Examining the “subtle shift” in the TRIPS Waiver talks

Newsletter Edition #98 [The Friday Deep Dives]

Oct 15

Hi,

I was reminded this week of a conversation I had many years ago, with a land-rights activist in India. He said, "Capital(ism) has patience. The point is if people’s resistance will outlive that patience.”

This came to mind, thinking of the TRIPS waiver discussions. Undoubtedly it might have been frustrating for negotiators on either side to keep reiterating their positions.

Every so often while reporting on the TRIPS Waiver debate at the WTO, one assumed that the discussions were at a turning point. After a year of these deliberations, we are probably at one.

Our deep dive analysis today’s weaves together several developments, deciphers conflicting signals, to attempt to piece together, what may be happening on the ground in Geneva, Brussels and elsewhere.

Write to us with your thoughts.

Support our consistent and critical reporting by becoming paying subscribers. Get in touch with us for institutional subscriptions.

Until Tuesday next.

Priti

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

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I. STORY OF THE WEEK

Examining the “subtle shift” in the TRIPS Waiver talks at WTO

The EU calls on South Africa to resolve impasse

Over the last two weeks, there have been indications of some behind-the-scenes movement that show WTO members’ willingness to arrive at a consensus on the intellectual property response to the pandemic. Although at the face of it, there has been no structural change in the way countries have aligned on the TRIPS Waiver discussions, nevertheless there has been greater engagement among members, sources familiar with the discussions say. As we reported last week, during the General Council meeting at the WTO, officials had suggested “a subtle shift” in these discussions.

What continues to be unclear however, is whether the direction of this shift is towards the bold proposal made by South Africa and India, on temporarily suspending a range of intellectual property protections in order to unplug bottlenecks in the manufacturing of medical products, to swiftly respond to the pandemic.

The “shift” was welcomed by the EU, UK, Norway and other opponents to the waiver proposal, at a TRIPS Council formal meeting at the WTO this week, where they highlighted the emerging “points of convergence”.

Soon, there were reports on a new proposal by the EU that underscores existing flexibilities in the WTO TRIPS agreement, without changing intellectual property ownership and the benefits that accrue.

The proposal appears to take forward its intention of mostly tweaking with compulsory licensing provisions (EU’s earlier proposal), but having “waiver-like characteristics”.

(Sources close to the discussions clarified to us, that this proposal was not clearly EU’s proposal, but admitted that the said document was a technical paper used in the discussions and closely portrays prevailing EU’s position on these issues.)

It is understood that the EU invited negotiators from developing countries, particularly South Africa.

Reuters reported that South Africa and the EU were in intense talks to resolve impasse. Separately, Politico also discussed a September 30 position paper that showed no change in EU’s plan (Politico: EU stands by opposition to vaccine IP waiver but touts 'convergence')

This story discusses this new EU proposal, in light of the demands made by the proponents of the waiver. We also bring you updates from the TRIPS Council discussions this week. In addition, significant remarks made by WTO DG Ngozi Oknojo-Iweala and USTR’s Katherine Tai are also featured here.

Photo by **Guillaume Meurice** from **Pexels**

THE EU PLAN: A WAIVER WITH CONDITIONALITIES?

The leaked document, titled “Ideas on the points of convergence on the TRIPS issues for discussion” reads:

“….it is important to ensure that the intellectual property system plays an enabling role in deploying existing capacity or creating new capacity for the production of COVID-19 vaccines and medicines. In that regard, ensuring that all WTO Members can make effective use of the TRIPS Agreement is crucial and consequently a waiver with respect to certain requirements related to granting compulsory licenses for the production and export of COVID-related pharmaceutical products, allowing for their rapid supplies, could be considered.”
“The objective would be to lift or simplify the key requirements related to exporting COVID-related pharmaceutical products under a compulsory license to the Members in need.”

Critiquing this proposal, one IP law expert said, “It is as if they are talking about a waiver for compulsory licensing, without calling it a waiver. I doubt if the proponents will accept this”.

According to the EU proposal, such a waiver can be a decision of the Ministerial Conference, and can follow a prior waiver format. It refers to the “Decision of the Ministerial Conference in a waiver format, based on the precedent of a waiver adopted in the wake of the HIV/AIDS crisis in 2003, i.e. Decision of 30 August 2003 on the implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health (WT/L/540).”

Experts point out that most of the waivers in the WTO system, have been a decision of the General Council and not a Ministerial Conference.

On paper, the product scope in the EU proposal includes “Product Scope Pharmaceutical products, i.e., vaccines, diagnostics, therapeutics against COVID-19”. This is wider than the US stand, that has so far restricted any waiver only to vaccines.

The EU proposal limits the scope of the waiver in terms of the TRIPS provisions covered mainly to Article 31 of the TRIPS Agreement. It suggests waiving the following provisions (fewer than those proposed by the proponents)

-          Article 31(b) – prior negotiations with rights holders – to be waived
-          Article 31(f) – requirement to supply predominantly the domestic market – to be waived.
-          Article 31bis – mechanism for compulsory licenses for exports – to be waived, with conditions, e.g., on eligible importing Members, for discussion.
-          Article 31(h) – remuneration – to be waived and replaced by specific rules on remuneration to support deliveries of the products at discounted prices.

