A compromise on the horizon? TRIPS Waiver talks in the 'Quad' at the WTO

Newsletter Edition #128 [The Friday Deep Dives]

Hi,

Today we bring you a story on what could be the beginnings of a potential compromise in the on-going TRIPS waiver talks among the four key WTO members (the EU. the US, SA and India), that are at the forefront of these negotiations. To be sure, differences persist.

Contentious as these discussions have been at the WTO, the resolution of this proposal is now further complicated by the Ukrainian crisis.

Read our exclusive analysis informed by insights and perspectives from diplomats and experts.

Write to us with your feedback.

Best.

Priti

Feel free to write to us: patnaik.reporting@gmail.com or genevahealthfiles@protonmail.com; Follow us on Twitter: @filesgeneva

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STORY OF THE WEEK

A compromise on the horizon? TRIPS Waiver talks in the 'Quad' at the WTO

While the Russian invasion of Ukraine has upended trade diplomacy at the WTO in recent days, the TRIPS waiver discussions have proceeded among a small group of members and is likely nearing a compromise, although differences persist.

Sources familiar with the process told us that technical deliberations among the quad that includes the US, the EU, India and South Africa, are now nearing completion.

These discussions are soon expected to follow at the level of the ministers of these four WTO members. “If the current text is acceptable by high-level decision-makers, it will then be taken up by the wider membership”, a source said. It is understood that the process of taking the proposal to the wider membership will be brokered by WTO DG, Ngozi Okonjo-Iweala.

Considering the sensitivities in these discussions and the critical juncture at which it is poised, sources did not want to be identified.

Photo by Edgar Hernandez from Pexels

THE QUAD PROCESS

According to sources the discussions among the technical experts in the Quad group on reaching a possible landing zone has nearly concluded. The ministers are expected to meet soon, some say, for the first time in two months, since these small group discussions first began in December 2021, following the abrupt postponement of the WTO ministerial due to the emergence of the Omicron variant. It also appears differences do persist.

“There is now compromise language on the table. We have defined a baseline in these discussions. It is now up to the high-level decision makers among the Quad to agree on a text,” a diplomatic source said.

Meanwhile, this week, WTO members also met at a TRIPS Council meeting on March 9-10 (see details below) to discuss the waiver proposal among other issues. In parallel, the EU and South Africa had a flurry of bilateral consultations on the waiver over the last few days, on behalf of India and the U.S., it is learned.

While the EU and South Africa deliberated on the technical, substantive aspects of a potential proposal, the questions on product scope and beneficiaries were addressed by the US and India, sources told us.

WTO top officials had warned that a compromise will not make anyone happy but herded members towards finding what they had called a “pragmatic” solution to the waiver discussions. It was reasoned that if these four key members, representative of interests of other members, were able to reach a consensus, it would be easier to take such a proposal to the wider WTO membership.

Diplomatic sources did not sound elated on concluding these technical discussions but suggested that the talks had moved in the right direction. “The proposal as it stands now, is narrower than what was proposed initially. We had to make a difficult trade-off between what we need and what we want”, the diplomatic source from a developing country said.

A developed country official said that the progress in the discussions has not been “too bad”, but cautioned that discussions had reached a critical point in October 2021, before they fizzled out again.

A FEW SUBSTANTIVE ELEMENTS OF A POTENTIAL COMPROMISE

What the contours of a potential compromise will be is not yet, but it is understood that any waiving of intellectual property protections will, for now, remain limited to COVID-19 vaccines. A second track on therapeutics and diagnostics is expected to follow suit within a defined period of time, sources suggested. The U.S. has been insistent on restricting the discussions to a waiving of IP protections around COVID-19 vaccines only, since its first limited statement of support in May 2021.

IP experts also suggest that current flexibilities in the TRIPS Agreement can also allow for the issuance of compulsory licenses, for example, in order to address the manufacturing of therapeutics and diagnostics. Some believe that those therapeutics that are based on small molecules can be accessed by using compulsory licensing flexibilities already available to all WTO members.

It is understood that the final decision will have a set of clarifications on waiving certain provisions in the TRIPS Agreement, and will also extend authorisations, setting conditions for such a waiver to be legally effective.

Overall, the proposed mechanism seeks to make possible an issuance of an executive order by a government in order to approve the manufacture of medical products. This is expected to the same effect as the issuance of a compulsory license, sources indicated.

For the EU, it’s proposal centering on Article 31 provisions (on Other Use Without Authorization of the Right Holder) of the TRIPS Agreement continue to be of priority in the context of these discussions.

