TWN Info Service on on WTO and Trade Issues (May13/08)
27 May 2013
Third World Network

Poorest nations held hostage by US/EU Demands on TRIPS compliance
Published in SUNS #7590 dated 24 May 2013

Beijing, 23 May (Chee Yoke Ling) -- For the past one week, the poorest members of the World Trade Organisation (WTO) have been locked in a battle against the united might of the richest countries to exercise their right to be exempt from the WTO intellectual property rules.

Last November, the least developed countries (LDCs) invoked Article 66.1 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) to request an unconditional extension of the transition period for as long as they remain as LDCs. The rationale is to allow LDCs to have policy space while they overcome their constraints and develop a viable technology base.

The battle is over the terms of the exemption.

Legally, the TRIPS Agreement obliges all WTO members to grant the extension, once a request is submitted by LDCs.

However, Nepal, the coordinator of the LDC group, pointed out at an informal open-ended meeting held on 22 May by the Chair of the TRIPS Council that "Given the precision of the language of Article 66.1, we had thought that it would be an easy decision based on the duly motivated request from LDCs. However, what we thought to be an easy process has not been so easy".

Developed countries, led by the United States and the European Union, and supported by Canada, Australia, Switzerland, New Zealand and Japan, are opposed to the LDCs' demands on the exemption although the LDCs have received widespread support from developing countries, civil society groups, academia, industry, members of the US Congress, and Members of the European Parliament.

Much of the RICH versus POOR dispute has taken place in informal small group consultations led by the Chairman of the TRIPS Council, Ambassador Alfredo Suescum from Panama, and participated by a handful of LDCs and developed countries that are opposed to the demands of the LDCs.

According to trade sources, the consultations are not open to other developing countries, although they have fully supported the LDCs' demands.

The informal consultations have been ongoing continuously since last Wednesday; however, to date no agreement has been reached.

According to a trade source, one of the most contentious issues is the length of the transition period. According to the Washington Trade Daily of 22 May, "the US and EU are insisting on a five-year extension; Switzerland is proposing a seven-year phase-in while Australia has suggested 10 years with different implementation conditions."

The US and the EU are also insistent on including a "no-roll-back" clause, said trade sources.

A trade source also indicated that a significant portion of the informal discussion focused on language committing LDCs to TRIPS compliance, although the raison d'etre for the exemption is to provide LDCs "breathing space" to develop a viable technological base and to overcome their constraints.

Earlier this week, the manner in which the Chair was conducting the consultations came under fire from different NGO groups: The Our World Is Not For Sale coalition (OWINFS), LDC Watch, and Electronic Information For Libraries (EIFL).

Letters (from the groups) charged the informal consultations as being unfair and prejudicial to the interests of the LDCs.

The letters specifically highlighted that the allies of the LDCs were not involved in the consultations and that the negotiations were being conducted to dilute the legitimate request of the LDCs although the TRIPS Agreement legally obliges WTO members to approve the LDCs' request for an extension, once it has been submitted to the TRIPS Council.

They also charged that the negotiation process facilitated the inclusion of conditionalities in the extension decision that would greatly minimise or nullify the benefit of the transition period.

OWINFS and LDC Watch, in their open letter to the Chair, stressed that he had a "solemn duty to ensure that the terms of the extension decision do not violate WTO rules or conflict with the rationale and the full rights LDCs are entitled to under Article 66.1 of the TRIPS Agreement".

EIFL emphasised the need for the Chair to conduct the consultations with "fairness and equity", adding that "LDCs deserve no less from the rest of the international community".

In a bid to bring some transparency to the informal consultations, an open-ended meeting was held by the TRIPS Council Chair on 22 May. The meeting was attended by the LDCs, developing and developed countries.

According to trade sources, the Chairman reported that "While we are not yet there, I sense that we have made progress." He referred to the "no-roll-back" provision as a "gateway issue whose resolution will affect how the other remaining issues can be settled. We seem to have a landing zone in sight".

On the duration of the transition period, the Chairman reported that if "no-roll-back" can be resolved, then members might agree on a definite extension period, although differences remain on how long that would be.

During the meeting, Nepal on behalf of the LDC Group, Morocco on behalf of the African Group, Saudi Arabia, Nigeria, China, Brazil, Bolivia, Mexico, India, Cuba and South Africa spoke in support of the LDCs' request.

Developed countries did not present reasons for their opposition during this meeting, trade sources said.

Nepal, in its intervention on behalf of the LDC Group, highlighted that the transition period under Article 66.1 is a critical special and differential (treatment) element for LDCs, which was developed in recognition of the particular situation of LDCs in terms of their capacity constraints and the need to acquire a sound and viable technology.

