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UK, Swiss and US positions likely to stymie WTO negotiations

Trade 2022-06-15, 11:45pm

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Intellectual property right



Geneva, 14 Jun (D. Ravi Kanth) — With the apparent exclusion of India from the “green room” meeting on fisheries subsidies on 13 June, it appears that the proverbial policy of “divide-and-rule” is becoming the norm at the World Trade Organization’s 12th ministerial conference (MC12), said people familiar with the development.

The seemingly avowed strategy of the organizers of MC12, including the WTO Director-General, Ms Ngozi Okonjo-Iweala, to isolate India is becoming apparent to ensure that if something happens as regards the outcome of the fisheries subsidies negotiations, India can be “named and shamed”, said a person familiar with the development.

India is already being cited as one country at MC12 that is allegedly creating hurdles in the agriculture negotiations due to its demands on the mandated issues like the permanent solution for public stockholding (PSH) programs for food security.

Although India apparently showed some little opening on the issue of trade and food security as well as on the draft decision on the World Food Programmes’s food purchases without export restrictions, it made it abundantly clear that without the permanent solution for PSH programs, it may not agree to the other two proposed outcomes in the agriculture deliverables for MC12, said people who asked not to be quoted.

More importantly, India has made crucial demands such as the inclusion of non-specific fuel subsidies and a period of 25 years of special and differential treatment in implementing the draft fisheries disciplines in the overcapacity and overfishing pillar that includes specific carve-outs for the major subsidizers like the European Union, China, and the United States among others, said people familiar with the development.

In a similar vein, China has been excluded from the TRIPS “green room” meeting on 14 June. China, which is a major producer of COVID-19 vaccines, has opposed the eligibility criterion as proposed in the second square-bracketed sentence of footnote 1 of the draft TRIPS Ministerial Decision.

China said unambiguously in the run-up to MC12 that it will opt-out from availing the flexibilities in the draft TRIPS Decision only on the condition that the particular square-bracketed footnote is removed. However, it is widely known that this approach is unacceptable to the US that appears intent on specifically targeting China for domestic political reasons.

The square-bracketed language in footnote 1 states: [For the purpose of this Decision, developing country Members who exported more than 10 percent of world exports of COVID-19 vaccine doses in 2021 are not eligible Members.]

Meanwhile, there is talk of China’s trade minister leaving MC12 on 14 June, but it is not clear whether it is due to the exclusion of China from the “green room” meeting or due to any other reason.

GREEN ROOM ON TRIPS DECISION

Meanwhile, during the second “green room” meeting on TRIPS that took place early morning on 14 June, apparently there was no consensus on account of the demands made by the United Kingdom and Switzerland, said people familiar with the development.

[Only a handful of delegations were invited to the “green room”: the US, UK, EU , Switzerland, Japan, Cameroon, Jamaica, Egypt, India, South Africa, Brazil and Argentina].

Much of the discussion in the “green room” focused on Footnote 2 that defines the”subject matter of a patent”. At the start of the Ministerial Conference, the Footnote 2 definition bracketed text was as follows: “For the purpose of this Decision, it is understood that “subject matter of a patent” [includes][means all finished COVID-19 vaccine products,] ingredients and processes [necessary] for the manufacture of the COVID- 19 vaccine.”

Alternative wording: [For the purpose of this Decision, it is understood that “subject matter of a patent” refers to [finished] COVID-19 vaccine products, and [ingredients][products] and processes necessary for the manufacture of the COVID-19 vaccine.]

The UK is insistent on narrowing the definition of subject-matter of a patent in the original text proposed by the DG on 3 May to make it exhaustive. Developing countries prefer a non-exhaustive definition of subject-matter of a patent, to ensure that the definition includes all elements for the manufacture of the COVID-19 vaccine.

They also argued for the deletion of qualifications such as “necessary” or similar terms that add hurdles to the use of compulsory licenses.

This position is also consistent with the TRIPS Agreement that allows any Member to override any patents without any such conditions.

The UK and Switzerland have also objected to paragraphs 6 and 8 of the draft TRIPS Decision, according to various sources, seeking to amend paragraph 6 and to delete paragraph 8 of the draft Decision.

In paragraph 6, the UK is seeking to terminate any compulsory license with the end date of the Decision, directly undermining the use of compulsory license.

