TWN Info Service on WTO and Trade Issues (May22/12)
12 May 2022
Third World Network

China offers "positive movement" on TRIPS COVID-19 text at WTO
Published in SUNS #9574 dated 12 May 2022

Geneva, 11 May (D. Ravi Kanth) -  The World Trade Organization's Director-General Ms Ngozi Okonjo-Iweala as well as several countries on 10 May welcomed China's "positive movement" on the controversial "TRIPS COVID-19" text, with Beijing having emphasized that its position is contingent upon the removal of the eligibility criteria as applicable to developing countries, said people familiar with the development.

At a General Council meeting on 10 May, China said that if their concern on the criterion of export share to define eligible members is addressed, "we will not seek the use of flexibility provided for" in the draft TRIPS COVID-19 text circulated by the WTO DG.

However, the United States and the European Union, which allegedly inserted this particular condition in the draft text, did not comment on the Chinese statement, said people familiar with the discussions.

During the discussion on TRIPS Council matters on the second day of the General Council meeting on 10 May, the Chinese trade envoy Ambassador Li Chenggang said that "as we stated in the TRIPS Council meeting last Friday, China has serious concern on and is not in a position to accept the second brackets of footnote 1."

The said bracket in the proposed outcome document circulated by the DG on 3 May deals with the eligibility criterion as to who among the developing countries can avail of the provisions of the draft text.

The second bracket in the draft text says that "for the purpose of this decision (in IP/C/W/688), developing countries who exported more than 10% of world exports of COVID-19 vaccines doses in 2021 are not eligible members."

China said that in its view, "using the criterion of export share to define eligible members will send a wrong signal to the outside world and also have systemic implications to the future negotiations."

Ambassador Li underlined that "China is a significant contributor to the global pandemic response and a staunch supporter of TRIPS waiver on COVID-19 vaccines."

"To further demonstrate our pragmatism and constructiveness and to better facilitate the negotiation (on the draft document circulated by the DG), China hereby announces that if our concern on the footnote is properly addressed, we will not seek to use the flexibility provided for by this decision."

Ambassador Li said China hopes "our positive move could be reciprocated with the same level of pragmatism and flexibility from other major stakeholders, so that an outcome that benefits developing members and LDCs in genuine needs could be reached at an earliest date before MC12."

In response to China's statement, the DG said "China has made a bold move today and we should recognize it."

"I think it really opens up the spirit of constructiveness which I hope will be forthcoming from our members to get a workable proposal out of this," Ms Okonjo-Iweala said.

Although the draft "TRIPS COVID-19" text is not rejected by any member, sharp concerns were raised on several elements, including the exclusion of diagnostics and therapeutics, as well as on other conditions being imposed, said people, who asked not to be quoted.

Surprisingly, the chair of the TRIPS Council, Ambassador Lansana Gberie from Sierra Leone, appears to have taken upon himself the task of pushing the controversial draft text while ignoring other proposals such as the draft revised TRIPS waiver proposal co-sponsored by 65 members.

At the GC meeting, the TRIPS Council chair said "I think we should look at the document on its merits and see whether this is something that we can take forward to the stage of negotiation."

More disturbingly, the chair said that "I think it is important that we reflect on this because it is frankly, the only product we have, the only game in town," adding that "we don't have a lot of time."

When asked at a media briefing whether it is proper for the chair to set the agenda based on the draft text advanced by the DG in a member-driven organization, the WTO's outgoing spokesperson Keith Rockwell told this writer that it is up to the members to bring any proposal into the discussions.

While the chair of the WTO's General Council, Ambassador Didier Chambovey of Switzerland, also appeared to support the draft text by urging members to "remain positively engaged and adopt a pragmatic and constructive attitude," Switzerland, taking note of the draft text, said it is being reviewed in its capital Bern.

Apparently, Switzerland also asked several questions at the meeting.

The WTO spokesperson Rockwell insisted that the document circulated by the DG is accepted as the basis for further negotiations.

As reported in SUNS #9572 dated 10 May, many developing countries pressed for the inclusion of diagnostics and therapeutics in the draft text circulated by the DG on 3 May, with Indonesia making it clear that both diagnostics and therapeutics are essential to reducing the financial burden of COVID-19 treatment.

