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World Trade Organization
C o n t e n t s
March 24 - March 28 , 2008
Opening Statement
Introduction Dear Delegates,
History of the Committee
My name is Akshay Ganju, and I am quite excited to be your
T o p i c A r e a A : T RIP S
director for the 2008 WorldMUN conference in Puebla, Mexico. Having
and Global health
directed SpecPol last year in Geneva, I know that WorldMUN 2008 will
Statement of the Problem
be an incredible experience, both substantively and socially.
History and Discussion of
the Problem
First, a little bit about myself – I am a senior at Harvard College,
Past UN Actions
and I concentrate in Social Studies. At home, “social studies” is the
Proposed Solutions
standard term for elementary school history; unfortunately, I don’t have
Questions a Resolution
it that easy. Social Studies is a cross-disciplinary field involving most of
Must Answer
the liberal art departments of the school (with a focus on political science,
Bloc Positions
philosophy, history, economics, and sociology) that specializes in the
Suggestions for Further
study of society and its functioning. I am also pursuing a secondary field
Research
in health policy; this year I am working on a thesis about the views of the
Topic Area B: the
American public towards healthcare reform. Along these lines, I am also
WTO and Labor
pre-med, and one day I hope to attend medical school. Though I grew up
R i g h ts
in Boston, next year I will end up in California upon graduation.
Statement of the Problem
History and Discussion of
I am really looking forward to this session of the WTO, and I hope
the Problem
you are as well. This study guide provides a good overview of the topic
Past UN Actions
areas, but remember that this is only an outline of information, and you
Proposed Solutions
should do further research on your country and your positions to be a
Questions a Resolution
productive and knowledgeable member of committee.
Must Answer
Bloc Positions
Of course, I hope that we can have a great MUN experience, with
Suggestions for Further
a creative, dynamic, and constructive committee. But my primary goal
Research
for this conference is that we can get to know each other and have a great
C l os i n g S t a t e m e n t
time in Switzerland. I look forward to meeting you all this spring!
Position Papers
Final Remarks
Appendix
Bibliography Till then,
and perfection of an invention would be lost when it was Western citizens, and unfathomable for most residents of
easily duplicated and sold by a different opportunist. the developing world.
The WTO was founded to regulate trade between This raises an important question – how can we
countries. Intellectual property rights provided a difficult provide low-cost drugs to the developing world, while
instance of international cooperation – some countries maintaining enough intellectual property protection to
had patent laws, whereas others did not. This proved quite enable Western drug companies to continue therapeutic
important in international trade: if Kenya has no patent innovation?
laws but Finland does, then Kenyan imitators can copy
Finnish inventions and sell them in Kenya, in essence TRIPS and Public Health
“stealing” profit from Finnish innovators. The WTO’s TRIPS allows several exceptions where governments
response was TRIPS, the Agreement on Trade-Related can refuse to grant a patent, including for “
Aspects of Intellectual Property Rights, which arose from diagnostic, therapeutic and surgical methods for treating
the Uruguay rounds of 1986 – 1994.9 TRIPS mandates humans or animals” in Article 27.3a.11 Along with this
certain minimal levels of copyright, patent, and trademark exception, TRIPS also allows for “compulsory licensing,”
protections within each member nation of the WTO.10 where “the law of a Member allows for other use of the
subject matter of a patent without the authorization of
Intellectual Property Rights and Pharmaceuticals the right holder, including use by the government or third
Intellectual property rights are especially salient parties authorized by the government” in Article 31.12
for the pharmaceutical industry. It is quite difficult and Compulsory licensing is at the heart of the current
expensive to develop an effective drug, starting from the debate on TRIPS and public health. According to TRIPS,
basic biochemistry and ranging through huge clinical a country in the throes of a public health crisis can suspend
trials – many drug companies spend billions of dollars per patent rights on therapeutic products. This can be very
year on drug discovery and development. But once a drug important – Kenya, for example, can suspend patent
is perfected, it can often be manufactured very cheaply. protections on HIV/AIDS treatments so the “government”
Thus, it is quite easy for “generic” drug companies – or “third parties authorized by the government” can
companies that do not manufacture the drug under patent produce generic versions of the drugs. But what if Kenya
or trademark – to copy a drug’s formulation, figure out a does not have the resources to produce generic versions of
manufacturing process, and produce cheap copies. This the drugs necessary for their population?
