[Ip-health] TWN Info: LDC TRIPS exemption approved with mixed reactions

Sangeeta Shashikant ssangeeta at myjaring.net
Mon Jun 17 05:22:03 PDT 2013

 TWN Info Service on Intellectual Property Issues (Jun13/06)
 15 June 2013
 Third World Network
The members of the World Trade Organisation (WTO) adopted a decision on 11
June for the world's poorest nations to exercise their right to be
exempted from implementing the    organisation's intellectual property
rights agreement.

Below a detailed news report on the contentious points between developed
countries and least developed countries, discussions that took place at
the TRIPS Council, reactions of NGOs/IGOs to the decision. Also available

Sangeeta Shashikant
Third World Network.
LDC TRIPS exemption approved with mixed reactions
Published in SUNS #7604 dated 13 June 2013 (updated Version)

    London, 12 Jun (Sangeeta Shashikant) -- The members of the World Trade
Organisation (WTO) adopted a decision on 11 June for the world's poorest
nations to exercise their right to be exempted from implementing the
organisation's intellectual property rights agreement.
    In a hard-won decision, for another eight years, least developed
countries (LDCs) shall not be required to apply the provisions of the WTO
Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS), except for Articles 3, 4 and 5 (which concern national treatment
and most favoured nation treatment).
    The decision does not include the highly contentious "no-rollback"
clause contained in the previous decision concerning the exemption
(IP/C/40) taken in 2005 and which expires on 1 July.
    This decision brings to an end months of uncertainty over the fate of
the "duly motivated request" submitted by Haiti on behalf of the LDCs last
November seeking an unconditional extension of the transition period for
as long as a country remains a LDC.
    The LDC request, while receiving massive support from developing
countries,industry, civil society, UN agencies and academics, was
fervently opposed by the developed countries led by the United States and
the European Union.
    The outcome is the result of many sessions of lengthy pressure-packed
closed-door negotiations over the last month, facilitated by Ambassador
Alfredo Suescum of Panama, the Chair of the TRIPS Council, between rich
countries (the US, EU, Japan, Australia, Canada, New Zealand, Switzerland)
that opposed the LDCs' formal request and a handful of LDCs. The Chair-led
negotiations were preceded by weeks of informal consultations between
developed countries and LDCs, facilitated by Australia.

    The Chair did hold informal briefings for other WTO members but
countries that unreservedly supported the LDCs' formal request were not
invited to the closed-door
negotiations. Draft texts and proposals under discussion in the closed
negotiations were also not circulated to the other WTO members for their

    The deal that was finally concluded between the developed countries
and the LDCs received mixed reactions from other members of the WTO, NGOs
and intergovernmental organizations (IGOs).
    The preamble of the Decision contains the following paragraphs:
    "The Council for Trade-Related Aspects of Intellectual Property Rights
(the "Council for TRIPS"),
    "Having regard to the transition period for least developed country
Members provided for in paragraph 1 of Article 66 of the TRIPS Agreement
(the "Agreement");
    "Recalling that this transition period was extended by the Decision of
the Council for TRIPS of 30 November 2005 (IP/C/40) until 1 July 2013;
    "Having regard to the request from least developed country Members,
dated 5 November 2012, for a further extension of this transition period,
contained in document IP/C/W/583;
    "Recognizing the special needs and requirements of least developed
country Members, the economic, financial and administrative constraints
that they continue to face, and their need for flexibility to create a
viable technological base;
    "Recognizing the continuing needs of least developed country Members
for technical and financial cooperation so as to enable them to realize
the cultural, social, technological and other developmental objectives of
intellectual property systems;"
    The operative paragraphs of the Decision state the following:
    "Decides as follows:
    "1. Least developed country Members shall not be required to apply the
provisions of the Agreement, other than Articles 3, 4 and 5, until 1 July
2021, or until such a date on which they cease to be a least developed
country Member, whichever date is earlier.
    "2. Recognizing the progress that least developed country Members have
already made towards implementing the TRIPS Agreement, including in
accordance with paragraph 5 of IP/C/40, least developed country Members
express their determination to preserve and continue the progress towards
implementation of the TRIPS Agreement. Nothing in this decision shall
prevent least developedcountry Members from making full use of the
flexibilities provided by the Agreement to address their needs, including
to create a sound and viable technological base and to overcome their
capacity constraints supported by,among other steps, implementation of
Article 66.2 by developed country Members.
    "3. This Decision is without prejudice to the Decision of the Council
for TRIPS of 27 June 2002 on "Extension of the Transition Period under
Article 66.1 of the TRIPS Agreement for Least-Developed Country Members
for CertainObligations with respect to Pharmaceutical Products" (IP/C/25),
and to the right of least developed country Members to seek further
extensions of the period provided for in paragraph 1 of Article 66 of the
    One of the most contentious points in the informal negotiations was
the no-rollback (NRB) clause. This clause, found in paragraph 5 of the
previous extension decision (IP/C/40), states: "Least-developed country
Members will ensure that any changes in their laws, regulations and
practice made during the additional transitional period do not result in a
lesser degree of consistency with the provisions of the TRIPS Agreement."

