported by India to several developing countries, including LDCs.

On how the draft ACTA provisions can constrain TRIPS flexibilities, India gave an example, saying that its right to exercise flexibilities, such as granting compulsory licenses, would be interfered with by the mandatory application of border measures to goods in transit. Indian exporters could be constrained from shipping goods produced under its own exception to countries where there is no applicable IPRs protection because transit may be blocked by an intervening transit country's application of domestic IPRs.

Similarly, under the draft ACTA, data exclusivity could be invoked by a transit country's customs authorities as a basis for seizing pharmaceutical products in transit, even if there is no data exclusivity in the exporting and importing countries. This would obviously act as a significant constraint on exporting countries such as India.

India stressed that benefits intended by the Doha Declaration on Public Health could also be effectively negated by transit provisions. The Para 6 system is aimed at making effective use of Compulsory License for countries with insufficient or no manufacturing capacities. Mandatory application of border measures to such drugs in transit could deny the potential beneficiaries access to much needed medicines.

India further argued that the released ACTA text shows a general shift in the locus of enforcement, which enhances the power of IPRs holders beyond reasonable measure. One ACTA option would mandate that each Party provide enforcement for the full range of IPRs infringement actions "at the border" of an importing country. This would permit IPRs holders to assert infringement and demand seizure of goods before customs administrative authorities, instead of initiating their claims in domestic courts. Under present WTO TRIPS Agreement rules, except with respect to trademark counterfeiting and copyright piracy, a Member may require that infringement claims be pursued in the courts, including for obtaining preliminary relief.

The draft ACTA limits the protections otherwise due to accused infringers under the TRIPS Agreement, potentially lowering knowledge thresholds, limiting due process requirements (e. g., requirements to act within particular time frames), limiting evidentiary requirements, and it does not specify the type of authority empowered to make critical decisions.

"This shift to summary administrative action may dramatically curtail the rights of accused infringers to defend patent infringement claims, ordinary trademark and copyright infringement claims, actions alleging violation of marketing exclusivity rights, and so forth. The draft ACTA therefore, will shift the negotiated balance of the TRIPS Agreement in favour of IPRs holders by shifting the enforcement forum towards customs administrative authorities and away from the civil courts."

According to India, IPR experts are increasingly challenging the concept of minimum standards concept and calling for setting maximum standards or ceilings so that there is (i) legal security and predictability about the boundaries of IP protection, (ii) protection of user's rights, and (iii) free movement of goods, services and information.

While India said that it is committed to dealing with IPR enforcement issues in line with its TRIPS obligations, the introduction of intrusive IPRs enforcement rules applicable to goods and services in international trade does not represent a reasonable or realistic response. "A response, if required, has to emerge from a multilateral and transparent process, as is available in the WTO TRIPS Council, and should fully conform to the objectives and principles (Art 7, 8 ) of TRIPS agreement and the balance of rights and obligations enshrined in the Agreement."

As goods and services of developing countries are becoming competitive with those of developed country producers, TRIPS-plus measures, like the ACTA, seek to introduce a new set of "non-tariff" barriers to trade that will preponderantly hinder developing country exporters.

"We urge developed country Members to keep these concerns in mind while dealing with IPR enforcement issues. Agreements such as ACTA have the portents to completely upset the balance of rights and obligations of the TRIPS Agreement. WTO cannot remain a silent observer to such a development. It is important that the issue is deliberated in this Council in detail," India concluded.

According to trade officials, the participants in the ACTA negotiations said that ACTA would not conflict with TRIPS and other WTO provisions. There would be no new trade barriers and distortions, as well as no change in the balance that has been struck, as they are not raising the level of protection.

Arguing that counterfeiting is a serious problem, they said that ACTA was necessary because counterfeiting is no longer a question of products such as fake luxury watches, but involves commercial-scale production of fake medicines, car and aircraft parts and other products, which are dangerous to health and safety.

According to trade officials, some of them also said they had to get together outside the WTO because countries had opposed discussing enforcement substantively in the TRIPS Council.

The European Union said that Members want to use the flexibilities in the TRIPS Agreement. What ACTA is doing is making use of flexibilities in TRIPS on enforcement in the interest of health and safety, and that the countries that are most vulnerable to these issues are the developing countries.

The TRIPS Council took note of the statements. +