Trade Won, Health Did Not. A Sliver of a Waiver at the WTO.
Newsletter Edition #146 [Geneva Health Files: WTO Ministerial Conference Update]
A soothing wind blew across the lakeside where the WTO is situated, calming frayed nerves of sleepless diplomats and tired trade geeks. This was the evening before the marathon ministerial conference which ended on June 17.
A senior ambassador, was reflecting on his perspectives on the TRIPS Waiver discussions at the WTO. “They have made changes within the rulebook. They could not have kept the rulebook aside”, he told me during a spontaneous conversation. That, in essence captured the past 20 months.
It happens very often in public policy, at both national and international levels, when institutions turn slavish to rules they have created even when such rules may not be serving public interest. This kills creativity and innovation especially while responding to emergencies.
Meanwhile, inside the green rooms, as dusk turned to dawn, difficult negotiations resulted in a nail-biting finish. In the end, trade had won. And health had not.
Read our update on the global health decisions made at the WTO at its Ministerial Conference that concluded yesterday.
Our story today, follows an update earlier in the week: "Power" Trips the Waiver at the WTO, no consensus yet hours before the close of MC12.
As a reporter chronicling these discussions, it feels like the end of a chapter, but the beginning of the post-Waiver world. I am convinced that trade and health are even more inextricably linked like never before.
We intend to continue our reporting on how trade cramps health priorities. Details matter and challenging lazy narratives with facts are important to us. Consider becoming paying subscribers to support our journalism. You can also make donations towards meeting our reporting costs.
We will likely not have an edition next week as I recover from accosting diplomats for the past month, first at the World Health Assembly and then at the WTO Ministerial Conference. Thank you for understanding.
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Trade Won, Health Did Not. A Sliver of a Waiver at the WTO.
There was jubilation and cheer after the landmark ministerial conference at the WTO which saw a raft of agreements between its 164 members, that some say, has set a new benchmark for success, a kind not witnessed in decades. The outcome also included a weak text clarifying the use of existing rules in the WTO TRIPS Agreement. For the 100-odd countries that supported the original TRIPS waiver proposal, and countless supporters globally, conference was a moment of resignation. It was the culmination of 20 months of a fight that saw sustained resistance from many developed countries that refused to waive intellectual property protection rules to boost manufacturing of COVID-19 medical products.
The performance of multilateralism at the 12th ministerial conference in Geneva was for the survival of international and domestic elites and failed the world's poorest, Hyo Yoon Kang, a scholar of intellectual property law tweeted, hours after the ministerial. For months, Kang and others, have highlighted the politics of the intellectual property legal regime and have shed light on the importance of waiving intellectual property provisions in the TRIPS Agreement to fight the pandemic.
But voices like Kang’s have been too distant at the WTO that has been all too keen to preserve prevailing IP regimes even in the face of the worst health emergency in 100 years.
This week the WTO adopted a weak text that essentially, only partially waived a single provision of the TRIPS agreement. In fact, so far is this text from the original TRIPS waiver proposal led by South Africa and India, that activists tried hard, and failed, in persuading WTO members to reject the text.
The dust will eventually settle down in Geneva, after 20 months of intense and divided debate on the TRIPS waiver. But observers say, a dent has been made. And the efforts to make intellectual property rules accountable to public health interests, will undoubtedly continue.
This story tries to capture the final hours of negotiations around the TRIPS waiver discussions at the ministerial conference. We also try to understand what this will mean for the future.
THE DRAFT MINISTERIAL DECISION ON THE TRIPS AGREEMENT
At the penultimate hour before the ministerial conference drew to a close at 5 a.m. on June 17, 2022, WTO members adopted the clarifications to the use of TRIPS flexibilities and a partial waiver of a single provision.
Stubborn disagreements on key elements on the text continued well into the small hours of the final day, illustrating the hard-won negotiations the “waiver” discussions have been. While the trade community loosely refers to this text as the waiver text, supporters of the original proposal disagree with the description. “This is not a waiver”, is the common refrain that is heard from the supporters of the TRIPS waiver proposal.
It is also politically expeditious, for both, the WTO and developed countries to refer to this as the waiver text. While semantics matter, in the light and sound that the ministerial has generated, this nuance has already been lost.
