TWN Info Service on WTO Issues
June 29, 2002

Dear friends,

Re: WTO TRIPS Council Meeting, June 25-27, 2002

The formal session of the TRIPS Council to address the difficulties of 
countries with insufficient or no manufacturing capacity in making 
effective use of compulsory licences, ended yesterday, and further 
discussions will continue in an informal mode. One and a half days 
have been set aside for these discussions, on July 24-25, 2002.

The Chair of TRIPS Council suggested that the WTO Secretariat be 
requested to prepare a "factual" paper, which would provide a summary 
of all proposals put forward by Members, on how to address the problem 
identified in Paragraph 6 of the Doha Declaration. There had been little 
time for reaction to the various proposals during the meeting - with 
apparently over 50 interventions made. The Secretariat paper is intended 
to help focus discussions, and is expected to be ready by July 15, in 
order to allow Members time to consider it, and to have their responses 
ready for the July 24-25 informal meetings. 

WTO Members have agreed to give effect to the extension of the transition 
period for the Least-Developed Countries until 2016. In addition, they have 
agreed on a waiver to exempt LDCs from having to provide exclusive marketing 
rights (EMRs) for new drugs for the same period. It is understood that the 
waiver recommendation will be submitted for approval to the WTO General 
Council on July 8, 2002.

Attached below is a quick commentary of some of proposals relating to 
Paragraph 6, put forward at the TRIPS Council. I hope you find it of use.

With best wishes,

Cecilia Oh
Third World Network



A comment on the proposals for an expeditious solution under Paragraph 
6 of Doha Declaration on TRIPS and Public Health, submitted to the TRIPS 
Council, June 25-27, 2002

Cecilia Oh, Third World Network
June 2002

WTO's TRIPS Council, meeting on June 25-27, heard proposals from WTO 
Members on the possible solutions to the problem identified in paragraph 
6 of the Doha Declaration on the TRIPS Agreement and Public Health. 
Paragraph 6 of the Doha Declaration is one of the elements of the work 
programme arising out of the Fourth WTO Ministerial Conference, which 
directs the Council to seek an "expeditious" solution to the problem 
faced by countries with insufficient or no manufacturing capacity in 
making effective use of the compulsory licensing provisions in the TRIPS 
Agreement. The deadline for achieving the solution is the end of 2002. 

The commentary below attempts to define the different aspects of the 
problem as set out in Paragraph 6. It examines the proposals put forward 
by the WTO Members, and provides a brief analysis of those proposals within 
the context of the defined problem.

Defining the problem

Although Paragraph 6 is framed in relatively narrow terms, the overall 
aim and objective of the Doha Declaration demands that the problem should 
be considered from all relevant perspectives if a workable, effective and 
expeditious solution is to be arrived at.  Since the Doha Declaration 
requires the provisions of the TRIPS Agreement to be "interpreted and 
implemented in a manner supportive of WTO Members' right to protect public 
health and, in particular, to promote access to medicines for all", it 
would only be logical that the problem in Paragraph 6 (and its solution) 
be approached with this objective in mind. 

How a problem is defined will influence the solution reached. Perhaps the 
United Arab Emirates stated it best, in its communication to the TRIPS 
Council (IP/C/W354, June 24, 2002), as follows:

"Paragraph 6 should be read in light of the overall picture designed by 
Ministers in the Doha Declaration aimed at supporting Members in taking 
measures to protect public health and facilitating access to medicines 
for all. It should be understood in light of the spirit of the Doha 
Declaration and the objectives set therein."

It would seem logical that a workable and effective solution for Paragraph 
6 should address the demand, as well as the supply side perspectives.

Demand side problem: The demand side problem is clear. It is implicit in 
Paragraph 6 that the source of affordable medicines is generic production 
of medicines. If a developing country is unable to manufacture and meet 
the demand for medicines domestically, there is need to source from 
somewhere else. In such cases, the compulsory licensing provisions in the 
TRIPS Agreement would only be of use if they were issued for the purpose 
of enabling the importation of needed medicines. This is where the supply 
side aspect to the problem comes into play. 

