[A2k] TWN Info: South supports LDCs' transition period, North creates obstacles

Sangeeta Shashikant ssangeeta at myjaring.net
Fri Mar 8 04:20:54 PST 2013

Title : TWN IP Info: South supports LDCs' transition period, North creates
 Date : 08 March 2013


TWN Info Service on Intellectual Property Issues (Mar13/01)
8 March 2013
Third World Network

South supports LDCs' transition period, North creates obstacles
Published in SUNS #7541 dated 8 March 2013

Geneva, (Simran Gathani) 7 Mar -- The "duly motivated request" by Least
Developed Countries (LDCs) to obtain an exemption from obligations under the
World Trade Organisation's intellectual property rights agreement, for as
long as a country remains an LDC received overwhelming support from many
developing countries.

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement
explicitly recognises in Article 66.1 the "special needs and requirements of
least-developed country Members, their economic, financial and
administrative constraints, and their need for flexibility to create a
viable technological base".

Accordingly, LDCs are currently not required to apply the provisions of
TRIPS (other than Articles 3 to 5), and upon a duly motivated request by a
LDC Member, the Council "shall" grant transition periods.

LDCs' latest request was discussed during the TRIPS Council meeting in
Geneva on 5-6 March.

However, hopes that the Council would decide in favour of the poorest and
most vulnerable segment of the international community by adopting the draft
decision text proposed by the LDC Group were dashed, particularly as several
developed countries backtracked on their legal commitments under Article
66.1 and resisted adoption of the proposed draft decision text.

No decision was reached on the matter, and it will be taken up again at the
next TRIPS Council meeting on 11-12 June. In the interim, the newly
appointed Chair of the TRIPS Council, Ambassador Alfredo Suescum from
Panama, will conduct informal consultations.

The LDC Group submitted a "duly motivated request" (IP/C/W/583) to the TRIPS
Council last November.

Annexed to the request is a draft decision text for the consideration of the
TRIPS Council which states: "Least developed country Members shall not be
required to apply the provisions of the Agreement, other than Articles 3, 4
and 5, until they cease to be a least developed country Member".

An extension of the transition period will give LDCs maximum flexibility in
determining the level of intellectual property (IP) protection and
enforcement that should be in place nationally. The TRIPS Agreement
recognises that this flexibility is important for LDCs to address the
developmental needs as well as to develop a viable technological base.

The previous extension of the transition period contained in IP/C/W/40
granted to LDCs in 2005 comes to an end in June 2013. Unless it is extended,
LDCs will have to fully implement the TRIPS Agreement.
 The previous extension was also subject to conditions such as
"no-roll-back" which prevents LDCs from undoing existing IP protections and
from providing reduced protection once its laws contain provisions that move
towards becoming TRIPS compliant. It also contains elements on technical
cooperation for TRIPS implementation, which are not linked to an extension
of the transition period.

At the TRIPS Council meeting, Nepal, on behalf of the LDC Group, officially
presented the request and called on the TRIPS Council to adopt the proposed
decision text.

The LDCs argued for an extension on the basis of their worsening
socio-economic situation, weak innovative and technological capacities, and
uncertainty when LDCs would be able to overcome their constraints and
develop a viable technological base. LDCs also argued that developed
countries had not fully fulfilled their commitments to transfer technology
to LDCs as required by Article 66.2 of the TRIPS Agreement.

They stressed that the TRIPS Agreement mandated an "automatic extension"
once a "duly motivated requested" was submitted to the TRIPS Council and
does not allow other WTO members to condition the request with clauses such
as the "no-roll back clause" found in the previous extension decision. LDCs
also stressed that WTO Members should not confuse the extension flexibility
provided under Article 66.1 with the technical assistance for implementing
the TRIPS Agreement which is a separate matter under Article 67 of the

According to an LDC delegate, the interventions by the US, European Union,
Canada, Switzerland and Japan focused on LDCs' compliance with the TRIPS
obligations, and subjecting any further extension to a series of conditions,
thus effectively limiting the policy space intended by Article 66.1.

