South Centre Welcomes WTO Decision on LDCs and TRIPs
South Centre welcomes further extension of LDCs’ transition period in implementing TRIPS Agreement.
The South Centre welcomes the decision of the TRIPS Council of WTO on 11 June 2013 to allow Least Developed Countries to delay implementation of the TRIPS Agreement until 1 July 2021. At the end of this period, LDCs can request further extension.
The TRIPS Agreement (Art. 66.1) states that in view of the special needs and requirements of LDCs, their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base, LDCs shall not be required to apply the provisions of the agreement, for a period that can be extended by the TRIPS Council, upon duly motivated request by an LDC.
The terms of the 11 June 2013 decision this time are better than the terms in the previous extension, granted in 2005. This is mainly due to the determination and skill of the LDC Group, led by Nepal, during the long negotiations lasting for months, which the LDC Group engaged in with the major developed country members of the WTO. Developing countries were fully supportive of the LDC Group request, as were many civil society groups around the world. However, the LDC Group’s request was unfortunately not acceptable to many of the developed country members of the WTO.
The new extension period is for eight years, starting on 1 July 2013. This is longer than the seven and a half years transition period provided in the 2005 decision. It is thus an improvement, though very slight. It is also significantly below what the LDC Group had asked for in its formal proposal IP/C/W/583, in which the Group had requested that the transition period should last so long as the country remains an LDC. This request was justified, especially since the relevant part of the TRIPS Agreement (Article 66.1) states that the TRIPS Council shall grant LDCs further extension of the transition period, upon due request. In the view of the South Centre, LDCs have a low level of economic and social development and thus require time to develop a viable technological base and to experiment with domestic IP legislation before being obliged to implement the TRIPS Agreement. The economic condition of LDCs as a group has not improved in the past several years, especially because of the global financial crisis of 2007-09 and the global economic slowdown.
The 11 June 2013 decision has also removed the condition introduced in the earlier 2005 decision that LDCs cannot roll-back the level of implementation of the TRIPS agreement that they have already undertaken in their national legislation. Under this condition, an LDC would not be able to experiment with IP-legal reforms that are suitable to their development context. For example, if a LDC introduces a TRIPS-compliant obligation on IP-protection, it would no longer be able to reduce that scope of protection, regardless of the fact that the LDC is not required to implement the TRIPS Agreement. This binding condition actually denied the policy space given to LDCs in the TRIPS Agreement to refrain from implementing the Agreement during the transition period.
This time, the LDC Group rightly insisted that any reference to a “no roll-back” binding commitment could not be included in the new decision. The LDC Group position was fully justified. However, some developed country members insisted on retaining the no roll-back commitment. As a compromise to the requests of developed countries, the new decision contains a sentence equivalent to a “best endeavour”, i.e. that LDCs express their determination to preserve and continue the progress towards implementation of the TRIPS Agreement". This is not a binding commitment on LDCs and in no way can this be understood, in accordance with the interpretation principles applied in WTO, as preventing LDCs from rolling back IP legislation as required to meet their particular needs.
This gain in policy space is reinforced by the sentence immediately following, that “Nothing in this decision shall prevent least developed country Members from making full use of the flexibilities provided by the Agreement to address their needs....” In our view, this includes the flexibilities contained in Article 66.1 of the TRIPS Agreement (to not apply provisions of the TRIPS Agreement, other than Articles 3, 4 and 5), which has now been extended.
We also welcome paragraph 3 of the Decision, that LDCs have the right to seek further extensions of the transition period. This reaffirms the clause in Article 66.1 that the Council shall grant further extensions of the transition period upon due request by LDCs.
The 11 June 2013 decision provides assurance that LDCs retain their policy space and continue to have the full flexibilities intended by Article 66.1 to overcome their capacity constraints and develop a sound and viable technological base.
The best outcome would have been that the LDC Group’s request had been fully agreed to by the TRIPS Council. Nonetheless, given the circumstances, the 11 June 2013 decision to extend the transition period is to be welcomed as it is a gain for the LDCs.