Under Article 31 of TRIPS Agreement, such licenses can be used for production and export (the non-predominant portion) for the duration of the patent term. As the only waiver in the TRIPS Decision is that of Article 31(f) of TRIPS (i.e. waiver of the prohibition to export the predominant portion of production), only this aspect should be time limited.

The UK and Switzerland have also called for the deletion of Paragraph 8 of the Decision, which states “[No later than six months from the date of this Decision, Members [will][shall] decide [whether to extend this decision] [on its extension] to cover the production and supply of COVID-19 diagnostics and therapeutics.]”

It appears at one point during the “green room” meeting, for the disputed text, the EU urged the UK to return to the original text that was circulated by the DG on 3 May i.e. “An eligible Member may apply the provisions of this Decision until [3][5] years from the date of this Decision. The General Council may extend such a period taking into consideration the exceptional circumstances of the COVID-19 pandemic. The General Council will review annually the operation of this Decision.”

However, the UK seems to have rejected the EU’s call, said people familiar with the development.

Even on 13 June during the thematic session on “Response to Emergencies”, the United Kingdom and Switzerland apparently raised serious concerns about the latest draft Ministerial Decision on the WTO Response to the COVID-19 Pandemic and Preparedness for Future Pandemics (WTO Response Decision) on grounds that their specific issues have not been addressed, said people, who asked not to be quoted.

The UK and Switzerland called for the draft WTO Response Decision text that had in principle been agreed to, be reopened to dilute provisions on intellectual property. They linked their demands to changes sought in the draft TRIPS Decision, also insisting that the Decision should also include pre-shipment notification of measures undertaken under the TRIPS Decision.

Even as the UK and Switzerland attempt to stymie the IP negotiations on behalf of “Big Pharma”, the facilitator Dr Jerome Walcott, the Minister of Foreign Affairs and Foreign Trade of Barbados, submitted a positive report of the discussions during the heads of delegation meeting.

For some time now, the textual changes introduced by the UK and Switzerland in the text circulated by the DG last month have not been properly addressed so far, as there is no consistency in the responses provided by the so-called “Quad” members, said a delegate, justifying the UK and Swiss position.

When asked whether it is correct to impose an eligibility criterion among developing countries for availing of the flexibilities outlined in the draft ministerial TRIPS decision, the official said it is “absurd” to impose the 10 per cent limit on China on grounds that it had supplied COVID-19 vaccine doses in 2021.

Meanwhile, China appears to have firmly decided that if the second square bracket in footnote 1 is not removed, then Beijing will stick to its decision not to join the consensus, said people, who asked not to be quoted.

Apparently, the US does not seem to be in favour of removing the second square bracket, said a negotiator, suggesting that Washington is yet to engage with China on this issue.

With only 24 hours left (at the time of this updated article) for the conclusion of MC12, SUNS sought to know if the issues raised by the UK and Switzerland would not be addressed and whether the two members would block the Decision.

We will make a final assessment and decide the issue accordingly, the official suggested.

Apparently, the UK and Switzerland don’t want the blame to be put on them as the two countries appear to be not agreeing to the proposed changes, said another person familiar with the proceedings in the “green room” meeting held on 13 June.

Following the “green room” discussions on 13 June, the chair issued the following draft text (which has not been agreed to, with certain paragraphs continued to be discussed on 14 June):

“MINISTERIAL DECISION ON THE TRIPS AGREEMENT

Adopted on [XX] June 2022

The Ministerial Conference,

Having regard to paragraphs 1, 3 and 4 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization (“the WTO Agreement”);

Noting the exceptional circumstances of the COVID-19 pandemic;

Decides as follows:

1.  Notwithstanding the provision of patent rights under its domestic legislation, an eligible Member[1] may limit the rights provided for under Article 28.1 of the TRIPS Agreement (hereinafter “the Agreement”) by authorizing the use of the subject matter of a patent [2] required for the production and supply of COVID-19 vaccines without the consent of the right holder to the extent necessary to address the COVID-19 pandemic, in accordance with the provisions of Article 31 of the Agreement, as clarified and waived in paragraphs 2 to 6 below.