The US, according to sources, said that its support for previous extensions
was "premised on promoting IP protection and enforcement", adding that it
was "essential to preserve" LDCs' implementation of IP laws and enforcement.
It added that it had "questions and significant concerns" and thus was "not
in a position to support" the LDC request at the TRIPS Council meeting.

The EU said that it was "willing to consider an extension" but it is
important to consider "where are we now" and "where we are going". It said
that a study on LDCs' progress in implementing IP systems could be a
"valuable starting point for our discussion and the question of what
challenges are outstanding regarding TRIPS implementation." The study is
financed by the Swedish government and facilitated by the WTO Secretariat.

It added that the LDC proposal "lacks both a clear and predictable
perspective and remain silent on how IP and the TRIPS Agreement could
specifically help LDCs in building a viable technological base".

Switzerland, according to sources, countered the LDC request, stating that
it had "systemic implications" for the WTO, while questioning whether the
transition period will benefit LDCs. Canada and Australia also questioned
the parameters of the LDC request.

Commenting on the outcome, Professor Brook K. Baker, from Northeastern
University School of Law, said: "There's no excuse for the TRIPS Council
having failed at its March meeting to grant what is a mandatory extension of
the LDC transition period pursuant to LDC's proper motivation. Granting
monopolies to transnational IP companies in the poorest countries in the
world is guaranteed to slow development in both technology and human
capacity. Access to medicines, educational, informational, and cultural
resources, agricultural inputs, and green technologies is critical to human
rights and survival in these countries. The efforts of the US and EU to pare
down and conditionalise this extension-of-right must be condemned."

Ambassador Shanker Das Bairangi from Nepal, on behalf of the LDC Group, in
officially presenting the LDC request and draft decision text to the TRIPS
Council, said the extendable transition period was "an important
flexibility" granted to LDCs.

Nepal argued that "LDCs need the continuation of flexibility as their
situation has not changed significantly over the years", "their
marginalisation continues", and "they have not been able to develop their
productive capacities which limit their meaningful integration into the
world economy".

"LDCs continue to be characterised by multiple structural constraints that
include low per capita income, low level of human development and extreme
vulnerabilities to external shocks. LDCs are home to more than 50 per cent
of over a billion people who live in extreme poverty. These countries are
the most off-track in the achievement of the internationally agreed
development goals, including the Millennium Development Goals. They bear
considerable health burdens - of both communicable and non-communicable
diseases. In 2011, according to UNAIDS, some 9.7 million of the 34 million
people living with HIV worldwide lived in the LDCs. Of these people, only
2.5 million had access to antiretroviral treatment", Nepal stressed.

Nepal also said "LDCs' economic indicators have not changed since 2005.
Trade in goods and services has not improved much - in fact trade deficit in
both goods and services have increased; per capita GDP growth has fallen".

Nepal further said: "All LDCs are net payers of royalties. These countries
have not been able to spend even a small fraction of their national budget
to research and development as they have to concentrate more on basics like
health and education. The developmental schemes for transfer of technology
provided in TRIPS Article 66.2 have not effectively and adequately

Nepal also argued, "The level of technological development in the LDCs has
remained low. In UNDP's Technological Achievement Index, LDCs are at the
bottom. So are they in UNIDO's Competitive Industrial Performance Index and
UNCTAD's Innovation Capability Index. Numbers from WIPO reports indicate
that LDCs have not been able to enter the race of technology and

"In Istanbul Programme of Action, we all recognised that LDCs are lagging
behind in the critical areas of science, technology and innovation. Unless
LDCs have flexibilities to adopt policies to stimulate technological
catch-up with the rest of the world, they will continue to fall behind other
countries and face deepening marginalisation", Nepal said.

"In terms of future outlook, the 2012 UNTACD LDCs report has noted that
ŒLDCs have to prepare for a relatively prolonged period of uncertainty, with
possible escalation of financial tensions and real economic downturn'",
Nepal added.

Nepal further argued that the transition period has been granted in
consideration of LDCs' special situation and it is not possible to predict
when LDCs will be able to overcome their constraints. It added that TRIPS
recognises in its preambular language that LDCs have "special needs" and
thus need "maximum flexibility in the domestic implementation of laws and
regulations in order to enable them to create a sound and viable
technological base".

