Richard Melson

July 2006

South Centre Bulletin

www.southcentre.org

South Bulletin 128

15 July 2006

Focus: Assessing Doha Round progress and the concluding part of the theme in the previous issue: making WTO’s TRIPS Respect Disclosure of Origin of Biological materials and associated traditional knowledge.

In this Issue

WTO: ‘Renegotiating Hong Kong Declaration Unacceptable’

Ministers from over a 100 developing countries from across a range of recently formed coalitions came together in a massive show of unity of purpose and positions at the WTO negotiations. On 1 July 2006, Ministers from the coalition groups of theG-20, the G-33, the ACP Group, the LDCs, the African Group, the Small, Vulnerable Economies (SVEs), the NAMA-11, the Cotton-4 and CARICOM presented a common platform.

The South Must Reclaim the Essence of the Doha Mandate

In the high-level Ministerial talks at the end of last month in the WTO, the nature of the crisis affecting this world trade was well amplified by a number of developing country ministers. They explain in their own words where the rub lies. They are no mood to dilute the original mandate of the Doha work programme.

WTO: Results Elusive As Developed Countries Resist – G-20

The G-20 developing country coalition in the World Trade Organization was simple and forthright in its analysis of the current crisis that has besieged the world trade body. "Despite serious engagement in negotiations since Hong Kong, that result is still not in sight due to the resistance of developed countries to reform their agriculture policies and to open up their markets to agricultural exports from developing countries."

WTO: No Sacrifice of Rural Development to Mercantilism – G-33

Ministers from the developing country coalition of G-33 in the WTO have reiterated their resolve to achieve a fair and balanced outcome in agriculture. During the most recent high-level talks at the world trade body, they emphasized that the G-33 should not be expected to shoulder the cost of achieving pure mercantilist goals of a few at the expense of putting their own development paths in peril.

Reducing International Inequality – UN Report

The World Economic and Social Survey 2006 just published by the United Nations focuses on ‘Diverging Growth and Development.’ The report explains the growing income disparity between the industrialised and the developing world during the last five decades partly by a rising number of growth collapses. Highlights of the report by Mr. Jose Antonio Ocampo, UN Under-Secretary-General For Economic And Social Affairs.

More in this issue

The WTO ‘Crisis’: Diverging Reactions

US: Disclosure of Origin Could Raise ‘Legal Cloud’ Over Patents

Getting the Relationship Between TRIPS & CBD Straight

NAMA 11 Ministerial Communiqué

South Centre News

Editorial: ‘WTO: High Time to Deliver on Promises’

WTO: ‘Renegotiating Hong Kong Declaration Unacceptable’

Ministers from over a 100 developing countries from across a range of recently born coalitions came together in a massive show of unity of purpose and positions at the WTO negotiations. At a press conference on 1 July 2006 (see next article), Ministers from the coalition groups of the G-20, the G-33, the ACP Group, the LDCs, the African Group, the Small, Vulnerable Economies (SVEs), the NAMA-11, the Cotton-4 and CARICOM presented the following joint statement. Though short, it covers the main areas of development concerns by various coalition groups from the developing world. Concerns on process have also been flagged off

"Building on the precedent of the historic meeting held in Hong Kong last December, the developing country groups met in Geneva on 1 July 2006 to assess the latest developments and to coordinate their efforts with a view to ensuring that the negotiations lead to an outcome consistent with the development mandate of the Doha Round.

The G-20, the G-33, the ACP Group, the LDCs, the African Group, the Small, Vulnerable Economies, the NAMA-11, the Cotton-4 and CARICOM agreed that the DDA must address on a priority basis, in a meaningful and comprehensive manner, the development needs and concerns of developing countries.

The Groups stressed that the negotiations must fully respect the Doha mandate and the agreements reached in the July framework and in the HK declaration. Any attempt to renegotiate or rewrite these would not be acceptable.

They recalled that the Doha Development Agenda placed the needs and interests of developing countries at the heart of the work programme and called for ensuring that developing countries, especially the LDCs, secure a share in the growth of world trade commensurate with the needs of their economic development. This requires strengthening the role of trade in development and poverty reduction.

The Groups renewed their commitment to reaching an agreement on full modalities for agriculture and NAMA by the end of this month. They acknowledged the need for addressing domestic support, agricultural market access and NAMA, but emphasized that the elements of this triangle are not equal.

The most substantial results must be achieved in the areas where the greatest distortions lie, in particular on trade-distorting subsidies in agriculture, that displace developing country products and threaten the livelihoods of hundreds of millions of poor farmers.

Such distortions have been prohibited for industrial goods for several decades. Market access will be an important component of a successful Round, but market opening in the developing countries must take into account their social and economic realities.

A development Round should not lead to the deindustrialization of the developing world. The priority is to reduce market access barriers in developed countries in order to create opportunities for the export products of developing countries.

The success of the Round cannot rely primarily on the efforts of developing countries. The greatest contribution must come from the developed countries, who must show leadership in this regard.

Developing countries are prepared to contribute in proportion to their capabilities and in line with the mandate.

The Groups reiterated the importance of S&D in all areas of the negotiations. In this context, they stressed the importance of flexibilities in NAMA for industrial development in developing countries, and the role of SPs and the SSM in addressing the food security, rural development and livelihood concerns of developing countries.

The Groups recognized the need to address the expectations of the LDCs with regard to making operational the Hong Kong Ministerial Decision on Duty Free and Quota Free market access and the simplification of rules of origin. They reaffirmed the need to address the issue of cotton ambitiously, expeditiously and specifically in its trade-related and developments aspects.

They also agreed on the need to provide adequate responses to the trade-related issues raised by the SVEs and recently acceded developing Members. They also recognized the need to address the issue of tropical products and products of particular importance to the diversification of production. They recognized fully the importance of long-standing preferences and the need to address the issue of preference erosion.

The Groups emphasized the need for a bottom-up, inclusive and transparent process as a necessary condition for achieving a result that responds to the needs of all Members.

The Groups reaffirmed their commitment to a successful completion of the Round by the end of 2006."

The South Must Reclaim the Essence of the Doha Mandate

In the high-level Ministerial talks at the end of last month in the WTO, the nature of the crisis affecting this world trade was well amplified by a number of developing country ministers. They not only issued a joint statement (see previous article) but also explained in their own words where the rub lies. One thing is clear. The Ministers are not in a mood to dilute the original mandate of the Doha work programme; nor are they willing to reopen what has already been agreed in the 2004 July Framework Agreement and in the Hong Kong Declaration. For now, it is clear that the commercial interest groups in developed countries have prevailed over the development requirements in the South. For the countries of the rich North, it is time for some serious rethinking of their leadership role. Extracts from a press conference on 1 July 2006.

Someshwar Singh

"Celso Amorim (Brazil): We have here the G20, G-33, ACP, G-90, Africa Group, LDCs, the Small Vulnerable Economies, the NAMA-11, the Cotton-4, and the Caricom. So we have a large group of developing countries. Of course some of them are overlapping. At this crucial moment, the success of this Round is hinging on almost a knife’s edge. It is important to show that a large group of developing countries is not only united but has concrete proposals and they are also prepared to negotiate. This is very important – our joint statement is not like a post-mortem joint statement, nor a series of impossible demands. These are all represents concrete proposals and positions that we have defended, around which we are negotiating. July will be a crucial month for finalizing this Round within the foreseeable future. I am optimistic that we will get there. It will not be easy. It will require a lot of political vision. But of course, the burden of leadership has to be – in this particular case – with those that have more to give, the richer countries.

Mari Pangestu (Indonesia): We, as developing countries, came here to negotiate. We have been constructive, we feel, in putting down our proposals for flexibilities. But we did not come here to renegotiate that this is a Development Round.

There was a lot of talk of market access and the fact that flexibilities requested by developing countries were eroding market access. This is not a helpful way to look at it. The flexibilities that we have demanded in SP (special products) and SSM (special safeguard mechanisms) are not about market access. They are about protecting targeted sectors that are vulnerable for the three criteria that we have already set out - livelihood security, rural development and food security. These are not to be re-negotiated. They are sectors to address the real concerns of developing countries as they open up for greater trade. So this is something that we feel should be addressed properly and looking at the real concerns of developing countries. It is about effective instruments of flexibility – effective instruments for SDT (special and differential treatment), SP and SSM. It is not about loopholes and erosion of market access.

What we have come here with are constructive proposals and we are prepared to talk about it. This cannot be done without movement from G-6 on other issues of market access and treatment of sensitive products and so on. We remain committed to the Development Round and again, just to emphasise another fact: the vulnerabilities are very different between countries. It is also not helpful to talk about how market access and trade flows comes from liberalization will benefit all of us. It is true – but the benefits are very different between countries, and within groups of countries. That is certainly what underlies the development concerns and underlies the flexibilities that are needed.

In low-income countries, 70 per cent of our employment is still in agriculture, and for middle-income countries it is 30 per cent – compared to 1 to 4 per cent in the developed countries. So you see the vulnerabilities are different – so should the flexibilities be – that is all we are asking as effective instruments.

Kamal Nath (India): There is no need to pretend that this has not been a failure. It would be great pretence if we were to say this has been a success. We came here with hopes that being a Development Round, leadership towards a successful completion of a Development Round rests with developed countries in much greater measure. After one and a half days, we came to the conclusion that there is just not any negotiating space. Now there is no negotiating space because there is really a difference of perception. It is not a question of 50 per cent or 60 per cent. This is a Round very clearly defined in paragraph 24 of the Hong Kong Declaration – where market access is to be enabled for developing countries into developed countries. This is a Round for trade flows and trade gains so that developing countries benefit.