Note that some of these elements are subject to negotiation at the high-level and may change as discussions proceed.

PROVISION ON EXCLUSIVE RIGHTS OF PATENT OWNERS

A key sticking point among the members, was the waiver of Article 28.1 of the TRIPS Agreement that governs exclusive rights given to a patent owner. The proponents had suggested a waiver of this provision, and the EU, among others were opposed to it. It now is understood that members could potentially find a way to extend authorization under this provision to enable the manufacture of medical products.

Article 28.1 reads as follows:

Rights Conferred

1.  A patent shall confer on its owner the following exclusive rights:

(a)    where the subject matter of a patent is a product, to prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing (6) for these purposes that product;

(b)  where the subject matter of a patent is a process, to prevent third parties not having the owner’s consent from the act of using the process, and from the acts of: using, offering for sale, selling, or importing for these purposes at least the product obtained directly by that process.

2.  Patent owners shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts.

TRADE SECRETS

Proponents of the waiver proposal have long argued that the access to undisclosed information is key to speed up the production of medical products including vaccines. The EU had said that gaining access to companies’ confidential information is difficult.

Several countries have domestic legislations to protect undisclosed information including trade secrets such as the EU’s directive on the protection of trade secrets and American laws to protect trade secrets.

Prevailing laws that protect trade secrets, seek to discourage “unfair competition”. However, in the midst of a pandemic, public non-commercial use trumps these concerns. Proponents of the waiver believe that legitimate public purpose that needs to be serviced is not in opposition to unfair commercial use.

So, while the TRIPS agreement does not explicitly prohibit the issuance of compulsory licenses for trade secrets, there is no mechanism that governs this, as we previously reported.

The proponents had originally suggested the waiving of Article 39.3 that governs protection of undisclosed information.

This reads as follows (Art. 39.3)

3. Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.

Efforts have now been made to clarify and expand the nature of “use” as read in this provision. This is expected to help in the acquisition, use and production of patented materials, sources explained. But to what extent it will make regulatory dossiers accessible is not clear yet.

(See our story from July 2021, that discusses this detail: Countries wrestle with regulatory data, trade secrets and tech transfer: TRIPS Waiver discussions at WTO)

THE CLAUSE ON A STANDSTILL ON DISPUTES

In addition, it appears that the proponents have, for the moment, also managed to safeguard one of the key elements of their original proposal – the standstill on filing disputes associated with the implementation of a waiver mechanism. The original proposal had suggested: “Members shall not challenge any measures taken in conformity with the provision of the waivers contained in this Decision under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994, or through the WTO's Dispute Settlement Mechanism.”

ON GEOGRAPHICAL LIMITATIONS

One of the most contentious aspects of these discussions have been efforts by the EU and the US, to narrow the scope of the waiver by insisting on eligibility requirements. (See Efforts to Narrow the TRIPS Waiver Continue: "Eligibility Requirements" Still on The Table)

We reported on February 4, 2022, that key developing countries including India and China, could likely be excluded from implementing the waiver. It now appears that India is now not a part of such a limitation, meaning that the country will be able to implement a waiver mechanism. Sources suggest that China may be excluded from the implementation of a waiver. It has been pointed out that with Chinese vaccines accounting for a significant portion of distributed vaccines globally, China may, in fact, favour the protection of intellectual property. (We were unable to specifically confirm this in time for the publication of this story.)

It is not clear whether Latin American countries will also be excluded from the implementation of the waiver. Developed country diplomats had pointed to existing capacities in Brazil and Argentina to meet regional demand for medical products.

(See MSF: Latin America: How patents and licensing hinder access to COVID-19 treatments)

ON THERAPEUTICS

Clearly a waiver of obligations to help production of therapeutics and diagnostics is important. There is now fresh evidence of rising IP protections for these categories of medical products.

A patent landscape report by the World Intellectual Property Organization launched earlier this week, appears to underscore the need for a waiver at the time of a pandemic. COVID-19-related vaccines and therapeutics reveals insights on related patenting activity during the pandemic. The report says, “Patenting activity related to COVID-19 vaccines and therapeutics is nearly equally distributed between companies and universities and research organizations, with companies having a slightly higher contribution.” Companies accounted for 49% of the vaccines patent dataset and 44% to the therapeutics patent dataset. The rest was accounted for by universities and research organizations, and independent innovators.

Meanwhile, Moderna published a new Global Public Health Strategy this week.