While several developing countries maintained that their capitals are still examining the draft text (IP/C/W/688), they also pointed to several other elements in the text.

Apparently, several developed countries including the United Kingdom, Switzerland, and Japan are understood to have conveyed their unhappiness over the draft text, saying that they did not take part in the discussions.

The United Kingdom apparently raised some sharp questions about the ownership and the navigators for further discussions on the draft TRIPS COVID-19 decision.

The four so-called "Quad" members - the US, the EU, India, and South Africa - also made statements at the GC meeting.

The US apparently said that it is engaged with its domestic stakeholders in discussing the draft outcome document, maintaining that it will also engage with members at the WTO to arrive at a consensus on the document.

The EU, which is the first member among the Quad to approve the draft outcome document, has praised the draft text as an important breakthrough.

India said it is looking forward to text-based negotiations, while South Africa said the pandemic is very much prevalent and the draft decision laid a platform to develop it further to address the concerns raised by members, said people familiar with the development.

WTO RESPONSE TO THE PANDEMIC

In response to the facilitator overseeing the WTO's response to the pandemic on trade-related measures, Bolivia, Egypt, Indonesia, Pakistan, South Africa, Sri Lanka, Tunisia, Uganda and Venezuela issued a comprehensive proposal covering all areas.

In their restricted proposal (Job/GC/278/Rev.4) issued on 9 May, the nine countries argued that "the COVID-19 crisis has revealed deep discrepancies in the policy tools available to developing countries and least-developed countries (LDCs) in comparison to those at the disposal of developed countries to allow response and recovery and maintain resilience to withstand a global crisis on a scale the world has been facing as a result of the COVID-19 pandemic."

According to the proposal, "developed countries both possess and have employed exceptional fiscal and monetary policies to manage the shock from the COVID-19 crisis and to cushion the economic and social impact in ways that developing countries and LDCs could not," arguing that "it is clear that we are neither building back better nor building back together and economic recovery continues to be imbalanced and uneven."

They demanded that "trade rules should accommodate the policy space that is particularly important for developing countries and LDCs since they lack the fiscal and monetary policy tools that developed Members have used to support their economies and people through the current crisis."

Therefore, the nine proponents contended that trade rules must address "resilience-building, response and recovery from domestic and global crises."

According to the proponents, "there is a crucial need to facilitate the utilization of instruments within the mandate and toolbox of the WTO to pursue structural transformation that is needed in order to address causes of this unequal recovery and to build resilience that allows better response to future crises. Such interventions should pursue enhancing developing countries' and LDCs' capacities to prepare, respond and recover from such crises, at the heart of which is the need to build the resilience of their populations, economies and social systems including the livelihoods of vulnerable farmers and food production systems."

The proponents underscored "the need to develop and enact new tools that would allow developing countries and LDCs the needed space through their trade policies in order to take immediate measures in the case of crises, in order to shield the livelihoods of the most vulnerable in their populations."

As part of the issues that need to be addressed in the WTO response to the pandemic, the nine proponents listed the following:

1. Waiver on agricultural subsidies;

2. Policy flexibilities for food stocks;

3. Making pandemic-related subsidies not-actionable;

4. In services, restrictions on Mode 4 market access for health workers including through increased non-transparent economic needs and labour market tests, visa requirements, lack of recognition of qualifications, discriminatory travel restrictions and vaccine differentiation, should be removed;

5. As regards IP (Intellectual Property), "recognizing the crucial need to diversify and scale-up production to meet global demands and promote economic recovery, 64 WTO Members have proposed a waiver from certain provisions of the TRIPS Agreement for the prevention, treatment, and containment of COVID-19 (IP/C/W/669/Rev.1). Adoption of this proposal remains an urgent priority and is essential to achieve equitable access. Beyond COVID-19, resilience building, response, and recovery to face domestic and global crises, also requires WTO Members to address issues and concerns with respect to intellectual property. For instance, WTO Members should not prevent or discourage another Member from utilizing flexibilities of the TRIPS Agreement or in any way limit such flexibilities, hence restricting policy options to respond to crises."