But if developed countries come to Geneva with the hope and belief that market access will be available in developing countries – not just market access of agricultural products but market access of subsidies – then of course there will be no negotiating space. And for that lack of negotiating space, at least I am leaving in a short while. The period after this is a period to reflect upon by the developed countries – we do have a time constraint and the same time, all of us are committed. That is very important – the unity of all the developing countries. It is a unity of purpose and conviction, of strengthening the multilateral system. We all are subscribing to the multilateral system and it is our great disappointment. We should ensure that no single goal fractures the multilateral system.

All our friends sitting here came from afar hoping that we will achieve the objectives and mandates of this Round by the end of July. We still have not given up hope. We are going to urge the Director General to continue with bilateral discussions, to engage with Ambassadors, with various groups, and if he sees a sense of convergence, we will surely be back. But there must be a sense of convergence – there must be a signal. And that convergence can only take place if there is a commitment to fulfilling the goals. As my colleague from Indonesia said – we cannot renegotiate what is already there. Just a couple of months ago, we sat through nights in Hong Kong and negotiated the Hong Kong Declaration. There is the Framework Agreement and there are flexibilities provided in there. They have not come there by chance. They have come there by intent, very deliberately to serve and meet the ends of the mandate. So the content of the Round is as important as the completion of the Round. We cannot have a completion without content or a content which is in contravention of the mandate. With that in front of us, we are going to have a Green Room today. We have made it clear: we cannot negotiate subsistence and livelihood security. We are willing to negotiate commerce but not subsistence and livelihood security. That is basic – and we should not even be asked to negotiate this. But unfortunately, that has not been so. While I am disappointed, I am still not pessimistic. I am not optimistic but realistic that everybody wants to see this – to ensure that the structure of the multilateral system is strengthened and maintained. So we will commit ourselves to moving on, hoping that this period of reflection will yield to better results.

Clement Rohee (Guyana): Like the question to be or not to be – the question was to negotiate or to talk. The 14 member states of the Caribbean Community came here to make our contribution to negotiate as part and parcel of the small and vulnerable economies. We of course found that were two issues that have to be resolved. One was the question of where to locate the landing space. And secondly, who was to provide the leadership for this landing space. The landing space was located in terms of the triangular issues and the leadership was to be found in the G-6. Having heard several calls on the G-6 to provide leadership, at the end of the day, it was found that that call fell on deaf ears. And so we were left still to continue this elusive search for the landing space.

Our position in this entire process since our arrival here was that we would not stand in the way of establishment of a package within the G-6. Whatever that package is, it should not be to the disadvantage of small and vulnerable economies, given the vulnerabilities of many of these countries. These countries are, generally speaking, very open in terms of their economies, trade and investment. In terms of the period ahead, I believe that it should be characterized by very high level consultations combined with the on-going bottom-up approach. We have to find and strike a balance between these two in order to ensure that the way forward is realized. I believe that we have a role to play in this respect. All the countries of the G-110 have a role to play, given the assurance that we will play our role and make our contribution in a positive way.

Dr. Mukhisa Kituyi (Kenya): We are at an interesting point where the temptation to start the blame game is high. Inspite of how popular that will be, the critical things that we need to mention – that the development constituencies as listed in the different groups present here need to restate its unity of purpose as the principal demandeurs of the Doha Round – that the Agenda has not changed. And we are not about to reopen negotiations about why we are united about our purpose in this Round. The second thing is that even at this dark hour, we still see the value of this multilateral system. Bilateralism is less favourable, less democratic and much more hostile than trade-based solutions found through the multilateral trading system negotiations. One of the residual processes of democracy is multilateralism and every effort needs to be made in the coming days to complete these full modalities negotiations on time. For this purpose, the task also falls on the shoulders of the developed country leadership. They have an early opportunity at the forthcoming G-8 meeting in St. Petersburg. The dialogue between trade ministers and heads of governments should ensure that the political statements of goodwill that have been made in the recent past should be translated into the negotiating positions of their technical teams. There is a ‘de-link’ between the general political statements of solidarity and absence of flexibility at the level of negotiations. We want to see much more engagement between these two positions.

Thirdly, the area of flexibility is in the area of those who are supposed to facilitate defending the role of trade in development, not those who are supposed to be the demandeurs of the Round. That is critically important – that the Groups listed here speak with one voice – of optimism but inflexibility on this being a Development Round.

Rob Davies (South Africa), Coordinator of the NAMA IX Group: Most of us here represent different interest groups among developing countries. What is critically important is that we are united together here around a common demand – to reclaim the essence of the mandate of Doha – which was that the needs and interests of the developing countries need to be placed at the heart of the work programme. Some of the difficulties which we are currently facing are that we have seen that priority being subordinated to vested interests, constituencies and commercial interest groups in developed countries – the needs and demands of those kinds of constituencies have actually swamped the development requirements.

This is manifested in a number of levels. First, in the inability or unwillingness of the big subsidizers in the developed world to make the kind of adjustments which everybody has identified as absolutely fundamental for development. The inability to make the kind of bold and decisive move on these moves is because they have been held hostage by these vested interests. We have also seen, and this is particular relevant in the area of NAMA-IX, that any concession which is seen as being offered is seen as having to be matched by a commercial concession to interests in developing countries – which is leading those countries to be placing inordinate and quite unrealistic demands on developing countries, particularly in the area of NAMA.

The kinds of coefficients which have been suggested as appropriate for developing countries are, quite frankly, coefficients that would require a level of social dislocation and adjustment in our countries without any compensating costs - which those countries are not willing to undertake themselves. By the way, the spread between the coefficients they are proposing for us and the kinds of coefficients which they are indicating they are willing to take is so narrow that the level of adjustment that they would be undertaking even within NAMA and the level of market access is derisive by comparison. That is the kind of problem we are facing in NAMA.

In the third area where there is a subordination of development concerns, is quite frankly in the marginalisation of a lot of issues for the least developed countries and other groups around this table. If we are going to make progress, then we have to reclaim the development essence of this Round. Unless we can reach a political commitment around that, we are not going to make the kind of progress that we need. All the groups here are prepared to negotiate and be flexible. We are quite committed to the multilateral system and want to see a success. But in many respects, the ball is in other courts if this Round is going to succeed as we hope it will.

Deepak Patel (Zambia)- Coordinator of LDCs: I shall try to be frank about the way we feel about LDC issues. First, it is extremely immoral and people should be ashamed of themselves in the rich North. They have professed for years to help the poorest in the world – and then drag us along for ten years to get language from ‘best endeavour’ to some form of ‘commitment’ and then ignore it for six months after Hong Kong. This is really shameful to do that. But we are not here to accept pressure so that we can bend backward to accommodate more market access and de-industrialisation etc. We have learnt, through experience, of the pressures. For many years in the 1990s, what they could not get out of us in the WTO, they used the Bretton Woods to get the liberalisation programmes undertaken in our countries. We have had enough of that.

We are extremely grateful to the support that we get from some members of the G-6 – like Brazil, India, China, including Japan and Australia – who have been very forthcoming in putting the pressure on the rich countries to deliver on the LDC agenda. I want to publicly state that we value this support – particularly Kamal and Celso’s role, and Minister Nakagawa of Japan, as well and Mark Vaile from Australia. We stand united. We are not going to allow ourselves to be blamed for any failure because our leverage lies in multilateralism. On bilateral basis, there is no leverage to negotiate. In the recent past, some members suggest that the alternative will be bilateralism and that will be absolutely disastrous for us. I hold my head up high on behalf of the LDCs – that we are not to blame for this delay in the decisions to be made. As my friend Kitui from Kenya said, words and deeds from the Heads of State must match the actions of their Ministers at the WTO. It is time that they delivered.

Alfredo Chiaradia (Argentina): Argentina does not coordinate any group but we are here to show that developing countries are all united, and that this document (the joint statement) constitutes a very strong statement of unity. As you have the text, I would only make reference to a point which says, "Such distortions have been prohibited for industrial goods for several decades." This is one central element in the text. It means international trade rules have been inequitable – they have been for a long time. Subsidies to production, subsidies to exports are legal. Domestic support is legal for agriculture and illegal for industrial production. This is something that implies a fundamental inequity in the rules of international trade and this Round was supposed to change that. This is the origin – that we have this Doha Round in the first place. If we are not changing this, this Round does not have any reason at all to exist. And we are the demandeurs together with all the developing countries.

Minister from Benin (extracts from the original in French): If there is failure, you all should know who the authors are. For this Group of Four, G-4, representing the African cotton producers, it is important that the question of survival of our peoples is taken into account. We are not asking for the world – all we are asking is that the rules of the WTO be respected with respect to removing domestic and export subsidies relating to cotton.

Minister from Dominican Republic (extracts from the original in Spanish): Our concerns are mainly in agriculture and NAMA. What we are asking for is additional flexibilities than the rest of the developing countries. We support the whole group of developing countries and we think that it is the developed countries that have to take the leadership to have a successful Round and to have benefits for the developing countries in a Round that is called for development.

Ambassador Mauritius (standing for his Minister) for ACP: As you are aware, the ACP groups the majority of the developing countries – including some of the poorest and the most vulnerable. This is why we share this unified platform of all the developing country constituents here. Our objective is simple. We are committed to a rules-based global trading system, will remain constructively engaged for a successful outcome of the DDA negotiations. But most importantly, we want that outcome to deliver on some of the issues that we are pushing for among the whole gamut of groups here, some span only one or two groupings here. At the end of the day, there has to be a balanced outcome that is development oriented. This is what the ACP is looking for.

Q: At a press briefing by the USTR, it was pointed out that SP and SSM, along with ‘inflexible’ stand in NAMA were at the core preventing progress in any market access. Do you agree?

