[Ip-health] News: LiveMint- Bitter pill for India-EU trade ties

Terri - Louise Beswick Terri at haiweb.org
Thu Aug 5 07:57:25 PDT 2010

Bitter pill for India-EU trade ties

India's ongoing negotiations with the European Union have seen
differences over intellectual property rights

Biswajit Dhar

The ongoing negotiations between India and the European Union (EU) on a
broad-based bilateral trade and investment agreement (BTIA) have seen
differences emerge in a number of critical areas, including those on
intellectual property rights. What is perhaps more disconcerting is that
these two negotiating partners find themselves on opposite sides of the
table in a number of forums.

The most recent flashpoint is a dispute initiated by India against the
EU at the World Trade Organization (WTO). EU customs authorities had
seized authorized generic pharmaceutical products-in transit to Latin
America and Africa- when they were transiting through ports and airports
in the Netherlands. More than 20 cases of seizures took place in 2008
and 2009. While taking action, EU authorities had enforced a 2003
European Commission directive, which allows seizure of goods that are
suspected of infringing the rights of intellectual property holders in
the EU even when the goods are merely in transit, i.e., they have not
entered the customs territory of any EU member state. Though the EU has
clarified that the seized shipments were released, the inordinate delays
caused in transit not only affected the commercial interests of the
exporting Indian firms but also denied patients in the importing
countries access to crucial life-saving medicines.

There are at least two substantive grounds on which the EU directive is
in explicit violation of WTO rules and procedures. First, WTO law
provides that intellectual property owners have the right to prevent
third parties from making, using, offering for sale, selling or
importing the protected products or processes. In other words, the
rights can be enforced only when there is an explicit conflict with the
commercial interests of the owners of intellectual property rights.
However, in the case involving seizures of pharmaceutical products, the
commercial interests of the EU intellectual property owners were in no
way affected, since the products were merely in transit through the
Dutch ports.

Second, there is a mutual agreement among WTO members to grant freedom
of transit through their territories, through the routes most convenient
for international transit, for traffic in transit to or from the
territory of other members. This provision was agreed to when the
General Agreement on Tariffs and Trade, or Gatt, the predecessor
organization of WTO, became effective in January 1948. Importantly,
during the six decades of Gatt's existence, the multilateral trading
system has seen no dispute on the issue of freedom of transit. That
means this is the first time that the multilateral trading system would
be considering a case where the freedom of transit has been denied by a

It is not only in international markets where the EU is challenging
generic pharmaceutical producers. In the domestic market, these firms
are facing the heat as the EU pushes for changes to Indian laws that
govern marketing of pharmaceutical products. The EU is, in effect,
seeking to introduce in India laws governing marketing of pharmaceutical
products that are similar to its own. In the EU, any firm seeking
marketing approval for a new pharmaceutical product, for which it has
submitted data on clinical trials, can get exclusive marketing rights on
the product for 10 years. This implies that any other producer can
market a similar product only after the 10-year exclusivity period has
lapsed. Introducing these provisions in India can dent the market
prospects of generic producers, most of which are looking to introduce
cheaper versions of patented products once their patent terms have

Yet another challenge for the Indian generic pharmaceutical industry
arises from the proposed Anti-Counterfeiting Trade Agreement (Acta), a
plurilateral agreement, which is the result of a joint initiative taken
by the US, the EU and Japan. Acta negotiations have a twofold objective:
to redefine counterfeit products and to strengthen the enforcement of
intellectual property rights. In fact, the proposals that Acta is
considering could result in ratcheting up standards of intellectual
property protection, well beyond those provided by the WTO agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The definition of counterfeit products that has been proposed by
participants such as the EU, if accepted, would expand the scope of
coverage of such products. If the global standards on intellectual
property rights-namely, those provided by TRIPS-were considered, the
term "counterfeit" can only be applied in respect of trademark

The legislative and enforcement issues that are being raised in Acta's
context encompass a number of areas, which include border measures and
intellectual property protection and enforcement. The proposals that
have been tabled in the Acta negotiations thus far, which are
considerably more stringent than TRIPS provisions, include civil
judicial proceedings to compensate for damages arising out of

Given the strong position that it has taken against "TRIPS-plus"
standards in WTO, India could find itself constrained in the ongoing
BTIA negotiations with the EU.

Biswajit Dhar is director general at Research and Information System for
Developing Countries, New Delhi.


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