TWN Info Service on Trade, IP and UN Sustainable Development
12 May 2021
Third World Network
www.twn.my

WTO: Will US & EU bully poorest nations on intellectual property amidst a global pandemic?

London, 12 May (Sangeeta Shashikant) – Limited progress has been made on the least developed countries’ (LDCs) request submitted in October 2020 for an extension of their transition period for implementation of WTO’s TRIPS Agreement, set to expire on 1 July 2021.

The request submitted on 1 October 2020, by Chad on behalf of the LDC Group in the WTO (IP/C/W/668) is seeking an extension of the LDC transition period, for as long as a country remains an LDC, and an additional period of 12 years as a country graduates from its LDC status, to ensure smooth transition.

Article 66.1 of the TRIPS Agreement accorded LDC Members of the WTO an initial ten-year transition period, with an automatic right of further extensions, that entitles LDCs exemption from implementing most TRIPS obligations. This is in view of the special needs and requirements of the LDC Members, including their economic, financial and administrative constraints and their need for flexibility to create a viable technological base.

Adoption of the request should have been fairly straightforward as Article 66.1 of the TRIPS Agreement explicitly states that, “upon duly motivated request by a least-developed country Member”, the Council for TRIPS “shall” accord extensions of this period.

And yet there has been much delay in adopting the request leaving some to wonder if the United States and the European Union will intimidate the poorest and weakest segment of the international community, even as these countries face the worst social and economic crisis in 30 years.

LDCs account for just 14% of the world’s population but they comprise more than 50% of the world’s extremely poor (i.e. those living on less than $1.9 a day). Typically, LDCs are severely constrained with very limited availability of skilled labour, productive capacities, access to secondary education, electricity, and internet access. LDCs clearly do not have the conditions to benefit from the full implementation of the TRIPS.

According to the UNCTAD LDC Report 2020, the COVID-19 pandemic will reverse years of painstaking progress by LDCs in social fields such as poverty reduction, nutrition and education with LDCs facing their worst economic outcome in 30 years, and an additional 32 million people in these countries being pushed into poverty. The report concludes that reaching the Sustainable Development Goals by 2030 is now a distant prospect.

The COVID-19 crisis has also revealed LDCs’ extreme vulnerability to external shocks, and the lack of the most basic tools to control the pandemic and deal with its impacts. For instance, there is huge disparity in COVID-19 testing with LDCs accounting for a mere 1.6% of global reported testing. 34% of LDC population lack basic sanitation facilities, with 7 hospital beds, and 2.5 physicians per 10,000 people compared to 50 beds and 29 physicians respectively in the OECD.

The 2021 UN Financing for Sustainable Development Report (FSDR) concluded that “COVID-19 could lead to a lost decade for development – one most pronounced in the Least Developed Countries (LDCs)”.

The LDC request has been extended twice before. However, each time LDCs’ full demands have not been met, with developed countries only willing to give impractically short extensions and even them, after strenuous negotiations. The last extension of the transition period granted in 2013 is again set to expire in June 2021.

The current LDCs’ request has been discussed at two formal sessions of the TRIPS Council in October 2020 and in March 2021. In these sessions, the LDC Group request received strong support from the developing countries, including the Africa group and the African, Caribbean and Pacific Group. In contrast the support from developed countries was rather lukewarm, with a few developed countries requesting more discussion on the modality and length of the LDCs’ proposal.

The TRIPS Council Chair Ambassador Dagfinn Sørli from Norway has convened at least two small group informal discussions between the LDC representatives and a few developed countries (the EU, the UK, the US, Switzerland and Japan). The next small group meeting may take place on 13 May.

In some of these meetings, the LDC Group had put forward some questions for the consideration of the opponents:

•  Does your delegation acknowledge that the LDCs continue to face multifaceted economic, financial, and administrative constraints and the need for flexibility to create a sound and viable technological base in the LDCs? Does your delegation consider that the outbreak of the COVID-19 pandemic has aggravated their existing challenges?
• The LDCs feel that extension under TRIPS Art. 66.1 should be targeted to meet sustainably the present and future needs of the LDCs. Can your delegation suggest and justify any ‘ideal length of period’ to be considered for the extension?
• Given the negligible role that the LDCs play in the global trade (collectively less than 1% share), does your delegation consider that the approval of the request as submitted will impact the global trade severely?
• The TRIPS Art. 66.1 (second sentence) does not impose any limitation on the length of the extension that the LDCs may request to the TRIPS Council. Can your delegation clarify its position on the requested total ‘period’ for extension: as long as LDC and a few more years after graduation?

While most of the developed countries recognize the LDCs are the most vulnerable group and the COVID-19 pandemic has aggravated their ongoing challenges, they are non-committal on the LDC request and at the same time are unable to justify their position for a fixed time frame given the huge development uncertainties and challenges facing the LDCs.