2.  For greater clarity, an eligible Member may authorize the use of the subject matter of a patent under Article 31 without the right holder’s consent through any instrument available in the law of the Member such as executive orders, emergency decrees, government use authorizations, and judicial or administrative orders, whether or not a Member has a compulsory license regime in place. For the purpose of this Decision, the “law of a Member” referred to in Article 31 is not limited to legislative acts such as those laying down rules on compulsory licensing, but it also includes other acts, such as executive orders, emergency decrees, and judicial or administrative orders.

3.  Members agree on the following clarifications and waiver for eligible Members to authorize the use of the subject matter of a patent in accordance with paragraphs 1 and 2:

(a) An eligible Member need not require the proposed user of the subject matter of a patent to make efforts to obtain an authorization from the right holder as set out in Article 31(b).

(b) An eligible Member may waive the requirement of Article 31(f) that authorized use under Article 31 be predominantly to supply its domestic market and may allow any proportion of the products manufactured under the authorization in accordance with this Decision to be exported to eligible Members, including through international or regional joint initiatives that aim to ensure the equitable access of eligible Members to the COVID-19 vaccine covered by the authorization.

(c) Eligible Members shall undertake all reasonable efforts to prevent the re-exportation of the products manufactured under the authorization in accordance with this Decision that have been imported into their territories under this Decision.[3] Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products manufactured under the authorization in accordance with this Decision, and diverted to their markets inconsistently with its provisions, using the means already required to be available under the TRIPS Agreement.

(d) Determination of adequate remuneration under Article 31(h) may take account of the humanitarian and not-for-profit purpose of specific vaccine distribution programs aimed at providing equitable access to COVID-19 vaccines in order to support manufacturers in eligible Members to produce and supply these vaccines at affordable prices for eligible Members. In setting the adequate remuneration in these cases, eligible Members may take into consideration existing good practices in instances of national emergencies, pandemics, or similar circumstances.[4]

4.  Recognizing the importance of the timely availability of and access to COVID-19 vaccines, it is understood that Article 39.3 of the Agreement does not prevent an eligible Member from enabling the rapid approval for use of a COVID-19 vaccine produced under this Decision.

5.  For purposes of transparency, as soon as possible after the adoption of the measure, an eligible Member shall communicate to the Council for TRIPS any measure related to the implementation of this Decision, including the granting of an authorization.[5]

6.  An eligible Member may apply the provisions of this Decision until 5 years from the date of this Decision. The General Council may extend such a period taking into consideration the exceptional circumstances of the COVID-19 pandemic. The General Council will review annually the operation of this Decision.

7.  Members shall not challenge any measures taken in conformity with this Decision under subparagraphs 1(b) and 1(c) of Article XXIII of the GATT 1994.

8.  No later than six months from the date of this Decision, Members will decide whether to extend this decision to cover the production and supply of COVID-19 diagnostics and therapeutics.

9.  This Decision is without prejudice to the flexibilities that Members have under the TRIPS Agreement, including flexibilities affirmed in the Doha Declaration on the TRIPS Agreement and Public Health, and without prejudice to their rights and obligations under the TRIPS Agreement, except as otherwise provided for in paragraph 3(b). For greater certainty, this Decision is without prejudice to the interpretation of the above-mentioned flexibilities, rights and obligations outside the scope of this Decision.

____

[1] [For the purpose of this Decision, all developing country Members are eligible Members. Developing country Members with capacity to export vaccines are encouraged to opt out from this Decision.] [For the purpose of this Decision, developing country Members who exported more than 10 percent of world exports of COVID-19 vaccine doses in 2021 are not eligible Members.]

[2] For the purpose of this Decision, it is understood that ‘subject matter of a patent’ refers to COVID-19 vaccines; and ingredients and processes required for the manufacture of the COVID-19 vaccines.

[3] In exceptional circumstances, an eligible Member may re-export COVID-19 vaccines to another eligible Member for humanitarian and not-for-profit purposes, as long as the eligible Member communicates in accordance with paragraph 5.

[4] This includes the remuneration aspects of the WHO-WIPO-WTO Study on Promoting Access to Medical Technologies and Innovation (2020), and the Remuneration Guidelines for Non-Voluntary Use of a Patent on Medical Technologies published by the WHO (WHO/TCM/2005.1).

[5] The information provided shall include the name and address of the authorized entity, the product(s) for which the authorization has been granted and the duration of the authorization. The quantity(ies) for which the authorization has been granted and the country(ies) to which the product(s) is(are) to be supplied shall be notified as soon as possible after the information is available.”