LDCs request exemption from TRIPS for another 15 years

The least developed countries in the WTO have made a request to the TRIPS Council to extend the transitional period for their implementing the TRIPS Agreement for a further 15 years after the present transition period expires at the end of this year.

At present, under Article 66 of the TRIPS Agreement, LDC members are not required to apply the agreement's provisions, except for Article 3(on national treatment); Article 4 (on most favoured nation treatment); and Article 5 (on multilateral agreements on acquisition or maintenance of protection).

The exemption period, which is ten years, runs out on 31 December this year.
However, Article 66 says that the TRIPS Council "shall, upon duly motivated request by a least-developed country Member, accord extensions of this period."

The formal request for extension was submitted by Zambia on behalf of the LDC members on 13 October and issued as a communication by the WTO Secretariat on 21 October (document IP/C/W/457).

Zambia, which coordinates the LDC Group, also presented the proposal at an informal meeting of the TRIPS Council on 20 October. The request will be discussed at the formal TRIPS Council at its meeting starting Tuesday.

According to information obtained from trade diplomats, several non-LDC developing countries were supportive of the request when it was discussed on 20 October. However, major developed countries, especially the US, seemed to be against the extension of the transitional period to LDC members as a whole, advocating instead that requests be made by individual LDCs, to be considered on a "case-by-case" basis.

There is expected to be a continuation of this debate (whether an extension should be given to the LDCs as a whole, or whether it should be considered on an individual basis) when the issue is discussed at the formal TRIPS Council.

Experts point out that there is a precedent for granting exemption (for a period) from applying the TRIPS Agreement to the LDCs as a whole.

In the Doha Declaration on TRIPS and Public Health, adopted by Ministers in November 2001, an extension of the transition period until 2016 for pharmaceutical products was granted to LDCs as a group of members, under paragraph 7 of the Declaration.

Subsequently, the TRIPS Council adopted a decision on 27 June 2002 granting exemption to all LDC members from applying certain parts of the TRIPS Agreement (in relation to pharmaceuticals) until 2016.

Further, the exemption was granted under Article 66.1, the same provision which gives the LDCs their present exemption from applying the TRIPS Agreement as a whole, and which the LDCs are now invoking in their request for a 15-year extension of this exemption.

In its communication to the WTO, the LDC Group said that the least-developed country WTO Members continue to face serious economic, financial and administrative constraints as well as a need for flexibility to create a viable technological base.

In accordance with Article 66.1 of the TRIPS Agreement, they are applying for an extension of the transitional period accorded under that provision for a further 15 years.

The paper said that Article 66.1 of the TRIPS Agreement accords LDC Members a ten-year exemption from certain obligations under the TRIPS Agreement.
This exemption expires on 31 December 2005.

"As set out in Article 66.1 of the TRIPS Agreement, the exemption was granted in recognition of the economic, financial, and administrative constraints faced by least-developed countries that prevented them from observing immediately all the obligations set out in the TRIPS Agreement; and it reflected the fact that the least-developed country Members have special needs and requirements, including the need for flexibility to create a viable technological base," said the LDCs' paper.

"During the past ten years, the least-developed countries have taken steps towards implementing the obligations set out in the TRIPS Agreement. However, their economies continue to be vulnerable, and their peoples continue to suffer poverty.

"Indeed, the most recent UNCTAD Least-Developed Country Report states that 'if past trends persist, the least-developed countries are likely to become the major locus of extreme poverty in the world economy by 2015'".

"Consequently, those least-developed countries that remain on the United Nations' list of least-developed countries, continue to face serious economic, financial and administrative constraints in their efforts to bring their domestic legal system into conformity with the provisions of the TRIPS Agreement."

The LDCs' paper added that Article 66.2 of the TRIPS Agreement states that "developed country Members shall 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 for them to create a sound and viable technological base".

This commitment by developed countries has been reaffirmed in paragraph 11.2 of the Doha Ministerial Decision on Implementation-Related Issues and Concerns that emphasized its importance and mandatory nature.

The LDCs said they need an extension of the transition period to enable them to take full advantage of the technical cooperation from developed countries in this area.

While there has been some movement in implementing this commitment with some developed countries notifying to the Council for TRIPS the technology transfers that they have been involved in, the commitment has not yet been adequately fulfilled.

Furthermore, Article 67 of the TRIPS Agreement calls upon developed countries to provide technical assistance to LDCs to assist them in implementing the TRIPS Agreement. "Thus the least-developed country Members need more time to take full advantage of the cooperation with developed country Members envisaged in Articles 66.2 and 67 of the TRIPS Agreement," said the paper.

Introducing the LDCs' proposal at the informal TRIPS Council meeting on 20 October, Zambia said that the LDCs' request had been necessitated by the following reasons:

• The special needs and requirements of LDCs over the past ten years have changed very little to enable them to comply with their obligations under the TRIPS Agreement.
• Despite the efforts that have been undertaken by most LDCs to comply with the TRIPS Agreement, they are faced with critical human resource and administrative constraints in the area of intellectual property rights, both in terms of numbers and technical capabilities.
• Most LDCs have an inadequate technological base that would support an effective system of IPR protection and have barely developed institutional linkages that would support implementation of obligations under the TRIPS Agreement.
• LDCs have competing needs against grave financial inadequacies and in the past ten years of the transition period have been unable to undertake the required assessments and other institutional capacity-building measures that would enable effective implementation of the obligations of the Agreement.
• The underdeveloped domestic legal systems in LDCs are not able to deal effectively with enforcement of intellectual property protection.

Zambia said that on the basis of the above, the LDCs request for the additional time to undertake assessments, identify the gaps in national legislation and build implementation capacities.

"It is our hope that during this transitional period of 15 years there will be commitment by the developed country members as envisaged under Article 67 of the TRIPS Agreement in providing technical and financial assistance to LDCs to assist in the implementation of the TRIPS Agreement," said Zambia.

According to trade diplomats, at the 20 October meeting, many other LDCs spoke to supplement the Zambia presentation. Several other developing countries, including Brazil, Argentina, Kenya and India voiced their support of the request, stating that the LDCs should continue to have the flexibility of exemption and that they should have the opportunity to make use of it.

Kenya added that the flexibility given to LDCs in the WTO is often taken away by other bodies such as the IMF and World Bank, through their loan policies. There needs to be coherence so that these other bodies do not encroach and take away the TRIPS flexibilities.

However, the major developed countries indicated that they would not support a request made on behalf of all the LDC members, according to trade diplomats. They apparently want requests made by individual LDC members, which would then be examined on a case-by- case basis.

The US advocated such a case-by-case approach, saying that there is need to know the situation on the ground in each country, and that more information is needed. The EU also said that more information from the countries is required.

The LDC members' request is expected to be brought up at the TRIPS Council on Wednesday.