Domestic policy space and TRIPS

The tension between domestic policy space or the ability to carve out public policies based on domestic political will and intrnational trade rules has been a recurrent theme of this blog. There are no easy answers and neither is the debate in black and white. It is not whether countries have domestic policy space - it is how much of space they have and how do they exercise it? A parallel theme is can the claim of domestic space be misused for blatant, discriminatory protectionism?

I have highlighted the debate around domestic space and TRIPS in this blogpost and this one regarding compulsory licensing a few months ago. Joseph Stiglitz and Arjun Jayadev in their Project Syndicate piece interestingly highlighted the importance of domestic policy space in the context of the recent decisions around patentability and TRIPS.

"According to the Indian Supreme Court, the country’s amended patent law still places greater weight on social objectives than in the US and elsewhere: the standards of non-obviousness and novelty required to obtain a patent are stricter (especially as they pertain to medicines), and no “evergreening” of existing patents – or patent protection for incremental follow-up innovations – is allowed. The court thus reaffirmed India’s primary commitment to protecting its citizens’ lives and health. 

The decision also highlighted an important fact: Despite its severe limitations, the TRIPS agreement does have some (rarely used) safeguards that give developing countries a certain degree of flexibility to limit patent protection. That is why the pharmaceutical industry, the US, and others have pushed since its inception for a wider and stronger set of standards through add-on agreements. 

Such agreements would, for example, limit opposition to patent applications; prohibit national regulatory authorities from approving generic medicines until patents have expired; maintain data exclusivity, thereby delaying the approval of biogeneric drugs; and require new forms of protection, such as anti-counterfeiting measures. 

There is a curious incoherence in the argument that the Indian decision undermines property rights. A critical institutional foundation for well-functioning property rights is an independent judiciary to enforce them. India’s Supreme Court has shown that it is independent, interprets the law faithfully, and does not easily succumb to global corporate interests. It is now up to the Indian government to use the TRIPS agreement’s safeguards to ensure that the country’s intellectual-property regime advances both innovation and public health."

Of course, the debate whether TRIPS provides policy space depends on the area of applicability one is talking about as well as the view one holds on the extent to which international rules should impact domestic policy making. However, it is interesting to see the debate shifting from whether TRIPs provides that flexibility to how one can use the flexibility to pursue national interests. And what applies to TRIPS applies to all other WTO agreements. The questions is whether developing countries can unearth and effectively engage with these flexibilities.

Compulsory Licensing and domestic policy space - A view

I had written about compulsory licensing, TRIPS and the exercise of domestic policy space, albeit in a judicial context, here. 

An interesting piece titled "Compulsory Licences for pharmaceuticals: An inconvenient truth?" by Sivaramjani Thambisetty on the recent grant of compulsory licenses in India highlights the various principles involved. As summarized by the author, the case brings to the fore these issues:

"Irrespective of the outcome of this case on appeal, the decision of the IPAB plays a crucial role in building up alternative and legitimate legal narratives around TRIPS and the ability to meet the public health needs of populations in all parts of the world. Despite the explicit legal grounds to grant compulsory licenses, they have been used relatively rarely in developing countries. There are many poorly reasoned and inadequately articulated fears that have prevented their wider use: fears that a CL will be seen as protectionist and incompatible with the TRIPS agreement; fear that it will chill foreign direct investment; or fear that a CL will draw the kind of political pressure and sanctions that were common prior to the TRIPs agreement. These fears appear in many cases to trump the reasonable legal conditions that have to be met in all cases where CLs are granted as well as widespread precedents from developed countries where CLs are used to tackle anti-competitive measures. (For instance, see here and here. )"

Issues of the violation of TRIPS, defining public interest, exercise of domestic policy space, developing country needs in the context of multilateral rules as well as public health concerns are raised here. Definitely more food for thought.

A wonderful read.

Hacking and the WTO

I had blogged about cyberespionage and the applicability of WTO rules here.

Now, a piece in National Interest which argues that hacking should be remedied through a dispute at the WTO. It argues fo rusing international law, especially TRIPS obligations to ensure cyber security.

I am not sure how realistic this is but this surely would make the WTO dispute settlement tread dangerous waters...