"We are seeking an extension of this transition period as the situation of LDCs has not changed significantly since the last extension decision in 2005 particularly in terms of meeting the objective of Article 66.1," Nepal stressed.

Nepal recalled WTO members' broad support for the LDC request at the last TRIPS Council meeting. It also reiterated the wide support LDCs have received from lawmakers including some US Congressmen and EU Members of Parliament, UN development agencies, civil society and academics.

Nepal stressed that the time-frame requested by the LDCs is for as long as a country remains an LDC. It added that the time-frame sought was reasonable, predictable and practical in view of the numerous challenges and constraints facing LDCs. Nepal also stressed that LDCs were against the inclusion of any conditionality in the extension decision.

It further added that developed countries are "not comfortable" with the time-frame proposed by the LDCs and have additionally "stressed on the inclusion of the no-roll-back condition".

It further highlighted that LDCs must be allowed to exercise maximum flexibility in the domestic implementation of laws, but for developed countries, the transition period is about making progress towards TRIPS compliance.

"We have not denied compliance. What we are seeking is the due recognition of the fact that LDCs do not have capacity to comply and this capacity comes with sound and viable technological base," Nepal said.

Nepal stressed that for LDCs to benefit from a transition period (i. e. to use the flexibilities), it is important to have a long time-frame.

"There needs to be some certainty, i. e. that the transition period will continue to be applicable, without conditions that are irrelevant. A short time-frame will not be helpful. The short time-frames granted previously have clearly been insufficient to develop suitable conditions to benefit from IP systems," it added.

On the no-roll-back clause, LDCs said the clause was "antithetical to the spirit of Article 66.1 as defined in the preambular text of the TRIPS Agreement which states: ‘Recognising also the special needs of the least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base'. The no roll back clause does the exact opposite by narrowing the policy space of LDCs".

Nepal added that even in 2005, almost all LDC delegations that intervened expressed displeasure about the inclusion of the clause. Negotiators of the TRIPS Agreement, Nepal further stressed, never intended for such a clause to be applicable to LDCs. Had the intention been to apply the provision to LDCs, this would have been stated expressly as in the case of Article 65.5 of TRIPS which is applicable to developing countries, Nepal further said.

It also said that it had suggested the possibility of working on a best endeavour language on no-roll-back followed by a clarification that such provision will not undermine the flexibilities available to LDCs under the TRIPS Agreement.

However, the developed countries then highlighted that their concern is also about "certainty of compliance" by LDCs. "And this concerns us," Nepal said.

In conclusion, Nepal appealed, "Let us not send a message that it can be so difficult for WTO Members to make a decision in favour of the most marginalised group of countries - a decision based on precise language of Article 66.1".

India also supported the LDCs' request and stressed that "any artificial deadline would not help in creating a sound and viable technological base and that the decision to extend the transition period should not be circumscribed by any conditionalities like a ‘no roll back clause' or TRIPS Implementation".

It added that there is opposition to the LDCs' request for extending the transition period till they remain LDCs with an offer of five years with several conditionalities that go against the intent and spirit of Article 66.1 of the TRIPS Agreement.

"We are concerned with this state of negotiations and urge the developed country Members to restrict the negotiations to the language of Article 66.1," said India.

India also said that it remains opposed to any reference requiring LDCs to commit to TRIPS implementation or compliance when the objective of Article 66.1 is to provide flexibility for LDCs to establish a viable and sound technological base.

It further expressed concern "with the insistence on the ‘no roll back clause' which alters the nature of rights, that the LDCs are legally entitled to, under the TRIPS Agreement", adding that it did not support such inclusion.

On duration, India fully supported the LDCs' request for an extension for as long as they remain LDCs, in view of the extensive development and technological challenges facing those countries.

It stressed that LDCs "need time and policy space to overcome their constraints and to develop a viable technological base", adding that it opposed short and impractical time-frames or to time-frames conditioned on review of LDCs' progress towards TRIPS implementation.

It also expressed openness to engage constructively in this process so as to achieve the desired outcome.

According to trade sources, South Africa cited a number of instances where developed and advanced developing countries had altered their intellectual property regimes to make them more flexible, adding that when there were examples of "roll-back" by more advanced countries; why were LDCs being asked not to "roll-back".

Brazil also supported the LDCs' demands, and added that this is an area that is extremely important where the WTO has to deliver for those most in need.

Informal consultations between developed countries and the LDCs are likely to continue until an agreement is reached. The next session of the TRIPS Council on 11-12 June 2013 is expected to take a formal decision on the matter.