Supply side problem: Today, several developing countries may have producers 
that are able to meet the import needs of developing and least-developed 
countries. These producers may manufacture generic medicines under 
compulsory licence both for domestic and export consumption. (The 
requirement for a compulsory would not apply in the case of countries 
that do not yet have product patent protection.) However, the limitation 
of Article 31(f) that the exports under compulsory licences must be 
"predominantly for the supply of the domestic market" raises the problem 
of whether the exports under compulsory licences will be enough to meet 
the demand of the importer countries. 

Come January 2005 (when the TRIPS obligations for both product and process 
patent protection have to be fully implemented by all developing countries), 
those developing countries presently able to produce and export will no 
longer be able to do so, in respect of new and patented medicines. This 
would also include those medicines covered by the mailbox provision, which 
will also be patent protected as of 2005. This means therefore, that 
compulsory licensing will increasingly become a vital tool for ensuring 
affordable access to new, on-patent medicines in many developing and 
least-developed countries. Yet, the limitation in Article 31(f) remains 
an obstacle towards ensuring multiple, sufficient and sustainable sources 
of supply for countries with limited capacity to manufacture medicines 

Manufacturing capacity: Another aspect of the Paragraph 6 problem is that 
of "manufacturing capacity". The capacity to produce medicines is extremely 
uneven in the Third World - recent surveys indicate that only a handful of 
developing countries have innovative capabilities (i.e., ability to come up 
with new molecules), or even the ability produce active ingredients, in the 
pharmaceutical sector. 

Countries may have the capacity to produce relatively simple drugs, or 
they may have the general capacity to produce active ingredients or 
formulations but lack the equipment, technology or access to the 
intermediate chemicals necessary to produce a particular product. 
More importantly, a country may have the technical capacity to produce 
but such production may not be economically viable, where the market is 
too small to achieve economies of scale. In all such cases, these countries 
should be covered by solution(s) proposed to address the Paragraph 6 problem.

What would be an "expeditious" solution?

In light of the above, a solution for Paragraph 6 should be one that 
addresses the problem from both the demand and supply side perspectives, 
in order to enable public health protection and facilitate access to 
affordable medicines, consistent with the overall aim of the Doha 
Declaration. It should also recalled the developing countries, in 
bringing the public health and patents onto the WTO agenda, were 
demanding for an authoritative interpretation of TRIPS provisions, 
so that they would be able to take measures related to protection of 
public health and ensuring access to medicines, without the risk of 
a legal challenge. 

Therefore, a solution must have the assurance that it provides legal 
security. It must also not be complicated, so that quick action can 
be taken to supply urgently needed medicines. Therefore, simple and 
speedy procedures, absent of cumbersome conditionalities, are essential. 

A legal solution must also be workable in practice. It must enable 
countries to effectively and quickly source for the medicines needed 
in the quantities and quality required. The solution must also take 
account of the longer-term requirements for countries with little or 
no manufacturing capacity. Clarity of rules will be needed to encourage 
private sector involvement. For instance, there should be clarity and 
predictability in the legal provisions on compulsory licensing, as there 
should be for regulations and procedures on prior negotiation (with 
patent holder) and compensation, as well as the period of validity of 
the compulsory licence. There should also be clarity and predictability 
in terms of producers' ability to export, so that they are able to 
determine the available markets for their products. The promotion of 
domestic manufacturing capacity and its long-term sustainability will 
depend on the assurance of economies of scale and economic viability.

At the recent TRIPS Council meeting on June 25-27, various proposed 
solutions were put forward by the WTO Members. These proposals have 
focussed mainly on the provisions of Article 30 and Article 31 of the 
TRIPS Agreement. The proposals from the developing countries, and the 
EC and US are considered below.

