The Telegraph
Since 1st March, 1999
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- The Cancun ministerial is unlikely to succeed unless the US weakens

The author is director, Rajiv Gandhi Institute for Contemporary Studies, New Delhi

The trade-related intellectual property rights council has given up. We will now have to wait for the ministerial conference in Cancun to sort out the mess. The background is the Uruguay Round (1986-94) of negotiations, where TRIPS and trade-related investment measures and services were included as new areas, with developing countries promised a quid pro quo of market access liberalization in industrial and agricultural goods. For reasons one need not get into right now, the promised market access liberalization did not materialize. Billions of dollars worth of trade gains disappeared into thin air. There was enough scope for circumvention in the Uruguay Round agreements.

The Uruguay Round also set up the World Trade Organization, which subsumed the historical general agreement on tariffs and trade and has a goods council, a services council and a TRIPS council. The WTO agreement also says that a ministerial meeting will be held on an average every two years. The first ministerial meeting in Singapore in 1996 and the second ministerial meeting in Geneva in 1998 were run of the mill, although the Singapore ministerial brought up issues that are now known as Singapore issues (trade facilitation, transparency in government procurement, investment, competition policy, labour and environment).

The third ministerial in Seattle in 1999 was much more important, because it proposed to start a new round of negotiations, dubbed at that time, the Millennium round. Because of controversy over the agenda, and some other issues, Seattle failed to launch the new round. It was left to the Doha ministerial in 2001 to launch the Doha development agenda, to be completed by 2005 and due for a mid-term review at the fifth ministerial in Cancun in September this year.

Labour is not part of the DDA. Environment has been included, but only in so far as compatibility of WTO norms with other multilateral environment agreements is concerned. A decision on inclusion of the other four Singapore issues in DDA will be taken in Cancun through “explicit consensus”.

The Uruguay Round TRIPs agreement covers several forms of intellectual property — patents, copyright and related rights, industrial designs, integrated circuits, plant and seed varieties, geographical indications, trademarks and undisclosed information. So far as India is concerned, Indian law is today completely WTO-compliant, barring protection not yet granted to test data. But that can be done through executive action, legislation is not necessary. In fact, after the second amendment to the Indian Patents Act, the Indian legislation is more than WTO-compliant on patents. We could have done less. Other changes, in the form of a third amendment, can wait till 2005.

There are several contentious issues that surface in the context of TRIPs. Last year, the Department for International Development-funded commission on intellectual property rights brought out a document and this is an excellent compendium of the arguments, written from the perspective of developing countries.

One, the promised market access liberalization did not materialize and the quid pro quo is missing. Two, thanks to TRIPs, developing countries have been saddled with additional commitments and the required capacity is missing. Nor has the promised technology transfer taken place. Three, TRIPs protection leads to monopolies and most developing countries will have to bear the costs, without being able to reap benefits, from inventions generated in their own countries. The monopoly issue is especially serious for agriculture (seeds, fertilizers, pesticides) and health (pharmaceuticals).

Four, in an area like geographical indications, there are higher standards of protection for wines and spirits, of interest to developed countries, but lower standards of protection for geographical indications of interest to developing countries. Five, the United States of America has a very loose definition of invention and consequently, the breadth of patents granted there is very broad. Even medical and therapeutic processes have obtained patents, not to mention genes and gene sequences.

Six, the US does not recognize prior art (something that is already in the public domain and cannot therefore be an invention) unless it is in written form. Traditional knowledge from developing countries has therefore been pirated and royalties not paid for bio-diversity from the South.

There are other arguments against TRIPs, but these are the main ones. One must appreciate that India is in a better position than most other developing countries. Systems, legislation and legal expertise are better. There are sectors (software, music, films, entertainment, pharmaceuticals, bio-technology) where Indians can also benefit from better intellectual property protection in other countries.

Given these generic issues, in Doha the monopoly argument focussed on three specific points, all linked to patents and possible increases in prices of drugs — competition policy, parallel imports and compulsory licensing. If there are price increases, can competition policy (such as through price controls) be used' In Doha, in addition to the usual ministerial declaration, there was another ministerial declaration on TRIPs and access to public health. The Uruguay Round TRIPs agreement had always allowed competition policy instruments and the Doha ministerial declaration clarified that was indeed the case. Parallel imports concern situations where a drug sold cheaply in some country is imported back into the original exporting country. Was this allowed' The TRIPs agreement had always allowed this implicitly and the Doha declaration made this flexibility explicit. Compulsory licensing concerns situations where a patent is not worked, that is, a drug is not manufactured. The government can then instruct the patent-holder to execute a licence in favour of a domestic manufacturer. The Doha declaration clarified that governments had sufficient flexibility in using compulsory licensing provisions.

Fine. But what happens to countries that do not have domestic manufacturing capacity' They cannot use compulsory licences. The TRIPs council was supposed to find a solution to this problem by December 2002, a problem that assumed special significance because of AIDS. Logically, there can be only one solution. You allow these countries to use the compulsory licensing provisions to import cheap drugs from other developing countries. India, Brazil, China, Cuba and South Africa are countries from which developing countries in Africa can import such drugs, with India leading the pack. Hence, if this proposal is accepted, a market will be thrown open for India. Of course, if this proposal is accepted, the Uruguay Round TRIPs agreement will have to be amended. Somewhere in Article 31 of TRIPs, possibly in Article 31(f), the change will have to be introduced.

But two questions remained stumbling blocks. Which developing countries will be allowed this flexibility' Only the 49 less developed countries, or other developing countries also' What diseases will be covered' Only infectious diseases like tuberculosis, malaria and AIDS, or other diseases as well' The US wants the narrow view and refuses to budge. It was because of this US opposition that the TRIPs council could not find a solution by December 2002. The council tried some more, but has now finally given up.

The Cancun ministerial conference will have to find a solution and this seems extremely unlikely, unless the US weakens its position. The European Union is much more sympathetic to the cause of developing countries. But as with Iraq, the US hopes to bully the security council or the TRIPs council to agree to what it wants. However, unlike the Singapore issues, the developing countries seem to be reasonably united on TRIPs. It is possible to call the American bluff and argue that without flexibility on TRIPs, there will not be a DDA and a DDA agreement.

It is true that the process of Uruguay Round negotiations illustrated a tendency to have bilateral agreements among the US, EU and Japan and then ram it down the throats of developing countries. On TRIPs, it should not be that easy this time and for the WTO system to be credible, developing countries need to be a part of the system.

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