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Failed WTO talks: impact on TRIPS

It is important to ensure that public good remains paramount while legislating and implementing any agreement on health

ON JULY 24 this year it was officially announced that the latest trade talks on the Doha development agenda had been suspended sine die with no indication of when it will be resumed. However, the general consensus among the six members from Australia, Brazil, the European Union, India, Japan and the Unites States was that the failed talks were by no means an endorsement of the redundancy of WTO and its role in ensuring an equitable global trade order.

The meeting discussed just one of the many pending issues, namely, trade distorting subsidies for agriculture by the U.S. and the EU and market access for farm products of developing countries.

Other important issues including those concerned with non-agricultural market access, labour, environment and the Singapore issues related to investment, services and government procurement are yet to be addressed, let alone resolved.

Gaps in mindset

The failure of the talks has been attributed to factors such as gaps in the mindset of some members as mentioned by the Indian Commerce Minister, intransigence on the part of the super powers, likely impact of an agreement on the November elections in the U.S. and insensitivity, particularly of the U. S. and the EU, to the problems of developing countries.

For a change, the finger pointing has been more between these two than between developing and developed countries. The U.S. claims that both by way of subsidies and tariffs the EU has much higher average rates than the U.S.

In the past, the U.S. stand on all global treaties has revolved around protection of its domestic interests at any cost, as reflected in its approach to such as the Convention on Biodiversity, Kyoto Protocol on the environment, the Cartagena Protocol on food safety, labelling related to GM foods and many others, to none of which the U.S had acceded so far.

Risk of lost momentum

The overall impact of the failed talks will be more on developing countries even if, in terms of trade, two thirds of WTO members from these countries control only ten per cent of the world trade, with fifty countries from the OECD and other developing economies accounting for 90 per cent. The impact on India is deemed minimal as only a fourth of its trade is dependent on WTO negotiations.

The general feeling is that even though no final agreement is likely before the end of the year, all major players — Celco Amorim of Brazil, Susan Schwab of the U.S., Tony Blair of the U.K., Peter Mandelson of the EU, Pascal Lamy of the WTO — and others have expressed their interest in resuming talks on the Doha agenda in the hope of reducing the conflicts and arriving at an acceptable draft, much like the Dunkel Draft of the Uruguay Round.

If only the EU and the U.S. can reduce their farm subsidies estimated at $1 billion a day, the chances of reaching a settlement will become much brighter. However, some others including Peter Mandelson feel that if status quo is the order for the next five or six months, the momentum to initiate further talks may be lost and a new global deal on the Doha round is unlikely for several years. There is still chance of reopening the negotiations. After all the Uruguay round took almost eight years for completion compared to the five years which have elapsed since the beginning of the present rounds.

It may appear that the failed talks should have no direct or indirect impact on TRIPS and other agreements under the General Agreement on Tariffs and Trade (GATT). The reason is that while the WTO talks between members of the G-6 were about reaching an agreement, provisions under TRIPS have been agreed upon by all members and are at the interpretation and implementation stage. Even though the WTO is ten years old, as far as implementation of TRIPS is concerned, countries have to implement a globally harmonised system in different time frames.

Thus India had the deadline of 2005 while the least developing countries have another ten years before their national laws become TRIPS compliant. TRIPS has been a sensitive issue for developing countries right from the signing of the GATT Agreement in 1994. Even today, there are many leaders in the developing world who argue that Intellectual Property Protection systems have little to do with global trade and hence should never have been a part of GATT.

What are the issues in the TRIPS Agreement for debate particularly in the wake of the recent threats to multilateralism? Can regionalism, bilateralism or even unilateralism prevail at least with respect to certain provisions under TRIPS?

For example, through fresh interpretations under Article 27 (patentability criteria), Article 30, 31 (Compulsory Licenses), Article 39 (Trade Secrets or Undisclosed Information), Para 6 of the Doha Declaration of 2001 (TRIPS and Public Health), will countries resort unilaterally to bring about appropriate legislations in their national laws to safeguard and protect domestic interests? Through unilateral measures, can some countries take recourse to issue of compulsory licences to make drugs accessible and affordable to their poor? Will there be increasing use of provisions under sanitary and phyto-sanitary provisions or through non-tariff barriers to restrict free trade among members?

In actual fact, the Doha Declaration's intention of providing for compulsory licences has not been served in letter or spirit by the `modus operandi' mandated for its implementation by the TRIPS Council and there have been practically no licence issued under those provisions so far.

The U.S. has still not repealed its 301 and Super 301 provisions which enable imposition of sanctions against countries that harm its trade interests. It continues to provide priority status for patent rights on `first to invent' basis rather than the `first to file' basis adopted by all other countries. In the past, some provisions under TRIPS were seriously challenged through a proposed unilateral action by the Brazilian Ministry of Health on the issue of AIDS drugs. In fact, Brazil, followed by South Africa and other countries, even threatened to flout the system of patent protection, though it was a founder member of WTO, to safeguard the interests of poor AIDS patients in their countries. Such protests and threats were used as a negotiating tool for bringing down prices by the patent holders.

It was prudent on the part of the major pharmaceutical companies with the patent rights to avoid the Dispute Settlement route and go in for a negotiated settlement on this. Such instances will probably increase in coming years even if they constitute, according to some, a violation of the rights of patent holders. What is important is to ensure that public good remains paramount while legislating, interpreting and implementing any agreement on matters that impact people's health, food security and subsistence.

Perhaps that is a key issue to be remembered whenever negotiations are reopened on the Doha agenda. Ultimately, just like developed countries want to protect their domestic economies through subsidies and support systems, developing countries should have opportunities to protect their national interests through better access to the global markets.

M. D. NAIR

mdnair@vsnl.com

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