Antigua, the U.S and a rule based system of dispute settlement

The proceedings of the WTO Dispute Settlement Body in a recent meeting throws light on the Online Gambling case (DS 285). While WTO watchers are keenly awaiting Antigua's proposed moves in relation to the cross-retaliation in this case, the use of cross-retaliatory measure in the field of IP has evoked strong reactions.

Some excerpts from the meeting indicate the strong, divergent viewpoints held as well as possible outcomes:

"Dominica, speaking on behalf of Antigua and Barbuda, said that Antigua and Barbuda was disappointed at the lack of compliance by the US and its failure to identify a single measure designed to implement the DSB’s recommendations and rulings.  Furthermore, Antigua and Barbuda was concerned that, at the January 2013 DSB meeting, the US had used terms such as “theft of intellectual property” and “government-authorised piracy” in relation to the lawful and expressly authorised use of trade remedies provided for in the WTO agreements. 

In Antigua and Barbuda’s view, the use of such intemperate and dismissive language by the US was a fundamental challenge to the WTO and a reputational assault both on the DSB that had given the approval for intellectual property (IP) suspensions and on Antigua and Barbuda that had sought its right to exercise it.  Antigua and Barbuda called on members to defend the WTO’s fundamental principles and to ensure that its rulings are applied equally by all countries despite their size. 

...

The United States noted that Antigua and Barbuda had assured the DSB that it would notify and provide specific details about how it would implement the suspension of concessions and that Antigua and Barbuda would not encourage or allow itself to become a haven for IP piracy. With regard to the status of the dispute, the US did not agree with Antigua and Barbuda’s view that the US had been unwilling to negotiate in good faith.  The US had been following the established, multilateral WTO process for responding to the DSB’s findings and had, in 2007, begun the process of modifying its Schedule of Specific Commitments under the General Agreement on Trade in Services (GATS).  The US had offered substantial compensatory adjustments in other service areas and every member had agreed to the compensation package except Antigua and Barbuda.  The US had also sought to offer Antigua and Barbuda elements other than new services concessions.  The US remained open and ready to engage with Antigua and Barbuda to find a solution."

What will the result be n this case:

1. A negotiated, amicable settement or a compensatory package?

2. Protracted dispute settlement proceedings on what constitutes compliance and claims of compliance and non-compliance?

3. A strong cross-retaliatory move by Antigua suspending rights of US IP holders?

4. Proceedings disputing the validity of the measures undertaken to cross-retaliate?

5. No action by Antigua and letting the dispute seeing no end?

Will it also be a case where the "rule-based" nature of the dispute settlement will be established? Or will it go the way that political economy of relations often force it to? The dispute in many ways is the test of the multilateral institutions rule based dispute settlement system - in terms of its efficacy, remedies and compliance.

Domestic policy space, Tobacco Plain Packaging and New Zealand

Plain Packaging of Tobacco products has been one of the latest issues that has knocked on the doors of the WTO pursuant to Australia's legislation to introduce plain packaging. I have blogged about it here, here and here and there is considerable discussion in the international economic law blogosphere about it. Dominican Republic, Honduras and Ukraine have challenged the Australian measure contending that it violates Australia's obligations under the TRIPS Agreement. I had also blogged about New Zealand's moves to enact a Plain Packaging legislation here. The issue raises, amongst other things, the interplay of domestic policy choices, international obligations and interpretation of international treaty provisions. Intellectual Property Watch has a detailed analysis of the various positions on the issue here.

The ICTSD had this piece recently on New Zealand's moves.What I found interesting in this piece is the stand by New Zealand authorities that they would await the decision int eh Australian case at the WTO and then go ahead with the proposed implementation in New Zealand.

"Wellington plans to formally introduce legislation requiring plain packaging for tobacco products this year, officials said last week. Should the planned initiative indeed become law, New Zealand would be the second country to implement such a measure after Australia - whose own policy has been the source of significant controversy. 

However, New Zealand Prime Minister John Key has indicated that his government will not implement the plain packaging measures until the legal challenges on Australia’s policy - including the WTO complaints that have been tabled by some of Canberra’s trading partners- are resolved. 

“We’re hopeful that there will be a WTO ruling, and we’re hopeful that we can make progress on this issue,” Key said last week. “But New Zealand’s always been a country from what I can recall, or see, that’s observed WTO rulings.” 

