131828/076/2005

I. INTRODUCTION

1. On 30 August 2003, the General Council adopted a decision implementing Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health ("the Decision"). The Decision contains two waivers to the obligations under Article 31(f) and Article 31(h) of the TRIPS Agreement, respectively.

2. Paragraph 11 of the Decision states that "(t)his Decision, including the waivers granted in it, shall terminate for each Member on the date on which an amendment to the TRIPS Agreement replacing its provisions takes effect for that Member. The TRIPS Council shall initiate by the end of 2003 work on the preparation of such an amendment with a view to its adoption within six months, on the understanding that the amendment will be based, where appropriate, on this Decision and on the further understanding that it will not be part of the negotiations referred to in paragraph 45 of the Doha Ministerial Declaration (WT/MIN(01)/DEC/1)".

3. The European Communities (hereinafter "the EC") took the view, in their Communication submitted to the TRIPS Council in November 2003¹, that the nature of the amendment process should remain essentially technical. The amendment should faithfully reflect what was agreed in the Decision. In any event, the fact that the TRIPS Agreement should be amended means that textual changes will have to be made to the TRIPS Agreement itself, in order to transpose the relevant paragraphs of the Decision into TRIPS language.

4. This proposal by the EC is aimed at providing the basis for the amendment. It is guided by the need to be faithful to the Decision in order to not reopen a discussion on substantive issues. The insertion of a textual provision into the TRIPS Agreement itself has the advantage of providing for a straightforward, clear, legally secure, effective and permanent solution within an existing legal framework, i.e. Article 31 of the TRIPS Agreement. Nevertheless, the EC emphasizes that the system put into place by the Decision can already be effectively used by Members.

5. In principle, the conditions of the Decision should be included in an Annex to the TRIPS Agreement. Article 31 should be amended to introduce a reference to this Annex. The preamble part of the Decision as well as Paragraph 11, which refers to the replacement of the waivers with an amendment, should not be introduced in the TRIPS Agreement.

6. The EC acknowledges the importance of the statement made by the Chairman of the General Council at the time of the adoption of the Decision ("the Statement"). The EC believes that the link, including the legal relationship, between the Decision and the Statement "Communication from the European Communities on the implementation of the General Council Decision on Paragraph 6 of the Doha Declaration on the TRIPs Agreement and Public Health, IP/C/W/416 of 21 November 2003." should be preserved. To that end the EC proposes that the Statement should be reiterated, in its entirety, by the Chairman of the General Council at the time of adopting the amendment. It should be noted that the Chairman's Statement of August 2003 constitutes a shared agreement accepted by all Members and context for the interpretation of the waiver Decision of August 2003. For the future amendment, it wouldshould be useful to confirmed this point at the time of adopting the amendment that the reiterated Chairman's Statement also constitutes a shared agreement accepted by all Members and context for the interpretation of the amendment.

7. It is proposed to amend Article 31 of the TRIPS Agreement by adding a second paragraph to the Article so that the current text of Article 31 would become Article 31, paragraph 1, and the amendment text would become Article 31, paragraph 2.

II. PROPOSAL FOR AN AMENDMENT OF ARTICLE 31 OF THE TRIP TRIPSS AGREEMENT

8. The text proposed by the EC is as follows:

Text of Amendment to Article 31 of the TRIPS Agreement

A new paragraph 2 is introduced in Article 31 as follows:

2. Under the conditions set out in Annex [X], Members are not obliged to apply the conditions set forth in paragraph 1, subparagraphs (f) and (h).

ANNEX [X]

1. For the purposes of this Annex:
   1. "pharmaceutical product" means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address the public health problems as recognized in paragraph 1 of the Doha Declaration on the TRIPS Agreement and Public Health. It is understood that active ingredients necessary for its manufacture and diagnostic kits needed for its use would be included (1);
   2. "eligible importing Member" means any least-developed country Member, and any other Member that has made a notification (2) to the Council for TRIPS of its intention to use the system as an importer, it being understood that a Member may notify at any time that it will use the system in whole or in a limited way, for example only in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. It is noted that some Members will not use the system set out in this Annex as importing Members (3) and that some other Members have stated that, if they use the system, it would be in no more than situations of national emergency or other circumstances of extreme urgency;
   3. "exporting Member" means a Member using the system set out in this Annex to produce pharmaceutical products for, and export them to, an eligible importing Member.

