Apr 4, 1990

ANYTHING IS POSSIBLE IN GATT BETWEEN CONSENTING ADULTS – EEC.

GENEVA, APRIL 2 (BY CHAKRAVARTHI RAGHAVAN) -- The European Community tabled in the GATT Monday a draft legal text for an agreement on TRIPs that would incorporate the agreement into GATT, apply both GATT principles and others "going beyond" them for IPRs, and compel GATT Contracting Parties to implement in their national laws existing WIPO conventions on IPRs, but with enhanced standards.

The proposal was tabled and introduced Monday in the Uruguay Round GATT Negotiating Group on "Trade-related Intellectual Property Rights" (TRIPs).

The EEC paper had been officially available only on Friday, and even to not all delegations. Third World countries sought postponement of the discussions to the next meeting Thursday, to enable them to look at the paper carefully. But the chairman of the negotiating group, Amb. Lars Anell ruled against them, and permitted the EEC to introduce and explain its paper and answer questions, merely agreeing to postpone discussions and comments to Thursday.

The EEC proposal is so contrary to international law and practice relating to amendments of Treaties and one treaty imposing obligations under another to which a country may not be a party that the EEC negotiator, Peter Morgans Carl, in briefing the press, could only say that "anything is possible between consenting adults".

The EEC proposal of legal draft has been put forward as an amendment to the GATT by incorporating a new "Article IX bis" and a detailed annex, setting out the enhanced norms in all areas of IPRs, national enforcement procedures, and tying it all squarely to GATT dispute settlement mechanisms that would enable trade retaliation.

Ironically, Article IX relating to marks of origin is a provision aiming to ensure that treatments on marks of origin and their enforcement do not result in creating trade barriers. The EEC's Article IX bis will ensure export monopolies for products made by the TNCs of the ICs holding the IPRs, and create barriers to production and trade and development of the Third World.

Among the rights for which norms, higher than in the WIPO administered conventions, are set in the EEC's proposed annex are those relating to copyright and related rights, Trademarks, Geographical indications including appellations of origin, Patents, enforcement of such rights under national laws, and application of GATT dispute settlement procedures and mechanisms.

The Annex also provides for protection of "Trade secrets" though the EEC has described it as "Acts contrary to honest commercial practices including protection of undisclosed information".

The EEC negotiator was frank enough to tell newsmen that for legal reasons this terminology rather than trade secrets had been adopted, since otherwise it would not be possible under IPRs to protect undisclosed information.

"We do not want to give the impression that there is a property for secrets. It is legally not possible", he said.

The negotiator also said that the paper, with some internal contradictions, was essentially also the outcome of the EEC member-states efforts to reconcile their own national laws and practices on IPRs and harmonise them as part of the 1992 Single Market.

Except perhaps on copyright, the negotiator did not think there was any major difference between the proposal of the EEC and the positions of the U.S. and Japan as explained by them in the TRIPs group.

Carl claimed, as one of the merits of the EEC proposals is its stipulation that it would prohibit unilateral retaliatory measures (as in U.S. S.301 of the U.S. Trade and Competitiveness Act).

However, Third World participants and observers noted that under the EEC proposals the concept of retaliation in barring access to markets for goods for failure to observe uniform minimum IPR standards would have been incorporated into the GATT itself, and the dispute settlement linked directly to the GATT mechanism in such a way as to obviate any need for unilateral retaliation, and make any retaliation GATT-legal.

The EEC draft text also appeared to prejudge and pre-empt the decisions on the international implementation of the results in the Uruguay Round, that both the Punta del Este Declaration and the midterm accord of April 1989 specifically reserved for the final meeting of Ministers, meeting on the occasion of the Special Session of the GATT CONTRACTING PARTIES at the conclusion of the Uruguay Round.

Asked whether the EEC procedure of a GATT amendment to create obligations under other treaties would not be used as a precedent and whether Third World countries, who have a near two-thirds majority inside GATT, could not use the GATT amendment procedures to compel Industrial Nations to adhere to commodity agreements or the Law of the Sea, Christoph Bail who is the EEC mission's legal counsellor and spokesman, said no one was obliged to undertake obligations unless he accepted it.

The EEC attempt to incorporate into GATT, through an amendment, rules and disciplines on scope, availability and use of IPRs and thus impose new obligations on contracting parties appeared to be counter to its own internal legal opinion that the amendment procedures under Art XXX "could not be used to incorporate into GATT new obligations in an area which arguably falls outside GATT".

According to EEC sources that Bail had a hand in this opinion, outlined in an EEC document of December 1989, for converting the GATT into an umbrella International Trade Organisation. This document which has been freely circulating among many delegations here for some weeks now, and the EEC and the GATT secretariat have been canvassing for it.

This idea of converting GATT into a bowdlerised version of the Havana Charter's ITO does not appear to have been abandoned by the EEC despite the opposition of the Third World and some ICs too, but only kept under wraps.

Third World delegates who credit the EEC with some "deviousness" in its negotiating strategies and tactics even suggested Monday that the EEC had put forward its TRIPs proposal merely to demonstrate to the U.S. (which is cool to the ITO idea) that any amendment of GATT was not feasible and hence the ITO route.

But in the TRIPs negotiating group Monday, the EEC in response to questions, made clear that its intention was to firmly anchor the TRIPs agreement into the GATT, and hence the proposal for amendment which would have to comply with the requirements of Art XXX.

Under Article XXX any amendment to the General Agreement needs affirmative votes of two-thirds majority of the contracting parties, and would bind only those who accept it. In addition, any amendment that would involve amendments to the General Most-Favoured-Nation treatment provisions in Part I would also need unanimity. Though the EEC proposals do not purportedly amend Article I, some of its provisions and rights and obligations could involve that too.