    [Note: Under this condition, an LDC would not be able to experiment
with IP-legal reforms that are suitable to their development context. For
example, if a LDC introduces a TRIPS-compliant obligation on
IP-protection, it would no longer be able to reduce that scope of
protection, regardless of the fact that the LDC is not required to
implement the TRIPS Agreement.]

    According to trade sources, the US and EU in particular wished to
retain this clause in the current extension decision, while LDCs were
opposed to its inclusion, repeatedly arguing that it was antithetical to
Article 66.1 of TRIPS. The text of Article 66.1 of TRIPS does not prevent
LDCs from undoing/reducing existing IP protections, should they be
detrimental to their needs.

    [Article 66.1 states: "In view of 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, such Members shall not be required to apply the
provisions of this Agreement, other than Articles 3, 4 and 5, for a period
of 10 years from the date of application as defined under paragraph 1 of
Article 65. The Council for TRIPS shall, upon duly motivated request by a
least-developed country Member, accord extensions of this period." ]

    Developed countries were generally not in favour of finalising the
time-frame of the transition period until discussions on NRB were
completed, sources say, and thus a number of different formulations were
presented and considered during the informal negotiations before arriving
at the final formulation in paragraph 2 of the Decision. LDCs firmly
rejected any obligatory NRB.

    Thus, the decision only makes a reference to paragraph 5 of Decision
IP/C/40, with LDC members expressing their "determination to preserve and
continue the progress towards implementation of the TRIPS Agreement." The
decision further reinforces that nothing in the decision prevents LDCs
from utilising flexibilities available to them under the TRIPS Agreement,
which includes the flexibility under Article 66.1 i.e. to not apply
provisions of the TRIPS Agreement, thus effectively allowing LDCs to undo
existing IP laws and provide reduced protection.
    According to trade sources, an earlier formulation presented by the US
to the LDC Group, i.e. that "LDCs are encouraged to continue that progress
towards (implementation of/compliance with) the TRIPS agreement", was
subsequently withdrawn by the US, claiming its proposal was a “mistake”.
At a later stage, the US proposed: "LDC Members express commitment to
preserving and continuing that progress towards full implementation of the
TRIPS Agreement".
    This formulation was not agreeable to LDCs, sources say, leading US
Ambassador Michael Punke to suggest other alternatives to replace
"commitment", such as "dedication" and "resolve", at an Ambassadorial
level meeting on the evening of 4 June 2013. Finally, all the countries
settled on "determination", a suggestion by the US at that meeting.
Proposals by LDCs were not accepted.
    The duration of the transition period was also heavily disputed.
Throughout the negotiations, developed countries favoured short timeframes
with the US going as low as 5 years.
    According to trade sources, Australia proposed a slightly longer time
frame of 10 years but subject to a TRIPS Council review of the progress
made in implementing the TRIPS Agreement. Such a review would have been an
additional condition beyond Art. 66.1 and thus was not acceptable by the
LDCs. The final duration agreed upon is 8 years, an increase over the
previous extension of 7 1?/2 years.
    According to trade sources, following agreement on the NRB clause, and
as discussions proceeded to the duration of the extension decision, the EU
emerged with a new proposal that would require the WTO to present after a
few years a report on the progress made in the development of intellectual
property systems by LDCs and any difficulties they encountered in that
regard with the view of providing technical assistance.
    This proposal was not acceptable to LDCs and even some developed
countries,sources say. Thus, the final decision does not include this
    However, during the TRIPS Council meeting on 11 June, the EU
reiterated a similar proposal but under the agenda item on technical
cooperation. The EU reaffirmed its commitment to provide technical
cooperation, but added that it needs information. It said that the
previous decision required LDCs to provide information on their technical
and financial cooperation needs to implement TRIPS but such an exercise
was a challenge, so it proposed that the WTO secretariat should prepare a
report in 2014 on the progress of LDCs in implementing theTRIPS Agreement
and difficulties faced.