Minister Nath: The Special Products are in the Framework Agreement and in the Hong Kong Declaration. They say very clearly, in English that everybody understands – even those who use English as a first language – that there is a set designation and criteria. Indicators are supposed to be negotiated. Now if you come and say SP means this – it is too late. You should have said it in Hong Kong or July of 2004 or June 2004. It is not open for negotiations. The second part about flexibility in NAMA – again, it is very clear and I have been repeatedly asking this question to the developed countries – please tell us how much you are willing to cut in tariffs. Whatever your cuts are – that is what Hong Kong framework says: ‘less than full reciprocity’ in the reduction commitments. If they cut 70 (per cent), I will cut 60 (per cent). If they cut 60 I will cut 50 - I do not see what the confusion is. Now if they say: we cut 20 and you cut 70 – that is not what this Round is about. I am still waiting for their answer.

Q: Minister Patel, could you please clarify about what you meant by ‘immoral’?

Minister Patel: The issues regarding the Least Developed Countries has been on the agenda since Marrakesch, about market access, trade-related technical assistance, capacity building, about supply-side constraints, rules of origin – all these issues have been out there since a long time. We have just not been able to conclude a deal even after 10 years. That is what it is all about. It is also about fair trade. These are the core issues that we have been trying to conclude.

Q: If the Doha Round were to go in suspension or failed and if you were to get the blame, what kind of domestic backlash would you get?

Minister Amorim: First of all, if there is such perception – it would be a gross misperception. The vision faculty of those who have such a perception has to be examined thoroughly because it is very clear that the burden of doing the most important things is on the developed countries. As Kitui has said very clearly, we – probably more than the big ones - have a big stake in the multilateral system. So we are doing everything we can to make this Round a success.

We know there are many things that can be obtained bilaterally but as said, it is less democratic as it is susceptible to pressure. But there are many things that cannot even be technically or even ontologically be obtained bilaterally. They can only be obtained multilaterally. And it is only in the multilateral system that you have the kind of Dispute Settlement mechanism that allows countries like Brazil to win cases like on cotton with the United States and on sugar with the European Union. And we are now trying to deal with the questions that might affect other countries that have to deal with these problems.

I am more worried about concluding the Round. It is important for all our countries. But of course we cannot conclude at any price. We already paid a high price at the Uruguay Round. Our industrial tariffs went down dramatically at that point. We introduced norms on intellectual property rights that sometimes were difficult for us to do. We engaged in the Services negotiations at a time when we were not offensive in services – things have changed to some extent now.

This Round, as someone recalled, was basically about agriculture – the unfinished business of the Uruguay Round. It is basically about distortions in agricultural trade. If this Round fails, it is because the rich countries are not addressing these shortcomings. I am not sure which one – the New York Times, the Washington Post or the LA Times – but they said after Brazil won the case on cotton against the United States. "We already knew that the subsidies were immoral. Now we know that they are also illegal. So let us do away with them."

Minister Patel: Our constituencies support us in what we do at the WTO and we expect that support to continue."

WTO: Results Elusive As Developed Countries Resist – G-20

The G-20 developing country coalition in the World Trade Organization was simple and forthright in its analysis of the current crisis that has besieged the world trade body. "Despite serious engagement in negotiations since Hong Kong, that result is still not in sight due to the resistance of developed countries to reform their agriculture policies and to open up their markets to agricultural exports from developing countries." The developing country Ministers’ assessment, amplified in their statement reproduced below, shows how little progress has been achieved in a round billed as ‘Development.’ The press statement of 29 June 2006 was made on behalf of Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, South Africa, Tanzania, Thailand, Uruguay, Venezuela and Zimbabwe.

"G-20 Ministers met in Geneva on 29 June to assess progress in the DDA negotiations and to discuss the challenge of achieving full negotiating modalities in agriculture within the next few weeks.

The G-20 attaches fundamental importance to redressing historical imbalances in agriculture trade. This is a key issue for developing countries. Despite serious engagement in negotiations since Hong Kong, that result is still not in sight due to the resistance of developed countries to reform their agriculture policies and to open up their markets to agricultural exports from developing countries. The way forward requires a concrete commitment to a successful and ambitious Round that lives up to the development objectives of the DDA.

The Group acknowledges the efforts by the Chairman of the Special Session to abide by the bottom-up approach and to assemble comprehensive reference papers on the three pillars of agriculture negotiations. These are indispensable elements of the negotiating process. We also need convergence on substance. In order to move the Round forward, we must expeditiously bridge the substantive gaps that still persist. This requires political determination.

It is essential that developed Members improve their proposals in domestic support in order to provide for substantial and effective cuts in trade-distorting support, as agreed in Hong Kong. In this regard, developing countries should not be expected to pay for the elimination of distortions that affect international trade in agricultural products.

The offers of developed countries in all components of market access must also be improved to ensure the substantial improvements called for by the Mandate. This is the key to unlock current negotiations in agriculture.

In the export competition pillar, the G-20 and the Cairns Group have presented a concrete proposal on scheduling for the elimination of export subsidies that would meet the requirements of a standstill in subsidies and a substantial reduction by 2010 with elimination by 2013. It is also essential to move in a pragmatic and effective way on disciplines on food aid, on exporting STEs and on export credits to achieve parallelism in the elimination of all forms of export subsidies. Improved disciplines on monitoring and surveillance, where the G-20 has groundbreaking proposals, are also an essential element of an outcome in agriculture.

The Group recalls that special and differential treatment remains an integral part of all the three pillars of the agriculture negotiation as a recognition of the structural differences between the agricultural sectors of developed and developing countries. The Group is committed to work towards an agreement including special and differential provisions that takes into account the interests of all developing countries with a view to making those provisions operational and effective. In this context, the Group stresses the importance of 2/3 proportionality in overall tariff reduction and emphasizes the flexibility of developing countries to self-designate an appropriate number of Special Products guided by indicators based on the criteria of food security, livelihood security and rural development, as well as the right to have recourse to a Special Safeguard Mechanism based on import quantity and price triggers. The Group also stresses the importance of strengthening disciplines on export prohibitions and restrictions of article XI of GATT 94 provided under Article 12.1 of the Agreement on Agriculture.

The Group reiterates its support for provisions exempting LDC’s from reduction commitments and highlights the need for steps to be taken to promote their export capacities through market opening and Aid for Trade programs.

The G-20 reaffirms the need to address cotton ambitiously, expeditiously and specifically within the agriculture negotiations. Without creating any new categories of developing countries, the G-20 recalls that the concerns of the Small, Vulnerable Economies must also be effectively addressed as part of the negotiations.

The Group recalls the importance of providing the Recently Acceded Developing Country Members sufficient flexibility to effectively address their particular concerns.

It has been widely recognized that the G-20 proposals constitute a sound basis for agreement. In this regard the Group reaffirms that the content and essence of all G-20 proposals in all elements of the Mandate are on the negotiating table and should be duly taken into account in any final outcome. On market access they represent the middle ground, and on the other two pillars – domestic support and export competition – their level of ambition is a guarantee of the fulfillment of our negotiating mandate. In this context, the Group welcomes recent expressions of willingness to move towards those proposals, and calls upon other major players to also converge towards them.

The G-20 is determined to continue working constructively on all issues. This is the time for progress and convergence. The G-20 renews its commitment to a successful outcome in the Doha Round in 2006 that fosters development and strengthens the multilateral trading system."

WTO: No Sacrifice of Rural Development to Mercantilism – G-33

Ministers from the developing country coalition of G-33 in the WTO have reiterated their resolve to achieve a fair and balanced outcome in agriculture. During the most recent high-level talks at the world trade body, they emphasized that the G-33 should not be expected to shoulder the cost of achieving pure mercantilist goals of a few at the expense of putting their own development paths in peril. They also expressed surprise at some members (including some developing countries) making ‘counter’ proposals that were contrary to the agreed mandate. Presented below is the 12-point G-33 statement issued on 29 June 2006. The list of G-33 countries is given at the end of the statement.

1. The G33 Ministers met on 29 June 2006 in Geneva to discuss current development in the negotiations and to see how the Group can further contribute to a successful outcome.

2. Ministers welcomed Bolivia to the G-33, further expanding the alliance of developing countries that have the majority of the world’s small, vulnerable and resource poor farmers across all continents.

3. Ministers reiterated their political commitment and readiness to work with other Members of the WTO to achieve a fair and balanced outcome in agriculture. They emphasized the development imperatives of the Doha Round and the crucial role that agriculture plays in the economic and social fabric of the developing countries. In this context, they drew attention to the need to ensure that modalities for Special Products (SPs) and the Special Safeguard Mechanism (SSM) which are vital components of the special and differential treatment provisions must be designed in order to effectively address their food security, livelihood security and rural development needs.

4. Ministers insisted that all aspects of SPs and SSM must be incorporated integrally in any modalities to be agreed by July 2006. They further stressed that no modalities in agriculture can be acceptable which do not fully reflect the expectations of the vast bulk of developing countries in the WTO on SPs and SSM.

5. The Group has already made comprehensive and constructive contributions on modalities, with full legal drafts, on SPs and SSM, ensuring that they are fully consistent with, and respect the integrity of, the Hong Kong Ministerial Declaration and the General Council Decision of 1st August 2004.

6. Ministers expressed deep concern that counter proposals tabled recently by a few Members contradict these decisions and undermine the letter and spirit of the Doha Declaration. Proposals which have been made with different objectives have the potential to subvert the development goals and aspirations of the vast majority. Ministers emphasized that the G33 should not be expected to shoulder the cost of achieving pure mercantilist goals of a few at the expense of putting their own development paths in peril.

