CPTech asks the WTO delegates to reject the 16 December 2002 Chairman's text. This is based upon the following:

1. In paragraph 1(a), the scope of diseases is limited to "the public health problems as recognized in paragraph 1 of the Declaration." The USTR will clearly use this as a greenlight to limit the declaration to the diseases mentioned in the paragraph 1 and exclude others, and they will also focus on the "gravity" language.

   We recognize the gravity of the public health problems afflicting many developing and least- developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.

   There is no legitimate reason to focus on paragraph 1 of the Declaration in terms of paragraph 6, except for the desire of the United States, Japan, Canada, Australia and the European Union to renegotiate the entire Doha Declaration and limit the paragraph 6 "solution" in ways that paragraph 4 is not. The scope of diseases for paragraph 6 should be the same as those relevant to paragraph 5 regarding compulsory licensing, and that is the text of paragraph 4.

   It is dead certain that countries will regret ever having agreed that the Doha Declaration is restricted to "the public health problems as recognized in paragraph 1 of the Declaration." The US and PhRMA, with the backing of Japan, EU, Canada and Australia, will hammer away at a solution until it is limited in application to the diseases specifically mentioned in the last part of paragraph 1.

   Lack of clarity has not been useful for developing countries, and whatever is unclear will work against the developing countries.

2. The footnote 3 in paragraph 1.b is highly protectionist, and says that developing countries will not be allowed to supply rich countries, even when the rich country is buying from a generic supplier. This will work against technology transfer in very profound ways.

3. The safeguards are inappropriate, particularly those that require notification to the WTO TRIPS Council. The information required to be provided to the TRIPS Council will be used to increase bilateral pressure on weak countries on both the importing and exporting sides. The WTO will have an explicit mandate to monitor individual licenses, and become deeply involved in issues now left to national discretion under Article 1 of the TRIPS. This is a major change in the role of the WTO and major loss of sovereignty.

4. The proposal requires compensation to be determined in the exporting country, which is contrary to any logical analysis of who should determine affordability, a loss of national sovereignty for the importing country, and may undermine compulsory licensing as a means to promote affordable medicines.

5. The safeguards on re-importation to other countries will be costly for developing countries, and used to discourage the use of compulsory licensing. There is no evidence that generic drugs are being re-imported in the rich countries in any significant amount.

6. The regional trade agreement provision is totally biased. The European Union has told CPTech it intends to have its proposed community patent system overcome its own regional 31.f problem, but would greatly limit this in the developing world, because of the requirement that at least half the members be LDCs. Europe of course is not made up of poor countries.

7. The technology transfer paragraph 7 is insultingly weak, and is undermined by the rest of the agreement, such as footnote 3, and also quite importantly in the way the capacity issue is defined. (see below).

8. Paragraph 9 of the Chairman's text continues not to address the major issue: will this deal prejudice a unilateral Article 30 case modeled after the EU Amendment 196? The text could clarify this issue. We asked that it be clarified. But it is not clarified. The fact that it isn't fixed illustrates how desperate the US and the EU are to stop an Article 30 case from succeeding.

9. The Annex provisions on the Assessment of Manufacturing Capacities in the Pharmaceutical Sector are of course very narrow, and will likely be used against Nigeria, South Africa, Kenya, Ghana, Brazil, Korea, Thailand, and nearly any other country that has any level of economic development. What is so appalling about this section and so important is that the problems should never have been framed in terms of capacity. Canada, the United States, the EU, Japan and other understood intimately that the real issue concerns economies of scale. Last summer, USTR was willing to discuss economies of scale, but then PhRMA took over the US position. In this draft, *any* economic development in the area of pharmaceuticals will eliminate the usefulness of this "solution."