Nepal argued that in its view "the most logical and predictable approach is
not to set an artificial timeframe". "Our proposed approach gives more
certainty and predictability - once you graduate, you need to comply. We
find precedence of such exemption in Article 15(2) of the Agreement on
Agriculture", Nepal added.

It said that LDCs' request has been motivated by the need for policy space
to "conserve the autonomy to determine appropriate development, innovation,
and technological promotion polices, according to local circumstances and
priorities", quoting from a UNDP policy brief on the matter.

"They need such space to ensure access to various technologies, educational
resources, medicines and tools necessary for development. Most IP-protected
goods and services are simply beyond the purchasing power of least developed
countries and their people", Nepal stressed.

It also quoted UNAIDS Executive Director Michel Sidibe who stated, "An
extension would allow the world's poorest nations to ensure sustained access
to medicines, build up viable technology bases, and manufacture or import
the medicines they need".

Nepal highlighted that Article 66.1 of the TRIPS Agreement "specifies an
obligation to grant extensions" once the TRIPS Council receives a duly
motivated request from LDCs. It also referred to paragraph 2(iii) of the
Uruguay Round Decision on Measures in Favour of LDCs, which states that,
"sympathetic consideration shall be given to specific and motivated concerns
raised by the least-developed countries in the appropriate Councils and

Nepal recalled the statement of UN Secretary-General Ban Ki-moon in 2007 at
the opening of the ECOSOC session which said "The rules of intellectual
property rights need to be reformed, so as to strengthen technological
progress and to ensure that the poor have better access to new technologies
and products", adding that "What LDCs are seeking today does not go to the
extent of reform of IPR. We are simply asking for the continuation of
flexibility already agreed in 1995 - with reasons".

Nepal also highlighted that the LDC request and draft decision text has
received strong support from the UN development agencies, civil society as
well as from industry.

Nepal called on WTO Members to extend support to the LDCs' request, which is
duly motivated and to adopt the draft decision contained in the annex of

Cambodia, a member of the LDC Group, stressed that an extension of the
transition period "will preserve the policy space and autonomy to determine
policies and to develop the necessary policy and law to balance IP".

It said that Cambodia had benefited from the exemption to exclude
pharmaceutical product patents, giving an example of generic medicines that
are now $140 compared to $10,000. This extension will definitely benefit
LDCs to gain access to affordable generic medicines. It sought full support
for the LDC request and draft decision.

Solomon Islands, also a member of the LDC Group, said that it found it
extremely difficult to take on TRIPS compliance, adding that it does not
have the capacity or infrastructure to implement IP let alone to ensure
compliance. It also said that R&D is not even on the agenda of its
institutions, adding that the level of education of its people is quite

It also pointed out that developed countries had yet to fulfill their
technology commitments under Article 66.2 of the TRIPS Agreement, adding
that developed countries had yet to agree to the reporting format on its
technology transfer commitments. It stressed that LDCs needed the
continuation of flexibility as the LDC situation had not changed.

On the issue of the duration of the transition period, Solomon Islands
stressed that the proposed period was "the most realistic, predictable and
transparent criteria", adding that the "process of graduation is a gradual
process. It does not happen overnight. To opt for a given time frame is an
arbitrary option with no basis".

Morocco, on behalf of the African Group, said that it fully supported the
cause of LDCs, adding that Article 66.1 does foresee the possibility of
renewing the transition period based on economic and financial constraints.

Ambassador Wayne McCook from Jamaica, on behalf of the African, Caribbean
and Pacific States (ACP Group), expressed strong support for the LDC
request, adding that once LDCs submit a request, Article 66.1 states that
the "Council of TRIPS shall accord" the extension, adding also that there
can be no question that the extension must remain as long as LDCs face

Brazil said it was ready to support the LDC request and the draft decision
text proposed by LDCs. It explained its support for three reasons:

(i) special and differential treatment provisions to be found in the various
agreements that form the "acquis" of the WTO, including the TRIPS agreement,
are an important systemic component. The role performed by this systemic
component is to ensure that the international trading system be an effective
instrument of social and economic development for all Member States;

(ii) it supports the principle that the international IP system should have
policy space for countries to adjust and calibrate their national
legislation in accordance with their respective stages of social and
economic development;

(iii) the incorporation of developing countries, in particular the least
developed ones, into the so-called knowledge economy has proved to be a
daunting challenge, the complexity of which could barely be assessed almost
twenty years ago, when the Uruguay Round was completed.