The 11 June 2013 decision also states that this decision is without prejudice to the Council’s previous 27 June 2002 decision on "Extension of the Transition Period under Article 66.1 of the TRIPS Agreement for LDC Members for Certain Obligations with respect to Pharmaceutical Products" (IP/C/25). By way of the 2002 decision, LDCs are not required to provide protection to patents or test data in relation to pharmaceutical products, until 1 January 2016. Thus, LDCs should continue to make use of the policy space provided by the 2002 Decision.
LDCs should now receive full support from UN agencies, the WTO, WHO and WIPO, in the spirit of the Development Agenda, to make effective use of the transition period to build their technological base through technology transfer and capacity building, whilst making full use of the flexibilities afforded to the LDCs, including the further extension provided by the TRIPS Council on 11 June 2013.
Before the expiry of the transition periods, LDCs should again assess their situation and may request extension in 2016, with respect to pharmaceutical products, and in 2021 in respect to all provisions of the TRIPS Agreement.
This Statement by the South Centre is jointly authored by Martin Khor (Executive Director), Carlos Correa (Special Advisor, Trade and Intellectual Property Issues), German Velasquez (Special Advisor, Health and Development), Viviana Munoz Tellez (Manager, Innovation and Access to Knowledge Programme) and Nirmalya Syam (Programme Officer, IAKP).
The down-grading of the “no-rollback” clause from a binding commitment by LDCs to a best endeavour type effort can be seen in the texts on this issue in the 2005 decision and the 2013 decision.
The 2005 decision, Paragraph 5 stated: "Least-developed country Members will ensure that any changes in their laws, regulations and practice made during the additional transitional period do not result in a lesser degree of consistency with the provisions of the TRIPS Agreement."
The 2013 decision, Paragraph 3 states: "…least developed country Members express their determination to preserve and continue the progress towards implementation of the TRIPS Agreement". It adds: “Nothing in this decision shall prevent least developed country Members from making full use of the flexibilities provided by the Agreement to address their needs…..”
Note 2: The TRIPS Council decision (Document IP/C/64) is as follows:
EXTENSION OF THE TRANSITION PERIOD UNDER ARTICLE 66.1
FOR LEAST DEVELOPED COUNTRY MEMBERS
DECISION OF THE COUNCIL FOR TRIPS OF 11 JUNE 2013
The Council for Trade-Related Aspects of Intellectual Property Rights (the "Council for TRIPS"),
Having regard to the transition period for least developed country Members provided for in paragraph 1 of Article 66 of the TRIPS Agreement (the "Agreement");
Recalling that this transition period was extended by the Decision of the Council for TRIPS of 30 November 2005 (IP/C/40) until 1 July 2013;
Having regard to the request from least developed country Members, dated 5 November 2012, for a further extension of this transition period, contained in document IP/C/W/583;
Recognizing the special needs and requirements of least developed country Members, the economic, financial and administrative constraints that they continue to face, and their need for flexibility to create a viable technological base;
Recognizing the continuing needs of least developed country Members for technical and financial cooperation so as to enable them to realize the cultural, social, technological and other developmental objectives of intellectual property systems;
Decides as follows:
1. Least developed country Members shall not be required to apply the provisions of the Agreement, other than Articles 3, 4 and 5, until 1 July 2021, or until such a date on which they cease to be a least developed country Member, whichever date is earlier.
2. Recognizing the progress that least developed country Members have already made towards implementing the TRIPS Agreement, including in accordance with paragraph 5 of IP/C/40, least developed country Members express their determination to preserve and continue the progress towards implementation of the TRIPS Agreement. Nothing in this decision shall prevent least developed country Members from making full use of the flexibilities provided by the Agreement to address their needs, including to create a sound and viable technological base and to overcome their capacity constraints supported by, among other steps, implementation of Article 66.2 by developed country Members.
3. This Decision is without prejudice to the Decision of the Council for TRIPS of 27 June 2002 on "Extension of the Transition Period under Article 66.1 of the TRIPS Agreement for Least Developed Country Members for Certain Obligations with respect to Pharmaceutical Products" (IP/C/25), and to the right of least developed country Members to seek further extensions of the period provided for in paragraph 1 of Article 66 of the Agreement.