Developing countries' proposals for solution

In the previous TRIPS Council meeting of March 5-7, the joint statement 
of the group of 52 developing countries identified two possible solutions 
based on Articles 31 and 30 of TRIPS. 

One option was to amend Article 31, by deleting paragraph (f), so that 
the words "predominantly for the supply of the domestic market" would 
no longer be an obstacle limiting Members' use of compulsory licences 
to export pharmaceutical products to countries in need. The second option 
proposed the development of an authoritative interpretation of Article 30 
that would recognize the right of Members to allow the production and export 
to address public health needs in another country (where that country has 
issued a compulsory licence to import the said production). At the TRIPS 
Council meeting on June 25-27, developing countries elaborated on these 

The Africa Group proposal

At the TRIPS Council on June 25-27, the Africa Group put forward a 
comprehensive proposal, which called for decisions on Article 31(f), 
Article 30, as well as on extension of transition periods and a 
moratorium on disputes related to measures taken for purposes of public 
health and access to medicines. These "elements of the solution" 
comprised a package proposal from the Africa Group, and were included 
an annexed draft decision, which set out the proposal in precise 
language for adoption. It can be said that there were three main 
components to the Africa Group proposal, as follows:

Article 31: The Africa Group proposal identified three options for 
addressing the problem; either through deletion of paragraph (f) in 
Article 31, or through an amendment to exclude its application to 
public health or access to medicines measures, or through an amendment 
to expand the definition of "domestic market" to include regional 
markets, free trade areas or customs unions. The rationale behind this 
Article 31 proposal lies in the need to create large enough markets to 
achieve economies of scale for generic medicines (and thus, economic 
sustainability) produced under compulsory licence. In deleting paragraph 
(f) in Article 31 or excluding its application to measures taken for 
public health and access to medicines, there would be no limitation on 
the quantity of exports of medicines produced compulsory licence. 
Alternatively, if there was an interpretation of "domestic market" which 
covered regional markets (or markets within a free trade union or customs 
union) then Members could give effect to a compulsory licence on a regional 
level, which would also address the problem of small domestic markets in 
developing countries.

Article 30: In addition, the Africa Group proposed an exception to patent 
rights under Article 30, so as to enable a country (with present 
manufacturing capacity) to produce and export to another so as to meet 
its public health needs. (See the 13-developing country proposal below 
for more details on the Article 30 approach.)

Extension of transition periods, bilateral and regional arrangements, 
and a moratorium on disputes: The African proposal also called for 
extension of transition periods developing and least developed countries 
that have insufficient or no manufacturing capacity, to allow them to 
develop social economic levels where they can meaningfully and sustainably 
protect public health on the basis of domestic capacity. The Group also 
raised the issue of bilateral and regional arrangements, which have 
incorporated TRIPS-plus conditionalities, and called for respect for the 
flexibility of the TRIPS Agreement. In addition, the proposal included a 
moratorium on disputes related to measures adopted to address public 
health concerns in countries with insufficient or no manufacturing 
capacity in the pharmaceutical sector. The moratorium would come to an 
end by a decision of the TRIPS Council, based on a determination by the 
WHO that certifies that the public health need has been eliminated. 

The package proposal from the Africa Group envisaged that all of the 
above elements would be required for a solution to Paragraph 6. The 
Group stated in its paper that these elements provided the solution to 
the Paragraph 6 problem, both in the short term as well as in the long 
term. The Article 30 approach would enable the supply and export of 
affordable medicines to meet the (urgent) need of countries in the short 
term, and the option of amending or interpreting Article 31(f) would 
encourage and facilitate investment in, and development of, local 
manufacturing capabilities in the medium and long term. In the meanwhile, 
the proposals on extending the transition period, ending bilateral 
pressures and establishing moratorium would provide the needed legal 
security to allow the measures to be taken. 