The debate about domestic policy space and international economic law is a long standing one. This case in New Zealand typifies, according to me, the interplay between the two. The postponement of implementation of a Plain packaging legislation pending the result of the dispute settlement proceedings at the WTO is an interesting case of the impact of multilateral trade rules on domestic policy making. Assuming that the WTO case rules that Plain packaging violates WTO obligations, will New Zealand withdraw it's legislation or go ahead risking non-compliance? There is nothing stopping new Zealand from going ahead with the legislation now and to that extent domestic policy space is not impacted. However, the existence of an international dispute settlement proceeding impacting the implementation of domestic law is in itself an interesting concept? Would the cause of international economic law be better served by such an approach? Or is it an unnecessary impediment to domestic sovereign will?

Cross retaliation and dispute settlement

International economic law experts watch with keen anxiety the next steps Antigua would take to effectuate the cross-retaliation sanction it has received from the WTO in the  US- Online Gambling case at the WTO. 

This NYT opinion preferred a negotiated deal rather than the execution of cross-retaliation. Simon Lester suggests in this blogpost that Antigua should adopt a non-abusive, reasonable way of retaliation by putting works that have received excessive protection in the public domain. Scott Lincicome highlights the strong impact the threat of cross retaliation can have in the context of non-complied WTO disputes in this view.

While many conjecture on how Antigua would implement the cross-retaliation option (many also feel that it would ultimately lead to a negotiated settlement) Shamnad Basheer in this piece offers a tiered approach to cross retaliation essentially contending that cross-retaliation should be considered a mainstream retaliatory technique rather than a secondary one. Calling it the "Tiered IP suspension model" he proposes:

"Whilst the notion of IP “cross-retaliation” has been doing the rounds for a while, there is considerable uncertainty regarding how this concept will be operationalized and implemented. Developing countries urgently need to work out an optimal model that helps assess losses to the foreign IP owner in a reasonably objective way—this way there is no time lost between the procuring of a favorable order from the WTO sanctioning cross-retaliation and the actual cross- retaliation itself. The lack of a credible domestic model has no doubt caused Antigua’s threat of cross retaliation to be taken less seriously by the US. 

This paper seeks to fill this lacuna by proposing a tiered suspension mechanism as a viable option. That the model lacks technical precision in terms of computing losses to IP owners accurately is not fatal since the current WTO framework only requires a broadly objective model that does not reek of arbitrariness. Further, the aim of this paper is to evolve a model that will help in securing compliance or a settlement. Given that the IP lobbies in countries such as the US and the EU are powerful, the likelihood of a settlement or compliance is very strong. Particularly, since the model advocates an automatic compulsory license after the offending measures have been removed. In other words, the likelihood of a country having to operationalize the IP suspension model is very remote. Any infirmities in the model ought to be evaluated, bearing this over- arching assumption in the model. Further, the current WTO framework only requires that broad equivalence be achieved and not that the retaliating state compute the losses to suspended IP owners in a technically accurate manner."

While one would have to wait to see how Antigua takes it forward, it is clear that cross-retaliation has brought back into focus the issue of compliance under the dispute settlement process. Will it lead to enhanced compliance or more complex negotiated settlements?

Antigua, gambling and a dispute

The US-Gambling case (DS 285) more popularly known as the Antigua case makes for an interesting case study of a WTO dispute settlement case.Yet another Caribbean country taking on the US, very similar to the rum cases that I had blogged about here. While I am not going into the legal aspects of the GATS violations in this blog post (it basically related to the interpretation of commitments that the US had undertaken under the GATS), the case brings to the fore many aspects of the nature of the dispute settlement process itself. For a brief summary of the dispute see this synopsis here.The AB essentially held that US measures of totally prohibiting online betting and gambling services of Antigua were inconsistent with the obligations it had undertaken under GATS.

Some observations about the dispute:

1. Long standing dispute - The request for consultations by Antigua was made in 2003. It is 2013 and the dispute has not reached a final conclusion to the satisfaction of the complainant even after the AB had ruled in its favor in 2007. This raises the issue of the efficacy of the dispute settlement system to provide efficacious remedies in a time-bound manner.

