THE least developed countries have requested the WTO for permanently extending the transition period to implement the Agreement on Trade Related Aspects of Intellectual Property Rights.
The transition period is due to expire on July 1, 2013. Is the request warranted?
The Trips Agreement creates obligations on WTO members for protection of intellectual property rights (IPRs), such as copyrights and patents. The Agreement, since it marked the first comprehensive attempt to create obligations in the area of IPRs on the multilateral level, provided for transition periods to WTO member countries to give effect to various provisions of the Agreement.
The purpose was to give WTO members some flexibility in putting in place the right legal and institutional arrangements.
Developed countries were given one year, while developing countries and economies in transition were given five-year transition periods (as per Article 65 of Trips).
Developing member countries including Pakistan were given an additional five-year extension, i.e. up to 2005, for protection of product patents.
The LDCs, in view of “their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base” were granted a transition period of 10 years under Article 66 of Trips. It was further provided that the Council for Trips, which monitors the operation of the Agreement, may further extend transition period for them upon their request.
The 10-year transition period for the group expired in 2005 but was extended till July 2013 “or until such a date on which they cease to be a least developed country Member, whichever date is earlier.” Earlier, in 2002, the Trips Council had extended the transition period until 2016 in relation to patents and test data protection for pharmaceuticals.
The Eighth WTO Ministerial Conference, the apex body of the Organisation, held in December 2011 asked the Trips Council to give full consideration to a request from the LDCs for extending their transition period beyond 2013.
Notwithstanding implementation periods granted to different groups of countries, they were required to give effect to certain provisions of the Trips Agreement from day one. Such provisions are embodied in Articles 3 (national treatment), and Article 4 (MFN treatment) of the Agreement. This exception is a non-discriminatory constitutional principle of the WTO.
Since the cut-off date of July 1, 2013 for implementation of Trips is drawing closer; LDC’s have filed a request for extension of the transition period as long as a country remains in the category. This means that if their request is accepted, these countries will be permanently exempted from having to comply with the WTO provisions relating to IPR protection. Only when a country has graduated from the status will it be required to comply with trips Agreement.
The LDC status is defined not by the WTO but by the United Nations on the basis of such variables as per capita income, human assets and economic vulnerability. A country may graduate from the status if it crosses the prescribed thresholds.
The gist of the submission for permanent extension of the transition period filed with the WTO is this: Representing the poorest and weakest segment of the international community, the LDCs continue to play a marginal role in the global economy. They have not been able to move beyond out-dated technologies, hindering the development of their productive capacities.
These countries continue to face serious economic, financial and administrative constraints and need a continuing waiver from Trips to create a sound and viable technological base. Besides, the group needs policy space to access various technologies, educational resources, and other tools necessary for development. Most IPR protected products are priced beyond the purchasing power of their nationals. Since it is impossible to determine when an LDC will be able to overcome the obstacles to creating a viable technological base, it should be exempted from implementing Trips provisions, except Articles 3 and 4, as long as it maintains the status.
The request for grant of a permanent waiver from fulfilling their IPR obligations has been made on the basis of special and differential (S&D) treatment principle of the WTO.
Based on their levels of economic development, WTO members have been given flexibility in meeting some of their obligations in the multilateral trading system.
The LDCs, because of their vulnerable predicament in the world economy, already enjoy duty free access in the markets of developed economies for most of their exports as well as exemption from complying with various provisions of WTO agreements.
However, despite such exemptions and privileges, the lot has not improved.
Their economies continue to be vulnerable to foreign competition and they continue to have an extremely low share in global trade.
In 2011, for instance, LDCs accounted for only one per cent of global exports. This lends credence to the argument that S&D provisions in themselves are not sufficient for significantly improvement. In fact, such provisions may have a negative effect, as they contribute to preventing these countries from become competitive.
However, there is a strong case for S&D provisions when it comes to patent protection for pharmaceuticals. The price of patented drugs is very high, in several cases exorbitant, beyond the vast majority of people in not only the LDCs but also many developing countries. Because of severe financial constraints, it is very difficult for governments in these countries to subsidise medicines.
Though there is a strong case for giving more flexibility to these countries in protecting drug patents, one may have some reservations regarding their request for blanket and permanent exemption from having to comply with the Trips Agreement.
This is partly because members of the multilateral trading system should not seek exemptions from compliance with any set of obligations and partly because the S&D provisions sometimes may also prove counter-productive.
Therefore, LDCs should be given only limited (drug patents, for example) and time bound (say, five year) exemptions from fulfilling their IPR obligations. The situation may be reviewed after the transition period has expired.