Moderna:

“Moderna is now updating its patent pledge to never enforce its patents for COVID-19 vaccines against manufacturers in or for the 92 low- and middle-income countries in the Gavi COVAX Advance Market Commitment (AMC), provided that the manufactured vaccines are solely for use in the AMC 92 countries.

In non-AMC 92 countries, vaccine supply is no longer a barrier to access. In these countries, the Company expects those using Moderna-patented technologies will respect the Company's intellectual property. Moderna remains willing to license its technology for COVID-19 vaccines to manufacturers in these countries on commercially reasonable terms. Doing so enables Moderna to continue to invest in research to develop new vaccines, prepare for the next pandemic, and meet other pressing areas of unmet medical need.”

But negotiators working on the waiver proposal were not impressed. “This gives control to Moderna. They can suspend the pledge whenever they want to. This is not a solution”, one source told us.

Also read Brook Baker’s analysis of this: Moderna’s Global Public Health Strategy:  Parsing the Hype and Shameful Access Gap.

(Do also note the recent announcement earlier this week: WHO and Medicines Patent Pool welcome US National Institutes of Health’s offer of COVID-19 health technologies to C-TAP)

WHAT’S NEXT

Some developing countries at the WTO are keen on pushing through discussions on the waiver proposal independently of other considerations. But the EU, and others are keen on linking these discussions to a political declaration on the WTO’s pandemic preparedness and response. It is still not clear how these parallel processes will progress in time for the Ministerial conference now scheduled for June 2022.

“The waiver has to be concluded expeditiously. And it will be a deposit of sorts, for other discussions at the WTO,” a developing country trade diplomat told us.

The waiver will likely be a part of “a decision matrix”, or referred to, in the wider declaration on the WTO response to the pandemic, sources said. Although the declaration political in nature, members expect it to have some legal effect and set a precedent for the trade response in future pandemics.

Diplomats hope that DG Okonjo-Iweala will be able to get the wider membership together to decide on a text on the waiver. The pressure is building on the WTO to deliver on this, sources said.

It is understood that if the American support to a waiver text is secured, there may not be serious opposition to the proposal in the wider membership. Although members such as the UK and Switzerland have clear positions on the process and content of these discussions.

Developing country diplomats hope that a General Council decision on the waiver can be reached ahead of the ministerial conference. But it is also possible that any consensus on the waiver will be subject to other considerations at the WTO.

“We expect the DG to use strong arm tactics to drive the process among the wider membership for an outcome on the waiver, unless there is a revolt in the palace”, one diplomat familiar with these dynamics said.

The Russian war in Ukraine has certainly put the DG in a tough spot, adding to an already complex situation.

Inevitably it has drawn the WTO leadership into this evolving political crisis within the international rule-making body for world trade. Geneva-based trade experts point to the pressure on the WTO DG to condemn Russia. “There is pressure on the WTO DG to take sides in this conflict” a person familiar with these dynamics told us. Ngozi Okonjo-Iweala, the WTO boss, seen as many as being decisive and outspoken, allegedly drew criticism for tweeting a photograph with her Russian colleagues in solidarity, although she also tweeted in support of her Ukrainian colleagues.  

RUSSIA AT THE WTO

Russia’s war in Ukraine has muddied multilateralism, trade diplomacy and health negotiations in Geneva.

While there have been calls to expel Russia from the WTO, there have not been any formal proposals yet, sources said. Trade law experts suggest that there is no clear provision in the WTO, to expel members. Some point to previous political disputes at the WTO involving the US and Venezuela, for example. Ironically, a previous Russia-Ukraine dispute about national security is also being cited in the current context. (See Russia - Measures Concerning Traffic In Transit)

There is also a perception that the Ukrainian crisis has given greater ammunition to the U.S., the E.U. and others, that have used the geopolitical response to this crisis to neutralize discussions in contentious areas especially at the WTO.

“The Ukrainian crisis is a game-changer for Europe. And certainly at the WTO. How can we talk about patents, when there is a war? The implications from this, can be deep. We could be looking at an agricultural crisis in a few months, given the importance of Russia and Ukraine in food exports. By June, things could be very different,” a developed country diplomat told us, alluding to the WTO ministerial.

Some Geneva-based trade diplomats are of the view that the EU, and the US have “weaponized” trade and economic policy in order to isolate Russia, while not willing to engage militarily in the conflict. These dynamics have now gone well past the concerns for the Ukrainians, this is also a trade war, many believe.