2. Evidence of a rule-based system - The case has been heralded by some as evidence that both smaller and large trading countries have equal rights in the system. As mentioned by Antigua's lawyer here:

"With Antigua, it’s $21 million. Maybe with China it’s going to be U.S. $21 billion. One of the messages we want to get across is that the WTO was sold to smaller countries as a level playing field and a way for them to expand the reach of commerce, subject to a set of rules that apply to everybody. I think more than anything else, this case is about fairness. The WTO is supposed to be fair.”

This goes back to the point that the dispute settlement mechanism, which is considered as as the crown jewel of the the WTO system, is based on rules and not on power politics. Countries irrespective of their trading and geo-political strength can challenge larger, more powerful trading partners at the dispute settlement. However, the inability of Antigua to meaningfully implement the WTO decision raises questions about the fairness of the system. Of what use is a rule-based system if the complainant cannot implement a decision or bear the fruits of it. Is the threat of other sanctions or the reality of trade much more overbearing that a judicial decision?

3. Landmark GATS case - This case is also considered as one of the few (there are only 23 cases that cite the GATS Agreement out of the over 400 WTO cases) cases where the commitments under the GATS were scrutinized by the dispute settlement mechanism. With services trade gaining in importance, this percentage is definitely going to grow.

4. Cross-Retaliation - The WTO has authorized Antigua to retaliate against the U.S. due to the latter's failure to comply with the decision. Antigua has threatened to retaliate in another sector - intellectual property - by ignoring copyrights of US holders by selling material on a website.This is an interesting strategy of retaliating in a sector not a subject matter of the dispute (the case was about GATS commitments, but the retaliation is proposed under copyrights) but which is a very strongly guarded right in the US. Will this strategy be used by other countries in their disputes? What implications does the suspension of obligations under TRIPS have for the legal framework that protects these rights? Shamnad Basheer has this detailed study of how a cross-retaliation model can be used by developing countries to ensure compliance in WTO cases. The USTR seemed concerned at the prospect of a suspension of obligations under TRIPS:

"The United States is concerned, however, that the Arbitrator agreed with Antigua’s request to suspend WTO concessions not just with respect to services, but also with respect to intellectual property rights (IPR).  Any authorization pursuant to the award would be strictly limited to Antigua; every other WTO Member remains obliged to protect U.S. IPR under WTO rules, including enforcement against any IPR-infringing goods.  Moreover, even with respect to Antigua, it would establish a harmful precedent for a WTO Member to affirmatively authorize what would otherwise be considered acts of piracy, counterfeiting, or other forms of IPR infringement.  Furthermore, to do so would undermine Antigua’s claimed intentions of becoming a leader in legitimate electronic commerce, and would severely discourage foreign investment in the Antiguan economy."

The Gambling case is an interesting case reflecting the many challenges that the dispute settlement mechanism faces. It also brings us back to the question as to what constitutes "compliance" in a case, which the US claims to be undertaking. We faced that in the long drawn Airbus-Boeing subsidies case too.

Shamnad Basheer has a great blogpost on the dispute on SpicyIP here.

For a different take, see Eyes on Trade blogpost which believes that this is yet another example of trampling of US domestic policy space by the WTO (after Tuna safe dolphins, COOL decision and Clove Cigarettes case) and it also sees "tiny" countries used as pawns by business interests to take on the major markets.

"The delicious and tsunami-scale irony is that now Antigua (population 88,000 and GDP $1 billion) is being "borrowed" by gambling interests to cross-retaliate against the United States - by removing intellectual property rights from U.S. products in the first use of such a sanction. Except, wait, didn't Ralph Nader warn against just this scenario of some commercial interest finding a tiny country to attack U.S. public interest policies back when the WTO was being debated?"

Another classic case study for the international trade law books?

TRIPS, Compulsory Licensing and Domestic Policy Space

Attended a seminar on "Compulsory Licensing and Developing Countries" organized by the Centre for WTO studies recently. Very enlightened discussion on how a recent case of the use of the Compulsory Licensing provision is, inter alia, in consonance with the TRIPS Agreement.

