January 03, 2003
Wrestling Match Over Drug Patents in Latest WTO Talks

A round of World Trade Organization talks on how to implement an agreement on getting cheaper pharmaceutical drugs for poor nations ended in failure in December, with the United States rejecting a last-minute compromise accepted by the other 143 member states.

The talks in Geneva, Switzerland, were the outgrowth of an agreement reached in Doha, Qatar in November 2001 about giving poor countries easier access to cheap drugs to combat epidemic diseases such as AIDS. The agreement provided for compulsory licensing of such drugs, in which the drugs could be manufactured without the patent holder's consent.

The United States, as the country generating the largest number of pharmaceutical patents, torpedoed the compromise put forward in Geneva to implement the agreement because it would extend compulsory licensing to a wide variety of drugs. Washington argued that would stifle the appetite of the drug industry to conduct future capital-intensive research and development into particular drugs, and, therefore, would not do anybody any good.

The developing nations, on the contrary, regarded the agreement as effective and rejected the U.S. proposal of restricting the compulsory licensing only to drugs for African nations for epidemic diseases such as AIDS.

But as The Economist pointed out in a commentary, the dispute missed a bigger point - that compulsory licensing in whatever form is not a solution to the problem of getting cheap drugs to poor nations. That is because most poor countries don't have the administrative or legal apparatus to make use of compulsory licensing, nor do they have any domestic drug industry that could take advantage of it.

For developing nations the drug patent issue is also part of a much broader range of trade issues under discussion. The negotiations over drug patents were seen by developing nations as a quintessential litmus test of the sincerity of the developed countries (or more precisely of the United States) in helping them, instead of merely cracking open their markets. This concern is especially acute in the area of agricultural trade negotiations, where developing nations want developed countries to open up their markets.

Despite the current discontent among member states, a new round of talks covering issues in a variety of fields is expected in 2003. Some still hope it will be possible to reach a compromise in the differing views among countries with opposing interests. But developing nations generally feel they have been unfavorably treated in the international economic system, a sentiment reflected in the increasing anti-globalization movement. No doubt the collapse of the drug talks will only reinforce this.

Some delegates from Asia, Africa and Latin America have said that without real progress in the drug discussions they won't back any compromise in the new round of talks on agricultural trade and other issues the United States sees as vital to boosting global trade.

The target date for concluding this new round of talks, agreed upon at the Doha conference, is January 1, 2005. The complexity of the issues and the fast pace of change in the world economy will make it hard to conclude the negotiations in that times. The results of the next WTO Ministerial Conference, to be held in Mexico in September 2003, will be of central importance in getting the negotiations concluded as scheduled.

In the new round of talks it is in the developed nations' interest to ensure that developing countries will implement previous commitments on market access, intellectual property rights and other issues. But developing countries are insisting they need revisions and a rebalancing of the agreements that came out of the Uruguay Round of negotiations in 1994, which produced most of the WTO agreements.

The area of enforcing intellectual property rights - embodied in the Trade Related Aspects of Intellectual Property Rights agreement - is of special concern to the developing nations. Many developing nations complained about the complexity in implementing the intellectual property rights agreement, given that most of them lack the proper legal framework and technological know-how to do this. In response, ministers from the developed world have made some concessions in terms of the implementation of the TRIPS.

The intellectual property issues, including the drug patent dispute, also will be sharing attention with agriculture and other trade concerns in the new round of talks. A large number of developing countries regard expansion of their exports of agricultural products as the most important way to ensure their own economic progress. They are insisting that developed countries should increase access to their markets and reduce or eliminate subsidies for their own agricultural industries. The developing nations also resented the U.S. proposal submitted to the WTO for eliminating tariffs on industrial and consumer goods by 2015, terming it "clearly unfair" and against developing nations' interests. The United States argued that developing countries stand to gain significantly, not only through better access to developed country markets, but also from each other. The second WTO Mini-Ministerial Conference scheduled for early next year will hear responses to the concerns about agriculture and other issues.

Posted by Feiwen Rong at January 03, 2003 03:06 PM

Well described. It will be interesting to see what happens in Mexico later this year. Big pharma is going to have some stiff competition in years to come.

Posted by: Zack Lynch on January 10, 2003 04:51 PM

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