Commenting on the issues currently under consideration in the consultations on the WTO response to the pandemic, the nine proponents said "proposals considered under the WTO pandemic response should in no way constrain the policy tools and space that developing countries and LDCs need to respond to pandemics and similar crises, nor restrict tools and flexibilities available to developing countries and LDCs under the WTO agreements."

On the issue of export restrictions, the proponents argued that "solutions concerning export restrictions should not undermine the rights available to developing and least-developed country Members under the WTO rules and should effectively allow for considering the specific needs and conditions in developing countries and LDCs."

The proponents said that what they have learned during the pandemic is that when demand exceeds supply, developing countries/LDCs will be outbid by developed countries who can afford to pay much higher prices.

On the issue of "regulatory coherence", the nine countries said that "as regulations and related implementation procedures are closely intertwined with a country's levels of development and institutional capacities, any propositions in this regard should avoid mandatory obligations seeking harmonization of technical regulations including standards and conformity assessment procedures."

Commenting on trade facilitation measures, the nine countries argued that "any trade facilitation measures to be recommended as part of the pandemic response should not undermine the flexibilities available to developing countries and LDCs under the Agreement on Trade Facilitation (TFA)."

Any new trade facilitation measures to be pursued should similarly acknowledge and accommodate the capacities of developing countries and LDCs including institutional financial and implementation capacities and should be voluntary and not result in new obligations, they said.

Furthermore, "Members should not seek to make permanent, trade facilitative measures made within the specific context of the pandemic."

On the controversial issues of tariffs and services, the nine countries said that "the pandemic response should not be utilized to pressure developing countries and LDCs to undertake additional liberalization, whether in goods or services."

They said that "lowering the import tariffs on goods considered essential to fight the COVID-19 pandemic is likely to have an adverse impact on the continued sustainability of the manufacturing industry in developing countries for these products."

On the issue of transparency as advanced by the developed countries, the nine countries said they "acknowledge the importance of transparency, but references to future work on transparency should not include additional cumbersome obligations" and "any work in this area must be in the provision of capacity building to developing countries."

According to the proponents, "transparency and inclusiveness must also permeate the entire functioning of the WTO including in convening of meetings (i.e., scheduling of meetings, inclusiveness through fair and equitable geographical and regional representation by delegations at the meetings), Ministerial Conferences, and work of the Secretariat."

Further, "strict requirements to publish information on trade measures taken during a pandemic must take due regard of limited institutional capacities that developing countries and LDCs have during such periods."

The proponents said that "members should encourage transparency of contractual terms, as opaque conditions in licensing arrangements have greatly contributed to vaccine inequity."

They warned that "several proposals with respect to collaboration go substantially beyond the function of the WTO Secretariat as well as risk undermining the Member-driven character of the WTO."

In short, the nine proponents said "it is crucial that as a rules-based organization, WTO Secretariat's role is limited to the various agreements within the WTO and is not expanded to addressing matters beyond its competency. The Member-driven nature of the WTO should be safeguarded."

THE EU'S RESPONSE

In response to the facilitator's report on the trade-related aspects in the WTO's response to the pandemic, the European Union said it "has been a strong proponent of the WTO response to the pandemic from the onset of discussions that members had in this forum."

Brussels said it "argued for a holistic approach which would encompass all the necessary elements of the response, including intellectual property."

The EU argued that "now that we have made a substantial step forward in the TRIPS Council, it is high time we had a fresh look at other elements of the pandemic, such as transparency, export restrictions, or trade facilitation."

The EU said the US and Brussels "have invested great efforts into allowing progress towards a credible outcome," adding that the two members "have reached a common understanding on the minimum or the landing zone that could be the final outcome in a number of areas, acknowledging that other Members have additional issues of interest that they would like to see reflected in the text."

The EU said that "our new compromise paper presents the essentials of the Walker text, which we value the most, in a condensed format."

The new paper worked out by the US and the EU "attempts to propose a balance that would be acceptable to all members."

It added that the paper is slightly shorter on ambition than the Walker text, adding that it believes that the paper "still maintains the credibility of the WTO."

In conclusion, contrary to what seems like positive and "hyperbolic" statements on the negotiations as put out on the WTO website, the reality on the ground is somewhat different and more nuanced where the negotiations seem "pretty mangled", said several members, who asked not to be identified.