7. Ministers took note of the draft possible modalities issued by the Chairman of the Agriculture Committee in Special Session. They expressed concern that the draft does not contain convergence on the critical instruments of SPs and SSM. Ministers highlighted the fact that SPs and SSM are not issues of concern only to the G-33, but to the majority of developing countries, which account for more than 2/3rd of the WTO membership, and represent around 90 per cent of the world’s farming communities.

8. Ministers welcomed the recent Joint Statement by the African Group, ACP countries, LDCs, and G-33. The declaration is a manifestation of the unity among developing countries, on issues that are of vital importance to the majority of developing countries in the agriculture negotiation. The Group reaffirmed its commitment to continue to intensify work and strengthen unity with all developing countries.

9. Ministers rejected introducing applied tariffs to benchmark the level of ambition in such commitments. They reaffirmed that the structure of the tiered formula for bound tariff reductions must integrally incorporate appropriate S&DT elements through, among others, higher thresholds and at least 2/3rd overall proportionality in the tariff reduction commitments of developing countries as compared to those of developed countries.

10. Ministers recalled that a number of its constituent members were small, vulnerable economies, whose developmental concerns must also be fully taken into account in accordance with the mandate. SPs and SSM are crucial to address their vulnerabilities and concerns. In the context of the tiered formula, the G33 also fully supports proposals for delayed implementation as well as for longer implementation periods for the Small, Vulnerable Economies.

11. Ministers expressed their concern regarding the insufficient progress made in the negotiations with a view to crafting modalities. Ministers recognized the need to make concrete progress in the agriculture negotiations by July 2006, in order to adhere to the commitment made in Hong Kong of concluding the Doha Round by December 2006. They call on Members, in particular developed Members, to show the necessary flexibility to ensure a successful and timely conclusion of the DDA negotiations. G-33 Ministers on their part expressed their readiness to further take the necessary decisions to contribute to a successful conclusion of the Round.

12. Ministers underlined the importance to continue building consensus through a bottom-up process, guaranteeing transparency, inclusiveness, and the effective participation of all Members.

(G-33: Antigua and Barbuda, Barbados, Bolivia, Belize, Benin, Botswana, China, Cote d’Ivoire, Congo, Cuba, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, India, Indonesia, Jamaica, Kenya, Korea, Madagascar, Mauritius, Mongolia, Mozambique, Nicaragua, Nigeria, Pakistan, Panama, The Philippines, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Senegal, Sri Lanka, Suriname, Tanzania, Trinidad and Tobago, Turkey, Uganda, Venezuela, Zambia, and Zimbabwe.)

Reducing International Inequality – UN Report

The World Economic and Social Survey 2006 just published by the United Nations focuses on ‘Diverging Growth and Development.’ The report explains the growing income disparity between the industrialised and the developing world during the last five decades partly by a rising number of growth collapses. Countries with weak economic structures and institutions and low infrastructural and human development have less capacity to gain from global markets. The report recommends a four-point agenda for domestic development. The main highlights are captured in the following extracts from the address by Mr. Jose Antonio Ocampo, Under-Secretary-General For Economic And Social Affairs to the High-Level Policy Dialogue of the Economic and Social Council on ‘Current Developments in the World Economy and International Economic Cooperation’on 3 July, 2006 in Geneva.

"The world economy has so far performed well this year. Some moderation in global growth is expected, however, in the second semester of 2006. This reflects a number of downside risks that have heightened recently, as partly seen in the conspicuously increased volatility in global financial and commodity markets in May and June.

At the same time, the most positive global economic trend in recent years persists: that is, the rapid and fairly broad growth of the developing countries. In 2006, the developing world will again, as in the two previous years, register a growth rate of more than 6.0 per cent, comparing favourably with 2.7 per cent for the industrialized world. The least developed countries (LDCs) in particular will reach an unprecedented rate of over 7 per cent.

The solid growth figures of developing countries reflect a favourable international economic environment. We see debt relief for some of the world’s poorest countries, plus recovery of the commitments in relation to official development assistance. Developing countries have also benefited from strong growth in world trade, from strong commodity prices fuelled by economic expansion in some large developing economies, and, until the first quarter of 2006, from exceptional access to private international capital markets.

Rising international inequality in the long-run is a major concern

Despite the improved breadth of performance by developing countries, both recent and past experience indicate that some of the currently favourable conditions tend to be highly volatile. In fact, as argued in the report - the World Economic and Social Survey 2006, over the past three decades, the incomes of developing countries have on average fallen further behind those of the developed world. International economic inequality has increased. More precisely, since 1980, the world has witnessed a process of dual divergence: an increasing income gap between developed and developing countries, paralleled by a process of growth divergence among developing countries.

Let me turn now to the four major findings of the World Economic and Social Survey 2006. First, success and failure in achieving sustained economic growth appear to be concentrated in time and space. The growth of individual developing countries depends not only on their domestic economic policies - the focus of debates in recent decades - but also on the regional and global economic environments. During the so-called golden age of 1950-1973, most developing regions experienced rapid economic growth. In contrast, the final two decades of the twentieth century brought a worrisomely large number of "growth collapses", with only a few developing economies able to sustain fast rates of growth.

This finding helps to explain our concern about greater international economic inequality. The divergence seen in recent decades has come mainly from growth failures in a large number of countries. This is quite different than a situation in which global inequality is rising because some economies are growing faster than others, but in the end all countries will gain. Moreover, widening global inequality itself diminishes the growth prospects of the less advantaged countries. This is so because markets tend to exacerbate inequality, as successful countries accumulate richer endowments and as capital follows success while those left behind remain more vulnerable to shocks in international financial and commodity markets.

The second major finding of the Survey is that, compared to growth in industrialized countries, growth in developing countries is much less about pushing technological frontiers than about changing the production structure in order to shift resources towards activities with higher levels of productivity. More broadly, sustained economic growth is associated with the capacity to diversify domestic production structure: that is, to generate new activities, to strengthen economic linkages within the country, and to create domestic technological capabilities. The industrial and modern sectors typically contribute dynamically to this diversification process given their: increasing returns to scale, gains from technological progress, engagement in learning by doing, and greater opportunities for forging linkages with other economic sectors. In contrast, de-industrialization and concentration of growth in informal service activities is a certain recipe for growth failures.

Observation of growth patterns suggests that these domestic factors are more important than integration into world markets, and that not all patterns of integration into international markets have the same effect on economic growth. According to the Survey, the countries that profit most from FDI are those whose domestic firms and institutions have the requisite absorptive capacity and help to build domestic technological capability through linkages created between domestic firms and foreign affiliates. At the same time, countries that have integrated into the more dynamic world markets for manufactures and services have performed better than those that have specialized in primary goods and natural resource-intensive manufactures; diversification seems to have been essential for their success. Finally, specializing in low-value added activities with weak domestic linkages generates low economic growth. In sum, a successful export strategy is a question not of how much countries export but rather of what they export and how their export sectors are integrated with other domestic economic activities.

This brings us to the Survey’s third major finding: macroeconomic stability, investment and growth are thus mutually reinforcing. But stability means more than low inflation; it also means avoiding strong fluctuations in the business cycle, external imbalances and/or financial crises. This is why counter-cyclical macroeconomic policies play such an important role in economic growth. In this regard, the Survey argues that in recent decades macroeconomic policy in most developing countries has become excessively pro-cyclical, largely determined by volatility of financial markets and commodity prices. Stimulating developing country growth and reducing world inequality will therefore require encouraging and opening up more space for counter-cyclical macroeconomic policies in developing countries.

Insufficient fiscal space, associated with pro-cyclical fiscal adjustment, has also been detrimental to long-term investments in infrastructure and human capital. This further explains growth divergence among countries. The Survey finds, for instance, that lagging infrastructural development likely accounts for as much as one-third of the income gap between East Asia and Latin America. In this respect, the analysis shows that official development assistance, when not determined by geopolitical factors, has had a strong positive impact on long-term growth essentially because in such cases it tends to support long-term investments in infrastructure and human development.

In its fourth major finding, the Survey uncovers a broader definition of institutional reform, encompassing more than creating markets and guaranteeing property rights. It also entails creating the regulatory and institutional framework that markets require to function, providing necessary public goods, and guaranteeing the fairness of rules. Equally important, the analysis shows that institutional reform does not need to be large scale and comprehensive from the outset, and, indeed, that "big bangs" in institutional reform may generate more harm than good. In contrast, minor and gradual institutional change can have a great impact on growth if it is perceived as initiating a further process of credible reform.

Overall, some of the Survey’s findings may not appear to be particularly surprising in light of classical perspectives about economic development, but they certainly provide new and meaningful insights in light of the more recent debates on economic growth and development. In this sense, the Survey helps to explain why the conventional strategy followed since the 1980s for closing the income gap between the developing and developed worlds-focused on unleashing market forces and integration into global markets-has been, at best, only partially effective.

An agenda for reducing international economic divergence

The Survey itself advances a strategy for reducing international economic divergence, in calling for an assertive but flexible agenda for domestic development, facilitated by international cooperation and rules that guarantee the appropriate "policy space" for developing countries. Such an agenda should address, among others, the following four issues:

One, fostering active trade and production sector policies to encourage the structural transformation of developing country economies, aimed at encouraging the diversification of production sector structures, creating strong domestic linkages among production activities, and upgrading technologies. International rules should be reviewed in this light, while avoiding at the same time some mistakes of past industrial policies.

Two, open up more space for counter-cyclical macroeconomic policies, striking a better balance between fiscal and monetary prudence and flexibility, and making price stability less an objective in itself than an intermediate goal of economic growth and employment creation. The effectiveness of these domestic policy efforts will also require policy interventions at the international level to dampen financial volatility.