Some have questioned whether the TRIPS Council can extend the transition so that it applies post-graduation but are unable to provide any evidence that such extension would contradict the text of Article 66.1. In any case, the full LDC request is already supported by the majority of the WTO membership, meaning they are in agreement that the request is consistent with the requirements of the TRIPS Agreement.

The EU’s delay in supporting the LDCs’ request is baffling especially given its full support to LDCs’ 2015 request for an extension of the transition period for pharmaceutical products for as long as a country remains an LDC, and the EU’s current policy of continuing special and differential treatment post-graduation.

Extensive Support for the LDCs’ Request

The LDC request has received global support.

Addressing the TRIPS Council in October 2020, the World Health Organization (WHO) said universal health coverage is a priority for WHO and part of the Sustainable Development Goals and that “[t]he challenges that remain for LDCs in terms of achieving development goals and structural transformation, in addition to their high degree of vulnerability in the current pandemic, not only with COVID-19, but as well as for other diseases, oblige WHO to make a statement today in support of the current request from LDCs for an extension of the Transition Period under Article 66.1 of the TRIPS Agreement”.

It stressed that an extension of the transition period would facilitate LDCs’ access to essential treatments and build up viable technology bases and manufacturing capacities in the countries, adding that the LDCs’ requests were “critical for the achievement of sustainable goal 3 related to health” and “during the current pandemic will facilitate reduction in disparities, for example, on diagnosis and treatments for COVID-19 that we are all witness today”.

On 22 April, close to 50 distinguished experts and academics wrote a letter to the US Trade Representative and the EU Trade Commissioner urging them to support the LDCs’ request. The signatories include Kevin P. Gallagher, Professor, Frederick S. Pardee School of Global Studies, Boston University; Joseph E. Stiglitz, Nobel Laureate and Professor at Columbia University; Mariana Mazzucato, Professor, University College London; Jose Antonio Ocampo, Professor, Columbia University; Ha-Joon Chang, Reader in the Political Economy of Development, University of Cambridge; Sharan Burrow, General Secretary, ITUC; and Dr. Dan Gay, Advisor, United Nations; Advisor, Organisation for Economic Co-operation and Development (OECD).

The letter argued that “[s]hort extensions granted to date have proven to be ill-considered and unrealistic, requiring LDCs to repeatedly seek extensions from the TRIPS Council. They are also impractical given that LDCs require development of their own industrial policy and a viable technological base to overcome capacity constraints, all of which requires a long-term strategy. Further, even as LDCs graduate from the LDC category, these challenges persist. This flexibility is also vital for countries to be able to respond effectively to emerging global challenges, including the pandemic and the ongoing climate crisis, and to uphold the rights of their people. In recognition of this situation, United Nations General Assembly resolutions have called on WTO Members to consider extending the existing special and differential treatment measures and exemptions available to LDCs to graduated LDC Members”.

The letter highlighted the pandemic’s “severely destructive impact on the economic prospects and long term development of LDCs, which forecloses a sustainable strategy to meet TRIPS obligations”.

It added that “[w]hile advanced economies have benefitted from historically low interest rates to fund response packages, sources of income for LDCs have dried up with remittances plummeting, global supply chains collapsing and tourism halted” and that while “[t]he G20 offered a postponement of bilateral debt payments due from LDCs, but this fell far short of the fiscal space necessary to combat the virus and protect lives with no similar treatment for private or multilateral debt”.

“To put the inequality of the economic crisis in perspective, the global stimulus response has amounted to more than $13 trillion, but less than 1 percent of this has been made available to lower income countries” the letter stressed.

The letter called on WTO Members to honour their obligation under Article 66.1 and cautioned that “[a]ny attempt to refuse or weaken the LDC’s request will be unconscionable given the social and economic hardship already facing LDCs. Adopting the LDC decision is its entirety is crucial to uphold the credibility of the WTO as an institution that can benefit the poorest and most vulnerable segment of the international community.”

Similarly in January 2021 more than 100 national, regional and international civil society organizations from around the world wrote to WTO members emphasising that the “LDCs’ request is fully justified”.

On 30 April 2021, COMMUNIA, Education International, the Electronic Information for Libraries, the International Federation of Library Associations and Institutions and Wikimedia Deutschland wrote to the European Commission calling on the EU to fully support the LDC request.

The letter stressed that “governments in LDCs need maximum policy space in domestic implementation, without fear of sanction, to craft copyright flexibilities appropriate for local needs and development priorities. In doing so, they are better able to support education, literacy, innovation and cultural participation, contributing to economic development and greater potential growth. Unless this potential growth is achieved, the chances of an LDC being able to benefit from TRIPS standards, once implemented, are greatly reduced”.

The signatories added that “[m]ere graduation from LDC status does not resolve development challenges overnight. LDCs will continue to grapple with the most pressing challenges they faced prior to graduation as it takes time to overcome capacity constraints, develop robust education systems, and nurture viable technological bases to compete in global markets. As such, we strongly support the recommendation that countries continue to benefit from the exemption for twelve years after graduation from LDC status”. +