The EU’s blatant attempts to prevent the LDCs from getting the full extension they had a right to under the TRIPS Agreement and its use of underhand tactics on the world’s poorest nations…. is an indication that corporate profits now outweigh any global commitment the EU has to the international human rights
European Commission’s Trade Agenda and Least Developed Countries
Corporate Profits Trump Concerns of the World’s Poorest Countries
by Shiba Phurailatpam
Regional Coordinator and Director of Asia Pacific Network of People Living with HIV (APN+)
This decade has seen the unveiling of an aggressive trade agenda by the European Commission that threatens the right to health and access to medicines in the Global South. Questions on the health impact of Europe’s trade policies have been swirling since the EU-India Free Trade Agreement negotiations revealed multiple intellectual property demands of India that will hinder the manufacture and supply of generic medicines. Now the EU is making those same demands of Thailand, another crucial manufacturer of generic medicines.
In 2013, even the world’s poorest countries who are members of the WTO were not spared the EU’s trade pressures.
Who are the Least Developed Countries (LDCs)?
The UN lists 49 countries as least developed, i.e. they meet three criterion:
– a low-income criterion, based on a three-year average estimate of the gross national income (GNI) per capita under $750;
– a human resource weakness criterion, involving a composite Human Assets Index (HAI) based on indicators of: (a) nutrition; (b) health; (c) education; and (d) adult literacy; and
– an economic vulnerability criterion, involving a composite Economic Vulnerability Index (EVI) based on indicators of: (a) the instability of agricultural production; (b) the instability of exports of goods and services; (c) the economic importance of non-traditional activities (share of manufacturing and modern services in Gross Domestic Product (GDP); (d) merchandise export concentration; and (e) the handicap of economic smallness (as measured through the population in logarithm); and the percentage of population displaced by natural disasters.
LDCs comprise more than 880 million people or about 12% of the world’s population but account for less than 2% of the world GDP and about 1% of the global trade in goods (2013 UNDP/UNAIDS Policy Brief). Adult literacy rate in LDCs is on average at 60.7%, with gross enrolment in tertiary education at about 6.6% while primary school dropout rate at 40.9 % of the population; only 1.7 per 100 people have personal computers, while about 5 out of 100 have access to the worldwide network; more than half of the LDC population do not have access to electricity, water or sanitation facilities (LDC Watch and OWINFS Open Letter).
LDCs and the WTO’s intellectual property rules
Of the UN recognised LDCs, 34 are members of the World Trade Organisation (WTO) and had to sign the WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights or TRIPS. TRIPS requires all WTO members to implement an intellectual property legal regime which includes the granting of trademarks and patents on pharmaceutical products.
At the time TRIPS was negotiated, a key safeguard enshrined in the agreement in Article 66 for LDCs was that they would have a ten year transition period to apply the TRIPS Agreement “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”.
Developed country members of the WTO were also obligated under this Article to set up conditions to encourage the transfer of technology to LDCs.
Crucially Article 66 also recognises the right of LDCs to get further extensions of the transition period on a duly motivate request. The operative part of Article 66.1 reads: “The Council for TRIPS shall, upon duly motivated request by a least-developed country Member, accord extensions of this period” (emphasis added).
The ten year transition period for LDCs was due to expire in 2005. In 2002, LDCs received a waiver for the grant or enforcement of patents and test data protection on pharmaceuticals till 2016 which was agreed as part of the Doha Declaration on TRIPS and Public Health. In 2005 the transition period to comply with TRIPS for LDCs was extended by 7.5 years to June 2013.
LDC’s 2012 TRIPS extention request
Last year, on 5 November 2012 Haiti on behalf of the LDC group submitted a request to the TRIPS Council for the transition period for LDCs to apply the TRIPS Agreement to be extended from the 2013 deadline to the time that they graduate from LDC status. The LDC request stated the obvious:
“The least developed country Members of the WTO represent the poorest and weakest segment of the international community. The economies of least developed country Members are extremely vulnerable, with large segments of their population living in poverty. They also face numerous challenges such as high burdens of infectious and non-infectious disease, low literacy, inadequate access to clean water and sanitation, low agricultural productivity, environmental and climate-related challenges”.
