World Trade
Organization
IP/C/W/389
14 November 2002
(02-6329)
Council for Trade-Related Aspects Original: English
of Intellectual Property Rights
ELEMENTS OF A PARAGRAPH 6 SOLUTION
Communication from Kenya, the Coordinator of the African Group
1. The Africa Group believes that the November 2002 TRIPS
Council meeting should be in a position to come up with an
initial draft for a solution to the paragraph 6 problem, in
time for recommendations to the General Council by December in
accordance with the Doha Ministerial instructions. The Group
therefore commends the efforts of the Chair in holding useful
consultations and timely producing and circulating his texts;
and wishes through this communication to constructively
contribute in this direction through concrete suggestions for
improving upon that text so that this exercise can lead to a
satisfactory outcome for all Members.
Scope of the decision
Diseases
2. (a) It is the view of the African Group that the
expression "other epidemics", in paragraph 1 of the
Declaration on the TRIPS Agreement and Public Health, covers
other diseases, including those that may be unforeseen for the
moment, and that on this basis Members shall have the right to
use the solution in the context of health problems they may
face.
(b) While paragraph 1 is part of the Declaration on
the TRIPS Agreement and Public Health, it should be
read in the context of the whole Declaration and
specifically in light of the substantive provisions
in, inter alia, paragraphs 4 and 5 highlighting the
right of Members to protect public health and the
flexibilities in the TRIPS Agreement. The
substantive provisions cover all public health
problems that a Member may face. If any regulation
is required, it should be borne in mind that there
is a built-in mechanism in this regard, for a Member
has to determine the health needs of its people in
accordance with its internal procedures before using
the solution, and the Declaration fully recognizes
this right of Members by highlighting that diseases
may constitute emergencies or other circumstances of
extreme urgency as and when the Member may itself
determine.
3. (a) In this regard, emphasis should not be on "gravity"
as used in paragraph 1 of the Declaration on the TRIPS
Agreement and Public Health but rather on the diseases and the
desirability of preventing suffering and deaths that could be
prevented. Gravity was used in the context of the huge scale
of suffering and deaths resulting from diseases. Those
diseases that were mentioned were only for illustrative
purposes at that point in time, and this should be clear from
the addition "and other epidemics".
(b) Also, the African Group believes that the right
of Members to protect public health, as highlighted
in the Declaration, applies to both present and
imminent health problems. Indeed, preventive or
preparatory measures are appropriate ways of
protecting public health without having to wait for
diseases to run out of control and for deaths to
occur.
Products
4. The position of the African Group is to retain the
expression "pharmaceutical sector" as used in the Declaration,
while at the same time explicitly agreeing that the expression
should be broadly construed in a manner that gives efficacy to
the solution and in accordance with the right of Members to
take measures to protect public health as highlighted in the
Declaration.
5. The African Group believes that the expression
"pharmaceutical sector" should include both products and
processes. The Group further believes that the expression
should cover substances and kits that are necessary for
producing, preparing and administering treatments.
Rights and flexibility under the TRIPS Agreement
6. (a) Regarding the scope of the solution, the African
Group believes that it shall not restrict the rights and
flexibility under the TRIPS Agreement. It should be agreed
that the solution is intended to be part of a permanent or
long-term solution to the problem of lack of or insufficiency
of manufacturing capacity while at the same time responding to
the short-term or immediate needs of Members with such
capacity problems.
(b) The solution applies to cases where a Member
requests another Member for supplies to address its
public health problems, but not where a Member
issues a compulsory licence to be worked by domestic
production to address its public health problems.
Objective criteria for beneficiary importing Members
Eligible Members
7. The African Group believes that all Members should be
eligible as importers, on the understanding that they will use
the solution only when they need it, that is, in cases where
they lack or have insufficient manufacturing capacity.
Indeed, paragraph 6 addresses "Members with insufficient or no
manufacturing capacity".
8. The proposal that some Members only use the solution in
cases of emergencies and other circumstances of extreme
urgency relating to HIV/AIDS, tuberculosis, malaria and other
epidemics, introduces a distinction that does not have a good
basis in the Declaration on the TRIPS Agreement and Public
Health, because reference was made to WTO Members with
insufficient or no manufacturing capacity.
9. Given that there would be a requirement for a request to
the exporting Member, from the importing Member, this amounts
to a built-in mechanism for regulating exports in certain
cases, which however need not be re-iterated in the solution.
However, where a request is properly made under the solution,
there should be an obligation on the requested Member to take
all measures necessary for the production and exportation to
be speedily accomplished.
Determination of manufacturing capacity
10. Any objective criteria should not be a way of imposing
cumbersome domestic pre-conditions for using the solution, and
should not limit the existing rights of Members to protect
public health in any circumstances.