Kudos to Shamnad Basheer (an authority on IP law and the founder of the hugely popular blog SpicyIP), Yogesh Pai (the force behind Trade, Law and Development Journal) and Madhukar Sinha for their brilliant presentation and interventions. It was interesting for me to see the possibility of yet another WTO provision being used as a domestic policy tool by a developing country within the framework of international trade rules to further one's national interest. I have often argued in this blog that critics of globalization tend to suggest that domestic policy space is totally curtailed in the context of the WTO, especially in the context of TRIPS. Though I am not an expert on patents and TRIPS, the seminar brought to light the fact that the use of Compulsory Licencing as per Indian Law can be reconciled with TRIPS provisions. Hence, a creative and flexible interpretation (or some would argue a literal interpretation) of Article 31 of TRIPS does provide that policy space.

This is another example that one must explore possibilities of using the existing multilateral legal framework to further one's national interest. The recognition that international economic law provides that flexibility is in itself a step forward.

Tobacco industry's view on Plain Packaging

The Australian Tobacco Plain Packaging legislation has been challenged at the WTO. Reports about New Zealand too going the Australian way have been blogged about here. The plain packaging case raises several issues pertaining to international trade rules, domestic policy choice, public health in the context of the right to trade with reduced barriers as well as the impact on employment in the tobacco industry. There are multiple stakeholders and varied interests. In fact, allegations that the disputes initiated by a few countries against the Australian measure was prompted by tobacco industry interests brings tot he spotlight the varied interests that eventually play out in an international trade dispute.

A representative of British Tobacco, New Zealand had this view on how New Zealand's plain packaging legislation violated WTO rules and that it is detrimental to New Zealand's interest to go in for plain packaging considering that other New Zealand exports like wine and liquor could face a similar situation in the outside market. Stressing on the violation of the TRIPS Agreements it states:

"New Zealand is a party to several multilateral and bilateral trade agreements that include protection of intellectual property, including brands. Forcing any product into a plain package denies the owner of the intellectual property, which includes the products' branding, the right to use what legally belongs to them. The New Zealand Government's plain-packaging proposal would prevent tobacco manufacturers from using their branding and, in doing that, breach New Zealand's international trade obligations and compromise our ability to participate in the international trading market. 

The Australian Government's decision to introduce plain packaging has already resulted in WTO challenges from the Ukraine, Honduras and the Dominican Republic, while other countries, including Mexico, Indonesia, Russia and Chile, are opposed to the introduction of plain packaging in Australia. 

There is no doubt that New Zealand will be next off the block if it goes ahead with plain packaging."

Comparing a proposed measure by Thailand requiring graphic health warnings to be on all domestic and imported beer, wine and liquor bottles with the plain packaging legislation, the view seeks New Zealand to revoke its plain packaging move in the trade interests of New Zealand.

One may not necessarily agree with the above view, but it is nevertheless interesting. What if there is plain packaging of different liquors? Can it be equated with tobacco plain packaging? What is in the national interest of New Zealand - it's domestic, liquor interests or public health policy? Are they incompatible at all as the view above suggests?

Employment, Dominican republic and Tobacco Plain packaging

(Cigarette manufacturing in the Dominican Republic)

The Dominican Republic is one of the complainants along with Ukraine and Honduras against the Tobacco Plain Packaging legislation of Australia. This piece in the Dominican Today about the dispute highlights the centrality of tobacco manufacturing in the Dominican Republic:

"While tobacco has been cultivated in the Dominican Republic for more than five centuries, the Dominican tobacco industry is a hundred years old. Tobacco export revenues represent roughly 8% of total exports in merchandise. The Dominican Republic is the largest net exporter of cigars in the world. Tobacco products represent 8.5% of fiscal revenue on merchandise taxation. There are around 5,500 tobacco producers, employing approximately 55,000 agricultural workers. Tobacco manufacturing employs another 63,000 people, of which 60 percent are women. Combined with the entire tobacco production chain, the industry thus generates around direct 118,000 jobs which supports approximately 350,000 people, according to information published by the Tobacco Institute of the Dominican Republic."

Thus, tobacco manufacturing and export is one of the main industries here as well as employment generator. It supports families and gives employment to a large number of women. Is this irrelevant in a dispute international trade law? If the Australian legislation, which is an exercise of its domestic policy space, is held to be compatible with WTO law (GATT, TBT and TRIPS), is the question of employment and job creation irrelevant to the issue. This is another classic case of the "loser" in globalization. An industry which was thriving can be possibly hurt by measures taken by other countries which may not be incompatible with international trade law. Those employed in these industries constitute a domestic constituency. How does the politics of domestic interests play out in international trade relations? While Dominican Republic's domestic will to engage in the trade is not impacted per se, the Australian measure does impact it in a negative way. Do considerations such as employment potential figure in the debate at all?

