TRIPS transition period for LDCs extended 7.5 years with conditions

Original Publication Date: 
5 December, 2005

Least developed country members as a group were granted extension of transitional period for 7.5 years to apply the provisions of the TRIPS Agreement - that is, "until 1 July 2013, or until such a date on which they cease to be a least-developed country Member, whichever date is earlier".

The present transition period for LDCs ends on 31 December 2005.

The decision was taken by the TRIPS Council on 29 November.

The extension is however subject to conditions that have been criticized by experts as severely constraining the benefits of the extension granted.

In particular the experts refer to paragraph 5 of the Decision which states that any changes in laws, regulations and practice made during the additional transitional period should not result in a lesser degree of consistency with the provisions of the TRIPS Agreement.

An expert on the TRIPS Agreement said that this condition "makes a mockery of the extension".

The Decision also specifically links the extension of the transitional period to "enhanced technical cooperation for LDCs" by developed country members under Article 67 of the TRIPS Agreement. The aim of the cooperation is to provide assistance in the preparation of laws and regulations on the protection and enforcement of intellectual property rights.

The TRIPS Council took the decision on the request by the LDCs as a group, pursuant to Article 66.1 of the TRIPS Agreement, for a 15- year extension of transition period to apply the provisions of the Agreement. The group had cited socioeconomic, administrative and financial constraints and the need to create a viable technological base as reasons duly motivating the request.

The Decision was negotiated between the LDCs and some key developed countries during informal consultations and was adopted by the formal TRIPS Council meeting Tuesday 29 November, when the Council resumed its session that was suspended on 28 October.

During the consultations, several developed country members, particularly the US, were insisting that each LDC should request an extension on an individual basis and extension will be granted on a case-by-case basis.

The TRIPS Council, which met in an informal setting followed by a formal meeting, also discussed the relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD) as well as the "permanent solution" to the TRIPS and health issue.

The preamble of the Decision on the LDC extension recognized "the special needs and requirements of LDCs, the economic, financial and administrative constraints that they continue to face and their need for flexibility to create a viable technological base". It further states that the Decision is made "recognizing the continuing needs of LDCs for technical and financial cooperation so as to enable them to realize the cultural, social, technological and other developmental objectives of IP protection".

The operative part of the Decision states that the TRIPS Council decides that "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 2013, or until such a date on which they cease to be a least-developed country Member, whichever date is earlier".

On technical cooperation, the Decision states: "With a view to facilitating targeted technical and financial cooperation programmes, all the least-developed country Members will provide to the Council for TRIPS, preferably by 1 January 2008, as much information as possible on their individual priority needs for technical and financial cooperation in order to assist them taking steps necessary to implement the TRIPS Agreement."
(paragraph 2)

"Developed country Members shall provide technical and financial cooperation in favour of least-developed country Members in accordance with Article 67 of the Agreement in order to effectively address the needs identified in accordance with paragraph 2." (paragraph 3)

The Decision further states: "In order to assist least-developed country Members to draw up the information to be presented in accordance with paragraph 2, and with a view to making technical assistance and capacity building as effective and operational as possible, the WTO shall seek to enh ance its cooperation with the World Intellectual Property Organization and with other relevant international organizations."

"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 Decision states it is without prejudice to the Decision of the Council on 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).

It is also without prejudice "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".

Zambia, coordinator for the LDC group, said that while the group accepted the Decision, it was not entirely satisfied with the agreement that had been reached. It said that the Group would have preferred an extension of about 10 years.

Rwanda said that while it agreed with the statement made by Zambia, it did not favour some of the provisions in the Decision. It said that it did not see a need to link the request made under Article 66.1 to technical assistance provided for under Article 67 of the TRIPS Agreement.

It also said that the Decision does not link to Article 66.2 of the TRIPS Agreement, wherein developed country members have a mandatory obligation to provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base.

On paragraph 5 of the Decision, it said that it was a "standstill provision" which "reduces the spirit of the extension of the transition period".

Bangladesh also expressed its dissatisfaction over paragraph 2 and 5 of the Decision. It felt that LDCs needed the flexibility and policy space than was being provided under the Decision. It added that the Decision has added more obligations on the LDCs.

Uganda also made observations along the same lines, particularly on paragraph 2 and 5 of the Decision.

According to a legal expert, the main purpose of the extension of the transition period should be to provide flexibility to LDCs by exempting them from applying the minimum standards of the TRIPS Agreement. This will allow LDCs to formulate laws suitable to their level of development as well as to use the transitional period to develop industrially and technologically.

However, while providing an extension of the transition period, the Decision prevents LDCs from "rolling back" during the transition period, that is from providing a reduced degree of IP protection in their domestic laws than the TRIPS Agreement. While the TRIPS Agreement provided a similar provision in Article 65.5, it is only applicable to developing countries and not to LDCs. The Decision takes it further, by applying it to LDCs, and thus severely limiting the benefits of the extension of the transition period.

