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SOUTHNEWS

 
No. 387, 3 November 2021

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Are the US, EU and China shifting positions on IP and Public Health? South Centre webinar discussed their recent trends as the second webinar of the Emerging Trends in FTAs and Public Health series

 

The South Centre is holding a series of webinars on emerging trends related to free trade agreements (FTAs) and investment agreements that impact public health. The goal of the sessions is to generate awareness, share experiences and expand knowledge for academics, policymakers and negotiators in ongoing and/or future negotiations. After a webinar focused on investment treaties and intellectual property (IP)[1], this session, which took place on 7 October 2021, examined the European Union (EU), United States of America (USA), and China’s recent experiences. The speakers were Prof. Ruth Okediji (Harvard University), Prof. Sean Flynn (Washington College of Law, American University), Prof. Carlos Correa (South Centre), Prof. Ellen ‘t Hoen (Medicines Law and Policy & Global Health Law Group, Law Faculty, University of Groningen) and Peter Yu (Texas A&M University). Dr. Viviana Muñoz-Tellez (South Centre) moderated. The full recording of the session can be found on the following link: https://www.youtube.com/watch?v=nIJIOJWb4Pg. A summary of the interventions based on the minutes taken at the event is presented below.

Prof. Ruth Okediji, Harvard University, highlighted the expansion in the presence of IP in regional trade agreements and how this correlated with the enactment of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). This intensification, especially from US, EU and China, can also be explained by IP as a structurally necessary issue after TRIPS, since countries could no longer be outside of its network of obligations. Also, this might be a strategic decision (both maximalist countries to expand IP protection and more balanced and developing countries to recalibrate it). Developing countries may be adopting a defensive move to solidify flexibilities and manoeuver around what may be called the ´wiggle room´ (Jerry Reichman) in IP implementation. They may also be ensuring that there was no pushback, reduction of the obligations of the TRIPS when IP norms are included in a certain manner, so the inclusion of IP converges in this paradoxical manner for both positions. Compared to the US and the EU, China is in a different position, as it is now both user and producer of IP, and increasingly adopts positions to strengthen IP on a global scale. Prof. Okediji noted that the implementation of such agreements requires interpretation of intellectual property rights (IPRs), but also of limitations and flexibilities. She noted two emerging areas of attention: (i) the expansion of trade secret protection (e.g. US-China Phase 1 Agreement), which may undermine the capacity to utilize other flexibilities under TRIPS and is, from the point of view of social welfare the least optimum IPR (as it does not disclose knowledge), and (ii) providing ex officio action to state officials to conduct IP enforcement, especially customs authorities even without complaints of IP holders.

Prof. Sean Flynn discussed how the Covid-19 pandemic led to a substantial change to US trade policy, but which has not gone far enough. The US, in an unprecedented move, supported the TRIPS waiver (although in a more limited version than the proponents) and no longer includes compulsory licensing in its Office of the United States Trade Representative (USTR) Special Section 301 reports:



The USTR has also delivered statements to support the Doha declaration on IP and public health. However, this acknowledgement does not include, inter alia, text and data mining, algorithms for mRNA vaccines, marketing labels and inserts (including South Africa and Australia, which halt market of generics), containment and right to repair, and containment measures (which also apply copyright and patents), which are all necessary to combat the pandemic and ensure access to health products. Prof. Flynn also referred to the fact that new interesting language in FTAs has been recently found (e.g. standardized exceptions and limitations on the Regional Comprehensive Economic Partnership (RCEP)) and could be replicated by other countries in future negotiations as well.

