April 30, 1999 USTR 301 report on South Africa, annotated

This is an annotated copy of the April 30, 1999 USTR Special 301 review of South Africa's policies on intellectual property rights. The USTR version is on the web at: http://www.ustr.gov/releases/1999/04/99-41.html.

The USTR report is basically a re-write of the February 16, 1999 Pharmaceutical Research and Manufactures Association (PhRMA) submission to USTR. Both the PhRMA and the USTR 301 review single out the South African government's efforts to speak publicly in the World Health Assembly as a basis for trade sanctions against the South African people. Annotations are in brackets.

USTR 301 report on SA

South Africa: South Africa's Medicines Act appears to grant the Health Minister ill defined authority to issue compulsory licenses, authorize parallel imports, and potentially otherwise abrogate patent rights.

[South Africa wants to use parallel imports and compulsory licenses. Both are legal under the WTO/TRIPS agreement. Parallel Imports are legal under Article 6, and compulsory licenses are legal under Article 31. In Europe, parallel imports of pharmaceuticals are common, and we do not bring trade pressures on this issue. Compulsory licenses are also used in Europe and the USA.]
Implementation of the law has been suspended pending the resolution of a constitutional challenge in the South African courts.
[Drug companies are tying to block the act in court]
Undisclosed test data is also not adequately protected under South African law.
[South Africa permitted generic versions of Taxol to enter the market. Taxol is a US government invention. Evidence the drug is safe and effective comes from US NIH sponsored clinical trials. USTR is seeking to protect BMS monopoly on Taxol worldwide.]
During the past year, South African representatives have led a faction of nations in the World Health Organization (WHO) in calling for a reduction in the level of protection provided for pharmaceuticals in TRIPS.
[This is a very troubling aspect of the 301 review. The South African Ministry of Health has spoken out against US government bilateral pressures on intellectual property issues. Doctors representing the South African government have helped to mobilize the public health community to address the global public health crisis with AIDS and other diseases, and have spoken in support of compulsory licensing of essential medicines. At no time has South Africa called for changing the TRIPS agreement. What South Africa wants to do is consistent with the TRIPS agreement.

Here the USTR makes it clear that it will punish even the expression of opposing views in international forums. This actions is designed to punish South Africa for giving a voice of the millions of infected AIDS patients in South Africa, and to warn other African countries not to speak out.]

Copyright piracy and trademark counterfeiting is widespread and the U.S. copyright industry estimates that trade losses due to piracy of copyrighted works increased more than 35 percent between 1997 and 1998. However, the South African Government recently took the welcome step of adopting a implementing strategy to its 1997 Counterfeit Goods Act which could strengthen enforcement. We call on the Government of South Africa to bring its IPR regime into full compliance with TRIPS before the January 1, 2000 deadline, ensure that all Government offices use only legitimate software, and clarify that the powers granted in the Medicines Act are consistent with its international obligations
[Compulsory licensing and parallel imports are both permitted under the WTO/TRIPS accord]
and will not be used to weaken or abrogate pharmaceutical patent protection.
[South Africa has to do more than abide by international agreements, it has to satisfy President Clinton and Vice President Al Gore that Glaxo-Welcome, Bristol-Myers Squibb, Merck and other companies can charge the prices they want in South Africa.]
We will continue to address these issues with the South African Government and will conduct an out-of-cycle review of South Africa's progress towards addressing these concerns in September 1999.

CPT Page on South Africa trade disputes CPT on IP and Health Care