On the matter of TRIPS and public health, relating to the 30 August 2003 Decision and paragraph 11 of that decision that mandates the TRIPS Council to find an "amendment based, where appropriate", the meeting was suspended and is expected to reconvene following further informal consultations.

The 30 August 2003 decision was adopted by the General Council and it enables countries that have capacity to manufacture generic medicines for purposes of export to countries with insufficient or no manufacturing capacity to be given a waiver from the constraint of producing under compulsory license predominantly for the domestic market. However, the decision includes several procedures, and a Chairman's statement read out before the decision's adoption added several more procedural constraints.

The issue before the TRIPS Council is on the form and content of an amendment of the TRIPS Agreement as mandated by paragraph 11 of the 30 August 2003 decision. The African Group submitted a detailed proposal involving some changes to the decision, and this was supported by several other developing countries as a good basis for negotiations.

While the African Group proposal is the only proposal that has formally been submitted, there are other informal proposals by the US and EC that have been discussed in the informal consultations.

During the meeting, Brazil, India, the Philippines, Turkey, Israel and others said that they had no information on the progress of the consultations taking place on the matter. They stressed the need to see a text and that sufficient time must be given for countries to consider and react to any text that is presented to the Members.

The TRIPS Council Chairman Ambassador Choi Hyuck of Korea who has been invited to attend consultations between the African countries, the US and the EU, said that he has taken note of those concerns and will convene his own consultations among a wider range of members.

A developing country delegate informally said that if there is no resolution to this matter prior to the Hong Kong Ministerial, the developed countries will try and push for a solution in Hong Kong. If there is an outcome, it will be sold as "the cherry in the development package", even if the outcome amounts to a major setback for developing countries. In his opinion, this matter should be discussed without any pressures, outside the context of the Hong Kong negotiations.

On the relationship between TRIPS and the CBD, India proposed during the meeting that a progress report on paragraph 19 of the Doha Ministerial Declaration be sent by the TRIPS Council to the General Council. It proposed the following report:

"The Council for TRIPS, pursuant to paragraph 19 of the Doha Ministerial Declaration, continued its examination of the proposals by Members, in particular on the relationship between the TRIPS Agreement and the Convention on Biological Diversity.

"The work on this issue was intensified in the recent months, leading to clarifications and technical inputs necessary to arrive at a better understanding of the concerns expressed and the solutions offered. However, further work is required.

"The Council agrees that this work shall continue on the basis of paragraph 19 of the Doha Ministerial Declaration and the progress made in the Council for TRIPS to date."

India said that the TRIPS Council could facilitate matters for the General Council by suggesting the above report, which could become the paragraph to be inserted in the draft Hong Kong text.

Prior to this text that was agreed by Members, India had proposed "However, further work may be required for the Council to make a recommendation".

While other members were agreeable, the US objected to the use of the word "recommendation". So, finally it was agreed to limit the sentence to "further work is required".

At the last TRIPS Council meeting, India and some developing countries proposed that the WTO's Hong Kong Ministerial Conference launch negotiations on mandatory requirements for patent applications to disclose the source of origin of biological materials and traditional knowledge, prior informed consent and benefit-sharing requirements. These requirements need to be inserted into the TRIPS Agreement through an amendment and the negotiations shall be conducted in the TRIPS Council in Special Session/TNC and shall be completed by September 2006, the proposal had said.

While this proposal was supported by many developing countries during consultations, it was opposed by the US, Canada, Australia, Japan, Korea, Singapore, Switzerland and New Zealand that were of the view that the Chairperson should make a factual report on the diverse positions in the discussion.

In support of its latest proposal, India stated that paragraph 19 of the Doha Ministerial Declaration instructs the TRIPS Council to examine, inter-alia, the CBD-TRIPS relationship. The paragraph requires the Council, in undertaking this examination, to take into account the development dimension and the principles and objectives contained in Articles 7 and 8 of the TRIPS Agreement.

India further said that given the importance of the development dimension of the Doha Work Programme, the TRIPS Council Agenda, since Doha, has always had a specific paragraph reminding Members of this requirement. Accordingly, intensive work has taken place at the technical level in the TRIPS Council since then and this work has to be captured in a report by the TRIPS Council, it added.

It made reference to paragraph 52 of the Doha Ministerial Declaration which mandates the General Council to report progress on work programme not involving negotiations to the next Ministerial Session. Even though the TRIPS Council has not yet arrived at a consensus recommendation pursuant to its examination of this issue and would continue this work beyond the Hong Kong Ministerial, it would need to report progress to the General Council, and the General Council, in turn, to the Ministerial. This is the process for all areas of the Doha Work Programme, India added.

India also said that this issue in respect of the CBD-TRIPS was raised in the informal Heads of Delegation meeting Tuesday by many Members including India.

India recalled that given the importance Members attached to the paragraph 19 issues, a separate paragraph was inserted in the Cancun Draft Ministerial Text (paragraph 23) instructing the TRIPS Council to continue the work and that the General Council shall report to the Ministers on this work in the next Ministerial session.

It added that such a paragraph would, therefore, need to be inserted in the Hong Kong draft Ministerial text as well.