The EU proposal is not in favor of waiving Article 28(1), 39 and Part III of the TRIPS Agreement, in contrast to the original waiver proposal.

According to the EU, these provisions are “outside the scope of the waiver as the inclusion of these provisions is not required for the objective described above and would not be justified or proportionate.”

Finally on the duration of the waiver, EU suggests “3 years with a possibility of further extension if the General Council so decides (e.g. if the circumstances of the pandemic persist).”

Critics are of the view that necessitating an extension by the General Council is problematic given the experience of developing countries in the context of extending the transition period under TRIPS Article 66.1 for Least Developed Country members. In addition, some have argued that this might disincentivise investment.

The EU proposal further suggests notification to the WTO of the measures taken and exports made, for greater transparency. But experts say that incorporating transparency requirements such as notifications are procedurally unworkable and could make it difficult to use the waiver, citing the experience of using Article 31bis.

THE DEMANDS OF THE WAIVER PROPONENTS:

As per the South Africa-India proposal, the TRIPS provisions that need to be waived include Article 28.1; Articles 31(a), (b), (f) and (h), Article 31bis; Article 39 Sections 5 and 7 of Part II of the TRIPS Agreement. They also suggest waiving “Part III of the TRIPS Agreement with respect to Sections 5 and 7 of Part II of the TRIPS Agreement, shall be waived in relation to vaccines, therapeutics, diagnostics, their materials and components as well as methods and means of manufacture, for the prevention, treatment or containment of COVID-19.”

Briefly, proponents have sought a waiver on these elements (to read the provisions in full find them here):

Article 28.1: on exclusive rights enjoyed by the patent holder

Article 31(a): on authorizations of Compulsory Licensing on “individual merits”

Article 31(b): prior negotiations with the right holder before issuing of a CL, except in situations of national emergency, other circumstances of extreme urgency and public non-commercial use.

(Proponents say waiving the above is especially crucial for vaccines given the complex patent landscape)

Article 31(f): CLs to be “predominantly for the supply of the domestic market”

Article 31bis: An amendment, based on the waiver in 2003, that was supposed to have enabled a country to export medicines manufactured under a compulsory license to another importing country. Given additional procedures and notifications, the use of this mechanism has been cumbersome, it is widely acknowledged.

Article 31(h): on the payment of adequate remuneration to the right holder when issuing a compulsory license.

Article 39.2: On the right to prevent disclosure or unauthorised acquisition and use by third parties…

Article 39.3: On undisclosed test data or other data submitted by the originator company for purposes of approving the marketing of the pharmaceutical product against “unfair commercial use”, “except where necessary to protect the public” or “unless steps are taken to protect the data against unfair commercial use”.

[Article 31bis background: Members had to work on ways to find a solution for what was called Paragraph 6 of the Doha Declaration on TRIPS and Public Health, that recognised the inability of some countries to make use of compulsory licensing mechanisms for lack of manufacturing capacity. This resulted in the August 2003 decision of the General Council of the WTO, waiving requirements of Article 31 (f) of the TRIPS Agreement, thus enabling a country to export medicines manufactured under a compulsory license to another importing country. The Canada-Rwanda case in 2007 illustrated the problems in using this waiver effectively. Members decided in 2005, to make this waiver a permanent amendment in the TRIPS Agreement. This amendment (Article 31bis) took effect in 2017.]

THE RISK OF A WAIVER WITH TOO MANY CONDITIONS

Experts are of the view that the EU proposal as it stands risks being ineffective in addressing current challenges if the use of a waiver is linked to conditionalities.

“The EU paper presents the 2003 TRIPS waiver that became Article 31bis as some type of precedent to follow. But the 2003 waiver is well known as a big screw up that has not worked, and not by accident…. Any effort to limit or condition who can import under a compulsory license is bad, and making the WTO more involved in remuneration decisions is not a good idea either,” James Love of Knowledge Ecology International said on Twitter.

Civil society organizations have, in the past, pushed for the use of Article 30 of the TRIPS Agreement.

Article 30: Exceptions to Rights Conferred
Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.

In the context of the EU proposal, Medicines Law and Policy, points out:

“…Alternatively, the EU could propose an interpretation of article 30 (which details exceptions to rights conferred by a patent) that would allow export of products as a straightforward exception. In the past the EC has indeed proposed a solution based on article 30….”

(Also see KEI analysis on this)

THE TRIPS COUNCIL MEETING OCTOBER 13-14

At the TRIPS Council formal meeting this week, sources indicated that there were areas of convergence between members on the COVID-19 IP response at WTO.

The EU was reportedly “encouraged” by recent small group meetings where scope and implementation of the waiver was discussed. Its proposal on TRIPS flexibilities was also discussed in these meetings. In addition, the UK, Norway saw emerging areas of convergence but continued to emphasise on “pragmatic” outcomes. Switzerland’s response to new developments were more “lukewarm” sources said. Swiss continue to be unclear on how waiver can be effective and expeditious to address pandemic.