Medicines Law and Policy, a group of legal experts, clarified in an analysis, “This Decision is no longer a TRIPS waiver in the sense it was proposed by South Africa and India in October 2020, which was a more comprehensive waiver of TRIPS obligations to be able to produce and access Covid-19 countermeasures. The broad waiver characteristics were lost when the EU’s counter-proposal from October 2021, which was centred around using the existing TRIPS flexibility of compulsory licensing, became the core of the draft that was put in front of the ministers to work with this week.”
So, what WTO members adopted this week is a narrow legal mechanism, limited to developing countries, where they can over ride a patent related to the production of COVID-19 vaccines without the consent of the rights holder. The mechanism clarifies the issuance of compulsory licenses. This is expected to help exports of vaccines among eligible countries. But much of this already exists in the TRIPS Agreement, experts say.
In an analysis on the adopted text, Knowledge Ecology International said:
“The TRIPS agreement contains 73 Articles describing various obligations on WTO members as regards the granting and enforcement of intellectual property rights. The original waiver proposal would have provided a clean waiver of 40 Articles in the TRIPS, as regards the manufacturing and supply of any COVID 19 countermeasure. The new considerably scaled back agreement focuses on just one part of the agreement, the 20-word paragraph 31.f which limits exports made under a non-voluntary authorization, often referred to as a compulsory license.”
A number of key issues were resolved only in the final days and hours of this 20-month discussion. A numbers of delegations were not aware of the final outcome on some of these issues, even after the text was adopted. Essentially, many countries were not aware of what the wider WTO membership had already signed up to, sources familiar with the proceedings of the final hours, told us.
The most contentious of them concerned footnote 1 of the text, that now reads
“For the purpose of this Decision, all developing country Members are eligible Members. Developing country Members with existing capacity to manufacture COVID-19 vaccines are encouraged to make a binding commitment not to avail themselves of this Decision. Such binding commitments include statements made by eligible Members to the General Council, such as those made at the General Council meeting on 10 May 2022, and will be recorded by the Council for TRIPS and will be compiled and published publicly on the WTO website.”
The US and China discussed this at length, literally till the final hour, sources tracking these negotiations said. And ultimately a work-around was crafted. However, experts feel that will set a precedent not only for developing countries such as China, but also have implications for how the developing world will access special and differential treatment at the WTO.
“If the goal was to help production of COVID-19 vaccines why punish the exporters?” a supporter of the waiver proposal said. Experts also worry what such a conditionality could mean for the production of therapeutics in the future.
María L. Pagán, Deputy United States Trade Representative and Chief of the US Mission in in Geneva, said at a press briefing hours after the conclusion of the ministerial, “The waiver encourages developing countries that have existing capacity to manufacture COVID-19 vaccines not to avail of the flexibilities that are provided here. Our position with respect to China has been that, you have the COVID vaccines and the mRNA technology, you are the second largest economy in the world. This is not for you. You don't need this. This is to enhance the manufacturing capacity in other areas of the world that don't have the capacity right now, or need a little bit of help in boosting that capacity.”
“The point is the encouragement to others, to also raise their hands and say, this is not for me because I don't need it. It is really for countries that don't have that capacity, to create…the economies of scale …”, she added, responding to our question on whether this language in the footnote could also potentially restrict countries such as India and others, from taking advantage of the new adopted text.
Footnote 2: “Subject Matter of a Patent”
There were also extensive discussions on footnote 2, primarily on account of opposition from the UK, sources said. This now reads as follows: “For the purpose of this Decision, it is understood that 'subject matter of a patent' includes ingredients.”
Experts say that developing countries were able to push back and make this interpretation broader than what was discussed during the negotiations.
The lone waiver: Article 31 (f)
Overall, experts say that the only waiver in the text is of Article 31 (f) of the TRIPS Agreement [para 3(b) of the text). The fundamental difference between the waiving of Article 31 (f) in the current text, and using the current Article 31bis mechanism that exists in the TRIPS Agreement, is that the use of this limited waiver will be “supply driven”, where eligible members can export to all other eligible members, Geneva-based trade experts explained to us.
