Developed countries, particularly the United States and the European Union, have offered a poor and impractical deal of an incredibly short extension of 5 years with restrictive conditions to least developed countries that are entitled to be exempted from implementing the WTO TRIPS Agreement.
Particularly problematic is their demand that the LDCs agree to a “no-roll-back” clause, a TRIPS plus condition that will prevent LDCs from rolling back (i.e. providing a reduced degree of IP protection) their current laws, even if they adversely impact their development concerns.
The US and EU are also insisting to include in the extension decision a section on need-assessment on IP, to facilitate implementation of TRIPS standards.
According to sources, this deal was offered in informal consultations between developed countries (US, EU and Japan) and the LDCs coordinated by Australia. The last such consultation took place on Friday, 26 April.
Last November the LDCs exercised their legal rights under the TRIPS rules, and submitted a request to the TRIPS Council requesting an unconditional extension of the transition period for as long as a country remains an LDC. The current transition period expires on 1 July 2013.
Article 66.1 of the TRIPS Agreement grants LDCs a renewable exemption from TRIPS obligations. The rationale is that LDCs need maximum flexibility to develop a viable technological base and address their constraints, and that the standard of TRIPS IP protection may be an obstacle in achieving those objectives.
The LDC request has received massive support from developing countries (in particular the Africa Group, the African, Caribbean and Pacific (ACP group), India, China, Brazil); industry, civil society and academics from all over the world.
Legally, the TRIPS Agreement (Article 66.1) mandates WTO members to approve the LDC request, once it has been submitted. However despite the unambiguous legal rights LDCs have under Article 66.1 of TRIPS, and the explicit obligation on WTO members to grant the extension as requested, the US and EU continue to deny the poorest segment of the international community their legal rights.
According to sources, during the 26 April consultation, the LDCs stressed that their request for an extension for as long as a country remains an LDC is reasonable, predictable and practical and that they continue to be against the inclusion of any conditionality in the extension decision.
LDCs that participated in the consultation also stressed that they were open to elements that were “reasonable, fair and legitimate” and that elements that constrain LDCs must be avoided, sources say.
An LDC diplomat informed Third World Network that the US and EU demand to include a no-rollback clause is antithetical to the spirit of Article 66.1, as defined in the preamble text of the TRIPS Agreement which states:
“Recognizing also the special needs of the least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base”.
The- no-roll-back clause does the exact opposite by narrowing the policy space of LDCs, and thus it alters the nature of rights LDCs have under the TRIPS Agreement. The US and EU demand, if agreed to, would actually amount to an amendment to Article 66.1, but without following proper WTO procedures as required by Article X of the WTO Agreement, the diplomat added.
[The previous extension decision adopted in 2005, improvidently included a ³no-roll-back² clause which states: "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." In the TRIPS Agreement such a clause is found in Article 65(5) and is only applicable to developing countries and not to LDCs.]
According to sources, during the consultation it was highlighted that just because the no-rollback clause illegitimately existed in the previous decision, it does not bind LDCs in accepting this clause in the 2013 Decision, adding that in 2005 LDCs delegations expressed displeasure at the inclusion of the clause.
LDCs, according to sources, also argued that historically (prior to the TRIPS Agreement), flexibility in the implementation of IP laws had enabled both developed and developing countries to achieve the optimal balance between private rights and addressing pressing development needs (e.g. access to knowledge, developing a technological base), but the “no-roll-back provision” precludes LDCs from designing IP laws that are optimal for addressing their needs and to take measures to address the severe conditions prevailing in LDCs.
LDCs stressed that by avoiding the no-roll-back clause, LDCs were not proclaiming that their IP laws will be scrapped, LDCs are simply trying to maintain the policy space that have been granted by TRIPS Agreement, sources say.
On the issue of duration, a trade diplomat informed Third World Network that developed countries are arguing that a 5-year extension was justified as every extension decision was reduced by 2.5 years (e.g. the original transition period was 10 years, followed by an extension decision in 2005 for 7.5). The diplomat said that the argument was based on erroneous facts, adding that in 2005, LDCs had initially proposed 30 years, and this was reduced to 15 years in a spirit of compromise. Even this duration was then sliced into half by the developed countries, with LDCs only being offered 7.5 years. LDCs are opposed to short time-frames (e.g. the 5 year proposed by developed countries), as the previous short-time frames have clearly been insufficient to develop suitable conditions for TRIPS implementation, the diplomat added.
During the consultations the developed country partners also queried as to why LDCs ‘consciously’ chose not to include the needs assessment provisions in the extension decision.
LDCs cited practical experience as well as that legally the issue of extension was not linked to the issue of technical assistance for TRIPS compliance, which was a matter under Article 67 of the TRIPS Agreement.
The demands of the US and EU not only violate the provisions of the TRIPS Agreement but also conflict with the WTO “Decision on Measures in Favor of Least-Developed Countries” agreed at the conclusion of the Uruguay Round.
In this decision, all WTO members agreed that “The rules set out in the various agreements and instruments and the transitional provisions in the Uruguay Round should be applied in a flexible and supportive manner for the least-developed countries”.