is done all the time today; for example, paracetamol and African nations in particular asked for additional
acetaminophen are generic forms of a drug commonly clarification, and the Doha Ministerial Declaration of 14
marketed under the trademark “Panadol” or “Tylenol.” November 2001 declared that the “TRIPS Agreement
One can find generic brands of many off-patent does not and should not prevent members from taking
drugs, such as acetylsalicylic acid (“Aspirin”), or ibuprofen measures to prevent public health.”13 But this declaration
(“Advil,” “Motrin,” “Brufen”). Importantly, however, still failed to address the central issue of countries that
drugs for which generics are available are all “off-patent,” could not afford to produce generic versions of patented
meaning that their patent-life has expired. All newer products. Article 31(f ) of the TRIPS agreement stipulates
drugs, including those for HIV/AIDS, are still under that compulsory licensing must be primarily targeted to
patent protection. the domestic market.14 But what if Kenya badly needs
Patent protection is crucial for the pharmaceutical medication, patented by an American company, generic
industry. Since development is so extraordinarily difficult copies of which can be made cheaply in India? Under the
and expensive, without the lucrative prospect of sole TRIPS phrasing, Kenya could not import generic drugs
manufacturing and marketing rights there would be little from India; they were only able to compulsory license and
incentive for companies to create the innovative new produce drugs for themselves. Many developing countries
therapies that improve modern medical care. Unfortunately, claimed that in the absence of infrastructure for themselves
these patent rights also mean that new drugs can be very to produce generic medications, the TRIPS public health
expensive – out of reach without insurance help for most exceptions were useless – they needed to be able to import
that Member,” essentially providing that the waivers can be Questions a Resolution Must Answer
used in the current form past the December deadline.21
Any proposed solution must comprehensively address
Proposed Solutions several questions. First, it must clearly resolve the debate
surrounding the current waiver system implemented by
Currently, there are two main proposals on the the 30 August 2003 agreement. Should that template
discussion table. The first proposal, backed by many of become a permanent amendment to TRIPS? Should that
the Western countries, is a package amendment of the amendment also include the statement of the Chairperson
current 30 August 2003 waivers (paragraph 6 of the Doha of the General Council? In addressing this question, issues
Declaration) and the statement of the Chairperson of the raised by developing nations, including the Nigerian plan,
General Council. Both are included in the Appendix. must be resolved.
Developing nations, especially the African Union, In the creation of any new generic import/export
contend that the current waiver system combined with system, many issues must be considered. Though
the statement of the Chairperson contain too many developing nations would love easy access to cheap,
restrictive procedural rules. Instead, they first require generic drugs, many Western nations fear that their
that the statement not be included with the amendment. pharmaceutical industries can be destroyed by careless
Secondly, Nigeria has put forward a counterproposal on and imperfect implementation of such patent-overriding
behalf of the African Union that maintains the essence of systems. Not only will their companies lose much revenue
the 30 August 2003 waivers while removing what they in sales in the developing world, but there is a strong fear
deem unnecessarily prohibitive procedural restrictions. of the creation of black and grey markets, where cheap
The Nigerian proposal is also included in the Appendix. generic drugs will be picked up in the developing world
Nevertheless, perhaps the best solution to the issue and resold in Western countries for much lower than
is one that is not yet proposed. Many outsiders, including the trademark price, reducing profits not only in the
activists, NGOs, and governments, contend that though developing world, but in Western countries as well. This
these proposals are good starting points, much work can stifle innovation and kill the industry, as companies
should be done rethinking the substantive debate around will no longer have incentive or the funding to research
the provision of generic drugs to developing nations. This and develop new therapies.
is where the creative brains of the WTO can shine.
Bloc Positions
The battle lines in this debate are really drawn between
developing and developed nations. As of 28 September
2007, only 11 countries have signed on to the amendment
in its current form: (in temporal order) the United States,
Switzerland, El Salvador, Republic of Korea, Norway,
India, Philippines, Israel, Japan, Australia, and Singapore.
Many Western countries, especially pharmaceutical centers
like the United States, Switzerland, and Japan, strongly
support the amendment in its current form, including the
statement of the Chairperson of the General Council, as
an effective means of providing generic medicines to the
poor of the developing world while maintaining patent
protections in the Western countries.