In Article 31bis, the use is “demand driven” where the importing country would first have to notify the WTO. Now any eligible member could technically produce vaccines, primarily for export, using this new adopted text.
[Specifically, experts point to the Annex to the TRIPS Agreement, 2 (b) (i), that says: “only the amount necessary to meet the needs of the eligible importing Member(s) may be manufactured under the licence and the entirety of this production shall be exported to the Member(s) which has notified its needs to the Council for TRIPS”. Such conditions do not apply in the adopted text.]
There were discussions on the duration of the applicability of this agreement, that was finally decided as five years, that experts say is too short.
On therapeutics and diagnostics
After much negotiation, there was consensus on paragraph 8 of the text that now reads:
“No later than six months from the date of this Decision, Members will decide on its extension to cover the production and supply of COVID-19 diagnostics and therapeutics.”
While developing countries are not hopeful that this will be discussed at the WTO, it was nevertheless significant to have this language in the adopted text.
In a statement made at the ministerial, Indian trade Minister Piyush Goyal said:
“…with great difficulty we got the period of 5 years. But we all know that by the time we get an investor, get funds raised, draw plans, get equipment and set up a plant, it will probably take 2.5-3 years to do that. After that, you will start producing and within 2 years, you will have to bring down your exports to the normal compulsory license level and your capacity will remain idle. Today, in India, we have vaccines which are expiring, we have the capacity of vaccines which is idling and therefore, investors will not be easy to come by for this.”
Responding to a question on this, Pagán at USTR said, that the US, like other WTO members, will consult stakeholders internally on the extension of the solution to therapeutics and diagnostics. “We are committed to looking at this decision…we will see where that takes us”, she added. In the run up to the Ministerial, the US was one of the staunchest opponents to this paragraph.
But WTO DG Ngozi Okonjo-Iweala was more hopeful. “Now we have something in hand. Exciting to now be able to go to those factories that are being set up all over the developing world and to work with them and to see how this can actually be made real.”
Apart from the weakness in the substantive elements of the text, what also caused consternation among developing countries, not only ahead of the ministerial, but also during the proceedings, was the lack of transparency and opportunity.
Sources familiar with the discussions indicated that there was not enough room or time for the majority of the delegations to fully understand the implications of the final text.
It is widely acknowledged that the support of the US to these discussions in May 2021, gave impetus to the TRIPS Waiver discussions, although critics say that the US was not able to live up to the expectations it generated.
On the eve of the conclusion of the ministerial, a statement from US ambassador Katherine Tai on an intellectual property response to the COVID-19 pandemic, said, “This agreement shows that we can work together to make the WTO more relevant to the needs of regular people. During a global pandemic, under difficult circumstances, the WTO moved quickly to address a major global challenge and respond to the strong desire of our African partners to produce a meaningful outcome. Consultations with our stakeholders in the private sector and civil society, with Members of Congress and their staffs, and colleagues across the Administration, were critical in informing USTR’s understanding of the nuances in the global market, production challenges, and the public health needs of the world’s people.”
International Trade Secretary, Anne-Marie Trevelyan, said:
“Coming into discussions about the WTO’s response to the pandemic, we were clear that the solution to the access of Covid-critical goods lay beyond Intellectual Property, such as principles in applying export restrictions, increased transparency supporting trade facilitation and tariff reduction. While we pressed for the WTO Declaration to go further, we welcome the fact that members found common ground and committed to keep working to improve our preparedness for future pandemics.
The UK is a long-standing champion of equitable access to vaccines. However, we could only accept an outcome on TRIPS that was operable and did not undermine the existing Intellectual Property framework. That is why the UK fought hard to clarify the exact intent and scope behind the TRIPS Decision. After intense negotiations, we are satisfied the final text is sufficiently workable.
Let me be clear: this is not about waiving IP rights. This decision should make it easier for developing countries to export the vaccines they produce within existing flexibilities.”