India supported the motivated request, and said that the LDC request was a
comprehensive one, highlighting the vulnerability of their poor population,
the marginal role their economies still play in the world trade and the very
limited productive capacity and technological infrastructure that they

It added that the framers of the TRIPS Agreement rightly understood the
special needs of the LDC Members and their need for maximum flexibility in
the domestic implementation of laws and regulations in order to enable them
to create a sound and viable technological base.

Article 66.1 of TRIPS therefore mandates the TRIPS Council to grant them an
extension from the obligations of the Agreement on the basis of a motivated
request. The provisions of Article 66.1 are precise and do not provide
discretion to the TRIPS Council to either deny the request or impose any
further conditions on the LDCs, India stressed.

It noted that the link between Article 66.1 and Article 67 "was unnecessary
and had created confusion", adding that there is absolutely no relation
between the transition period which is meant to assist the LDCs in
developing a viable technological base and Article 67 which is an obligation
on the developed countries to provide technical assistance to the LDCs to
help them implement the TRIPS Agreement.

India also emphasised that the no-roll-back provision in the previous
extension decision has no place in the TRIPS Agreement and had in fact
reduced the policy space for the LDCs in utilising the TRIPS flexibilities
during the transition period to engage in technological development and
ensuring access to affordable goods to its citizens.

China said that it recognised that LDCs faced constraints and needed maximum
flexibility to meet their developmental challenges, expressing hope that the
extension will give maximum flexibility to LDCs, to address access to
essential goods that would allow them to participate more effectively in the
global trading system.

South Africa, in expressing support for the transition period, said that the
circumstances that gave rise to the transition period had not changed and
that LDCs face resource and human constraints, weak innovative capacities,
adding that this makes a strong case for an extension which should remain in
force as long as a country remains a LDC.

Bolivia also expressed support for the LDC request and draft decision text
on the basis that it was reasonable as the data showed that LDCs' situation
had worsened. It also pointed out that intergovernmental organisations and
NGOs had expressed their support for the transition period. It stressed that
the issue of extension should not be considered as part of the package of
issues that will be held at the WTO Ministerial Conference in Bali (in
December 2013), adding that the issue pertains to the regular work of the
TRIPS Council.

Cuba also supported the LDC request. It similarly stressed that it was not
an issue that should be linked to the WTO Ministerial Conference in Bali.

Rwanda, a member of the LDC Group, reiterated that the economic situation of
LDCs had not changed, the technological base has not been developed due to
lack of technological infrastructure, qualified personnel, necessary skills
and lack of technology transfer. This is evidenced by the composition of
exports which is dominated by a handful of commodities without any
technological and skills intensive products, adding that the share of LDCs
in total trade was 3% in 1954 compared to the current share of only 1%!

Referring to the language of Article 66.1 of TRIPS, Rwanda said that, "all
WTO Members including developed countries have a legal obligation to accept
the proposed decision text."

It stressed that conditions attached to the previous extension in IP/C/40
especially the no-roll-back clause "should and shall not" be attached to the
current decision text, adding that the LDC group's request is a new request
under Article 66.1 and thus LDCs are NOT bound by the conditions of the
previous decision. The "no-roll-back" clause severely hindered use of the
flexibilities by LDCs, Rwanda said, adding that such a provision was
provided for in TRIPS Article 65.5 but it pertained only to developing
countries, and not to LDCs.

Rwanda also stressed that the transition period provided by Article 66.1 is
to address the special needs of LDCs and to develop the technological base
and not for TRIPS compliance, adding that the issue of technical assistance
is a separate issue under Article 67 of TRIPS.