Developing nations, however, and most specifically
A lab at the Farmanguinhos pharmaceutical company produc-
the African Union, claim that the current amendment is
es Ribavirina, an AIDS medication which inhibits the replica-
so restrictive that it is useless, and that only one drug has
tion of DNA and RNA.
been able to clear its hurdles in the past two years since
its implementation. These countries strongly support the Suggestions for Further Research
Nigerian counterproposal.
Upon first discussions of the Nigerian proposals, the This study guide is only intended to be a brief
United States, the European Union, Switzerland, Japan, introduction to the topic of political imprisonment, and
Canada, the Republic of China, and Australia were among it is essential that you conduct additional research on the
the countries that criticized the suggestions and called for history and policy surrounding the issue, especially as it
the continued closure of negotiations.22 Other developing relates to your country in committee.
nations, however, were less disapproving. Malaysia The WTO website is a wonderful resource on the
called for more consultations on the matter, and India topic, and contains helpful non-technical and technical
welcomed a move back from procedure to substance – descriptions of the various documents and issues relating to
moves applauded by Argentina, Brazil, Mexico, Thailand, TRIPS and public health. There is also a good collection of
and Israel. Some other developing nations, like Pakistan, past and present news articles with up-to-date information
fully support the Nigerian proposals. on the progress of the issue. One problem with the
WTO website, however, is its bias towards the current
amendment on the table permanently implementing
paragraph 6 of the Doha Declaration – information on
counterproposals must be found elsewhere.
Because of the very contemporary nature of this
debate, news articles are the best source of information.
I would recommend digging through online archives and
databases of news and journal articles as the best source
of information on the various valences of the current
discussion, as well as the position of specific countries.
Learning more about patent-protections and international
trade, as well as issues of public health and the provision
of generic medications, can help you devise novel and
creative solutions to the problem that will help push
debate forward.
theory),” and that there is not even a link between labor murky.
standards and trade.30 GATT Article I does not allow nations to provide
The first steps of the WTO to include a clause on more favorable treatment to some countries instead of
labor standards occurred at the 1996 Ministerial Meeting others with regard to “like products,” which is known
in Singapore. Even though the WTO Director-General as the “Most Favored Nations” (MFN) clause; Article I
had already ruled out the possibility of possible sanctions thus prohibits dissimilar treatment of the same good from
against any country, the developing country opposition to different countries simply on the basis of national origin
the discussion itself was so vehement that an invitation to – this rules out, for example, a nation levying additional
the ILO Director-General to simply address the meeting taxes on goods from a country because of the exporter’s
was withdrawn.31 The final result was the Singapore labor laws.35 And tariffs are generally the sole means of
Ministerial Declaration: regulating trade, as Article XI excludes the use of most
We renew our commitment to the observance of non-tariff border restrictions, like licenses and quotas.
internationally recognized core labour standards. The GATT Article III allows importing governments to
International Labour Organization (ILO) is the competent impose regulations on products, as long as these imported
body to set and deal with these standards, and we affirm products face the same regulations as domestic products.
our support for its work in promoting them. We believe In this sense, countries tried to claim that the manner
that economic growth and development fostered by in which a product was produced constituted part of the
increased trade and further trade liberalization contribute product itself, and set up restrictions with these distinctions.
to the promotion of these standards. We reject the use of For example, countries would argue that Russia could set
labour standards for protectionist purposes, and agree that up extra tariffs on beef produced with growth hormones,
the comparative advantage of countries, particularly low- as long as both imported and Russian hormone-fed beef
wage developing countries, must in no way be put into faced the same tariffs; in this sense, hormone-fed beef and
question. In this regard, we note that the WTO and ILO non-hormone-fed beef were considered different products,
Secretariats will continue their existing collaboration.32 even if they were technically the same good. This was
The Singapore Ministerial Declaration opened many used to set up restrictions on products made with poor
doors: this was the first time that the WTO acknowledged labor conditions versus similar products made with better
a connection between trade and its social consequences; labor standards. GATT panels put an end to this practice,
it puts the comparative advantage of low wage countries however, by ruling that regulatory measures on products
beyond question; and the declaration forces countries to were different than regulatory measures on the manner in
recognize core labor standards as members of the WTO, which products were produced; if products were basically
rather than simply as members of the ILO.33 Nevertheless, identical but were produced with different standards, then
in more than ten years no further explicit action has been an importing country could not create tariff distinctions
taken by the WTO with regards to workers’ rights. The between them.36
issue was raised again in the Seattle ministerial conference Perhaps the closest the WTO comes to permitting
of 1999, though no further action was taken, and the trade enforcement mechanisms is in Article XX, which
current Doha rounds of negotiation simply reaffirmed the permits otherwise unallowable measures that are
1996 declaration.34 “necessary to protect public morals” and “necessary to
protect human life and health.”37 Arguably, this measure
Current Interpretations of WTO Laws could allow for countries to use trade sanctions to enforce
The Singapore ministerial declaration is an (arguable) labor standards, which could fall within the realm of
attempt by the WTO to establish some sort of “social protecting “public morals” and “human life and health.”