Is Australia's Plain Packaging discriminatory in favour of local products?

The Tobacco Plain Packaging dispute is gradually progressing at the WTO. Honduras, one of the complainants against Australia, filed its complaint at the WTO which is available here. I have earlier blogged about the issue here, here, here and here. Apart from the main challenge on the grounds that plain packaging legislation is inconsistent with Australia's commitments under the TRIPS Agreement I found the points in relation to discrimination between local products and foreign products a bit untenable:

"  Article 3.1 of the TRIPs Agreement, because Australia accords to nationals of other Members treatment less favourable than it accords to its own nationals with respect to the protection of intellectual property;
...
  Article 2.1 of the TBT Agreement and Article III:4 of the GATT 1994, because the measures at issue result in treatment less favourable of imported products than of like products of national origin."

I found these two leal claims rather strange since the plain packaging applies equally to tobacco products manufactured in Australia and imported into Australia. Further, it is difficult to imagine de facto discrimination in this case. Am I missing something here?

"Falsified Drugs", India, EU and the WTO - The next battle?

Mint carried a piece recently on the issue of EU's Directive on falsified drugs and its probable impact on the Indian Pharmaceutical Industry. The EU Directive which was enacted in June 2011 essentially amended an earlier Directive on the Community code relating to medicinal products for human use, as regards the prevention of the entry into the legal supply chain of falsified medicinal products.

The new Directive is found here which amended an earlier Directive. The EU Directive is an elaborate piece of legal rules which mandates the following a particular standard of manufacturing of medicinal drugs which would apply to drugs imported into the EU.

Explaining the rationale of the Directive, the preamble, inter alia, states:

"... 

(2)There is an alarming increase of medicinal products detected in the Union which are falsified in relation to their identity, history or source. Those products usually contain sub-standard or falsified ingredients, or no ingredients or ingredients, including active substances, in the wrong dosage thus posing an important threat to public health.

(3) Past experience shows that such falsified medicinal products do not reach patients only through illegal means, but via the legal supply chain as well. This poses a particular threat to human health and may lead to a lack of trust of the patient also in the legal supply chain. Directive 2001/83/EC should be amended in order to respond to this increasing threat."

What is a "falsified medicinal product" as per the EU Directive? The Directive defines a falsified medicinal product as follows:

"Any medicinal product with a false representation of:

(a) its identity, including its packaging and labelling, its name or its composition as regards any of the ingredients including excipients and the strength of those ingredients;

(b) its source, including its manufacturer, its country of manufacturing, its country of origin or its marketing authorisation holder; or

(c) its history, including the records and documents relating to the distribution channels used.

This definition does not include unintentional quality defects and is without prejudice to infringements of intellectual property rights.’"

The Directive lays down that drugs can be imported only if certain good manufacturing practices are followed and the products are accompanied by a written confirmation of a competent authority of the same. These "good manufacturing practices" are mandated in Article 47 of the Directive. Alternatively a country must obtain a declaration as per Article 111b of the Directive from the EU whether that country’s regulatory framework applicable to active substances exported to the Union and the respective control and enforcement activities ensure a level of protection of public health equivalent to that of the Union. In other words, a country intending to export its medicinal products to the EU, must establish that its regulatory framework with respect to good manufacturing practices are in conformity with that of the EU.

A number of points on this issue:

1. Is there a case for challenging the EU Directive as violating the TBT Agreement? Is it an unnecessary obstacle to international trade? Is article 2.2 of the TBT Agreement violated?


Article 2.2 of the TBT Agreement states:

"2.2        Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade.  For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create.  Such legitimate objectives are, inter alia:  national security requirements;  the prevention of deceptive practices;  protection of human health or safety, animal or plant life or health, or the environment.  In assessing such risks, relevant elements of consideration are, inter alia:  available scientific and technical information, related processing technology or intended end-uses of products."

Are the restrictions more trade restrictive than necessary to fulfill the objective of protection of human health. Is the certification procedure and standard unduly burdensome? Is the possibility of potential misuse for protectionist purposes be a ground for a claim that it is more trade-restrictive than necessary?