Prof. Carlos Correa discussed how the Special Section 301 reports are instruments by the US to put pressure on foreign countries, which have continued to be deployed even after the TRIPS Agreement and although a strong reason for developing countries to accept an international IP instrument was to avoid such unilateral measures. Most World Trade Organization (WTO) cases on IP were in fact against developed countries. Policies/legislations criticized by the USTR, such as India´s Section 3(d) and Argentina´s patentability criteria guidelines, continue to be in force and no complaints have been submitted against them in WTO. The Special Section 301 remains as an instrument to push for changes in developing countries according to US´ own interests and understandings.[2] These issues have been addressed by recent South Centre publications available from: https://www.southcentre.int/tag/us-special-section-301/

Prof. Ellen ’t Hoen noted that the EU´s explicit negotiating objective on IP in FTAs is to promote a comprehensive IP at the level of EU protection for pharmaceuticals, but also to take into consideration the level of development of trade partners (something which was included after a lot of pressure). The EU level of protection for pharmaceuticals contains numerous different forms of exclusivities (special protection certificates, additional protection for paediatrics, market exclusivity and special market exclusivity for orphan drugs – for rare diseases).[3] On the other hand, patent linkages are not part of the EU system and are not pursued in its FTA negotiations. This system has been amply criticized for not reaching its goal of promoting research and development (R&D) and developing European industries – as many filings come from the US. The system also impedes compulsory licensing in the EU, since such instrument is not enough to overcome data exclusivities (with the exception of compulsory licenses (CLs) for exports to countries without manufacturing capacity). These issues have been readdressed during Covid-19, when EU states adopted new laws and policies for swift protection, but the EU opposes the TRIPS waiver (although nations have expressed support). The European Parliament has often exerted pressure against the Commission´s position. These elements are to be taken by countries when negotiating with the EU.

Prof. Peter Yu discussed whether China is shifting its position, noting that the context is different from the US or the EU. China has indeed signed a number of FTAs but many contain few IP provisions or no IP chapter. During the RCEP negotiations, China did not demand TRIPS-plus rules even though it participated actively. Other developments are also important: the Belt and Road Initiative has an IP dimension, but focuses more on procedural and technical cooperation than on the harmonization of substantive rules. Since the mid-2000s, China has pushed for indigenous/independent innovation internally and has become more active in international IP policymaking at the World Intellectual Property Organization (WIPO) and the WTO. IP and innovation have received considerable domestic support, and biotechnology has emerged as a priority area (e.g., Made in China 2025). The most recent amendment to the patent law and the proposed changes to pharmaceutical regulations offer strong protections for pharmaceutical patents and 12 years of market exclusivity for biologics. The latter is equivalent to the US standard and unmatched by any existing FTA. These changes are good indications of where China stands and where it will go. In the EU-China Comprehensive Agreement on Investment (CAI) and the US-China Phase 1 Agreement, the demands for stronger protections for trade secrets or against forced technology transfer came from the EU or the US, not China. China has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) but its IP laws are already in line with the CPTPP rules. China supports the TRIPS waiver but is not a co-sponsor. In the future, China will probably not be at the forefront of the IP and development debate, as its position has become increasingly complex and is getting closer to those of developed countries.

During Q&A, Prof. Peter Yu noted that, with respect to its position on the TRIPS waiver, China has prioritized a different form of vaccine diplomacy and hesitates to engage in an issue that remains highly contentious in the US and the EU. Prof. Carlos Correa recommended, in response to a query on what countries in Latin America should do in relation to vaccines, for patentability criteria to follow rigorous criteria and for flexibilities under TRIPS to be utilized. In some cases, countries should revise legislation, courts apply in a rigorous manner to ensure more compatibility between IP protection and public health. He further made reference to his recent South Centre research paper with Mr. Nirmalya Syam and Mr. Daniel Uribe on the implementation of the TRIPS waiver in light of FTA obligations, noting in particular that some agreements already include a call for consultations in case a waiver at the WTO is passed, and the use of the estoppel doctrine to ensure consistency and ensure that an FTA does not prevent States from implementing the TRIPS waiver.[4]