    Nepal (the LDC coordinator) clarified that the new extension decision
does not make reference to needs assessment, and that such an assessment
pertains to TRIPS implementation under Article 67 should not be associated
with the extension decision under Article 66.1 of the TRIPS Agreement.
    It also added that the needs assessment exercise agreed in 2005 did
not work well as LDCs that prepared needs assessment received no response.
Thus, during the negotiations, there was "mutual agreement" to drop
reference to needs assessment as a condition in the new decision on
transition period. Nepal stressed that LDCs do not agree to the
Secretariat preparing a report, however, also clarifying that it was open
to a discussion on capacity building.
    India, in supporting Nepal, stressed that Article 66.1, which concerns
an extension of the transition period, has no linkages with needs
assessment, adding that since on other IP issues, developed countries did
not wish to burden the Secretariat, similarly, the Secretariat should not
be burdened to prepare areport on LDCs.
    India's intervention was supported by Brazil and South Africa. The
Chair took note of the statements and added that the TRIPS Council will
revert to the matter at the next meeting.
    The deal concluded between the developed countries and the LDCs,
adopted by the TRIPS Council, received mixed reactions from Members of the
    Nepal, on behalf of the LDC group, stressed that the transition period
provided under TRIPS Article 66.1 is a critical Special & Differential
element for LDCs. It is a flexibility provided specifically to LDCs in
recognition of their particular situation in terms of their capacity
constraints and their need to develop a sound and viable technological
base. It added that the LDCs, through their formal request in IP/C/W/583,
sought an extension of the transition period as LDCs' situation remains
the same in terms of their poor technological base and capacity
    It added that, "Our request received a huge support from Members of
this Council, for which we are thankful. Beyond this house, LDCs' duly
motivatedrequest enjoyed support from lawmakers, UN development agencies,
civil society and academicians. We are thankful to them as well."
    It further added that the LDCs engaged in "direct talks with developed
country partners" as well as through "Chair-led consultations" and with
other Members of the WTO, adding that the outcome is "an accomplishment of
months-long, intense negotiations". It is a "compromise outcome we can
live with," Nepal said.
    It further said, "Now LDCs will have 8 more years of transition
period. The years ahead are going to be challenging for LDCs as they aim
to advance on the path of development. The Istanbul Programme of Action
has set the timeline of 2020 for at least half the number of LDCs to reach
the graduation threshold. We sincerely hope that our partners will be
forthcoming in providing enhanced support measures to LDCs, including in
the areas of trade and transfer of technology. As LDCs' situation improves
and as they advance from marginalisation to greater participation in
global trade and multilateral trading system, they will find greater
incentives for participation in TRIPS provisions."
    Haiti, while welcoming the compromise, said that the original LDC
request contained "no notion of conditionalities" and the duration was
until a country graduates (from being an LDC). It added that the
transition period will enable the LDCs to develop a viable technological
base and to achieve a certain level of socio-economic development.
    India said that it has consistently supported the LDCs' request for an
extension of the transition period under Article 66.1 of the TRIPS
Agreement without any conditionalities.
    It further said that, "The compromise decision reached today, to grant
an extension of 8 years, is far removed from the legitimate request of the
LDCs for a transition period for as long as they remain LDCs. This would
have allowed the LDCs much needed time to address the extensive
development and technological challenges facing them. Regrettably, despite
overwhelming support from developing countries and a few developed
countries, an outcome has been negotiated which is a derogation from the
provisions of Article 66.1."
    It said India would join the consensus to adopt the extension decision
"since the compromise decision represented a step forward from the 2005
    It also stressed its "systemic concern about the process adopted in
reaching this decision which was negotiated between a small group of
countries, to the exclusion of the larger membership. This would no doubt
