TWN Info Service on WTO and Trade Issues (Jun18/08)
14 June 2018
Third World Network

Trump calls WTO a disaster, but wants new disciplines on innovation
Published in SUNS #8697 dated 8 June 2018

Geneva, 7 Jun (D. Ravi Kanth) - Even as the United States President Donald Trump continues to abuse the World Trade Organization as a "disaster", his officials along with those of other developed countries are pushing for new disciplines for "innovation" while blocking progress for affordable access to medicines based on the United Nations High-Level Panel on Access to Medicines, trade negotiators told SUNS.

On Wednesday (6 June), the US President Donald Trump described the WTO as a "disaster", and suggested that the US will only pursue "fair trade deals".

Trump's National Economic Council director Mr. Larry Kudlow said "international multilateral organizations are not going to determine American policy," according to Washington Trade Daily of 7 June.

"The US is still involved with the WTO, but the global trade body "has become completely ineffectual," Mr Kudlow stated," according to WTD.

"And even when it makes decisions, even in the rare moments when it makes decisions, important countries don't even abide by them," Mr Kudlow said.

Despite such damning attacks on the WTO by the political head of the world's largest economy and his team of officials in the White House, the US along with its allies from the developed and some developing countries called for incentivizing "innovation" on a multilateral framework as part of the IPR disciplines.

At the TRIPS Council meeting on 5 June, along with the European Union, Japan, Canada, Australia, Switzerland, Korea, and Chinese Taipei among others, the US made a strong case for incentivizing innovation.

Surprisingly, the EU, Japan, Canada, Australia, and Switzerland among others who want to salvage the WTO and multilateral trading system from the escalating US illegal actions are ready to align their positions with Washington's on IP issues, said a trade envoy who asked not to be quoted.

"Worse still, they joined hands with the US to oppose the UN High-Level Panel report for strengthening flexibilities in the TRIPS agreement for addressing major public health challenges," the envoy said.

Brazil chose to adopt an ambivalent position on these two issues - incentivizing innovation as demanded by the US and its allies, and promoting public health through competition law and policy as proposed by China and South Africa, said a participant who took part in the meeting.

During the TRIPS Council meeting which lasted for two days (5-6 June), the US along with its allies vehemently opposed a proposal sponsored by China and South Africa and later co-sponsored by India and Brazil on "Intellectual Property and the Public Interest: Promoting Public Health through Competition Law an d Policy."

The US also severely opposed several other issues raised by the developing countries.

South Africa, which enumerated the salient features of the joint proposal with China, India and Brazil, underscored the need for considering the UN's HLP report that seeks to achieve Goal 3 of the SDGs.

Last year, the UN's high-level panel made significant recommendations on how to avail of and strengthen the flexibilities in the TRIPS agreement for ensuring accessible medicines at affordable prices.

"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 May 24.

The TRIPS agreement has also 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 ("Bolar" exception) 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."

South Africa pointed out that "Competition law" is not fully discussed with in the WTO's TRIPS Agreement.

In their proposal, South Africa and China stated that "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."

"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," South Africa and China maintained in their proposal.

The proposal also suggested that "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.

In sharp response to the proposal, the US, which had earlier opposed the UN report, said the proposal on public interest fails to account fully the benefits of protecting IP.

The US also said the China-South Africa proposal will have negative effects by discouraging members from protecting and implementing IP regimes. It argued that IP and competition law are distinct disciplines implemented and overseen by different administrative authorities.

It maintained that the TRIPS Council is not the appropriate forum for discussing competition law and policy issues.

The EU also criticized the joint proposal by developing countries, cautioning about the use of competition policy as a TRIPS flexibility.

The EU, according to participants present at the meeting, said the UN High- Level Panel was wrong to assume that there is "policy incoherence between the justifiable rights of inventors, international human rights law, trade rules and public health."

The EU questioned several other findings of the UN report, especially about "refining the criteria for grant of a patent, patentability criteria."

Despite the UN Panel being co-chaired by former Swiss President Ruth Dreifuss, Switzerland said that the panel's deliberations were not driven by members. Switzerland argued that member states did not endorse the panel's recommendations.

In sharp contrast, the US and its allies put up a united front for incentivizing innovation. The US spoke about the critical role of innovation in different creative areas, particularly in music industry which provides a robust copyright protection and contributes to bringing people closer together and generating greater cultural awareness.

Australia suggested the role played by Reach&Match, a trademark innovating educational kit that empowers children with disabilities and children in mainstream education to learn together in an inclusive environment.

The EU said digitalization is critical for addressing the challenges faced in terms of health care while Japan argued that efficient IP systems can support and promote innovation in various important areas. Switzerland spoke about the broad repercussion in technological areas such as the Solar Impulse project.

South Africa, however, cautioned the proponents on incentivizing innovation on grounds that the relationship between IPR and economic development is complex and difficult to quantify.

It maintained that the attempt to quantify the impact of the IPRs depends on many variables that are determined by their respective legal frameworks.

Given the disparities in access to Information and Communication Technologies and uneven levels of progress in the pace of innovation among countries, incentivizing innovation will not generate positive benefits for confronting global challenges such as climate change, South Africa maintained.

India said the strength of IP rules should be calibrated to the levels of development in respective countries.

The TRIPS Council meeting also witnessed a widening North-South divide on other issues such as the review of the provisions of Article 27.3 (b), the relationship between the TRIPS Agreement and the Convention on Biological Diversity, protection of traditional knowledge and folklore, and non-violation and situation complaints.

In short, while the US President continues to pile criticism on the WTO as a "disaster", the US is able to keep its alliance with other major industrialized and some developing countries intact by blocking progress for addressing life-and-death issues concerning access to affordable medicines.