The resolution highlighted the extremely vulnerable situation that the LDCs find themselves in with little development of productive capacity and had been unable to move beyond “out-dated technologies” (as noted above, under TRIPS, developed countries are obligated to facilitate such technology transfer.)
The request accordingly notes:
“Developing a viable technological base is a long-term process. Given the increasing complexity of modern industrial practices, least developed country Members need a continuing waiver from TRIPS in order to be able to grow economically viable industrial and technological sectors, to consolidate capacity, and to work their way up the technological value chain. Moreover, because of their extreme poverty, least developed country Members need the policy space to access various technologies, educational resources, and other tools necessary for development. Most IP protected commodities are simply priced beyond the purchasing power of least developed country Members and their nationals”.
UNAIDS and UNDP support LDC Proposal
In February of 2013, UNAIDS and the United Nations Development Programme (UNDP) voiced their strong support for the proposal and issued a policy brief on the importance of the extension of the transition period. The policy brief highlights the serious challenges faced by LDCs in confronting disease and illness. Heavy health burdens in LDCs include the estimated 9.7 million people living with HIV. The disease burden co-exists with poverty and the inability to provide prevention, treatment and care “particularly where respective interventions call for high-cost medicines, diagnostics, and other health products” often made expensive by patents. “Cancer incidence is expected to rise 82% from 2008 to 2030 in low-income countries (compared to 58% in upper-middle and 40% in high-income countries).”
UNAIDS and UNDP note that:
“…without the requirement of providing intellectual property protections, LDCs are free to follow the historic path of copying and adaptation to develop their technological capacities, at the same time strengthening their human, administrative, financial and other capacities…”
The LDC proposal garnered wide support from civil society, academics and experts (NGO letter; Global Commission on HIV and the Law). Developing countries also extended their full support to the LDC proposal, some even noting that the 2005 extension contained some unwarranted conditions which should not feature in the new extension (Government of India intervention).
EU leads developed countries demand for “informal consultations”
The extension sought by the LDC’s “duly motivated request” should have been immediately granted as per the clear language of TRIPS. But developed countries including the EU that are strident in their demands that the developing world comply with other provisions of the TRIPS Agreement appear to not take their own commitments under that same agreement quite so seriously.
The hopes of the LDCs that the request would be granted in accordance with their rights under the TRIPS Agreement were dashed at the March 2013 TRIPS Council meeting where the matter was taken up. Instead the LDC proposal was put through months of closed door negotiations with developed countries preventing them from realising one of the few rights they have under the TRIPS Agreement.
Nepal, on behalf of the LDC groups gave a detailed explanation for the proposal:
“LDCs need the continuation of flexibility as their situation has not changed significantly over the years. Their marginalization continues. They have not been able to develop their productive capacities which limit their meaningful integration into the world economy. LDCs’ economic indicators have not changed since 2005…
…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 materialized. 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 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 marginalization…
…LDCs’ request has been motivated by the need of policy space to (to quote UNDP’s latest issue brief) ‘conserve the autonomy to determine appropriate development, innovation, and technological promotion polices, according to local circumstances and priorities’. 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”.
This appeared to have little impact on the EU and the rest of the developed world that persisted with attempts to impose conditionalities on the LDCs. The EU in its intervention at the March TRIPS Council meeting stated that it was “willing to consider” the proposal but was unhappy with the lack of a time frame or the consideration of efforts by the EU and the World Intellectual Property Organization (WIPO) in some LDCs to develop IP systems already.
The EU’s statement as well as those of other developed countries were remarkable as they were speaking in fact of an obligation of the TRIPS Council and not something that was negotiable! If a developing country were to ever state that they would only “consider” and demand negotiations on one of their obligations under the TRIPS Agreement, it would surely be met swiftly with a trade dispute and unilateral trade sanctions. But LDCs have little muscle to flex at the WTO and at the March 2013 meeting this became painfully obvious as the EU called on the TRIPS Council Chair to facilitate “informal consultations” and bulldozed the LDC group into negotiations.