Three, ensuring sustained levels of public spending to make the necessary investments in infrastructure and human capital. This means that additional fiscal space needs to be created through increased efficiency of public expenditures, improved governance and strengthening of the tax base and, for the poorest countries, through additional development assistance (ODA).

Four, promoting gradual, country-specific and home-made institutional reforms. International cooperation can help in this regard by supporting such gradual domestic processes, by fully respecting the principle of ownership of domestic policies and institutions and, particularly, by avoiding the proliferation of institutional conditionality."

The WTO ‘Crisis’: Diverging Reactions

Depending on who analyses the results of the Doha Round so far, one gets a different perspective on either the success or failure. But for now, the civil society groups seem to be pretty much content that the developing world is not giving in to compromising on their just demands. Presented below are views as expressed by three organizations – the WTO, the World Bank and the Focus on the Global South.

The WTO Version: ‘We are now in crisis.’ Director-General to try to break impasse

Ministers have failed to narrow their differences on the "modalities" or template agreements that are needed to compile detailed cuts in tariffs and agricultural subsidies, and members have asked Director-General Pascal Lamy to try to broker a compromise "as soon as possible". Members also shared his assessment that the negotiations are now in crisis.

A formal meeting on 1 July 2006 of the Trade Negotiations Committee, which comprises the entire WTO membership, brought to an end about three days of discussions among a representative group of ministers. No progress was made in trying to narrow the gaps on formulas for reducing tariffs and subsidies, various flexibilities, and other disciplines that would be in the "modalities".

Members agreed that Mr Lamy should consult members intensively and widely in order to establish "modalities" urgently — the term several used was to "facilitate" and act as a "catalyst". He agreed with them that members will remain the main actors, and the principles will continue to be "bottom-up" (input coming from members rather than from above), transparent and include all members. The consultations will be based on the draft texts in agriculture and non-agricultural market access. The director-general will report back to the members as soon as possible.

In statements, members said they remain committed to completing the negotiations by the end of the year. The "modalities" are needed so that countries can list their new commitments to reduce tariffs on thousands of products and to cut farm subsidies. The lists will be in documents known as "schedules" that will run to several hundred pages per country and to tens of thousands of pages for the whole membership. These lists will take several months for each member to compile and in each case for other members to examine and possibly negotiate.

"I will not beat about the bush," Mr Lamy told delegates in an informal meeting that immediately preceded the formal meeting. "We are now in a crisis. We are far from the necessary convergence to be able to establish modalities in agriculture and NAMA [non-agricultural market access], despite all the hard work put in by everyone."

He reported that he had continued consultations since the informal meeting on 30 June with delegations, coalitions and the group of six key players known as the G-6 (Australia, Brazil, the EU, India, Japan and the US).

"However, the fear that I expressed for you yesterday — that a real negotiation might not take place — seems to be the reality facing us. This is serious, not only for the agriculture and industrial tariffs, but also obviously for the round as a whole if we want to conclude it by the end of this year."

The news was not all bad. Mr Lamy said he had witnessed no acrimony in his consultations. And "no one … appears to want to throw in the towel. Everyone is still committed to finishing the round this year. Everybody agrees with this deadline. So the question now facing us is how we deal with the situation."

Shuttle diplomacy, high level contacts, use of modern communications and testing numbers lie ahead for the director-general, he told a press conference afterwards. The gaps are not unbridgeable and there is no panic despite the crisis, he said.

Asked about timing, Mr Lamy said he had just received the mandate and would reflect on how to proceed. "I’m in a hurry and if the G-6 members are also in a hurry, so much the better," he told journalists.

Asked whether he will produce a draft text, he replied that there is enough text on the table — what is needed is numbers.

The World Bank Intervention:

On 9 July, 2006, the World Bank President Paul Wolfowitz sent a letter to the G8 +5 leaders (Brazil, China, India, Mexico, South Africa) urging them to reach an agreement in the Doha round trade talks when they meet in St. Petersburg, Monday, July 17. The letter was addressed and sent to each of the leaders. The following is the text of the letter:

"The upcoming gathering of the G-8 members and the planned outreach session with leaders from China, Brazil, India, South Africa, Mexico, the African Union and international organizations offers a unique opportunity we must take advantage of if we are to make urgently needed progress in the Doha trade talks. With time running out, our collective efforts can make the difference. We can work to lift millions from poverty, boost developing country income, improve global market access and reduce taxpayer and consumer costs for all—or allow the whole effort to collapse, with harm to everyone.

"Good intentions are in generous supply. The U.S. Trade Representative has committed "to do our part" pointing out just last week, "there are plenty of examples of trade rounds that have faltered and ultimately been resurrected." The EU Trade Commissioner said, "There is a three way bargain here. The G20 wants steeper cuts in U.S. farm subsidies before accepting required cuts in industrial goods. Washington can unlock this by stepping forward with a better offer. If this happens the EU, will at the same time meet them both with a strengthened offer."

"While successfully concluding the Doha round will depend on detailed formulas and a painstaking technical process, there is the opportunity for the leaders gathered in St. Petersburg to provide the momentum essential to success. Next week, a collective pledge by the U.S. to reduce agriculture subsidies, by the EU to improve market access and the + 5 Members to limit tariffs on manufactures—a pledge that meets Chief Negotiator Pascal Lamy’s "20-20-20" targets—could help seal a deal.

"The world’s poorest people, the 1.2 billion living on less than $1 a day, are counting on your good intentions being transformed into decisive action, just as last year when your resolute political leadership launched the historic Multilateral Debt Relief Initiative.

"A pro-development result will yield gains for rich and poor alike. It would be an important step on the path to full liberalization which could eventually generate $300 billion a year in additional production for the world’s economy. Developing countries could gain by as much as $86 billion alone, dwarfing annual bilateral assistance efforts.

"I urge all participants in the July 17 meeting to come prepared to compromise and commit to success."

Focus on the Global South: WTO Talks Collapse – Good News for the Developing World

The illegitimate Mini Ministerial which the WTO’s Director General Pascal Lamy convened in Geneva came to a standstill as the US refused to offer further cuts in their domestic supports, whilst at the same time demanding that the developing world reduce their agricultural tariffs.

The collapse of talks is good news for the developing world. Assessments of the outcome of the Doha Round, from a variety of institutions, including the World Bank and the EU’s own Sustainability Impact Assessment, have already predicted that the Round would have adverse impacts on the poorest countries, particularly countries in Africa. Both the US and the EU have been aggressive in demanding for market access in industrial products, and the US for more access in agriculture. Yet despite being the prime culprits for dumping their agricultural products on the world market, causing destruction to the livelihoods of subsistence farmers, both these giants have only offered cosmetic cuts in their agricultural domestic supports.

According to Walden Bello of Focus on the Global South, "The US is so intransigent, there are no prospects to get a fair deal. The developing countries should cease being part of this charade and abandon these talks, which they should have done long ago."

- Member or Director General Driven Organisation?

The danger of the current impasse is that the Director General, Pascal Lamy is likely to see this as his opportunity to play an even more aggressive role in stitching an agreement together. The WTO Secretariat is supposed to be a neutral party in the negotiations, yet Lamy has clearly overstepped his mandate:

1) He has urged Members to converge on the magic "20" number. (That is, converging on the G20 proposal of 54% tariff cuts; $20 billion for US "trade distorting" domestic supports; and a maximum tariff of 20 in industrial products for the developing world). US "trade distorting" supports in 2005 amounted to only $19.7 billion. This means the US will be let off the hook in domestic supports (although it would not be easy for them to increase their supports in the future). Yet Lamy’s suggestion requires the developing world to cut their industrial tariffs, in some cases, into their applied rates. The sectors that will be affected include textiles and clothing, automobiles, plastics, etc. Trade unions in the South are already predicting unemployment by the hundreds of thousands.

2) Lamy is in the habit of organizing decision-making meetings which exclude the majority e.g. the present Mini Ministerial. Who is allowed into these meetings is decided by the highest echelons in the Secretariat. Whilst no decisions are formally made in the Green Room, in practice, Green Room decisions are filtered straight into plenary meetings and endorsed. Unless a country is politically powerful, it is near impossible for them to block these decisions.

Comments Aileen Kwa of Focus on the Global South, "Pascal Lamy cannot be trusted as a neutral player. He is leading the multilateral trading institution in completely the wrong direction. The Doha agenda and Lamy’s magic "20" puts in jeopardy the WTO’s own stated objectives – to strive for full employment and to improve the welfare of people. US, EU and Pascal Lamy’s narrow focus on market access serves the interests of the world’s transnational corporations. The WTO needs a complete overhaul – where rules prioritise not liberalization or a pretense of liberalization, as is the case with the US, but economic and human rights and the livelihoods of people."

US: Disclosure of Origin Could Raise ‘Legal Cloud’ Over Patents

The most vociferous and consistent opposition to developing country demands to make changes in the WTO’s TRIPS Agreement has come from the United States delegation. In their subsequent interventions, they have made repeated references to their basic opposition to introducing the disclosure requirements in TRIPS. Instead, they propose a set of solutions that essentially lie in the ‘national’ domain – where the onus really shifts from the patent applicants to national administrative organs – which even in the megadiverse developing countries have enough problems of their own without additional burdens. Following are extracts from a US paper (IP/C/W/449), which was circulated a year ago, encapsulating the main US arguments.

General Comments on the Doha Mandate to Examine the Relationship between the TRIPS Agreement and the CBD

The United States is one of several Members that see no conflict between the TRIPS Agreement and the Convention on Biological Diversity (CBD) and consider that these agreements can and should be implemented in a mutually supportive manner. The United States has previously set forth a comprehensive analysis of the obligations of the provisions of the CBD most frequently cited as related to the provisions of the TRIPS Agreement. [1] In examining the relationship between TRIPS and the CBD, it is worth recalling that the CBD does not require, or even mention, patent disclosure requirements. The CBD calls upon Parties to condition access to genetic resources on prior informed consent, and to encourage the equitable sharing of benefits arising from the utilization of genetic resources, upon mutually agreed terms. The CBD does not require countries to modify their patent laws in any way.

