Pandemic Fears Raise Questions About WTO Health Waiver Opt-Out27/10/2005 by William New, Intellectual Property Watch Leave a CommentShare this Story:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)Much of our best content is available only to IP Watch subscribers. We are a non-profit independent news service, and subscribing to our service helps support our goals of bringing more transparency to global IP and innovation policies. To access all of our content, please subscribe now.As nations prepare for a possible avian flu pandemic, some observers are raising questions about a seemingly obscure footnote in international trade law under which dozens of governments have agreed not to import cheap generic drugs made for poor countries.The concern is that the provision could make it difficult for those developed countries to obtain sufficient amounts of critical drugs in time to address a widespread health emergency. But the countries signing up for the provision themselves have not been publicly among those raising the concern.At issue is a footnote to a 30 August 2003 temporary waiver of a provision in the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).The WTO TRIPS Council is under mandate to find a way to make the waiver permanent in the TRIPS agreement. But no agreement on permanency has been reachable at the 25-28 October TRIPS Council meeting, so the issue was suspended by the chairman and sent back to informal consultations between the council chairman, the group of African nations, the European Union and the United States. These countries were dubbed by the chairman the interested parties.Several other countries, such as Argentina, Brazil and India, have called for the discussions to be opened up to more countries.Under TRIPS, WTO members are permitted to issue compulsory licenses for products they deem necessary for domestic public health. Under a compulsory license, the patent on a product is exhausted so it can be produced locally.But some countries that may need drugs lack the capacity to produce them, a fact acknowledged under paragraph 6 of the 2001 Doha Declaration on Public Health, which mandated the issue be addressed. WTO members agreed on 30 August 2003 to the temporary waiver of TRIPS Article 31(f), which requires predominantly all products produced under compulsory license to be used domestically.When that agreement was reached, the WTO General Council chairman at the time read out a statement which declared the waiver would be used in good faith and would be undermined if diversion of the products to other markets occurred.In a footnote to the 2003 decision, the following countries agreed to opt out of using the system as importers: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and the United States. Also opting out with their accession to the European Union were: Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia.A number of these countries have implemented this opt-out in their national legislation and others are in the process. On 25 October, Canada circulated a communication at the TRIPS Council describing its implementation in a way that might be interpreted to offer a way around the opt-out.Consumers International argues that the countries opting out may have put their public at risk of not being able to obtain affordable drugs or drug components to fend off a pandemic because it would be impossible to acquire sufficient amounts without importing drugs made under compulsory license. They call for a reconsideration of the opt-out clause.One delegate to this week’s TRIPS Council meeting suggested in an interview that many of these countries, such as the United States, could issue their own compulsory license and produce the drugs for domestic use since the opt-out is aimed at importing and exporting. But this assumes all countries that agreed to the opt-out have domestic manufacturing capabilities, could obtain all the inputs to making the drugs, and that their domestic producers would comply.Also, at least in the immediate case of Tamiflu, the best-known medicine to fight avian influenza, the drugs could potentially be imported from India and Israel. Tamiflu does not yet have a patent in either country so may not need a compulsory license to be produced. Both countries have significant generic drug manufacturers.Chairman’s Statement Proves DivisiveIn the chairman’s statement, 11 other WTO members were mentioned as having agreed that they would only use the system as importers in “situations of national emergency or other circumstances of extreme urgency.” They are: Hong Kong, Israel, Korea, Kuwait, Macao, Mexico, Qatar, Singapore, Taiwan, Turkey, and the United Arab Emirates. Some of these countries are concerned that having been grouped together as wealthier developing countries there might be a precedent for politically grouping them elsewhere in the WTO.The discussion of the chairman’s statement has been fairly divisive, with members falling roughly into three camps, delegations say. The African group proposal, the only formal proposal under discussion, does not carry the issue forward from 2003. Argentina, Brazil, India favour this approach, with no revival of the chairman’s statement.Some of these governments noted this week that agreement on the TRIPS and public health issue is not required by the December WTO ministerial in Hong Kong, and said that no solution is better than a bad one.The European Commission “non-paper,” which has not been formally offered nor modified but is widely discussed, is interpreted by many as recommending the chairman’s statement be read out again when the waiver is made permanent. But it calls for the “legal relationship” between the 2003 waiver and the chairman’s statement to be carried forward. The European proposal also differs by suggesting the whole waiver subject be placed in an annex to the TRIPS with only a mention added to the core treaty text.The US view, according to sources, is that a stronger, written version of the chairman’s text should be included in the permanent waiver. Switzerland and Japan also support this view, according to sources.The third view is similar to that of the United States but is considered softer. Countries such as Canada, apparently joined by Australia and others, do not want another reading of the chairman’s text, but are more open to how it gets carried forward, whether it is an asterisk, footnote or other means. This group may fear that another reading might lead to slippage of some of the 11 developing countries that were pressured into agreeing in 2003 not to use the waiver except in extreme circumstances.But a delegate from one of the 11 nations told Intellectual Property Watch “there is no danger of any of the 11 countries falling off,” though the delegate said there are concerns among those countries that their agreement in 2003 not be enshrined in the TRIPS agreement text. They agreed to make their individual statements and be mentioned in the chairman’s statement in 2003 in a “good faith” effort to reach agreement on the waiver. Now some are afraid it will be made legally binding within the TRIPS text. Singapore, South Korea and Taiwan are said to be in this category.“The voluntary undertakings made by some members in good faith should also not be turned into binding obligations via incorporation into the TRIPS agreement,” the delegation of Singapore told the meeting. Singapore said it favours the EU proposal because it retains the existing arrangement without placing it in the TRIPS text.Dangerous Political Precedent For 11 Nations?Perhaps more troubling to the 11 countries is that their agreement not to use the waiver as a group may now be seen as a precedent for politically grouping them together in other WTO negotiations.A delegate from one of the 11 nations said in the past few weeks, the United States in the WTO Services Council referred to the group and the chairman’s text in arguing that the group should accept stronger liberalisation of their services markets. This could not be confirmed with the US delegation by press time.Share this Story:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Google+ (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)Related"Pandemic Fears Raise Questions About WTO Health Waiver Opt-Out" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.