11. Rather than listing certain criteria, the idea could be
that a Member should go through a process of establishing that
it needs certain pharmaceutical products and processes in
which it has insufficient or no capacity. The mechanisms that
a Member uses for establishing that this situation exists,
should be left to the Member itself. In practice, the health
departments assess the medical needs of the country, and the
procurement agencies look for sources of supplies =96 if there
are none domestically, they would have to be found abroad.
12. (a) So, rather than attempting to list objective
criteria that in any case might not comprehensively apply and
might not cover certain unforeseen situations, there could
instead be a requirement that:
Before invoking (the solution), a Member through its
relevant department (for example the health
department), shall determine that there is a need
for certain pharmaceutical products and processes to
address existing or imminent public health problems,
which the member has insufficient or no
manufacturing capacity to satisfactorily meet.
(b) In this regard, there should be no reference to any
tendering procedures.
Eligible supplying Members
13. (a) All Members should be eligible to supply
pharmaceutical products and processes to another to address
public health problems.
(b) It needs to be noted that the solution would
function on the basis of a request from the
importing Member. This constitutes a built-in
mechanism for the importing Members to give
preference to developing country suppliers rather
than developed county suppliers. This could take
place within the context of South-South cooperation.
However, there should be no obligation on importing
Members to show to the TRIPS Council that they have
given preference to developing country suppliers.
Conditions/safeguards
14. Though the need for conditions and safeguards has not
been concretely demonstrated, the African Group has been
prepared to consider them in a spirit of compromise. However,
the Group cannot accept conditions and safeguards that would
make it difficult to use the solution or in any way have the
effect of rendering the solution meaningless. On this basis,
the Group's view is as follows:
(a) While there may be conditions and safeguards
requiring the exporting Members to produce only in
accordance with requests and to export all the
production to the requesting Member, there is no
need for conditions on importing Members. Part III
of the TRIPS Agreement provides enough safeguards in
relation to importing Members particularly if
combined with the condition on supplying Members to
export all the production. Importing Members
according to Part III of the TRIPS Agreement are
already under detailed obligations to enforce the
rights of the patent holder both in relation to
border measures and to domestic legal procedures and
remedies.
Labelling only
(b) Regarding the conditions on exporting
countries, labelling is enough. The other
conditions about shape and colouring, are
unnecessary. Also, the other conditions may further
increase production and compliance costs; and may
have implications relating to health standards.
No safeguards/conditions on production for domestic
market
(c) It is the view of the African Group that the
conditions or safeguards shall not apply in cases of
production located within a Member to supply the
domestic market to address public health problems.
The domestic market in this sense should be agreed
to encompass the entire regional market in
accordance with the interpretation to be applied to
"domestic market" in paragraph (f) of Article 31.
Building sufficient manufacturing capacity
Long-term solution
15. (a) The African Group believes that the ultimate
solution to the paragraph 6 problem is to build domestic
manufacturing capacity and that this should be explicitly
agreed and mentioned in the solution; and that measures to
support the building of domestic manufacturing capacity are
necessary and should be taken in the context of a paragraph 6
solution as well as generally in the context of the TRIPS
Agreement.
(b) The Group believes that there should be an
undertaking by developed country Members to take
measures to facilitate the transfer of medical-
related technology to developing and least-developed
country Members, in operationalizing the objectives
stated in Article 7 and the provisions of Article
66.2 of the TRIPS Agreement as well as paragraph 7
of the Declaration.
Economies of scale
16. The following clauses should be part of the solution:
(a) To enable utilisation of economies of scale in
production, in granting compulsory licences to
address public health problems, Members agree that
the TRIPS Agreement should not prevent compulsory
licences that are recognized and given effect within
context of the regional trade agreement that the
Member issuing the compulsory licence is party to.
(b) It is agreed that utilisation of economies of
scale is an important element of the solution under
paragraph 6, in terms of making production
attractive and feasible, in order to support the
location of production facilities within the
territories of developing and least-developed
country Members. Accordingly, the solution shall be
part of the legal incentives to support the location
of production facilities within the territories of
developing and least-developed country Members.
Regional trade agreements
(c) Accordingly, it is agreed that "domestic
market", for developing country Members, shall
include collectively the markets of all parties to a
regional trade agreement within the meaning of the
applicable provisions of the WTO Agreement
particularly Article XXIV of GATT 1994 and the
Enabling Clause.
(d) However, there should not be any reference to
"duly notified RTAs" as this may raise problems of
the conformity of the RTA to WTO rules =96 conformity
has been a big problem in the history of GATT and
the WTO/CRTA, which has yet to be satisfactorily
resolved.