clause” into its bylaws. Nevertheless, there is a deeper Nevertheless, such measures would have to be “necessary,”
question of enforcement – should countries be allowed and labor standards would have to fall within the bounds
to take trade action within the WTO to enforce labor of human health or public morality. This issue has never
standards? Though it is commonly assumed that this is not been explicitly addressed in the WTO or its appellate
allowed, some of the current regulations can be somewhat bodies, and many questions remain. For example, does
“necessary” mean that such action can only be a last resort Is There a Need for the WTO to Address Labor
after the exhaustion of other diplomatic means? Does Standards?
enforcement of labor standards count as protecting public The WTO understands that its role in the issue of labor
morals and health? rights revolves around four main policy questions:39
Another possible route is the use of the WTO’s trade • Do lower labor standards give a country’s exports
preferences for developing countries. Despite its MFN unfair trading advantages? Would this lead
policy, the WTO does allow developed countries, under all countries to a “race to the bottom,” where
the “general system of preferences” (GSP), to unilaterally countries are forced to lower their labor standards
give some preferential tariff rates to developing countries to remain competitive both domestically and
in an effort to aid development.38 Since these are internationally?
voluntarily given by the developed country, they can also • To maintain parity, should countries only
be withdrawn for a reason such as poor workers’ rights; trade with other countries with similar labor
such withdrawal would leave that developing country to standards?
face standard tariff rates while other developing countries • Should the WTO explicitly allow countries to
enjoyed some GSP benefits. When contested, a WTO use trade actions to enforce labor standards in
panel found that such GSP preferences had to be extended trading-partner countries?
to all developing countries, but could discriminate • Is the WTO even the correct institution to craft
between developing nations if there were objective criteria labor policy and enforcement? Should this be
to show that some developing countries needed the GSP left to the ILO?
treatment more than other developing nations. Since this The first question sets the stage for the remaining
now allows differentiation of GSP based on objective issues, and addresses the substantive economic policy at
social criteria, such as observance of basic human rights, issue in this debate – is there even a need for the WTO to
preferential GSP treatment might be a possible means of address global issues of labor rights? Neoclassic economic
enforcing labor standards on developing countries within theory about competitive advantage and game theory
the WTO framework. Nevertheless, this still remains would argue that countries with lower labor standards do
ambiguous, and the GSP program is only unilateral and have a trading advantage, and that such advantages would
is not a WTO-wide policy. force all countries to consequently lower their standards.
A country with lower labor standards theoretically has
much lower production costs – fewer benefits mean lower
wages, and poorer working conditions mean that less
money needs to be invested in infrastructure and keeping
employees happy. Child, women, and elderly workers
also command smaller salaries, and preventing the
unionization of labor is a powerful means of controlling
wage increases. With fewer production costs, identical
goods can be produced cheaper in low-standard countries,
which give the products a competitive advantage in the
global marketplace. The “race to the bottom” argument
follows a classic game theory formula. Suppose country
“A” has low labor standards and can produce a good at
very low cost. Country “B” and country “C” also produce
An Afghan girl removes weeds from a poppy field near the road from the good indigenously, but with higher labor standards,
Kabul to Jalalabad. and all three countries trade freely with each other. Since
country A can produce the good cheaply with its low
labor standards, it saturates the market and all buyers
in all three countries buy the product from Country A,
which kills domestic production and sales in countries Developing countries believe that developed countries
B and C. In order to compete, both countries B and C wish to use labor standard intervention to artificially
must lower their standards to match those of country A, raise the costs of production in developing countries to
and parity resumes with each country producing the good bolster their own domestic industry by reducing the cost
at similar costs. But why stop there? To gain additional advantages enjoyed by developing nations.
