[e-drug] 7 Reasons to Reject A Bad Deal: CPTech Note to TRIPS Council Members

[James Love <james.love@cptech.org>]

E-drug: 7 Reasons to Reject A Bad Deal: CPTech Note to TRIPS Council Members
---------------------------------------------

Date: 27 November 2002

Will the TRIPS Council negotiations paragraph 6 expand or shrink 
export strategies under TRIPS?  The US and EU hope to shrink export 
opportunities.  Everything will depend upon the nature of the final 
proposal, but under most recent draft proposals, and certainly every 
draft since November 19, the proposals would make countries *worse 
off* in terms of export strategies.  This reveals how little the US 
and EU are giving up, and how underhanded the negotiations are.
Here are 7 reasons to reject a bad deal:

There are two big problems with a "limited" solution to
paragraph 6.

1.   US will claim high moral ground for limits on compulsory licensing.

       The United States will quite predictably use the limited
       solution to pressure countries to limit exports even in
       areas where the TRIPS now provides flexibility.  As the
       recent Rosa Whitaker letter to African governments
       illustrates, the United States intends to create a
       "ghetto" for compulsory licensing that is very limited in
       scope and which will rarely be used.    If the TRIPS
       Council accepts a limited solution, the US will claim the
       high moral ground in its bullying of developing
       countries.

2.   Potential Unilateral use of Article 30 is prejudiced.

       The real opportunities for "fixing" the irrational and
       highly inefficient problems in Article 31.f are
       unilateral Article 30 approaches, based upon the
       Amendment 196 approach recently adopted by the European
       Parliament, which itself is a modification of an Article
       30 export strategy adopted by Canada for pre-expiration
       exports.    Paragraph 9 of the Chairman's text is
       cleverly and clearly written to prejudice an Article 30
       approach.  Why?  It says it is without prejudice to the
       rights reaffirmed by the Doha Declaration on TRIPS, but
       here it will be argued that this means the items in
       paragraph 5 of the Doha Declaration, which do not address
       Article 30.  Then the Chairman's text singles out exports
       under 31(f) as not being prejudiced.   In practice, once
       this crazy system is adopted, it will be much more
       difficult to take a "better deal" to a panel on an
       Article 30 case.   This could be "fixed" in the paragraph
       11 of the Chairman's proposed text, and the reason it
       isn't is that the US, the EU and the WTO secretariat
       don't want to do anything to legitimize an Article 30
       approach.

What would happen if the negotiations on paragraph 6 collapse? 
Countries would find there are plenty of available strategies for 
exports, and with the Doha Declaration fully intact, and a well 
advertised failure to get a decent solution to paragraph 6, plenty of 
high moral grounds to use them.   Here are the ways exports can be 
done:

3.   Paragraph 7 of the Doha Declaration.

       Under Paragraph 7 of the Doha Declaration on TRIPS, LDCs
       can do whatever they need to authorize exports, until
       2016 at the earliest.  Generic suppliers from anywhere
       can simply locate factories in these countries.  This
       will do more for technology transfer and economic
       development in LDCs than anything else in the current
       drafts on technology transfer.

4.   Use Article 31.k.

       The TRIPS already has a green light for exports under a
       compulsory license.  It's called Article 31.k, and is its
       quite flexible.  Consider the following.

       a.   Under 31.k, there is no need for prior negotiation on
            reasonable commercial terms with patent owners.

       b.   Under 31.k, everything including compensation can be
            done through an administrative process.   There is no
            requirement for full blown antitrust case, you only need a
            simple and cheap administrative authority (many examples in
            US on this).

       c.   Under 31.k, there are no restrictions on products.
            Typical Asian, US or European cases involve software patents
            (178 in one month last year), consumer electronics, or
            biotech (such as the Anderson Gene Patent or the US licenses
            on Monsanto Corn patents) or even tow-trucks.

       d.   There are no restrictive or burdensome safeguards.

       e.   Liberal refusal to deal grounds can be used.

5.   Use Article 30.

            The Untied States, Canada, Europe and others used
            Article 30 for a variety of problems.   The United
            States used Article 30 for imports and exports of
            generic versions of patented products, without
            notice, without compensation, and without
            safeguards, related to drug registration and
            testing.  Canada does too, and soon so will the EU.
            The European Parliament Amendment 196 is now a
            roadmap for the legal language for authorizing
            broader exports.  Post Doha, this should clear a
            panel, despite US opposition.

               Manufacturing shall be allowed if the
               medicinal product is intended for export
               to a third country that has issued a
               compulsory license for that product, or
               where a patent is not in force and if
               there is a request to that effect of the
               competent public health authorities of
               that country.

  6.   Use 31.f.

            The larger market countries can use 31.f for up to
            49 percent of production, and this will allow a fair
            amount of spill over for several countries.  Again,
            no burdensome requirements or limitations on
            products or scope.

7.   Exports from non-WTO members.

            It will always be possible to have "off shore"
            production from non-WTO members, if the incentives
            are right.   This happens now for lots of
            transactions highly regulated in the United States
            or Europe.

  The important message is that there should be no desperation 
regarding the need for a "solution" this week in the TRIPS council. 
If the paragraph 6 negotiations fail, other strategies will be used. 
Some delegates may want to justify the time spent on this, but 
delegates should avoid a "Bridge on the River Kwai" scenario, where 
the bridge gets built even though it helps the enemy.

James Love, Consumer Project on Technology
http://www.cptech.org, mailto:love@cptech.org
voice: 1.202.387.8030; mobile 1.202.361.3040
James Love <james.love@cptech.org>
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