2. What should India's strategy be? Is not India's national interest in consonance with the interests of the Indian drug manufacturers? Should not there be a strategic agenda to pursue one's interests to protect one's industry? Should there not be a coalition of stakeholders set up to identify "national interest" and chalk out a strategy for pursuing it legitimately at the WTO?

3.Claiming that a particular measure is "protectionist" is quite different from establishing a contravention of WTO obligations of the EU. While the former can have a rhetorical and political pitch, the latter must have sound grounding in the interpretation of the Agreements as well as impact on local industry.


4. Would "protection of human health" be an acceptable exception for the EU to justify this measure? Can India take a stand that the standards prescribed are unduly burdensome and treat developing countries unfavorably since complying with this would make their products, in effect, uncompetitive? Is there de facto violation of national treatment even though on the face of the measure there is no discrimination between imported and local products.


I am not an expert in this field, but I guess this issue would throw open complex questions of the interpretation of TRIPs, TBT as well as the General Exceptions under Article XX GATT.Are we going to see an India EU WTO dispute?

Is the Australian Plain Packaging legislation violating national treatment?

The Dominican Republic was the latest complainant to the Tobacco Plain Packaging dispute at the WTO against Australia. I had blogged about it here. The request for consultations of the Dominican Republic touched on aspects of alleged violations of the TRIPS, TBT and GATT Agreements. 

The gist of the request for consultation is found here:

"These measures regulating the plain packaging and appearance of tobacco products for retail sale appear to be inconsistent with Australia's obligations under the following provisions of the TRIPS Agreement, the TBT Agreement and the GATT 1994: 

 Article 2.1 of the  TRIPS Agreement, which incorporates the provisions of the  Paris Convention for the Protection of Industrial Property, as amended by the Stockholm Act of 1967 ("Paris Convention"), in particular, (i) Article 6quinquies of the  Paris Convention,because trademarks registered in a country of origin outside Australia are not protected  "as is"; and, (ii) Article 10bisof the  Paris Convention, because Australia does not provide effective protection against unfair competition, for example, creating confusion between the goods of competitors;

 Article 3.1 of the TRIPS Agreement, because Australia accords to nationals of other Members 
treatment less favourable than it accords to its own nationals with respect to the protection of 
intellectual property;

 Article 15.4 of the TRIPS Agreement, because the nature of the goods to which a trademark is 
to be applied forms an obstacle to the registration of the trademark;

Article 16.1 of the  TRIPS  Agreement, because the measures prevent owners of registered 
trademarks from enjoying the rights conferred by a trademark;

 Article 20 of the  TRIPS Agreement, because the use of trademarks in relation to tobacco products is unjustifiably encumbered by special requirements, such as (i) use in a special form,for example, the uniform typeface, font, size, colour, and placement of the brand name, and, (ii) use in a manner detrimental to the trademark's capability to distinguish tobacco products of one undertaking from tobacco products of other undertakings;   

 Article 22.2(b) of the  TRIPS Agreement, because Australia does not provide effective protection against acts of unfair competition with respect to geographical indications, for example, creating confusion  among consumers with respect to the origin of goods;

 Article 24.3 of the TRIPS Agreement, because Australia is diminishing the level of protection it affords to geographical indications as compared with the level of protection that existed prior to 1 January 1995;  

 Article 2.1 of the  TBT Agreement, because the technical regulations at issue accord to imported tobacco products treatment less favourable than accorded like products of national origin; 

 Article 2.2 of the  TBT Agreement, because the technical  regulations at issue create unnecessary obstacles to trade because they are more trade-restrictive than necessary to fulfill a legitimate objective; and, 

 Article III:4 of the GATT 1994, because the measures at issue accord to imported tobacco products treatment less favourable than accorded like products of national origin."

While the TRIPS and TBT violations require analysis, the Article III:4 GATT violation surprised me. The Plain Packaging Legislation is equally applicable to imported as well as domestically made products. Thus, locally made Australian cigarettes too must follow the same conditions. There is no de jure discrimination on this account. As far as defacto discrimination is concerned, does the imposition of plain packaging requirements on imported tobacco products have an impact on the competitive conditions in favour of local products? Does it accord less favourable treatment to imported products or are local products advantaged? To me, both imported and local products are treated in the same manner. It seems that the national treatment violation contention is not on very strong grounds. Am I missing something here? The rest of the contentions is set for a whole lot of jurisprudential interpretation by the Panel and Appellate Body. 