Dr. Viviana Muñoz-Tellez, South Centre, asked for speakers to discuss, as concluding remarks, areas to build up a positive agenda considering all the challenges presented (including issues such as trade secrets, data protection, competition law, technology transfer, etc.). Prof. Ruth Okediji proposed a transparency mechanism, a way in which countries are able or required as part of the FTA design to self-report on activities that limit or hinder the capacity of the flexibilities, and for such mechanism to include the commitments of developing countries to exercise the flexibilities. They may be pragmatically easier to be accepted and be in fact quite effective. Secondly, that FTAs need to reconceive the interface between IP and health and have commitments to limit IP rights especially when nations have self-declared that there is a health crisis that requires mitigation of those rights. Prof. Sean Flynn proposed an explicit reference to trade secrets compulsory licensing in FTAs, something which is not sufficiently clear from TRIPS, and a general backstop government authority to use IP when it needs to (along the lines of Berne Convention´s Article 17 in relation to copyrights, but which could be expanded). Prof. Carlos Correa recalled the fact that not all FTAs have vast TRIPS-Plus provisions, which was the case of the EU-Mercosur agreement – other countries should know this is possible. He also called for more experimentation on TRIPS flexibilities, including, inter alia, a discipline for compulsory license of know-how and the use of competition law as a framework to disclose know-how. Prof. Peter Yu proposed to mirror experiences such as the RCEP´s reference to exceptions and limitations to copyrights and to deploy mutual supportiveness language (e.g. refer to the Convention on Biological Diversity (CBD) or, if developed, the Pandemic Treaty). With respect to post-pandemic FTA negotiations, he invited negotiators to think more about the balance between the new pandemic-related rhetoric and the older rhetoric concerning IP and development. Prof. Ellen ’t Hoen proposed that the conversation needs to shift from IP protection to what is the best way to finance R&D that we need, with the expectation of the Covid-19 offering the opportunity to restart the debate, including the opportunity to develop new norms during the upcoming discussions on a pandemic treaty at the World Health Assembly (WHA) in November 2021. Dr. Viviana Muñoz-Tellez concluded by highlighting that South-South cooperation is a very important area, including in the TRIPS waiver matter, to finalize the session.

The South Centre also delivers no-cost technical assistance for developing countries´ officials during multilateral, regional and bilateral trade negotiations, investment agreements, bilateral engagements between IP offices, and other activities pertaining to IP and public health. For more information, please refer to our dedicated website: https://ipaccessmeds.southcentre.int/

 
[1] See full recording of the first session on investment agreements and IP here: https://www.youtube.com/watch?v=4tLswcXpAxo
[2] See Carlos M. Correa, Special Section 301:US Interference with the Design and Implementation of National Patent Laws, Research Paper, No. 115 (Geneva, South Centre, 2020). Available from: https://www.southcentre.int/wp-content/uploads/2020/07/RP-115.pdf; see also Maria Fabiana Jorge, “United States: An Obsolete Trade Practice Undermines Access to the Most Expensive Drugs at More Affordable Prices”, Policy Brief, No. 83 (Geneva, South Centre, 2020). Available from https://www.southcentre.int/wp-content/uploads/2020/08/PB-83.pdf.
[3] See, for more information Pascale Boulet, Christopher Garrison and Ellen ‘t Hoen, “Data Exclusivity in the EU: A Briefing Document”, June 2019. Available from https://medicineslawandpolicy.org/wp-content/uploads/2019/06/European-Union-Review-of-Pharma-Incentives-Data-Exclusivity.pdf.
[4] See Carlos M. Correa, Nirmalya Syam and Daniel Uribe, Implementation of a TRIPS Waiver for Health Technologies and Products for COVID-19: Preventing Claims Under Free Trade and Investment Agreements, Research Paper, No. 135 (Geneva, South Centre, 2021). Available from https://www.southcentre.int/research-paper-135-september-2021/.

Author: Vitor Henrique Pinto Ido is Programme Officer of the Health, Intellectual Property and Biodiversity Programme (HIPB) of the South Centre. 
SOUTHNEWS is an e-newsletter service of the South Centre providing information and news on topical issues from a South perspective.

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For more information, please contact Anna Bernardo of the South Centre: Email bernardo@southcentre.int, or telephone +41 22 791 80 50.
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