advantage, one of the countries can simply reduce their The second, third, and fourth questions delve into
labor standards further, which gives them a temporary cost the specific actions of the WTO. Should the WTO
benefit; the other two countries must then follow suit. In address the issues of labor rights? And if it should, how?
this “race to the bottom,” free international competition This reaches beyond the arguments above surrounding
necessitates that all countries continually lower their labor the “race to the bottom.” For even without a race to the
standards. bottom, with the 1996 Singapore ministerial declaration,
Some argue that this neoclassical economic story is the WTO affirmed its social and moral duty to uphold
false. A 1996 study by the Organization for Economic core labor standards. And the ILO has historically been
Cooperation and Development (OECD) found that, quite ineffective in mandating and implementing global
the view that argues that low-standards countries change. The WTO, however, has the unique opportunity
will enjoy gains in export market share to the detriment to harness the power of international trade tariffs and
of high-standards countries appears to lack solid empirical sanctions to remove the benefits of low labor standards
support. These findings also imply that any fear on the part and force countries to improve their attention to this
of developing countries that better core standards would crucial aspect of human rights. But should the WTO do
negatively affect either their economic performance or the so?
competitive position in world markets has no economic
rationale.40 Past UN Actions
This conclusion is supported by many further
studies in the field; a working paper available online by
Drusilla Brown (2005) outlines many of these papers and
their arguments.41 This result is ambivalent with regards
T he History section above provides a good overview
of the (lack of ) past WTO action on the issue of
labor rights. The ILO has been designated by the United
to the WTO discussion, however: it provides a rationale Nations as the central institution regarding labor rights,
for developing countries to assert that the “race to the but cooperation and enforcement is still a great issue
bottom” is unfounded and WTO action is unnecessary, worldwide. The only explicit reference to labor standards
while at the same time giving developed countries by the WTO is in the 1996 Singapore ministerial
ammunition by asserting that developing countries declaration, which reads:
should not fear competitive repercussions from the WTO We renew our commitment to the observance of
instituting strict labor standard legislation. This argument internationally recognized core labour standards. The
concludes that the best way to improve labor standards in International Labour Organization (ILO) is the competent
developing countries is not through trade sanctions but body to set and deal with these standards, and we affirm
just the opposite – encouraging economic development our support for its work in promoting them. We believe
and rising wages through foreign investment that will that economic growth and development fostered by
(inevitably) raise labor standards as countries become increased trade and further trade liberalization contribute
more developed. to the promotion of these standards. We reject the use of
Developing countries argue that the push for the labour standards for protectionist purposes, and agree that
WTO to address labor standards is just a veiled excuse the comparative advantage of countries, particularly low-
for developed countries to practice protectionism. Many wage developing countries, must in no way be put into
domestic industries in developed countries suffer from the question. In this regard, we note that the WTO and ILO
low-cost competition afforded by developing countries, Secretariats will continue their existing collaboration.42
which attract investment out of developed countries and The appellate bodies of the WTO have also added
then lower global prices through strong competition. to this discussion, by ruling that actions to limit trade of
particular goods because of their manufacturing process is embargo on Myanmar because of its labor and human
not allowed under the current wording of Article I and III. rights abuses, and there has been no backlash or criticism
Article XX, however, remains as an ambiguous tool that of this technically illegal policy from the WTO, any
could perhaps be used to influence trade policy around member states, or Myanmar itself.43
labor standards. There are also several less radical possibilities.44 At
the 1999 Seattle ministerial conference, the United States
Proposed Solutions supported the formation of a WTO Working Group on
Trade and Labor within the WTO itself. The European
A
developing and developed countries. Developed countries ll delegates are required to submit position papers
strongly wish to promote labor rights in the developing online by 16 March. These papers should reflect
world, either due to an embedded liberal wish to extend the stance of your country on both the topic areas given
basic human rights or in a push to protect their domestic and should be about a double spaced page in length
industries from the competition from cutthroat practices (Times New Roman, 12 point font) per topic area. These
in developing countries. Developing nations see no need documents will be published on the WorldMUN website
for WTO involvement in their indigenous labor practices to allow other delegates to review their co-delegates’ views
– they argue that there is no substantive basis for such about the topics at hand, and will also be read by your
meddling (there is no “race to the bottom” for competitive directors.
advantages), and that by interfering in developing Writing the position papers will also allow you to
countries’ domestic labor policy, developed countries crystallize your own thoughts and focus on the salient
are simply trying a different approach to protectionism. issues of the extremely complicated topics at hand. For
Obviously, the higher a country’s labor standards, the less these reasons, you should spend some time thinking
they have to fear from WTO intervention, and the more about and writing the position papers, ensuring that you
they have to gain from all countries competing on an even cover each topic accurately and evenly, even though you
playing field. might have a strong preference for one over the other.