The CBD does have a mandate to elaborate and negotiate an international regime on access to genetic resources and benefit sharing. One outcome of the CBD process has been the Bonn Guidelines on Access to Genetic Resources and Fair and Equitable Sharing of the Benefits. After CBD parties gain experience from the implementation of the Bonn Guidelines, they will have a better understanding on how to promote prior informed consent, access to genetic resources and related traditional knowledge, and equitable benefit sharing.

US government agencies, not just US-based companies, collect genetic resources in the field. As the United States has described in previous communications to the TRIPS Council, agencies such as the National Park Service, the National Cancer Institute, the National Institutes of Health, and the Agricultural Research Service of the Department of Agriculture all have adopted measures tailored to fit their specific sector’s needs that are consistent with the CBD principles of prior informed consent and benefit sharing on mutually agreed terms. [2] These US guidelines are practical, effective and not burdensome, and operate outside of the intellectual property system. The US government has also provided information to private US entities on in situ genetic resources collection, consistent with the Bonn Guidelines. [3]

Although not a Party to the CBD, the United States is nevertheless taking positive steps to promote and encourage prior informed consent and equitable sharing of benefits on mutually agreed terms, two of the objectives Members have raised in the TRIPS Council. As we have stated on prior occasions, we consider that discussions in the TRIPS Council could benefit significantly if other Members could provide information on how they are implementing programs to achieve these objectives.

General Comments on Proposal for New Patent Disclosure Requirements

Brazil and India have correctly recognized that "any system that introduces uncertainties and imbalances into the patent system may be detrimental to technological progress in general and the protection of inventions in particular". [4] We fully agree and emphasize that this concern underlies our view that the TRIPS Council ought to exercise the utmost caution in considering any proposals that may do so. Nonetheless, the authors of IP/C/W/443 assert that the proposal for new patent disclosure requirements [5] would establish certainty in these matters "by establishing clear internationally agreed rules on disclosure", will help to ensure the "legitimacy of the patent system" and would help fulfil the objectives of the TRIPS Agreement in Article 7. We disagree. As noted in IP/C/W/434, there are many troubling questions with respect to patent disclosure requirements proposed that would lead to significant uncertainties. [6] Besides the potential detrimental effect on technological progress, this uncertainty would also undermine the sharing of benefits of such use, as explained below.

The recent submission by Peru and statements by other Members give an incorrect impression that the patent system is experiencing some kind of crisis. While patent offices around the world do face significant work load burdens, the patent system, in fact, works quite well. As discussed further below, erroneously granted patents are the rare exception rather than the rule. Peru’s submission also raised concerns regarding the "legitimacy" of the patent system, [7] and Peru has stated that "the legitimacy of the IP system is in dispute, and that will remain the case as long as bad patents continue to be granted and the system continues to be used to legitimize unjust and unfair situations". [8] While noting these concerns and perceptions, after further consideration, as set forth below, the IP system generally, and the patent system in particular, do not in any way legitimize misappropriation. Moreover, patents, when coupled with a benefit-sharing regime, can be an effective tool for benefit sharing. Situations involving misappropriation can be remedied through effective application and adequate enforcement of access and benefit-sharing regimes that directly regulate inappropriate behaviour.

Proposed Options for Achieving Appropriate Access, Equitable Benefit Sharing, and Preventing Erroneously Granted Patents

In document IP/C/W/434, the United States provides concrete proposals for achieving the widely shared objectives of (1) ensuring authorized access, i.e. prior informed consent, (2) achieving equitable sharing of the benefits arising from the use of traditional knowledge and genetic resources, and (3) preventing the issuance of erroneously granted patents. [9] To avoid duplication, those proposals will not be repeated here.

After further analysis of the observations made in IP/C/W/434 and IP/C/W/443, it appears that certain areas of common ground and understanding are emerging among Members. Nonetheless, there remains a wide degree of disagreement. In our view, a close reading of these two documents, among other recent contributions made in TRIPS Council, continues to lead to the conclusion that new patent disclosure requirements are not an appropriate solution to the concerns raised, and only further convinces us that the most effective way to ensure the objectives of ensuring prior informed consent and equitable benefit sharing is tailored, national laws outside the patent system that directly and effectively regulate the relevant conduct.

The reference to "national laws" does not imply that international norms have no relevance nor that the solutions proposed are not international in character, as has been alleged by some. Indeed, appropriate international guidelines, such as the Bonn Guidelines and guidance from the Intergovernmental Committee on Genetic Resources, Traditional Knowledge and Folklore at the World Intellectual Property Organization (WIPO), which address issues of appropriate access and benefit sharing outside the patent system, may be of significant relevance and can be helpful to Members in achieving objectives. Furthermore, a national contract-based system can be international in its outlook and may contain, inter alia, choice of forum, choice of law, or international arbitration provisions relevant to cross-boundary dispute or enforcement issues.

Specific Observations on Achieving Widely Shared Objectives

A. Prior Informed Consent and Misappropriation

Brazil and India have conceded that "an international disclosure requirement alone will not work to guarantee prior informed consent". [10] This appears to be a significant clarification of common ground among Members that can help refine the discussion on the precise nature of the objectives of such a disclosure requirement. [11]

In noting that their proposed global patent disclosure requirement is "not envisaged to be a stand alone system, but as a vital measure and incentive that would support and ensure the effective operation national regimes for prior informed consent", [12] the authors of IP/C/W/443 appear to recognize that, in the absence of any such national regime, such disclosure requirements would be of little or no utility. This position therefore recognizes the primacy of establishing such regimes, while making clear that the disagreement among Members on this issue is the narrower question of whether such a global disclosure requirement can be justified by its ability to "ensure the effective operation of national regimes of prior informed consent", notwithstanding its negative effects on the patent system, technological development and benefit sharing.

As a general matter, the authors of IP/C/W/443 appear to broadly dismiss the utility of a contract-based system that ensures prior informed consent and equitable benefit sharing by claiming that a "fragmented nation-to-nation system" cannot achieve our objectives as such a system would entail "high transaction costs and would hence be difficult to implement". The authors of IP/C/W/443 assert that "[contractual] arrangements alone cannot suffice to ensure the monitoring and enforcement of these requirements in third countries. Contractual obligations or similar mechanisms in national laws can only suffice if they are obligatory and enforceable across national borders". [13]Further, it is alleged that "national requirements can do little to address the transnational character of the problem of misappropriation and bio-piracy". [14]

However, a contract-based system need not entail high transaction costs if implemented in an effective and systematic manner, e.g., by providing clear points of contact and setting forth clear statements of agreement to minimize disputes. [15] In addition, a contract-based access and benefit sharing, with appropriate monitoring and enforcement would help to centralize monitoring and would not be a "fragmented" system. As noted above, a contract-based system can be international in its outlook and may contain, inter alia, choice of forum, choice of law, or international arbitration provisions relevant to cross-boundary dispute or enforcement issues.

1. Monitoring System

Beyond the claims set out in document IP/C/W/443, a number of Members have raised other concerns in discussions relating to the proposed disclosure requirements providing a potential monitoring system with respect to genetic resources and traditional knowledge. Delegations such as Switzerland, the European Communities and New Zealand have also asserted that there may be a role for the disclosure of country of origin and/or source in monitoring the use of genetic resources. [16]

An effective monitoring system should provide for monitoring of the use of genetic resources or traditional knowledge at the point of access through the access and benefit-sharing (ABS) system. A contract-based access and benefit-sharing regime can require mandatory disclosure to authorities of any commercial application utilizing the relevant genetic resources or traditional knowledge, and therefore, can ensure monitoring for the use of these resources or knowledge regardless of the commercial application involved, and whether or not any application is related to a patent. Therefore, such a system provides a more effective means to ensure the monitoring objective, without the deleterious effects on the patent system.

2. Enforcement of ABS Systems

Delegations have also expressed concerns over effective enforcement of national access and benefit-sharing provisions, including any monitoring provisions. In the vast majority of cases, compliance will be facilitated through cooperation between the holders, or other appropriate authorities, and users of the genetic resources and/or traditional knowledge. In the rare cases where a party violates the national regime, they would be subject to criminal and civil provisions, similarly as with respect to other areas of misconduct, such as breaches of environmental law, health and safety laws and other areas in which governments have an important regulatory interest.

From a broader perspective, patent rights are not a universal enforcement regime to regulate any misconduct that can arise in the development or use of an invention. As we have observed previously, patent rights permit an inventor to exclude others from certain acts, but do not permit an inventor to use the invention without restriction.  Restrictions can and are placed on the use of certain inventions to ensure safety and efficacy (e.g. health regulations governing pharmaceutical products), to protect the environment (e.g. regulations governing emissions from automotive engines) or to protect domestic or national security (e.g. regulating firearms), for example. These restrictions are enforced outside the patent system by separate regulatory mechanisms. [17]

While a few individuals could ignore the legal requirements of an access and benefit-sharing system, in the same way that individuals currently may violate health or safety regulations, the case has not been made for why a contractual system that would apply to the vast majority of those seeking access would not serve effectively, just as health, safety and other regulatory codes that are of great importance apply where appropriate.  Furthermore, the patent system does not condone or "legitimize" violations of these other laws and, in the same manner, does not condone or legitimize misappropriation of genetic resources or traditional knowledge in violation of a country’s access and benefit-sharing requirements. As is done in the case of these other distinct regulatory systems, criminal provisions and/or civil liability for failure to comply can be included in the country’s laws for those few who might take genetic resources without entering into an access and benefit-sharing agreement with the required party.