The 13-developing country proposal

The 13-country proposal from Bolivia, Brazil, Cuba, China, Dominican 
Republic, Ecuador, India, Indonesia, Pakistan, Peru, Sri Lanka, Thailand 
and Venezuela asked that solutions for Paragraph 6 should "avoid taking 
a narrow approach" and should "not be detrimental to the fulfilment of 
the objective of the TRIPS Agreement of transfer of technology, which is 
critical to improving manufacturing capacities in the pharmaceutical sector, 
and therefore to ensuring sustainable access to affordable medicines". The 
developing country proposal also stressed the point that any WTO Member 
could face the problem set out in Paragraph 6. In this case, the solution 
considered by the TRIPS Council should not be limited to a specific 
category of countries, although it was envisaged that the developing and 
particularly, the least-developed countries would be the main beneficiaries. 
The proposal further stated that each Member should have the right to 
determine whether it was in the situation of insufficient or no manufacturing 

In their proposal, the developing countries identified, as the main focus, 
a solution based on an authoritative interpretation of Article 30 of TRIPS, 
but also proposed solutions based on Article 31.

Article 30: These developing countries proposed an authoritative 
interpretation of Article 30 of TRIPS which would "recognise the right 
of Members to make, sell and export patented public health related 
products without consent of the patent holder to address public health 
needs in another country". Article 30 of TRIPS allows "limited exceptions" 
to exclusive patent rights, so long as they do not unreasonably conflict 
with the normal exploitation of the patent; and do not unreasonably 
prejudice the legitimate interests of the patent owner, whilst taking 
into account the legitimate interests of third parties. Whilst TRIPS 
does not define the nature and extent of these exceptions, it is clear 
there is a distinction made between exceptions under Article 30 and 
compulsory licences under Article 31. It is no longer disputed that 
Article 30 allows for exceptions to exclusive patent rights in the 
cases of experimental or scientific use, and early working (the Bolar-
type exception). These exceptions are drafted in national patent 
laws as outright or automatic exceptions; that is to say, the exceptions 
are applicable, without the need for specific authorisation by a court 
or administrator, in favour of any person that avails himself of the 

In their paper, the developing countries propose that WTO Members should 
recognise an exception that would allow generic producers, without consent 
of the patent holder, to manufacture and export to other countries in need 
of the said medicine or products. As a solution to the Paragraph 6 problem, 
the developing countries propose that the interpretation would recognise 
the right of Members to provide for a specific exception in their national 
patent laws, to the effect that generic production of a patented medicine 
for export to meet a public health need in another country would not be 
deemed as infringing the patent. The approach under Article 30, as an 
automatic exception would negate the need for a compulsory licence to be 
issued in the country of export, only in the country of import would a 
compulsory licence need to be issued (if patent protection was in place 

Article 31: The developing countries also raised the possibility of 
amending Article 31(f), by deleting paragraph (f) in order to eliminate 
the limitation on export. In relation to solutions based on Article 31, 
they further proposed that consideration be given to the use of Article 
31(k), which relates to compulsory licences issued to correct anti-
competitive practices. In such cases, the limitation on exports in Article 
31(f) does not apply. In this context, the developing countries ask that 
the WTO Secretariat document current use of Article 31(k) by WTO Members. 

Double compensation: In examining solutions based on Article 31, whether 
in paragraphs (f) or (k), developing countries pointed out that solutions 
based on Article 31 would require the issuing of two sets of compulsory 
licences, in both countries of export and import. It was a point of concern 
that two sets of compulsory licences had to be issued, which would also 
mean payment of double remuneration to the patent holder, to address what 
was essentially the same problem. Not only would this procedure be 
administratively burdensome but that the patent holder would be paid double 
remuneration. In the case of double remuneration or compensation, the 
developing countries stated that the patent holder should not be so entitled. 
A more reasonable approach would be to determine compensation in the country 
where the product is consumed.

