Feb 13, 1989

TRIPS CONSULTATIONS SHOW SERIOUS DIVISIONS.

GENEVA, FEBRUARY 10 (IFDA/CHAKRAVARTHI RAGHAVAN) The consultations this week in GATT on the issue of "Trade-Related Intellectual Property Rights" (TRIPS), an item on the Uruguay round agenda, has shown some large gaps in the positions of major industrialised nations and the third world countries, according to participants.

The "green room" consultations on this issue were held by GATT Director-General Arthur Dunkel, in his capacity as chairman of the official level meetings of the Trade Negotiations Committee (TNC) of the Uruguay round.

The Montreal Ministerial mid-term review meeting in December last had mandated Dunkel to hold consultations on this and the other three areas of deadlock (textiles, safeguards and agriculture), while putting on hold other results obtained at Montreal.

The outcome of the consultations in these four areas as well as the results on hold and other items on the agenda of the Montreal meeting are to be reviewed at a high level meeting of the TNC at Geneva in the first week of April.

The consultations on agriculture are scheduled for next week. Consultations have already been held on textiles and safeguards, and are to be resumed in the week of February 20, when Dunkel is expected to present his own ideas for resolving the deadlock in these two areas.

On TRIPS, in view of the serious gaps, Dunkel is likely to hold further consultations, both with delegations who had participated in the "green room" and others, to find a way out, participants said Friday.

The consultations are to be resumed in the week of March 6.

The U.S., EEC, Japan and other industrial nations want the TRIPS negotiations to create a GATT framework providing for substantial norms and standards in intellectual (industrial) property protection, and for its enforcement through GATT consultation and dispute settlement procedures.

The third world countries have generally been opposing this, insisting that the negotiations could only address the "trade-related" aspects and strictly in terms of the mandate.

In the consultations, various third world delegations have reportedly objected on various grounds to the substantive issues of protection being dealt with in GATT.

Firstly, the mandate is only to "clarify" the GATT provisions, keeping in mind both the promotion of intellectual property protection and the need to ensure that intellectual property protection did not become a barrier to legitimate trade, and formulate new provisions "as appropriate".

Secondly, the jurisdiction of international organisations having competence in the area like the World Intellectual Property Organisation, had to be fully respected, as stipulated in the mandate.

Thirdly, standards and norms and their enforcement are matters to be prescribed in national laws and within the sovereign jurisdiction of states.

Fourthly, there are many aspects of public policy which have some trade effects. But this could not be used as a ground to bring all such policies under GATT scrutiny or jurisdiction.

Fourthly, the subject is a very complex one, and its various aspects are being negotiated in several international organisations - the WIPO, UNCTAD and the FAO.

There are a variety of conflicts of interests that had to be resolved - such as for example the rights of plant breeders vs. rights of farmers, intellectual property protection vs. public welfare, consumer rights, and industrialisation and development policies.

The issue of "compulsory licensing", which some of the proposals seek to block through the GATT standards and norms, is at the heart of the negotiations for revision of the Paris Conventions.

Complex and technical issues, negotiations on these have been going on for ten years in other fora.

There are also on-going efforts over harmonisation of patent laws in the WIPO, where issues about duration of patents and the areas that could be excluded from patents were being negotiated, involving as they did some deep differences among governments.

These issues are being handled by technical and policy experts in the competent organisations. If they had not made progress, it was because the industrialised nations had deliberately blocked progress in negotiations.

To believe that complex issues with such serious differences and which had been engaging the attention of the International Community for ten years could be resolved through "magic solutions" in one of the 14 negotiating groups of the Uruguay round, and in the remaining 18 months left, is highly unrealistic.

The U.S. and other industrialised nations in the consultations have sought to dismiss the jurisdiction and mandate issue, arguing that any aspect, which restricted or distorted trade, was within the mandate.

The Uruguay round negotiations need not settle all the details, but only the "principles" and create a framework for settling details.

However, third world participants reportedly pointed out that the issues mentioned by them were the issues of "broad principle" that were being negotiated elsewhere, and not detailed provisions arising from the principles.

Issues of broad principles on which there was no international consensus could not be resolved through trade policy in the general agreement.

A number of participants from the third world, in underscoring the public policy aspects of the issue, have underscored their concerns about the likely rise in prices of drugs and other essentials in their countries, if they had to change their patents, laws and provisions in these areas.

The U.S. and others questioned this view.

The U.S. also argued for actions in the Uruguay round, claiming that its enterprises were losing an annual 40-50 billion dollars in revenues because of lost export earnings due to lack of adequate intellectual property protection in other countries.

Third world participants however pointed out that even if these data, based on claims of the enterprises were to be taken as a basis, the efforts of enterprises to "regain these losses" could only come out of increased prices and outflows from other countries.

Issues were not so simple as the leading industrial nations were trying to make out.

The profits and benefits to owners could be only one of the aims of intellectual property protection.

The countries providing such protection had also to take into account other considerations, such as "humanitarian" and "public welfare" in framing their public policies.

On the issue of dispute settlements, several participants felt that the consideration of the issue in the TRIPS group was premature, and had to be dealt with in the context of the overall work in the group on dispute settlements.

Uruguay and several participants reportedly said that they favoured multilateral dispute settlement mechanisms, not only for trade disputes but also for all problems between countries. Disputes to be settled in GATT should have something to do with direct GATT obligations.

Participants said that overall the consultations showed that the major differences that had arisen in the two years of negotiations in the group, and reflected in the four alternative formulations presented to the Montreal meeting and referred back to Geneva, remained without change.

While one or two third world countries like Hong Kong and South Korea appeared to have supported the viewpoints of industrial nations, the other third world nations involved in the consultations were against the substantive issues being negotiated in the TRIPS group.

Among these were Brazil, Colombia, Egypt, India, Pakistan, Singapore, Uruguay and Yugoslavia, and with varying nuances Chile, Jamaica and Mexico.

Thailand, which has been penalised by the U.S. (under section 301 proceedings) by withdrawal of its GSP benefits for refusal to provide adequate protection to U.S. drug companies, reportedly said in the consultations that it wanted a multilateral approach to the entire issue, but was not too particular whether it should be in WIPO or the GATT.