“Ministers agreed on a Declaration on the WTO response to the pandemic and preparedness for future pandemics which affirms their commitment to transparency, timely and comprehensive information sharing, and restraint on imposing export restrictions. Responding to the exceptional circumstances of the COVID pandemic and to address the requests from developing countries, Ministers agreed on a waiver of certain procedural obligations under the TRIPS Agreement which allow for the swift manufacture and export of COVID-19 vaccines without the consent of the patent owner. At the same time, the agreement maintains a functioning intellectual property framework with incentives for investment, research and transfer of technology. This environment is indispensable for the development of new vaccines and medicines and should contribute to the strengthening of the production capacity of African countries.”
“Pharmaceutical industry expresses deep disappointment with decision on waiving intellectual property rights adopted at the World Trade Organization Ministerial Conference
IFPMA, the body representing biopharmaceutical companies in Geneva, expresses deep disappointment with the decision taken to adopt a TRIPS waiver, despite intellectual property (IP) not being a barrier to vaccine scale-up and wide acknowledgment of vaccines surplus.
IP has enabled the rapid research and development of several effective vaccines against COVID-19 and underpinned the more than 380 voluntary partnerships; while trade barriers have severely undermined collective efforts to deliver vaccines to those who need them most.
Industry warns that such an “empty shell” and fact-free decision can have severe consequences on innovation and global health security.”
In a statement following the ministerial, MSF said:
“We are disappointed with the inadequate outcome on waiving intellectual property for COVID-19 medical tools that resulted from more than 20 months of deliberations…
…Without agreement on a true global solution to ongoing access challenges, MSF now urges governments to take immediate steps at the national level to make sure people have access to needed COVID-19 medical tools. Governments should consider using all available legal and policy options, including suspending intellectual property on COVID-19 medical tools, issuing compulsory licenses on key medical technologies to overcome patent barriers, and adopting new laws and policies to ensure the disclosure of essential technical information needed to support generic production and supply.”
DISSECTING THE NEGOTIATIONS
A number of supporters of the original waiver proposal brought by South Africa and India, have already begun soul-searching on strategies that might have led to greater success.
“This is essentially the first waiver decision in 19 years. It was a lost opportunity. Why didn’t the negotiators focus on treatments? Vaccines are harder. Why did they restrict the discussions only to COVID-19? The pandemic was an opportunity to widen these discussions”, a prominent access to medicines advocate raised these questions, on the sidelines of the ministerial.
While some point to weak negotiating capacities of southern countries, other defend co-sponsors, suggesting that the blame for the weakening of the original proposal lie with the rich countries.
“These were very difficult negotiations. Southern negotiators were up against not only developed countries, but also forces outside of the room,” a source following these discussions said. There could be external pressures operating on developed countries that ultimately shaped these discussions, the source added. “We will never know”, the person said.
A senior diplomat, from a developed country, engaged with these discussions for many months, suggested that in most permanent missions of countries in Geneva, there was very little understanding of public health and public interest, indicating that missions mostly had patent experts trained in upholding the law and not in innovating with existing rules.
“It also did not help, that southern negotiators effectively blamed northern countries for deaths associated with COVID-19 deaths world-wide. That is not the way to engage in negotiations,” he added.
These discussions also showed that developed countries had to acknowledge that IP was indeed a barrier in the access to medical products during COVID-19, he said.
Others reflected on how messaging and advocacy on the part of some CSOs might have contributed to confusion in the public. “They first said they want a waiver, then they said, they did not want it. This confuses the common man,” a seasoned global health observer remarked.
But most agree, the well-funded campaigns supporting the TRIPS waiver galvanized communities across countries leading to greater engagement and participation in these issues.
As for the WTO, the diplomat closely involved in the waiver discussions said, “We did not expect the Quad to take so long in their discussions, and not reach an agreement.”
Many believe that the strategy to divide the discussions in the Quad, unraveled the negotiating strategy for the global south. “India and South Africa, should never have agreed to engage bilaterally with the US and the EU, respectively,” an expert who was involved in access to medicines negotiations in the past, told us this week.
As for the activists, some hope to now focus on taking the fight to the capitals to influence national laws directly.
The challenges in addressing the access to medicines has already moved to WHO, where a new instrument to govern health emergencies is taking shape. The TRIPS Waiver discussions offer a cautionary tale, and many lessons to rework the playbook at WHO.
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