Both the Africa Group and the developing country proposals lay down 
various options, and are focused on seeking solutions that take into 
account both the short term (and urgent) need to facilitate access to 
affordable medicines, as well as the longer term objective of developing 
capacity to produce medicines. The proposals also underscore the concern 
that implementation of the TRIPS provisions have and will create fundamental 

The crucial question would be whether other WTO Members, with whom the 
developing countries have to negotiate for a solution, perceive the problem 
and more importantly, the required solution(s), in the same way.

The EC proposal - A change of tune?

In their previous communication to TRIPS Council in March 2002, the EC 
and its member states had stated that they considered amendment of Article 
31 and the interpretation of Article 30 (to allow production for export) 
as two possible solutions which merited particular attention. However, in 
their submission to June 25-27 TRIPS Council, the EC addressed only the 
Article 31 approach. On other approaches, the EC referred to the waiver 
or moratorium approach (proposed by the US - see below), as well as the 
interpretation of Article 30, but stated that both these approaches "fall 
short of providing the type of sustainable and legally secure solution that 
the EC is aiming for".

The EC proposal, for a solution based on Article 31, is for the introduction 
of a new paragraph in Article 31; the basic principle of which would act to 
exclude the application of paragraph (f) to cases where a compulsory 
licence is granted in one country for the production and export to another 
country (which has been specifically designated in the grant of the 
compulsory licence) to address its public health problems. This exclusion 
would apply when a number of conditions, to be specified within the new 
paragraph, are fulfilled.

The EC proposal states that those Members that would qualify for importing 
would be the developing countries, but adds the words, "focussing 
especially on least developed country Members and low income Members, with 
no or insufficient domestic manufacturing capacity". It is not clear whether 
this would result in a two-tier system of countries; i.e., those eligible 
for such exclusion and those that are not.

Additional legal obligations to prevent diversion: The conditions proposed 
by the EC, under which the proposed exception will be triggered and applied, 
are focussed on prevention of diversion of the products from their intended 
destination. Thus, the proposal includes legal obligations on both countries 
of export and import to take steps to prevent such diversion. WTO Members 
granting the compulsory licence for export will have to take "all necessary 
regulatory and administrative measures" to ensure that condition against 
diversion is "effectively respected". The importing Member would have to 
take "all reasonable and necessary regulatory and/or administrative 
measures" to effectively ensure that the product is not re-exported. Thus, 
the EC proposal would place a responsibility on the importing Member to 
enforce measures such as "border controls, supervision over distribution 
of the pharmaceuticals concerned and the imposition of the necessary 
restraints on the distributor(s)". It is questionable whether these 
additional obligations would only compound the problem and negate the 
effectiveness of the solution. It would also be interesting to have had 
some evidence from the EC that such diversion does in fact occur.

Procedure: The EC also propose further procedural steps, which requires 
the exporting and importing Members to "promptly inform of their intention 
to issue a compulsory licence" and provide the patent holder with the 
opportunity (within a short-time after notification) to make an offer to 
supply the products at "strongly reduced prices". Where the offer of the 
patent holder meets the needs of the Member, "notably in terms of price, 
safety and sustainability, this would be sufficient reason not to resort 
to a compulsory licence under the proposed exception". This would appear 
to be an unnecessary and particularly burdensome condition, and arguably, 
a TRIPS-plus requirement. It might be noted that the EC has not forgotten 
to add that it would be up to the importing Member to judge whether the 
offer by the patent holder of sufficient to meet its needs.

Moratorium/waiver: The EC, in preferring a textual addition to Article 
31(f), adds that such addition would come under the procedural rules set 
out by Article X of the Marrakesh Agreement, but cautions that "(A)s for 
all amendments of international agreements, it is a procedure that takes 

How much time exactly is left unsaid. In the interim, the EC suggests 
that Members could agree to a temporary arrangement pending the entry 
into force of the additional paragraph to Article 31, such as a moratorium 
or possibly a waiver (which it has said does not offer a sustainable and 
legally secure solution).