While you are empowered and encouraged to make
Suggestions for Further Research decisions in the committee, they have to be in accordance
with your country’s policy and should not be colored
system. In the event that an eligible importing systems providing for the grant of regional
Member that is a developing country Member or patents to be applicable in the above
a least-developed country Member experiences Members should be promoted. To this end,
difficulty in implementing this provision, developed country Members undertake to
developed country Members shall provide, provide technical cooperation in accordance
on request and on mutually agreed terms and with Article 67 of the TRIPS Agreement,
conditions, technical and financial cooperation including in conjunction with other relevant
in order to facilitate its implementation. intergovernmental organizations.
5. Members shall ensure the availability of effective 7. Members recognize the desirability of promoting
legal means to prevent the importation into, and the transfer of technology and capacity building
sale in, their territories of products produced in the pharmaceutical sector in order to overcome
under the system set out in this Decision and the problem identified in paragraph 6 of the
diverted to their markets inconsistently with Declaration. To this end, eligible importing
its provisions, using the means already required Members and exporting Members are encouraged
to be available under the TRIPS Agreement. If to use the system set out in this Decision in
any Member considers that such measures are a way which would promote this objective.
proving insufficient for this purpose, the matter Members undertake to cooperate in paying
may be reviewed in the Council for TRIPS at the special attention to the transfer of technology
request of that Member. and capacity building in the pharmaceutical
6. With a view to harnessing economies of scale sector in the work to be undertaken pursuant to
for the purposes of enhancing purchasing power Article 66.2 of the TRIPS Agreement, paragraph
for, and facilitating the local production of, 7 of the Declaration and any other relevant work
pharmaceutical products: of the Council for TRIPS.
(a) where a developing or least-developed country 8. The Council for TRIPS shall review annually the
WTO Member is a party to a regional trade functioning of the system set out in this Decision
agreement within the meaning of Article with a view to ensuring its effective operation
XXIV of the GATT 1994 and the Decision and shall annually report on its operation to the
of 28 November 1979 on Differential and General Council. This review shall be deemed to
More Favourable Treatment Reciprocity and fulfil the review requirements of Article IX:4 of
Fuller Participation of Developing Countries the WTO Agreement.
(L/4903), at least half of the current 9. This Decision is without prejudice to the rights,
membership of which is made up of countries obligations and flexibilities that Members have
presently on the United Nations list of least under the provisions of the TRIPS Agreement
developed countries, the obligation of that other than paragraphs (f ) and (h) of Article 31,
Member under Article 31(f ) of the TRIPS including those reaffirmed by the Declaration,
Agreement shall be waived to the extent and to their interpretation. It is also without
necessary to enable a pharmaceutical product prejudice to the extent to which pharmaceutical
produced or imported under a compulsory products produced under a compulsory licence
licence in that Member to be exported to the can be exported under the present provisions of
markets of those other developing or least Article 31(f ) of the TRIPS Agreement.
developed country parties to the regional 10. Members shall not challenge any measures taken
trade agreement that share the health in conformity with the provisions of the waivers
problem in question. It is understood that contained in this Decision under subparagraphs
this will not prejudice the territorial nature 1(b) and 1(c) of Article XXIII of GATT 1994.
of the patent rights in question; 11. This Decision, including the waivers granted
(b) it is recognized that the development of in it, shall terminate for each Member on the
date on which an amendment to the TRIPS interpreted and implemented. I would like to emphasize
Agreement replacing its provisions takes effect for that this Statement is limited in its implications to
that Member. The TRIPS Council shall initiate paragraph 6 of the Doha Declaration on the TRIPS
by the end of 2003 work on the preparation of Agreement and Public Health.
such an amendment with a view to its adoption First, Members recognize that the system that will
within six months, on the understanding that the be established by the Decision should be used in good
amendment will be based, where appropriate, on faith to protect public health and, without prejudice to
this Decision and on the further understanding paragraph 6 of the Decision, not be an instrument to
that it will not be part of the negotiations referred pursue industrial or commercial policy objectives.