B. Benefit Sharing

To better understand why patent disclosure requirements would not promote benefit sharing, it is important to recall that the benefits that arise from the utilization of genetic resources come from commercial or non-commercial exploitation. Even focusing only on the commercial context, there are benefits that flow from utilization of traditional knowledge and genetic resources whether or not any invention has been developed that qualifies for patent protection. Neither herbal remedies nor plant varieties may be patentable in a particular country. A patent disclosure requirement would do nothing in these cases to help enforce a country’s ABS regime, because those who utilize these resources never apply for a patent in the first place.

Brazil and India clarify that their proposal for new patent disclosure requirements will not substitute for but will supplement and ensure the effective enforcement of national ABS regimes. [18]

While we welcome this clarification, we do not see how we can design disclosure requirements to supplement national legislation that is not in place in the majority of Members. Establishing national access and benefit-sharing systems is essential before engaging in discussion of supplemental patent disclosure requirements. Furthermore, it would seem prudent to determine areas of inadequacy, based on experiences, of existing national systems in order to more fully consider these matters.

The authors of IP/C/W/443 attempt to address the examples given by the United States in IP/C/W/434 in which benefits from an invention would be diminished if the patent was issued and later invalidated, or was never issued, and the invention is nevertheless commercialized. [19]The authors argue that this is similar to situations involving any other patent and is not limited to patents involving disclosure of the country and source of origin.

However, there is a significant difference in this case, as it is the very proposal of adding new disclosure requirements with the objective of ensuring benefits that would cause the additional uncertainty that may lead to invalidation or other ways of diminishing benefits that could be shared from these inventions.

More simply put, the remedy proposed itself (invalidation due to non-compliant disclosure, etc.) would destroy or have significant negative consequences on the benefit being sought, rather than ensuring that the benefit would be shared with the appropriate party. This would clearly fail to meet the shared objective of ensuring the equitable sharing of benefits arising the utilization of genetic resources and/or traditional knowledge. [20]

In response to statements in IP/C/W/434 regarding cases of commercialization that do not involve patents, the authors of IP/C/W/443 recognize this concern, but they state that "these are concerns and issues that will be dealt with outside the patent system". [21]The United States has long advocated a system outside the patent system to address all issues of commercialization and exploitation regarding genetic resources and/or traditional knowledge.

Rather than attempting to single out applications involving patents and trying to deal with them with a new patent disclosure requirement that may negatively effect technological development, a more appropriate solution would be strengthening national regimes outside the patent systems in order to take a comprehensive, holistic approach and address all instances of commercialization of misappropriated resources and/or traditional knowledge that need to be addressed outside the patent system in any event.

In this context, it is our understanding that only a relatively small number of Members have established access and benefit-sharing systems and most of these systems have only been in effect a short time. It therefore may be helpful to the Council’s consideration of these issues to understand, from national experiences, examples of perceived problems with existing ABS regimes, e.g., problems encountered or other issues with respect to existing monitoring and enforcement provisions, so concerns regarding monitoring and enforcement that have been raised can be more adequately discussed.

The United States believes that any international effort should not be focused on new patent disclosure requirements but rather, on efforts to encourage the establishment of appropriate access and benefit-sharing systems that (1) improve compliance by providing users with clear rules for collection of genetic materials, and (2) help ensure that where uses of genetic resources or traditional knowledge are made, benefits are equitably shared with the appropriate parties.

C. Preventing Erroneously Granted Patents

Document IP/C/W/443 clarifies an important point of agreement that "the mere disclosure of source and country of origin may not help ascertain inventorship, etc". [22] However, it goes on to state that "to the extent that the disclosed information will help determine whether biological resources and/or traditional knowledge were used [in certain circumstances"], [23] it may assist examiners in determining these issues.

Furthermore, document IP/C/W/443 refers to issues of "bad or questionable patents" [24] and states that these occur because of insufficient disclosure of the details of the existing knowledge and the inadequacy of the patent system to check these details.

The United States generally shares concerns regarding erroneously issued patents, but we remain convinced that the proposed disclosure requirements do not address these concerns in an appropriate manner.

Determinations of inventorship, prior art, etc. are generally rooted in a country’s patent law. For example, inventorship is generally based on acts of invention, while determinations of novelty and inventive step (obviousness) are based on the state of the relevant art. Information regarding the country of origin or the source (i.e. country locations or ex situ collection sites) is not generally relevant to these considerations and would therefore be of little value in that process.

There are more direct options that can effectively address these issues and prevent the grant of erroneously issued patents. Options include the use of organized, searchable databases, requirements regarding information material to patentability, and the use of effective post-grant opposition or re-examination systems. [25]

Brazil and India point out the perceived limitations in organized databases in protecting traditional knowledge and genetic resources. One such complaint is that "no documentation can be completely comprehensive and exhaustive". [26] While this may be the case, certainly such a source of information that directly relates to the genetic resources and/or traditional knowledge would be more comprehensive than information regarding country of origin and/or source of such materials which, in many cases, would be of little or no relevance to the patentability issues under consideration. For the same reasons, the assertion that disclosure requirements would assist in the effectiveness of opposition or re-examination proceedings is also unfounded.

As noted previously, the United States considers that post-grant opposition and re-examination proceedings play an important role in helping to avoid or rectify erroneously granted patents. There are a number of examples where such systems have been used effectively in this area. [27]

Document IP/C/W/443 is also helpful in clarifying that "no suggestion has been made that the act of patenting per se would constitute misappropriation". However, the authors then state that "the act of applying for a patent or patenting an invention where biological and/or traditional knowledge is used … without obtaining prior informed consent of the Member or relevant authorities in the Member in which the biological resources and/or traditional knowledge are obtained and without providing for equitable benefit sharing, that constitutes a serious form of misappropriation" (emphasis added). [28]

In other words, it is not the act of patenting or applying for a patent, but rather the fact that traditional knowledge or genetic resources were accessed in violation of a national access regime and are being exploited, based on that improper access, without obtaining prior informed consent and without providing for equitable benefit sharing that is the cause of any potential misappropriation. As noted before, it is not a patent disclosure requirement that can ensure such matters, but rather having in place a comprehensive and effective access and benefit-sharing regime that will do so.

D. Additional Issues

Several other claims are made in document IP/C/W/443 that fail to adequately address concerns raised by the United States and others concerning the proposal for patent disclosure requirements. In response to concerns raised regarding the burdens on both the patent offices of Members and patent applicants, the authors of IP/C/W/443 state their expectation that the patent applicants would have to take "all reasonable measures" to determine the country of origin but that "such burden would generally be subsumed in, or at least not be more burdensome than the usual burden befalling the patent applicant to make out a case for his claims under current patent procedures and practices". They note that, in the US system in particular, the requirement could be covered under the "information material to patentability requirement". [29]

The United States appreciates that Brazil and India acknowledge the requirement in the United States to disclose information material to patentability in addressing their concerns. However, as noted, the United States does not consider a requirement for source and/or origin to be similar to a requirement to disclose information material to patentability. As discussed previously, information regarding source and/or country of origin is generally not material to patentability, and is therefore of little use in trying to remedy the granting of erroneously issued patents. A more effective approach in achieving the objectives of preventing erroneously granted patents would be one that focuses on information material to patentability. One significant advantage of this approach is that the information required is solely related to issues of patentability and thereby would not introduce new uncertainties of laws unrelated or tenuously related to the invention into the patent system.

Brazil and India go on to state that patent examiners would not be required to determine the validity of prior informed consent or adequacy of benefit sharing, but then note that "the patent office will need to take decisions based on these documents [prior informed consent and benefit sharing] only when the validity of a patent is challenged during … opposition proceedings". [30] This point underscores the potential for a "legal cloud" over the validity of patent rights.

Many of these disclosure requirements would be new and would provide an additional avenue to litigation and other uncertainties that would undermine the role of the patent system. Particularly where the sanction, as has been proposed, would be revocation of the patent right, this would cause undue uncertainties in these patent rights, even where a good faith attempt has been made to comply with such requirements. [31]This would not only have the potential effect of undermining the technological development incentives of the patent systems, but would also have a negative effect on any benefit-sharing that could be derived therefrom.

Conclusion

After analyzing the recent comments from Brazil and India, as well as other Members, it appears that a number of points are being clarified and issues are becoming more focused. For example, there no longer appears to be any question that, notwithstanding other significant differences, Members share the view that national, contract-based access and benefit-sharing systems are essential elements of any solution.

A major point of disagreement appears to be whether the proposed new patent disclosure requirements are justified as a means of enforcing national ABS systems, in light of the negative consequences of such requirements. In order to better assess and resolve issues regarding proposals to remedy the concerns expressed by Members, it may be helpful for those Members with ABS systems currently in place to identify the perceived problems, in particular with respect to monitoring and enforcement provisions of such systems, so that the Council may better address these issues.

Continued focus by the TRIPS Council on shared objectives and options available to achieve them will be helpful in addressing the mandate of paragraphs 12 and 19 of the Doha Ministerial Declaration. Along these lines, the United States has presented a number of concrete proposals to address concerns of Members. With respect to access and benefit sharing, we view the best approach to be one involving the implementation of national regimes for prior informed consent and equitable benefit sharing that establishes clear terms and that can be enforced adequately and effectively outside the patent system. Further, when addressing issues regarding the erroneous granting of patents, Members should focus on remedies that directly address that goal. These remedies include the use of organized databases, information material to patentability and the use of post-grant opposition or re-examination systems as an alternative to litigation.

Notes

[1] See United States, IP/C/W/257.