On the duration proposed by LDCs, Rwanda said it was specific and practical
and any shorter period would not be practical, adding that the last
negotiated extension of 7.5 years was absolutely inadequate for LDCs to deal
with its development challenges and to develop a viable technological base.
Such a limited time-frame is of limited practical value to LDCs and creates
uncertainty as to whether LDCs will obtain another transition period, making
it impossible for LDCs to maximise use of the policy space available during
the transition period.

The time-frame is also insufficient to develop a technological base, it
added. Developed countries also get predictability and certainty as they are
clear that as a LDC nears graduation they will comply TRIPS obligations,
Rwanda said.

Rwanda also highlighted that the LDC request and draft decision text
received very strong support from civil society groups, certain UN agencies,
as well as from industry. Letters and statements in support have been
received from more than 375 civil society organizations including trade
unions, from around the world representing millions of people, from UNDP and
UNAIDS, from the Electronic Information for Libraries (EIFL) that works with
libraries worldwide to enable access to digital information in developing
countries and from the Computer and Communications Industry Association
(CCIA), an organisation that represents the interests of a wide range of
companies in the computer, Internet, information technology, and
telecommunications industries such as Google, Facebook, Yahoo.

Rwanda mentioned that the CCIA in its press statement notes that the
implementation of TRIPS Agreement would be counterproductive adding costs to
Public Health systems and other administrative burdens at a moment when
these countries are contending with human and technological barriers to
modernisation. It referred to the statement by the President and CEO of
CCIA, Mr. Ed Black that, "we look forward to the day when there are no more
LDCs. But as long as any country's people are living on two dollars a day,
they should have complete flexibility in IP protection". This statement is
in line with the preamble of the TRIPS Agreement and consistent with the
empirical evidence.

Angola called on the WTO membership to support the LDC proposal, stressing
that LDCs represent the poorest and face many challenges, suffer high
disease burden, inadequate sanitation, and low agricultural productivity.
The situation of LDCs had not changed since 2005, adding that LDCs'
productive capacities continue to be limited and they face serious problems
in infrastructure and technology transfer.

Zambia said that the LDC request has been necessitated by the multiple
difficulties LDCs had to deal with over the past transition periods, to
develop the necessary national conditions that would ensure the minimum
levels of IP protection, while facilitating access, assimilation, adaptation
and enforcement issues in the face of weak institutional capacities and
limited but often competing financial resource needs. It is clear from the
2005 extension, that the challenges faced by our countries requires
timeframe that is not arbitrarily determined, but one that takes into
account the prevailing economic, financial and administrative constraints
faced to ensure that IP facilitates the creation of a sound and viable
technological base, added Zambia.

It further said that the LDC economies are faced with economic, financial
and administrative constraints as well as special needs and requirements
that necessitate the need for maximum flexibilities under the TRIPS
Agreement to enable us to build the necessary conditions that would
facilitate the effective protection of IP while maximising economic benefits
from exploitation of IP.

"The need for maximum flexibility is not an invention of our own. This is
something acknowledged in the preamble of the TRIPS Agreement and the
objective is clear. To enable LDCs create a sound and viable technological
base." Zambia said, adding that it looked forward to Members' positive
consideration of the Group's request.

Tanzania said that no country wants to remain a LDC. Short extensions will
not give LDCs the time to overcome capacity constraints and to develop a
viable and competitive technological base. Overcoming these problems takes
contextually specific strategies, policy flexibility, greater financial
resources, but it also takes time - decades not years.

Bangladesh explained that LDCs are not asking for full autonomy. Even under
the transition period, LDCs will need to implement Articles 3, 4, and 5 of
the Agreement. The idea behind the flexibility is to create a sound and
viable technological base, and not for LDCs to become TRIPS compliant.

It stressed that the extension anticipated by Article 66.1 was "automatic"
as it states "shall" and there is no way of interpreting it otherwise. The
last extension was granted 7 years ago. Out of this, for 4 years LDCs
suffered financial and food crisis. LDCs were hardest hit. Their
marginalisation increased. Imports rose more than exports, adding that no
technology transfer took place from developed countries. Thus, it is only
natural that LDCs are assisted by this extension.

According to sources, other countries that supported the LDC request for an
extension of the transition period are Saudi Arabia, Argentina, Mexico and
Sri Lanka. +

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