Coherence
17. There should be recognition that in addressing public
health problems in developing country Members, measures under
the TRIPS Agreement should be part of the international
effort. It should be agreed that there must be coherence
between the WTO and other organizations such as UNIDO, WHO,
UNAIDS, UNCTAD, the World Bank, etc.; particularly with
regard to transferring medical-related technology to
developing country Members. The TRIPS Council should annually
receive reports on how this coherence is being implemented,
for purposes of information sharing. However, this must not
in anyway be understood or taken to mean that the solution
should be restricted and made subject to efforts in other
organizations; rather the TRIPS Council must find a complete
solution within its competence and the WTO as an institution
must fully exhaust its mandate in this regard.
Amendment to Article 31(f) of the TRIPS Agreement
18. The amendments relating to paragraph (f) of Article 31
should be in the following terms:
(a) Paragraph (f) of Article 31 is hereby amended by
adding the following sentence:
"This restriction to supply predominantly for the
domestic market shall not apply to laws and measures
adopted to address public health problems."
(b) Members agree to ensure that they complete
their domestic procedures for acceptance of this
amendment by 25 June 2003.
(c) The provisions of Articles XXII and XXIII of
GATT 1994 as elaborated and applied by the Dispute
Settlement Understanding shall not apply to measures
taken under (the solution), until this amendment is
accepted by all Members.
19. Or [a waiver]: The General Council could adopt a long-
term waiver to last until ALL Members accept the amendment to
paragraph (f) of Article 31, waiving, inter alia, the
following provisions in the TRIPS Agreement:
(a) the condition in paragraph (f) of Article 31 to
supply predominantly for the domestic market; and
(b) the rights conferred by a patent under Article
28 in relation to pharmaceutical products and
processes needed to address public health problems,
to the extent that this enables the production for
export, and the selling abroad and the exportation,
of the pharmaceutical products and processes
requested for purposes of addressing public health
problems in third countries. However, the waiver in
this respect shall not be understood as waiving the
right to remuneration or compensation for the use of
the patent; that is, patent holders shall be
compensated for using their patents for production
for export to third countries.
(c) However, the terms and conditions on which the
waiver should be granted must include:
(i) the clear agreement by Members that
Articles XXII and XXIII of GATT 1994 as
elaborated and applied by the Dispute Settlement
Understanding shall not apply to measures (under the
solution) for the duration and any extended
periods of the waiver; and
(ii) an explicit understanding that the annual
reviews shall only be formalities, on the basis
that Members have recognised that the waiver was
necessary to address health problems that are of a
long-term nature. In particular, Members shall not
be required to justify their use of the solution.
Production for export to address public health problems
20. In order to explicitly provide for production for export
under the solution, the General Council decision should state
that Members may take measures facilitating production for
export and the exportation, in the following terms:
(a) Without prejudice to the right to issue
compulsory licences to supply other Members, any
Member may designate within its territory specific
locations or enterprises for production for export
or supply to other Members in order to address
public health problems in the latter Members.
(b) Members that adopt laws or measures in this
context, and Members that have public health needs,
may notify them to other Members directly or through
the Secretariat of the World Trade Organization and
to any relevant international organizations. It is
understood that this paragraph does not create a
notification obligation on Members but shall be for
the purpose of information sharing designed to
facilitate the use of the solution.
Notification and transparency
21. The African Group takes the view that notification should
serve the purpose of information sharing but must not
constitute a notification obligation.
22. It should be understood that in the context of the
detailed procedural requirements under Article 31 of the TRIPS
Agreement, including paragraph (b), compulsory licences would
be necessary only when voluntary licences are not forthcoming,
without prejudice to the right of Members to themselves
determine the grounds for issuing compulsory licences and
without prejudice to the rights of Members relating to
emergencies and other circumstances of extreme urgency.
Therefore, additional notification requirements are
unnecessary.
23. Nevertheless, the rights relating to emergencies and
other circumstances of extreme urgency as highlighted in the
Declaration on the TRIPS Agreement and Public Health, shall
not in anyway be restricted or limited. In particular, there
must be no limitation of the right of Members to waive the
requirement in paragraph (b) that "use without authorization
may only be permitted if, prior to such use, the proposed user
has made efforts to obtain authorization from the right holder
on reasonable commercial terms and that such efforts have not
been successful within a reasonable period of time". It
should be clearly understood that all the various elements of
this requirement may be waived by Members in cases of
emergencies or other circumstances of extreme urgency, and
that the solution in building upon the Declaration should not
seek to undermine any flexibility that Members have.
Integral with the Declaration
24. This (solution) is based on the Declaration on the TRIPS
Agreement and Public Health, and shall not undermine or
restrict the flexibilities in the TRIPS Agreement. (The
solution) shall be an integral part of and shall be applied
and interpreted in light of the Declaration on the TRIPS
Agreement and Public Health.
25. This communication is without prejudice to the positions
of individual members of the African Group.