USTR IPR Report 2012 - Some thoughts

The USTR publishes every year an annual review of the state of Intellectual Property Rights (IPRs) protection and enforcement in trading partners around the world popularly known as the Special 301 Report. The Report for 2012 can be found here. While I am not dwelling into many controversial aspects of the country "watch lists" and the like, two sections caught my attention:

1. Implementation of the WTO TRIPS Agreement

2. WTO Dispute Settlement

The report alluded to the state of TRIPs compliance as perceived by the United States today:

"The TRIPS Agreement, one of the most significant achievements of the Uruguay Round, requires all WTO members to provide certain minimum standards of IPR protection and enforcement.  The TRIPS Agreement is the first broadly-subscribed multilateral IPR agreement that is subject to mandatory dispute settlement provisions.

Developed country members were required to implement the TRIPS Agreement fully as of January 1, 1996.  Developing countries were given a transition period for many obligations until January 1, 2000, and in some cases, until January 1, 2005.  Nevertheless, certain members are still in the process of finalizing implementing legislation, and many are still engaged in establishing adequate and effective IPR enforcement mechanisms. 

Recognizing the particular challenges faced by least-developed countries (LDCs), in 2005 the United States worked closely with them and other WTO members to extend the implementation date for these countries from January 2006 to July 2013.  The LDC members in turn pledged to preserve the progress that some have already made toward TRIPS Agreement implementation. Additionally, the LDC members have until 2016 to implement their TRIPS Agreement obligations for patent and data protection for pharmaceutical products, as proposed by the United States at the Doha Ministerial Conference of the WTO.  

In December 2011, WTO Ministers decided to invite the TRIPS Council to give full consideration to a duly motivated request from LDC members for an extension of the TRIPS Agreement transition period.  The U.S. supports this decision and looks forward to continuing to work with LDCs and other WTO members in this regard.     

The United States participates actively in the WTO TRIPS Council’s scheduled reviews of WTO members’ implementation of the TRIPS Agreement and also uses the WTO’s Trade Policy Review mechanism to pose questions and seek constructive engagement on issues related to TRIPS Agreement implementation.  Furthermore, the United States continues to work with other WTO members to encourage a discussion within the WTO TRIPS Council on implementation of the enforcement-related provisions of the TRIPS Agreement.  The United States hopes that the TRIPS Council can generate a useful sharing of experiences related to IPR enforcement to ensure effective implementation of enforcement obligations."

On the Dispute Settlement mechanism it referred to specific cases it had brought against China and EU and had this to say:

" The United States will continue pursuing the resolution of WTO-related disputes announced in previous Special 301 reviews and determinations.  The most efficient and preferred manner of resolving concerns is through bilateral dialogue.  Where these efforts are unsuccessful, the United States will not hesitate to use the dispute settlement procedures, as appropriate."

The reliance on WTO dispute settlement procedures to further one's domestic national interests is portrayed in the Report which is a sharp contrast to some voices in the US to abandon the WTO process after the adverse rulings of the Panel/AB in COOL, Cloves Cigarettes and Tuna cases. It is evident from the para relating to implementation of the TRIPS that the US actively engages the multilateral trade rules to further its national interests. It is often argued that the WTO and multilateral trade rules are a hindrance to national sovereignty. However, it is worthwhile to analyse how one can engage with the multilateral system in its various fora (including Dispute resolution) to further one's legitimate trade interests. While every dispute settlement need not be viewed as a trade war, developing countries should develop the capacity to effectively engage with the dispute settlement process to protect what they perceive as domestic interests be it producers, consumers or the economy as a whole.Engaging with the WTO can be done at two levels - one, using the existing provisions (exceptions) to further one's domestic policies and two, seeking remedies under the Agreements to ensure market access and unfair restrictions on trade are not imposed. However the engagement comes at a cost - and that is one needs to accept the multilateral trading system as a rule based, fair system as well as being a credible player in terms of compliance and action. With domestic compulsions and realities these are tough tightrope walks - but globalised governance and its impact was never going to be a simple cakewalk.