Singapore urged members to “synergize” discussions at the TRIPS Council and with the Walker process. Brazil, Japan, Korea, asked members to be flexible to forge consensus.

Proponents of the waiver were said to be open to working on trade and health package. South Africa saw the possibility of aligning on a package of trade related IP aspects for MC12

"Our objective is not to win a debate, but to reach a concrete outcome". South Africa also expressed disappointment at the lack of progress on text-based process on the waiver.

India said that a “handful of members have chosen to remain unconvinced regarding the content and intent of the TRIPS waiver proposal”. China is open to engaging in discussions, source said.

While, the US reiterated its support for a waiver of IP protections for COVID-19 vaccines, it also emphasised “consensus” at WTO. (See below on USTR comments on the waiver this week)

Pakistan, Bangladesh, Bolivia, Cuba, Venezuela, Nigeria, Egypt, Indonesia and Namibia extended support to waiver and welcomed any initiative that address access to vaccines, medical equipment for COVID-19. Colombia suggested it is open to addressing IP issues either through a waiver for vaccines or in terms of TRIPS flexibilities. Australia, New Zealand reiterated support for waiver, with the latter suggesting applicability of waiver to vaccines only.

Sources also said that TRIPS Council chair, Norwegian Ambassador Dagfinn Sørli was cautious about way ahead and noted that members' positions have not deviated since previous meetings. But it is learned that he is optimistic on the discussions given the progress in bilateral consultations between members.

Discussions in the TRIPS Council are broadly being guided by the following objectives, Ambassador Sørli has said: engaging in text-based negotiations on the South Africa and India proposal, continuing deliberations in a small group format; urging “a compromise by members to move away from long held positions”; focusing on possible “points of convergence”; and aligning with the wider discussions in relation to the WTO response to the pandemic led by Ambassador David Walker.

He added that that if members reach a consensus at the TRIPS Council, it would contribute to other relevant processes in the context of the Ministerial Conference.

Interestingly he also added that the TRIPS Council will be informed if members meeting in another context are able to come to an agreement on this issue. “If members meet in another context and reach agreement, they will inform TRIPS Council...". This assumes significance in the context of bilateral discussions between the EU and South Africa.

While it is not “regular” to resolve intractable WTO issues bilaterally between members, (in this case, in Brussels) trade experts say that members do meet among themselves to resolve issues faster in ways that are not possible even in small group meetings that could have upto 20 members participating.

At the meeting South Africa said, “while the TRIPS waiver proposal should still be an integral part of any successful outcome at MC12, members should move beyond the binary approach between the waiver proposal and the declaration proposal submitted by the EU.”

The next small group consultation is scheduled on October 26th. There will be a TRIPS council meeting ahead of General Council meeting in November 22-23.

TAI IN GENEVA

Meanwhile in a significant visit to Geneva this week, US Ambassador Katherine Tai also laid out the American vision for the WTO. On whether the US had wavered on the question of the TRIPS Waiver, Tai said:

“….It is something we continue to think about and work on, because it is so important. From the outside it might look like silence. But I want everyone to know that the Biden administration’s embracing and endorsement of the TRIPS waiver, and the proponents is about our commitment to the global COVID response, the need to address what we are hearing from so many WTO members which is that we need more production of vaccines and a more equitable distribution of vaccines.
While we are making progress collectively there is a lot more progress that we need to make.
I want to put in context the endorsement of the waiver, in the overall efforts that the Biden administration is making, 1 billion doses committed, and to deliver on them.
To answer your question…because this is a Geneva crowd and I say this with the utmost affection that we are all trade nerds here, on the TRIPS Waiver, the challenge is how do you get consensus in the WTO, so that the WTO can look at the issue of IP rules and where they can be modified in the pandemic to increase production and for more equitable distribution of doses….It is such an important issue because of the time, because of the potential positive impact on the lives of people.”

TAILPIECE: WTO DG ON THE WAIVER

Ngozi Okonjo-Iweala on the TRIPS Waiver speaking at Reviving the multilateral trading system:

“By focussing only on the TRIPS Waiver, people are missing a very important point ,and are not focussing on some very critical issues for solving this problem of access to vaccines. The simple fact was that the world was not equipped, did not have enough production capacity for producing vaccines in the first place. We were producing 5 billion vaccines in total prior to the pandemic – largely children’s vaccines. And the pandemic came, we find that we need 10-15 billion doses. There was not enough investment in production capacity to begin with, to produce that number of vaccines. So, we have to focus on that. So even you get the IP waive today and you do not have a factory or a manufacturing plant, you are not going to get anywhere. So, the attention on the waiver issue, yes, this is important but people have shifted attention from some of the other constraints…
So, you need to increase production capacity, you need to decentralise production, from the 10 countries. 80% of world export of vaccines come from these countries. In this crisis, that does not work…”

See also her remarks yesterday at the Peterson Institute for International Economics in Washington D.C., where she suggests that WTO members could find “a pragmatic compromise on the IP waiver which ensures equitable access to developing countries while preserving incentives for research and innovation.”

Coming weeks will reveal who finally pays for a pragmatic compromise.