Asked whether the EEC was not precipitating a confrontation on the issue with the Third World countries, Carl claimed that a number of Third World countries welcomed it since they knew that in order to ensure access to the markets of the EEC and other ICs, the results of the TRIPs agreement would have to be incorporated into the GATT.

Third World sources said that at an informal meeting of some key delegations over the weekend, Third World delegations viewed the EEC moves as dangerous, and agreed on the need for Third World delegations presenting their own proposals reflecting their views.

The EC negotiator said that while the proposal would require GATT CPs to provide in their domestic laws the norms of the WIPO conventions as revised at Stockholm (which made the convention more restrictive), and provide for various enhanced norms under the GATT amendments, this did not amount to an amendment of the WIPO conventions and was perfectly legal.

The intention, he made clear in response to questions, was to compel some of the signatories like Brazil who were parties to the Paris Conventions but not of the Stockholm revision or those who had not acceded to the Paris convention to implement it domestically.

He also claimed that by providing enhanced protection for processes and products, the EEC proposal would encourage transfer of technology. But he could give no answer when he was asked to cite the example of any of the 12 member-state who had provided, at their respective stages of development corresponding to that of the Third World countries, both process and product patents and import monopoly rights and had been able to get transfers of technology.

The amendment to the GATT would have the GATT CPs committing themselves to provide for protection of IPRs under their domestic laws and practices in conformity with the rules and disciplines in the annex, and thus establish normative links between GATT and the TRIPs agreement, and dispute settlement under GATT procedures to enable retaliation.

At the TRIPs meeting Chile posed the question whether this implied that next time its exports of apple or other agricultural products were subjected to restrictions under the CAP, Chile could withdraw IPR protection for EEC persons and enterprises as a retaliation. There was apparently no response.

The annex proposed by the EEC claims that it "only creates obligations and rights between CPs and creates no direct rights for individuals". But the very next section relating to copyright begins with the proposition "Authors and their successors in title shall enjoy the rights...".

In demanding uniform minimum standards in all countries, the EEC proposal would also appear to demand material reciprocity by Third World countries - a concept that has been expressly precluded by the Punta del Este mandate in regard application of the principle of special and differential treatment for Third World participants.

The general provisions in the annex would require all CPs in their domestic laws and practices to comply with the substantive provisions of the Paris convention for protection of industrial property as revised at Stockholm and the Berne Convention for protection of literary and artistic works as revised Paris in 1971, and in addition with the provisions of the annex on individual rights.

In international law any treaty revision or amendment is binding only on those who accept it. But the EEC negotiator made clear that the intention was to compel those who had not accepted still to abide by the changes.

Under "national treatment", the CPs are called upon to abide by the GATT provisions in this (which apply to goods and services incorporated in goods when they cross international borders) and also the Paris and Berne convention rights applicable to nationals. This implicit universalisation of grant of IPRs appeared to be contrary to the principle of territoriality and independence of patents under the Paris conventions.

Computer programs are to be protected under the Berne convention as "literary works", and thus presumably for the 50 year period. But since a computer program itself is based on logic, perhaps some creativity in terms of ideas, and the logical steps to implement them, the protection is likely to lead to complications, even though many Europeans and even some like India have preferred to protect the literary or original part of the work under copyright some expert observers noted.

But under the Berne convention and the appendix put in by the Paris revision, Third World countries have some special dispensations. The EEC proposal does not prohibit it, but other provisions such as against compulsory licensing would suggest it is.

The provisions relating to patents would have patent rights extended to "any inventions, whether products or processes, which are susceptible of industrial application, which are new and which involve an inventive step".

In line with the European patents convention, it would however allow countries to exclude from patentability "plant or animal varieties or essentially biological processes for the production of plants or animals". But this exception is not to apply to microbiological processes or products thereof.

But while plant or animal varieties or essentially biological processes could be exempt from patentability, nevertheless the country concerned would be required to provide for protection of plant varieties by patents or by an effective sui generis system. Presumably the reference is to the UPOV rights.

The patentee will have among other things import monopoly rights, and the patent rights will survive whether or not the patent is worked, whether or not imports are made. Patents are not to be revoked for non-working.

The proposals would also block parallel imports from third party sources in another country, where the process and product patents are valid and being used, such as through licence. Under the Paris conventions this is permissible under the theory of exhaustion of rights, but the EEC proposals would prohibit it.

In what would be a total reversal of the burden of proof, any process patent-holder, when he brings a case against a product claimed to be produced by another party through a different process, the burden of proof about its being a different process would be cast on the other party.

The term of protection for a patent is to be 20 years. The right of issue of compulsory licences is to be severely restricted, and virtually abnegated. Compulsory licences may not be issued for non-working, or insufficiency of working if the rights holder could show that this non-working was justified by existence of "legal, technical or commercial reasons".

An ironical part of the annex is the provision for grant of technical assistance by the "developed Contracting Parties", on request. Among other things this assistance is to include "prevention" of abuse of rights granted, presumably based on the view of the ICs that abuses could be dealt with under national competition laws.

Observers however noted in this connection that when monopoly rights are created for IPRs through an international regime, but with no countervailing provisions against their abuse, either in the regime creating the monopoly rights or separate international regime on competition and prevention of abuse, national competition laws to prevent abuse would in fact take a secondary position.

The TRIPs negotiating group decided Monday that discussions on the EEC proposals would be taken up on April 5. At the next meeting, the group is to consider the developmental aspects.