By May, it became clear that these consultations were meant only to create pressure on the LDCs to back down from their request. As an outraged open letter to Alfredo Suescum, Ambassador of Panama to the WTO who was the chair of these informal consultations noted the “unfair and prejudicial” process was limited to developed countries that were opposing the request instead of also involving the developing countries that were supporting the request. The letter noted that this was an attempt to “overwhelm the negotiating capacity of the poorest members of the WTO by placing them in an unfair position where they have to face the united might of the developed countries.”
“It is sheer hypocrisy that these countries themselves blatantly copied, imitated and borrowed each other’s intellectual property for their technological advancement in the pre-IP era and now they are imposing the false notion that IP is essential for development, which basically guides their current opposition to LDCs’ request.” –Arjun Karki, LDC Watch on the opposition by developed countries to the unlimited time frame
That same month the EC recommended to the European Council that the EU position in the TRIPS Council should be that the LDC extention should not be more than what was granted in 2005 (i.e. 7.5 years) and that LDCs should not decrease any existing levels of IP protection below that of TRIPS. Regrettably this position was then adopted by the European Council.
The latter conditionality is also referred to as a “no rollback clause” which is similar to one that was imposed in the 2005 LDC extention decision. India in its intervention at the March meeting noted that “…the no roll back provision 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.”
The EC’s continued efforts to water down the LDC proposal did not go unnoticed and in June health groups in Uganda (part of the LDC group) organised a protest to hand over a letter to the Head of the Delegation of the European Union Mission to Uganda registering their opposition to the EU’s position on the LDC extention.
The 2013 LDC extention decision
On 11 June 2013, the final extention details were finally announced and as opposed to the full enjoyment of their right under the TRIPS Agreement, the world’s poorest countries under pressure from the EU and the US had to settle for an 8 year extention till 2021.
Crucially, however, the LDC objection to the “no roll-back” clause from the 2005 decision succeeded. Instead of any mandatory or obligatory condition to freeze their national IP systems, LDCs merely expressed a determination to preserve these developments.
The decision re-iterates that this extention does not preclude any future requests for further extentions and is without prejudice to the 2016 extention for the grant or enforcement of patents on pharmaceutical products.
Without the obligation, LDCs can now review the impact of their early compliance with TRIPS most of which has taken place under technical assistance from the developed world or the WIPO. WIPO’s technical assistance has not been without criticism and an evaluation in 2011, the report of an External Review of WIPO Technical Assistance in the Area of Cooperation for Development, was released.
The WIPO Review found that in relation to WIPO’s technical assistance and advice in relation to development matters,
“…respondents overwhelmingly poorly rated WIPO’s efforts to adapt its legislative advice to reflect national development priorities in areas such as public health and access to education. Similarly, WIPO’s assistance to put into practice the IP flexibilities that are included in their national laws (e.g., through patentability guidelines, advice on issuing a compulsory license; guidelines on differences between their national patent laws and those of countries which may assist their country in patent search and examination) was predominantly ranked by respondents in the poor range….Further, with regard to WIPO advice to tailor the implementation of national treaties to reflect national development needs and priorities, 11 of 14 respondents that provided a ranking, rated WIPO’s assistance in this area as in the poor range or only satisfactory. Interviews with stakeholders during the country visits conducted by the Review Team also affirmed that while WIPO’s legislative assistance is appreciated, particularly by IP offices, WIPO is not proactive in providing advice on flexibilities and officials do not perceive that they can rely on WIPO for tailored or pro-development advice. Several country visits by the Review Team also highlighted that countries sometimes perceive that a request for advice on the use of flexibilities would not be an appropriate request to make of WIPO and/or that it would likely be refused”.
EU’s shocking press release
As aggressive as the EU was throughout the negotiations with the LDCs, few could have expected the EC’s next move once the final decision was announced.
On 11 June 2013, the day the final LDC extension decision was announced, the EC issued a press release purportedly welcoming the LDC extention decision. In it, the EC claimed it had always been supportive of LDCs enjoying every flexibility under TRIPS despite their actions in the previous month of blatantly violating WTO rules by forcing negotiations and compromise on a crucial right of LDCs under TRIPS.