to in paragraph 45 of the Doha Ministerial Second, Members recognize that the purpose of the
Declaration (WT/MIN(01)/DEC/1). Decision would be defeated if products supplied under
[ANNEX] - Assessment of Manufacturing Capacities in the this Decision are diverted from the markets for which they
Pharmaceutical Sector are intended. Therefore, all reasonable measures should be
Least-developed country Members are deemed to taken to prevent such diversion in accordance with the
have insufficient or no manufacturing capacities in the relevant paragraphs of the Decision. In this regard, the
pharmaceutical sector. provisions of paragraph 2(b)(ii) apply not only to formulated
For other eligible importing Members insufficient or pharmaceuticals produced and supplied under the system
no manufacturing capacities for the product(s) in question but also to active ingredients produced and supplied under
may be established in either of the following ways: the system and to finished products produced using such
(i) the Member in question has established that active ingredients. It is the understanding of Members
it has no manufacturing capacity in the that in general special packaging and/or special colouring
pharmaceutical sector; or shaping should not have a significant impact on the
OR price of pharmaceuticals.
(ii) where the Member has some manufacturing In the past, companies have developed procedures
capacity in this sector, it has examined this to prevent diversion of products that are, for example,
capacity and found that, excluding any provided through donor programmes. “Best practices”
capacity owned or controlled by the patent guidelines that draw upon the experiences of companies
owner, it is currently insufficient for the are attached to this statement for illustrative purposes.
purposes of meeting its needs. When it is Members and producers are encouraged to draw from
established that such capacity has become and use these practices, and to share information on their
sufficient to meet the Member’s needs, the experiences in preventing diversion.
system shall no longer apply. Third, it is important that Members seek to resolve
any issues arising from the use and implementation of the
The 30 August 2003 Statement by the Chairperson of Decision expeditiously and amicably:
the General Council47 To promote transparency and avoid controversy,
notifications under paragraph 2(a)(ii) of the Decision
The General Council has been presented with a would include information on how the Member in
draft Decision contained in document IP/C/W/405 to question had established, in accordance with the Annex,
implement paragraph 6 of the Doha Declaration on the that it has insufficient or no manufacturing capacities in
TRIPS Agreement and Public Health. This Decision is the pharmaceutical sector.
part of the wider national and international action to In accordance with the normal practice of the TRIPS
address problems as recognized in paragraph 1 of the Council, notifications made under the system shall be
Declaration. Before adopting this Decision, I would like brought to the attention of its next meeting.
to place on the record this Statement which represents Any Member may bring any matter related to
several key shared understandings of Members regarding the interpretation or implementation of the Decision,
the Decision to be taken and the way in which it will be including issues related to diversion, to the TRIPS Council
for expeditious review, with a view to taking appropriate products supplied to developing countries. Novartis
action. further differentiated the products through distinctive
If any Member has concerns that the terms of the packaging.
Decision have not been fully complied with, the Member GlaxoSmithKline (GSK) used different outer
may also utilise the good offices of the Director General packaging for its HIV/AIDS medications Combivir,
or Chair of the TRIPS Council, with a view to finding a Epivir and Trizivir supplied to developing countries. GSK
mutually acceptable solution. further differentiated the products by embossing the
Fourth, all information gathered on the tablets with a different number than tablets supplied to
implementation of the Decision shall be brought to the developed countries, and plans to further differentiate the
attention of the TRIPS Council in its annual review as set products by using different colours.
out in paragraph 8 of the Decision. Merck differentiated its HIV/AIDS antiretroviral
In addition, as stated in footnote 3 to paragraph 1(b) medicine CRIXIVAN through special packaging and
of the Decision, the following Members have agreed to opt labelling, i.e., gold-ink printing on the capsule, dark
out of using the system as importers: Australia, Austria, green bottle cap and a bottle label with a light-green
Belgium, Canada, Denmark, Finland, France, Germany, background.
Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Pfizer used different colouring and shaping for
Netherlands, New Zealand, Norway, Portugal, Spain, Diflucan pills supplied to South Africa.
Sweden, Switzerland, United Kingdom and United States Producers have further minimized diversion by
of America. entering into contractual arrangements with importers/
Until their accession to the European Union, Czech distributors to ensure delivery of products to the intended
Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, markets.