have broaderimplications for negotiations in other areas as well and is
something that is best avoided in the interest of the system and its
    India expressed hope that "any future request by the LDCs for
extending the transition period for pharmaceuticals which will expire in
2016, would be looked at in a positive manner without any conditionalities
being imposed on them."
    Brazil welcomed the result but said that it shared the systemic
concern voiced by India, stressing that future consultations should aim at
including a broader membership in the negotiation process.
    South Africa aligned itself with the statements made by India and
Brazil. It said that it was not satisfied with the duration but could live
with it. Italso stressed that the outcome is far removed from the
legitimate request of the LDCs despite widespread support the request
received. However, it said that it could join the consensus since the
decision is a "step forward from the 2005 decision".
    China welcomed the "compromise decision", expressing its understanding
that the outcome is not easily achieved. It recognised that the
no-rollback clause was not included in the decision, and the right of LDCs
to make full use of the flexibilities, adding that no conditionality
should beattached to LDCs in as far as treaty language does not require
so. It echoed the views of Brazil, India and South Africa that encouraged
more inclusive negotiations.
    Lesotho said that in the decision, LDC Members declared their
determination to move towards TRIPS compliance, however, this
"determination is importantly hinged on the acquirement of capacity by the
LDCs to meet their developmental needs including: economic, financial, and
administrative needs and also theneed for the creation of viable
technological base".
    "It is this ‘needs-based approach' that is key to ensuring that LDCs
are integrated into the Multilateral Trading System in a true sense of the
phrase, ‘Integration into the MTS'", Lesotho added.
    On the timeframe, Lesotho said that "while a much longer timeframe
would have been desirable ... the arrival at 8 years' timeframe is a
decisive expression by Members that the needs of the LDCs are key
determinants of the extension timeframe".
    It also stressed that the extension decision "highlights the
centrality of the impending need to preserve the flexibilities of the
LDCs, be they those in the TRIPs Agreement itself or those in the WTO
agreements", adding that reference to flexibilities in the Decision "is a
resounding reassurance by Members that quells any doubt concerning the
ability of LDCs to use the available policy space provided by such
    Rwanda thanked all stakeholders that supported the LDCs. It reiterated
the rationale of Article 66.1 and expressed hope that during the
transition period, LDCs will take the advantage to build a sound
technological base and overcome structural constraints.
    Developed countries supported the outcome. The US simply supported
adoption of the outcome reached with the LDCs. Japan said that the
decision supports the needs of LDCs and will assure the private sector.
    New Zealand said that the decision is in keeping with the spirit of
Article66.1 of TRIPS, adding it had always supported a meaningful
extension, and it was a "positive outcome on the whole."
    The EU welcomed the decision, stressing that the decision recognises
that IP is good for development and provides LDCs more time to implement
TRIPS. In itspress release, EU continues to read the TRIPS Council
Decision as preventing LDCs from rolling back its laws, though the general
understanding of NGO, IGOs and others of the Decision is otherwise.
    NGOs and the South Centre, an intergovernmental organization of
developing countries generally welcomed the decision, since it was an
improvement over the previous extension decision, but also highlighting
that the decision does not deliver the full legitimate demands of LDCs to
the TRIPS Council due to the opposition of developed countries.
    In its statement, South Centre states: “The best outcome would have
been that the LDC Group’s request had been fully agreed to by the TRIPS
Council. Nonetheless, given the circumstances, the 11 June 2013 decision
to extend the transition period is to be welcomed as it is a gain for the
LDCs.” It calls LDC Group’s request “justified” in view of Article 66.1
and “the low level of economic and social development” and time needed “
to develop a viable technological base and to experiment with domestic IP
legislation before being obliged to implement the TRIPS Agreement”.
“However, the LDC Group’s request was unfortunately not acceptable to many
of the developed country members of the WTO.”, it added.
