New Chairman's Draft Moves Toward Developing Countries on TRIPS

Inside US Trade
November 15, 2002

A new compromise draft for the World Trade Organization talks on expanding access to affordable medicines under discussion by a select group of trade ministers in Sydney today (Nov. 15) would allow all developing countries greater flexibility to import generic copies of patented drugs and would not explicitly limit the new rules to a defined set of diseases.

The Nov. 10 draft by the Chairman of the WTO Council on Trade Related Aspects of Intellectual Property Rights would give all developing countries and countries in transition toward market economies the choice to take advantage of the new flexibility to import generic substitutes. The U.S. and EU had advocated establishing income criteria that would exclude advanced developing countries like Brazil and China and transition economies from the new flexibility. The proposal also sets up alternative mechanisms for how countries would decide for themselves whether they have the ability to make the drugs domestically, or need to import the ge.oJhcs from abroad.

The proposal by Chairman Edouardo Perez Motta, Mexico's WTO Ambassador, also would allow developed countries to supply the drugs. The U.S. had originally advocated that developing countries alone be eligible as producers, but had not recently pressed this point.

On diseases to be covered by the deal, the draft text refers to language agreed by ministers in the Doha declaration on TRIPS and public health, and makes no attempt to seek greater definition of that language, as the Oct. 17 chairman's draft did (Inside U.S. Trade, Oct. 25, p. 1). That language, in paragraph one of the declaration, can be pointed to by developing countries seeking an open ended solution because of its reference to "public health problems." The U.S., however, will be able to use its mention of the AIDS/HIV, malaria and tuberculosis epidemics to argue that the agreement is limited to such serious epidemics. Health activists, including Doctors without Borders, however, decried the potential limits this language could impose on developing countries which need affordable medicines for a wide array of health problems.

Overall the Chairman's draft shows the talks inching toward the broader solution favored by developing countries, which are organized into two groups--African countries and a group of developing countries with generic industries, including Brazil, India and China. That sets the stage for a debate on the legal mechanism, in which a key part will center on whether the.oJhorter or the importing country is responsible for issuing a compulsory license to override a patent.

The Brazil-led group advocates an agreement that the limited exceptions to patent rules allowed under Article 30 of the TRIPS agreement should be interpreted to allow countries to manufacture and export generic drugs to fulfill a compulsory license issued in another country. TRIPS Article 31.f currently mandates that compulsory licenses be used predominantly for the domestic market. The Article 30 solution would not require exporting countries to go through compulsory licensing procedures. Health activists argue that this would create an additional legal hurdle and make countries which need the drugs dependent on legal decisions outside their borders.

The Chairman's text would require that the exporting country be responsible for issuing the compulsory license. It also points the talks in the direction of a legal solution that would first use a long-term waiver until an amendment codifying the changes to the TRIPS agreement is enacted.

U.S. Trade Representative Robert Zoellick entered the Sydney meeting after two weeks of conflicting signals from the U.S. on the drug patent issue. Deputy U.S. Trade Representative Peter Allgeier hinted the U.S. might be willing to be more flexible on the diseases covered and the countries that would be allowed to import or export under the new rules in Geneva meetings last week (Inside U.S. Trade, Nov. 8, p.1).

But those hints .oJhow an Oct. 25 letter from Assistant U.S. Trade Representative for Africa Rosa Whitaker to African trade ministers in which she makes explicit the U.S. desire, backed by its pharmaceutical industry, to exclude advanced developing countries from qualifying as importing countries, and limiting coverage to the major epidemics facing Africa, HIV/Aids, malaria, and tuberculosis. Whittaker also argues for the exclusion of diagnostic products, with the exception of test kits for Aids, from the solution, and reiterates the U.S. position that only developing countries should be allowed to export products under compulsory license.

African countries, together with developing countries with major generic drug industries like India, China and Brazil, have argued against all these limits. Whittaker argues that these limits serve the interest of Africa by focusing on Africa and its pressing public health problems, according to the letter, reprinted below.

"I urge you to instruct your officials in Geneva to work with the U.S. and other African countries to ensure that the solution the TRIPS Council develops benefits African countries and responds to the region's needs," Whittaker writes.

On EU Trade Commissioner Pascal Lamy's home turf, the EU Parliament passed a directive that, if approved by member states and the commission, would allow its generic manufacturers to export medicines where another country has issued a compulsory license, or if no patent on the drug exists in that c.oJhry, allow the export if that country's public health department requests it. The language in this directive, adopted Oct. 23, forms a template for a broad solution favored by health activists, who have allied themselves with developing countries.

In addition to the parliament's action, French Trade Minister Francois Loos issued a statement Nov. 7 advocating a solution to the question under TRIPS Article 30, the means favored by health activists.

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