Malta, Poland, Slovak Republic and Slovenia agree that To help ensure use of the most effective anti-
they would only use the system as importers in situations diversion measures, Members may share their experiences
of national emergency or other circumstances of extreme and practices in preventing diversion either informally
urgency. These countries further agree that upon their or through the TRIPS Council. It would be beneficial
accession to the European Union, they will opt out of for Members and industry to work together to further
using the system as importers. refine anti-diversion practices and enhance the sharing
As we have heard today, and as the Secretariat has of information related to identifying, remedying or
been informed in certain communications, some other preventing specific occurrences of diversion.
Members have agreed that they would only use the
system as importers in situations of national emergency The Nigerian Counterproposal (Numbering consistent
or other circumstances of extreme urgency: Hong Kong with Amendment to Article 31 of TRIPS)48
China, Israel, Korea, Kuwait, Macao China, Mexico, [Article 31]
Qatar, Singapore, Chinese Taipei, Turkey, United Arab 2. The obligations under subparagraph 1(f ) of
Emirates. this Article shall not apply to such use that is
[Attachment] - “Best practices” guidelines necessary for the purposes of production of a
Companies have often used special labelling, pharmaceutical product(s) and its export to an
colouring, shaping, sizing, etc. to differentiate products eligible importing Member(s) who notifies(4)
supplied through donor or discounted pricing programmes the Council for TRIPS of its intention to use
from products supplied to other markets. Examples of the system established under this paragraph In
such measures include the following: accordance with the terms set out below.
Bristol Myers Squibb used different markings/ a. For the purposes of this paragraph:
imprints on capsules supplied to sub Saharan Africa. i. “pharmaceutical product” means
Novartis has used different trademark names, any patented product, or product
one (Riamet®) for an anti-malarial drug provided to manufactured through a patented
developed countries, the other (Coartem®) for the same process, of the pharmaceutical sector
needed to address the public health clearly identified as being produced under
problems as recognized in paragraph the system set out in this paragraph through
1 of the Doha Declaration. It is specific labelling or marking. Suppliers
understood that, among others, should distinguish such products through
active ingredients necessary for special packaging and/or special colouring/
its manufacture and diagnostic shaping of the products themselves, provided
kits needed for its use would be that such distinction is feasible and does not
included; have a significant impact on price.
ii. “eligible importing Member” means d. Members shall ensure the availability of
any least-developed country Member, effective legal means to prevent the re-
and any other Member with no or exportation or unlawful importation into,
insufficient manufacturing capacity and sale in, their territories of products
in the pharmaceutical sector that has produced under the system set out under this
made a notification to the Council paragraph, using the means available under
for TRIPS of its intention to use Part III of this Agreement. If any Member
the system as an importer, it being considers that such measures are proving
understood that a Member may insufficient for this purpose, the matter may
notify at any time that it will use be reviewed in the Council for TRIPS at the
the system in whole or in a limited request of that Member.
way, for example, only in the case
of a national emergency or other e. With a view to harnessing economies of scale for
circumstances of extreme urgency or the purposes of enhancing purchasing power
in cases of public non-commercial for, and facilitating the local production of,
use; pharmaceutical products; where a developing
iii. “exporting Member” means a Member or least-developed country Member is party
using the system set out in this to a regional trade agreement within the
paragraph to produce pharmaceutical meaning of Article XXIV of the GATT 1994
products for, and export them to, an or the Decision of 28 November 1979 on
eligible importing Member. Differential and More Favourable Treatment
b. Where use is made by an eligible importing Reciprocity and Fuller Participation of
Member of the subject matter of a patent Developing Countries (L/4903), at least
under this paragraph, adequate remuneration half of the membership of which is made
for purposes of subparagraph 1(h) of up of countries on the United Nations list
this Article shall be paid in that Member of least-developed countries, the obligation
taking into account the economic value to of that Member under subparagraph 1(f )
the importing Member of the use that has of this Article shall be waived to the extent
been authorized in the exporting Member. necessary to enable a pharmaceutical product
Where a compulsory licence is granted produced or imported under a compulsory
for the same products in the importing licence in that Member to be exported to the
Member, the obligation of that Member markets of those other developing or least-
under subparagraph 1(h) of this Article shall developed country parties to the regional
be waived in respect of those products for trade agreement.
which remuneration in accordance with the f. Members recognize the desirability of
first sentence of this subparagraph has been promoting the transfer of technology and
paid in the exporting Member. capacity building in the pharmaceutical
c. Products produced under the licence shall be sector in order to help importing Members