Perhaps an indication of the length of time it would take for such an 
amendment can be found in the previous EC communication to the March 5-7 
TRIPS Council. The EC had then stated that a solution based on amendment 
of Article 31 (assuming a consensus on this point is reached in the TRIPS 
Council) could not be implemented until the Fifth WTO Ministerial because 
it would require a proposal to the Ministerial Conference for the amendment 
of TRIPS, as required under Article X of GATT. On the other hand, "for a 
solution based on Article 30, a three-quarters majority in the General 
Council would suffice". (See EC Concept Paper, IP/C/W/339, 4 March 2002, 
paragraph 30).

The effect of the provisions of Article X of the Marrakesh Agreement seems 
to be that an amendment of TRIPS would require a proposal to be submitted 
to the Ministerial Conference, for which acceptance by two thirds of the 
WTO membership is required for the amendment to take effect. If the 
amendment is of a nature that would alter the rights and obligations of 
the Members, these will take effect only for those Members that have 
accepted them even if these have been approved by two thirds of the Members 
(See B.L. Das (1998), An Introduction to the WTO Agreements, pg. 138)

In effect, it would appear that the EC proposal is much like the US 
proposal for a moratorium, pending the acceptance of the amendment. 
It would also be fortuitous timing for the EC, should the amendment 
be tabled at the Fifth Ministerial Conference, during which perhaps 
some trade offs on other issues of interest to the EC could be made 
in exchange for the amendment. 

The US moratorium proposal - A sustainable, balanced and workable solution?

The US communication to the TRIPS Council meeting encouraged WTO Members 
to reaffirm Paragraphs 1 and 6 of the Doha Declaration again, in an 
apparent attempt to define the scope of the problems to be addressed. 
The US document then goes on to state that the solution should be limited 
to developing and least-developed countries, for "if the solution were 
available to producers in the developed world, there might be little 
opportunity for producers in the developing and least-developed Members 
to supply pharmaceuticals". 

The US proposal dismisses the Article 30 approach, stating that the 
provision is intended to apply only to statutory exceptions that had 
already been provided for in national laws at the time the TRIPS Agreement 
was negotiated. But if it were so, would not the provision have made this 

Preferring a solution based on Article 31, the US proposal suggests and 
exemption from the provision of Article 31(f), and lays down the conditions 
to be met by exporting and importing Members, in order for such exemption 
to operate. Acknowledging that Article 31(f) presents a problem for export,
the US suggests that developing country Members seeking to export the needed 
pharmaceuticals could be exempted from Article 31(f), on condition that the 
compulsory licence issued under Article 31 complies with each provision of 
Article 31, save for paragraph (f). In addition, the exporting Member would 
also ensure that the entirety of the production is exported to the importing 

Members eligible to import would be those that are "afflicted by a public 
health problem, especially those resulting from HIV/AIDS, malaria, 
tuberculosis and other epidemics, and has insufficient or no manufacturing 
capacity in the pharmaceutical sector". However, the US notes that the 
criterion of capacity was not defined in Paragraph 6, and proposes that a 
procedure to clarify which developing country Members could be considered 
eligible (although all LDCs are considered to have insufficient capacity). 
Again, this would raise the possibility of a group of countries that may 
not be eligible for the exemption.

Importing Members are also required to inform the TRIPS Council of their 
intention to seek imports. In addition, there is also a requirement for all 
Members to ensure that means are provided to prevent trade diversion.

The exemption from Article 31(f) would be given effect either through a 
moratorium for dispute settlement or a waiver of the obligation. According 
to the US, this option should be preferred as agreement on the moratorium or 
waiver mechanism be reached much more easily and quickly than on an amendment 

It is not easy to see how agreement on the moratorium or waiver could be 
reached quickly, as many questions remain unanswered and many aspects of 
the proposal have yet to be worked out. For instance, how long would the 
moratorium operate? Or in the case of a waiver, would it be undertaken on 
a case-by-case basis? There are many uncertainties, and it may be that 
one would agree with the EC's assessment that the moratorium or waiver 
proposal could not offer a sustainable or legally secure solution.

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