Completely disregarding the actual text of the final decision, the EU press release also stated
“The decision does not affect the transition period for patents for pharmaceutical products, which was agreed in 2002; LDCs will not have to protect these patents until 2016. Where least-developed countries voluntarily provide some kinds of intellectual property protection even though they are not required to do so under the TRIPS Agreement, they have committed themselves not to reduce or withdraw the current protection that they give”.
These statements were grossly misleading and a misrepresentation of the final decision. The language of the “no roll back” clause included in the 2005 decision was removed from the 2013 decision and civil society and health groups immediately condemned the EU press release.
In a strongly worded letter, civil society groups and academics immediately clarified the misrepresentations of the EC stating that “the EU’s interpretation of the new extension decision is fundamentally flawed and purposefully misleading, and is just another attempt to undermine rights of the poorest nations granted under Article 66.1 of TRIPS”.
It was also pointed out that the EC’s statement on the 2016 deadline was designed to mislead LDCs as not only can that deadline also be extended, the latest extention applied to the whole of the TRIPS Agreement (except Articles 3, 4 and 5 of TRIPS that LDCs are required to comply with). The EC’s interpretation would lead to an absurd situation where LDCs do not have to apply the TRIPS Agreement till 2021 but have to start granting or enforcing pharmaceutical patents after 2016.
The importance of the transition period
The importance of the transition period for the development of LDCs and in the context of medicines for the development of local manufacturing and technology has been underscored in several statements of support for the LDC proposal.
Brazil in its support (intervention, TRIPS Council, Agenda item 11, 5 March 2013) noted that, “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”.
Indeed several developing countries, after complying with TRIPS are now reviewing their laws to ensure the full incorporation of TRPS flexibilities as their ability to access affordable generic medicines becomes more and more difficult. The Philippines amended its law in 2008, nearly 10 years after TRIPS compliance to include TRIPS flexibilities. In 2012, Argentina issued strict patent examination guidelines for pharmaceutical products. Brazil and South Africa are currently undertaking their own review and the reform proposals on the table all entail the inclusion of key health safeguards such as those similar to the Indian prohibition on evergreening.
The Indian experience with patent law perhaps has the most to offer as experience for the LDCs. India’s patent system was inherited from the British and resulted in the highest prices of medicines anywhere in the world. In 1970 the Indian government abolished product patents on food and medicine aiming to be self-reliant in these areas and to be able to access affordable medicines. During this time, India also set up scientific research centres and adopted an industrialisation policy that supported local pharmaceutical production. India’s minuscule pharmaceutical industry grew to become one of the largest centers of generic production in the developing world. The safety, quality and affordability of Indian generic medicines soon resulted in India supplying most developing countries with medicines. Unlike the majority of developing countries, India also waited till the very end of its transition period (2005) to amend its patent law to comply with TRIPS. As a result not only was India able to incorporate every single TRIPS flexibility that had evolved over time, it was also able to preserve the maximum space for generic production. The result of delayed compliance with TRIPS is clear. Take Thailand on example, also a local manufacturer of generic medicines, Thailand complied with TRIPS by 1999. Thus, although the first generic AIDS medicines was synthesised in Thailand, by 2007 the country had to issue compulsory licences on patented first and second line AIDS medicines. By contrast first line and to a large extent second line AIDS medicines remain off patent in India.
As successful as India’s health safeguards in its patent law have been, patents are now being granted in India and cancer and hepatitis C patients are facing treatment costs in thousands of dollars. India has already had to issue a compulsory licence on a cancer medicine whose cost was too high. India is also being sued incessantly by multinational companies like Novartis and Bayer for the safeguards in the Indian law while the EU is pressuring the Indian government in the FTA negotiations to adopt TRIPS-plus patent protection.
LDCs can use the transition period to the full extent to set up local manufacturing of medicines and other pharmaceutical products. The lack of intellectual property protection in all areas of technology would allow LDCs to access knowledge and medicines at affordable prices.
To do this, LDCs must retain the ability to fix mistakes they may have made in early or over compliance with the TRIPS Agreement.
The EU’s blatant attempts to prevent the LDCs from getting the full extension they had a right to under the TRIPS Agreement and its use of underhand tactics on the world’s poorest nations like the misleading press release is an indication that corporate profits now outweigh any global commitment the EU has to the international human rights.