2. The obligations of an exporting Member under Article 31(f) of this Agreement shall not apply with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) in accordance with the terms set out below in this paragraph:
   1. the eligible importing Member(s) (4) has made a notification (2) to the Council for TRIPS, that:
      1. specifies the names and expected quantities of the product(s) needed (5);
      2. confirms that the eligible importing Member in question, other than a least developed country Member, has established that it has insufficient or no manufacturing capacities in the pharmaceutical sector for the product(s) in question in one of the ways set out in paragraph 11 of this Annex; and
      3. confirms that, where a pharmaceutical product is patented in its territory, it has granted or intends to grant a compulsory licence in accordance with Article 31 of this Agreement and the provisions of this Annex (6);
   2. the compulsory licence issued by the exporting Member under this Annex shall contain the following conditions:
      1. only the amount necessary to meet the needs of the eligible importing Member(s) may be manufactured under the licence and the entirety of this production shall be exported to the Member(s) which has notified its needs to the Council for TRIPS;
      2. products produced under the licence shall be clearly identified as being produced under the system set out in this Annex through specific labelling or marking. Suppliers should distinguish such products through special packaging and/or special colouring/shaping of the products themselves, provided that such distinction is feasible and does not have a significant impact on price; and
      3. before shipment begins, the licensee shall post on a web site (7) the following information:
         - the quantities being supplied to each destination as referred to in indent (i) above; and
         - the distinguishing features of the product(s) referred to in indent (ii) above;
   3. the exporting Member shall notify (8) the Council for TRIPS of the grant of the licence, including the conditions attached to it (9). The information provided shall include the name and address of the licensee, the product(s) for which the licence has been granted, the quantity(ies) for which it has been granted, the country(ies) to which the product(s) is (are) to be supplied and the duration of the licence. The notification shall also indicate the address of the website referred to in subparagraph (b)(iii) above.

3. Where a compulsory licence is granted by an exporting Member under the system set out in this Annex, adequate remuneration pursuant to Article 31(h) of this Agreement shall be paid in that Member taking into account the economic value to the importing Member of the use that has been authorized in the exporting Member. Where a compulsory licence is granted for the same products in the eligible importing Member, the obligation of that Member under Article 31(h) shall not apply in respect of those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member.

4. In order to ensure that the products imported under the system set out in this Annex are used for the public health purposes underlying their importation, eligible imp orting Members shall take reasonable measures within their means, proportionate to their administrative capacities and to the risk of trade diversion to prevent re-exportation of the products that have actually been imported into their territories under the system. In the event that an eligible importing Member that is a developing country Member or a least-developed country Member experiences difficulty in implementing this provision, developed country Members shall provide, on request and on mutually agreed terms and conditions, technical and financial cooperation in order to facilitate its implementation.

5. Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products produced under the system set out in this Annex and diverted to their markets inconsistently with its provisions, using the means already required to be available under this Agreement. If any Member considers that such measures are proving insufficient for this purpose, the matter may be reviewed in the Council for TRIPS at the request of that Member.

6. With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products:
   1. Where a developing or least-developed country WTO Member is a party to a regional trade agreement within the meaning of Article XXIV of the GATT 1994 and the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries (L/4903), at least half of the current membership of which is made up of countries presently on the United Nations list of least developed countries, the obligation of that Member under Article 31(f) of this Agreement shall not apply to the extent necessary to enable a pharmaceutical product produced or imported under a compulsory licence in that Member to be exported to the markets of those other developing or least developed country parties to the regional trade agreement that share the health problem in question. It is understood that this will not prejudice the territorial nature of the patent rights in question;
   2. It is recognized that the development of systems providing for the grant of regional patents to be applicable in the above Members should be promoted. To this end, developed country Members undertake to provide technical cooperation in accordance with Article 67 of this Agreement, including in conjunction with other relevant intergovernmental organizations.

7. Members recognize the desirability of promoting the transfer of technology and capacity building in the pharmaceutical sector in order to overcome the problem identified in paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health. To this end, eligible importing Members and exporting Members are encouraged to use the system set out in this Annex in a way which would promote this objective. Members undertake to cooperate in paying special attention to the transfer of technology and capacity building in the pharmaceutical sector in the work to be undertaken pursuant to Article 66.2 of this Agreement, paragraph 7 of the Doha Declaration on the TRIPS Agreement and Public Health and any other relevant work of the Council for TRIPS.

8. The Council for TRIPS shall review annually the functioning of the system set out in this Annex with a view to ensuring its effective operation and shall annually report on its operation to the General Council.

9. This Annex is without prejudice to the rights, obligations and flexibilities that Members have under the provisions of this Agreement other than paragraphs (f) and (h) of Article 31, including those reaffirmed by the Doha Declaration on the TRIPS Agreement and Public Health, and to their interpretation. It is also without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under the provisions of Article 31 (f) of this Agreement. \

10. Notwithstanding Articles 64 (2) and (3) of this Agreement, Members shall not challenge any measures taken in conformity with the provisions of this Annex under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994.

11. Least-developed country Members are deemed to have insufficient or no manufacturing capacities in the pharmaceutical sector. For other eligible importing Members insufficient or no manufacturing capacities for the product(s) in question may be established in either of the following ways:
    1. the Member in question has established that it has no manufacturing capacity in the pharmaceutical sector; OR
    2. where the Member has some manufacturing capacity in this sector, it has examined this capacity and found that, excluding any capacity owned or controlled by the patent owner, it is currently insufficient for the purposes of meeting its needs. When it is established that such capacity has become sufficient to meet the Member's needs, the system shall no longer apply.