Take discussions on the TRIPS Waiver.

“It seems that there is a narrative that you cannot talk about the waiver anymore because there is a war in Europe”, a developing country diplomat told us.

The Ukraine crisis is important, but with an estimated 15 million deaths from COVID-19 we cannot let this geopolitical crisis scuttle the waiver discussions, one developing country diplomat noted. (WHO has registered 6 million deaths in the on-going pandemic. But it is widely believed that the actually number of deaths could be two-three times the official records.)

Members realize that there is a small window to decide on the waiver. Competing political crises and opportunities, are already driving public attention away from the pandemic.

It is increasingly clear that the Ukrainian crisis has spilled over across plurilateral meetings, committees and other forums within the WTO, sources said. This was witnessed at the TRIPS Council meeting this week.

THE TRIPS COUNCIL MEETING THIS WEEK

At the TRIPS Council meeting earlier this week, Ukraine first took to the floor. Ukraine reportedly said it does not see how members can conduct economic relations with Russia at the WTO on a business-as-usual basis in the current circumstances. (See Ukraine seeks Russia’s suspension from WTO due to Moscow’s invasion: Third World Network.) It also thanked Developed Countries Coordinating Group at WTO that recently excluded Russia.

In addition, the EU, US, UK, Canada, Norway, New Zealand, Japan, Switzerland, Georgia, Trinidad & Tobago took the floor to condemn Russia's "unprovoked military aggression" against Ukraine.

These members underscored that “the WTO is predicated on certain values among these that a fair and just international order is one built on rules, reciprocity and transparency. The invasion of Ukraine is an attack towards what the United Nations, the WTO and Geneva as the capital of multilateralism stand for,” according to sources present at the meeting.

Russia is reported to have said the WTO is a rule-based organization and regretted the efforts towards politicization of WTO and fragmentation of the multilateral trading system, sources said.

The meeting took stock of small group discussions among the quad members, but no details from these consultations were shared. South Africa said at the meeting that small-group consultations continue on "good faith", and spoke about the on-going efforts to find a landing zone. The EU said it was convinced that a bridge possible between waiver proponents and its proposal of using existing TRIPS flexibilities. India said that the discussions on the waiver should address the ongoing pandemic and restore credibility of the WTO. The US reiterated its support for waiver of IP protections of COVID-19 vaccines at the meeting.

Other members including the UK, Switzerland and the Africa Group sought transparency and inclusiveness in these discussions, sources said.

In its statement, the UK said:

“…. the current process around waiver discussions is not transparent and means this Council is not informed of the substance of discussions. At this point, I would like to support the delegation of Tanzania, speaking on behalf of African group, in the call for a fuller briefing to this Council. This is needed to fulfil the mandate placed upon Members to engage with each other constructively. Simply put, we cannot be expected to progress towards an outcome on discussions which this Council does not know the details of.

While we recognise the urgency of taking forward discussion on the wider pandemic response, the United Kingdom will not accept an outcome when we have not been consulted or given sufficient prior notice to assess what is being proposed in writing. This is because getting it wrong could make both short and long-term pandemic preparedness worse. Members of this Council are entitled to digest, scrutinise, and discuss any outcome of these negotiations before we can reach consensus. As was made clear ahead of November’s expected MC12, this process needs to happen before Ministers can agree an outcome.”

Dagfinn Sørli, the Norwegian Ambassador at the chair of the TRIPS Council hoped that the small group discussions may lead to a platform based on which consensus can be reached by the wider membership, sources said. Both the original waiver proposal by South Africa and India, and EU's proposal focused on TRIPS flexibilities remain as open items on the agenda of the TRIPS Council. 

TAILPIECE:

One of the larger goals of the waiver proposal has been to attempt to define processes to quickly boost production to improve the access to medical products, steps that could be adopted during health emergencies. While current discussions on the waiver are limited to the COVID-19 pandemic, there are no specific provisions for future health emergencies. It is something that can be added once a decision is made, sources indicated.

At the WHO, in the context of the pandemic treaty discussions, developing countries wish for a waiver-like provision that could kick in automatically once a Public Health Emergency of International Concern has been declared.  

These are surely ambitious targets, given the sustained resistance that any suspension of IP protections during this pandemic has generated. But diplomats believe that the process has been as important as the destination.

It is not entirely clear to the extent to which the proponents of the waiver are willing to compromise.

One Geneva-based diplomat has called any potential narrow waiver as only a “political souvenir”. Small, but possibly significant?

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