    On the no-rollback clause, the South Centre stresses that the new
extension decision removed the no-rollback condition introduced in the
earlier 2005 decision adding that “This time, the LDC Group rightly
insisted that any reference to a “no roll-back” binding commitment could
not be included in the new decision”.
    It views paragraph 2 of the new decision which states LDCs express
their determination to preserve and continue the progress towards
implementation of the TRIPS Agreement as “a compromise….equivalent to a
“best endeavour””, stressing that “it is not a binding commitment on LDCs
and in no way can this be understood, in accordance with the
interpretation principles applied in WTO, as preventing LDCs from rolling
back IP legislation as required to meet their particular needs”. It adds
that the gain in policy space is reinforced by the sentence in paragraph 2
of the new decision that nothing in the decision affects LDCs’
flexibilities under the TRIPS Agreement. It also adds the TRIPS Council
decision “provides assurance that LDCs retain their policy space and
continue to have the full flexibilities intended by Article 66.1 to
overcome their capacity constraints and develop a sound and viable
technological base”.
    Medecins Sans Frontieres (MSF) welcomed the LDC efforts but said that
the outcome was “unsatisfactory” since it is time-bound, adding that “by
refusing to grant them [LDCs] a longer and more complete extension, the US
and EU are deliberately ignoring the health challenges faced by LDCs”. It
also notes “[p]ositively, however, LDCs are now in a position to roll-back
existing level of IP protection to meet domestic policy objectives, and
should do this in the years ahead”.
    Oxfam spokesperson Mohga Kamal-Yanni said: "This is better than
nothing but short time extension does not allow LDCs to build up their own
technological and knowledge base, and the laws and regulations necessary
for implementation of the TRIPS agreement – let alone to benefit from such
implementation. We supported LDCs’ request because they need the space to
implement intellectual property systems appropriate for their development
needs. “It is shameful that rich countries opposed the fair request of the
LDCs. We hope that this position is not repeated when the special waiver
on medicines expire in January 2016.”
    Primah Kwagala, Policy Advocacy manager for CEHURD (a Uganda NGO) said
“We are glad to see that our governments stood up to pressure, and fought
for the right to pro-development policies”, adding that “In Uganda, the EU
emphasizes human rights,” “But their tactics in Geneva show that they
conveniently ignored the human right to health when it mattered most.”
    Matthew Kavanagh of Health GAP called the pressure by US and EU
“outrageous and hypocritical” adding that “The US government has called
for achievement of an AIDS Free Generation and global goals on education
and climate—but without access to affordable generic medicines and other
technologies in poor countries, this vision cannot be attained.”
    Our World Is Not For Sale (OWINFS) congratulated the LDCs on their
perseverance and “condemned the unconsionable anti-development stance of
developed countries particularly the US and EU throughout the negotiation
process, to undermine the valid legal rights of the poorest nations”. It
also expressed concerns with the “non-transparent negotiation process
facilitated by the Chair of the TRIPS Council, Ambassador Suescum of
Panama, often in a way that was prejudicial to the LDCs”.
    Among the NGOs there was unanimous agreement that LDCs had won back
policy space to reduce their current levels of IP protection.
    Professor Brook Baker of Health GAP called on LDCs “to use the policy
space they have fought for and won,” adding that “Virtually all the
theoretical and empirical evidence finds that IP impedes, rather than
helps, development projects in low income countries. Many LDCs, though,
still need to enact IP reforms that allow unrestricted access to essential
public goods. They can be selective, but they should not simply maintain
the colonial IP systems that they inherited, norshould the follow the
siren song of WIPO and other IP fundamentalists who claim that IP is good
for you—just close your eyes and swallow.”
    Teresa Hackett from Electronic Information from Libraries (EIFL) said
“The decision gives LDCs more breathing space. By all accounts, it was an
extraordinarilyhard won gain. LDCs should now review their policy options
for how best to maximise access to knowledge resources for education,
research and development in order to make effective use of the transition

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