[2] See, e.g., United States, IP/C/W/341 and IP/C/W/393.

[3]See http://www.state.gov/g/oes/rls/or/25962.htm.

[4] Brazil and India, IP/C/W/443, paragraph 4.

[5] Similarly as IP/C/W/434, the term "new patent disclosure requirements" in this paper refers to the proposed new requirements regarding disclosure of source and/or origin, evidence of prior informed consent, and evidence of equitable benefit-sharing that have been proposed by Members in the course of TRIPS Council sessions.

[6] See, e.g., IP/C/W/434, footnote 7.

[7] See Peru, IP/C/W/441.

[8] IP/C/W/441, paragraph 3.

[9] IP/C/W/434.

[10] IP/C/W/443, paragraph 8.

[11] IP/C/W/443, in footnote 8, Brazil and India also assert that the United States considers existing provisions of the TRIPS Agreement permit Members to require patent applicants to disclose the source and/or country of origin. However, the United States has not yet considered this issue.

[12] IP/C/W/443, paragraph 8.

[13] IP/C/W/443, paragraph 8.

[14] IP/C/W/443, paragraph 25.

[15] Some Members have also raised concerns regarding "unequal bargaining power". However, one flexibility of the United States proposal is that Members may, if appropriate, regulate the terms of agreement through national laws or rules. In such cases, the country of origin would determine for any cases it deems appropriate certain terms of collection without the need for arms-length bargaining in the typical sense.

[16] See, e.g., IP/C/M/46 at paragraph 46 (Statement of the European Communities) and at paragraph 60 (Statement of New Zealand); see also Switzerland, IP/C/W/400.

[17] See IP/C/W/434, paragraph 25.

[18]IP/C/W/443, paragraph 13.

[19] IP/C/W/443, paragraph 16.

[20] See IP/C/W/434, paragraph 10, where a number of situations are examined where if such a requirement were adopted and a non-compliant disclosure were discovered that would invalidate a patent, or prevent a patent application from grant, because of a new patent disclosure requirement, any benefits from that invention would be greatly diminished: - for example, if a patent issued, but was later invalidated, or if an application were published, but never issued, the invention has been disclosed to the public and third parties can most likely use and commercialize the knowledge or resources disclosed without any obligation of sharing benefits; - further, if a patent is never issued and the information never published, the patent applicant may still be able to commercialize the invention without disclosing the invention to the public and without any obligation to share benefits; a new disclosure requirement could also have further significant, unintended consequences where a patent applicant has entered into a valid benefit-sharing agreement with the custodians of the traditional knowledge or genetic resources but, due to uncertainties in the law, a disclosure may be found invalid.  For example, if there were improper disclosure that resulted in revocation of a patent due to litigation by a third party not affiliated with a traditional knowledge or genetic resources holder, this could actually upset the pre-existing benefit-sharing agreement

[21] IP/C/W/443, paragraph 16.

[22] IP/C/W/443, paragraph 17.

[23] IP/C/W/443, paragraph 17.

[24] IP/C/W/443, paragraph 12.

[25] IP/C/W/434, see paragraphs 28-32.

[26] IP/C/W/443, paragraph 28.

[27] IP/C/W/434, paragraph 31

[28] IP/C/W/443, paragraph 12

[29] IP/C/W/443, paragraph 20

[30] IP/C/W/443, paragraph 22

[31] See, e.g., WIPO/GRTK/IC/7/15, statement of Biotechnology Industry Organization (BIO) to the WIPO Intergovernmental Committee on Genetic Resources, Traditional Knowledge and Folklore, "Biotechnology companies had to be able to count on patent exclusivity to justify taking risks and spending money to discover and develop inventions. A disclosure requirement that could block the grant of a patent for an otherwise eligible invention, or could be used to invalidate that patent, would create unacceptable risks (emphasis added").

Getting the Relationship Between TRIPS & CBD Straight

In response to the several objections raised by the United States (as outlined in the previous article), several developing country delegations including Bolivia, Brazil, Colombia, Cuba, India and Pakistan made the following submission in the WTO in October last year. Following are extracts from the paper (IP/C/W/459), which was circulated a year ago, responding to each of the issues raised in the on-going debate in the WTO to amend the TRIPS Agreement to include disclosure of origin of biological resources and associated traditoinal knowledge in patent applications.

I. General Comments on the Doha Mandate to Examine the Relationship between the TRIPS Agreement and the CBD

A. Conflict Between TRIPS and the CBD

1. The United States, in all its submissions, has argued that there is no conflict between TRIPS and the CBD. In its most recent submission, the United States in fact reiterates the same positions and arguments it put forward several years ago, in document IP/C/W/257. Comparing Article 1 of the CBD and Article 7 of the TRIPS, it argues that the objectives of the two documents do not run counter to each other and are mutually supportive. The United States, however, focuses its analysis on an excessively narrow interpretation of both treaties, which does not take into account their spirit and objectives. It is well accepted that the CBD does not address the resource depletion issue alone. Instead, it highlights this issue as a result of the extensive piracy of biological resources of the countries rich with genetic resources. It is an accepted fact that the gene and biochemical hunt over the components of biological diversity is largely driven by their use, value or the knowledge associated with those resources, without which bio prospecting loses much of its content. This knowledge associated with the biological resources is also a product of the human intellect, which is recognized under the CBD as deserving of protection. Hence, the protection of the components of biodiversity and associated traditional knowledge from bio piracy must be integrated within the framework of the TRIPS Agreement. The TRIPS Agreement as it stands today, whilst promoting the granting of patents to products based on genetic resources and associated traditional knowledge, contains no effective provisions to protect those resources and associated knowledge from misappropriation and theft. It is the absence of such provisions in the TRIPS Agreement that may generate conflicts between its implementation and that of the CBD. On the other hand, the inclusion of provisions in TRIPS to protect genetic resources and associated traditional knowledge from misappropriation would, in practice not only support fulfilment of the objectives of the CBD, but would also be in line with the fundamental objectives of TRIPS.

2. The United States opines that "the objectives of the TRIPS Agreement as stated in Article 7, are the protection and enforcement of intellectual property rights in a way that (and not should, as in the text) contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technology and in a manner conducive to social and economic welfare, and to a balance of rights and obligations". Article 7 of TRIPS points to the need for a balance between the monopoly rights granted under the intellectual property (IP) regime and the public interest. It provides for the benefits that should accrue to the society at large in return for the grant of intellectual property rights, viz. promotion of technological innovation, transfer and dissemination of technology, social and economic welfare etc. What the CBD envisions is a different system, which claims benefit-sharing in respect of the use of genetic and biological resources and associated traditional knowledge for the countries of origin and providers of such resources or traditional knowledge which, regrettably, are not currently protected under TRIPS. The lack of safeguards against misappropriation in the TRIPS context has led to a situation where, under the existing IP regime, those genetic resources and associated traditional knowledge are often erroneously dealt with as if they formed part of the public domain, open to appropriation by anybody without any obligation to ask for permission and pay back the provider(s). No consideration is given to the fact that genetic resources and associated traditional knowledge constitute fundamental elements of several products and processes and represent both an economic and intellectual contribution to the attainment of the invention. The conflict thus largely relates to the issue of appropriation of benefits arising from the commercialization of products/processes that are based on biological material and/or traditional knowledge. The moot point is whether the patent holder appropriates all the benefits arising from the commercialization of a product based on biological material and/or traditional knowledge or whether he/she shares the benefits with the States and/or the traditional knowledge holders. This underlying conflict lifts the veil off the balance set by the US proposals by comparing the objectives of the Convention and the TRIPS.

B. CBD Does Not Require Or Mention Patent Disclosure Requirement

3. The United States submits that there is no express obligation under the CBD regarding disclosure requirements in patent law. [1]This argument of the United States has already been responded to in previous TRIPS Council meetings. Not being an IP instrument, the CBD does not create patent disclosure requirements. But Article 16.5 of the CBD does oblige countries to cooperate to ensure that patents and other IP rights do not run counter to the objectives of the CBD. We submit that the Doha Development Agenda can make a crucial contribution in this regard.

C. Collection of Genetic Resources by the United states Governmental Agencies consistent with the CBD principles of Prior informed consent and Benefit Sharing on Mutually Agreed Terms

4. The United States argues that its governmental agencies and US-based companies have been undertaking bioprospecting activities in a manner consistent with the principles of prior informed consent (PIC) and benefit sharing; it also affirms that its efforts have been in line with the Bonn Guidelines. [2] Though it may be true that the United States may be taking steps internally, these steps are not sufficient to solve the concern of misappropriation caused by the issue of bad patents and the trans-boundary nature of the problems of illegitimate bioprospecting. In this regard, contractual agreements alone cannot ensure compliance with the principles of PIC and benefit sharing, as it is difficult to enforce a foreign obligation for an act that is not prohibited in the country in which it is to be enforced. It is an established fact that in enforcement of laws involving multiple jurisdictions, the binding nature and enforceability of foreign judgements/obligations are always moot points. The Yahoo! – Nazi case illustrates this point very well. The French Jewish and anti-racist groups initiated legal action against the California-based Yahoo! web portal when the latter allowed Nazi memorabilia (items such as SS daggers, swastikas, photos of death camp victims, replicas of Zyklon B poison gas canisters etc.) to be sold on its US auction pages. [3] As the French laws bar the display or sale of racist materials, the French court ordered that French internet surfers should be denied access to US pages hosting the auction. Though Yahoo! banned the sale of hate-related items from all the sites, it challenged the decision on the ground that the offending sites were aimed primarily at the American market and were therefore protected by the US freedom of speech laws. Subsequently, the US Federal Court ruled that Yahoo! was not bound to tailor its non-French sites to French laws. This clearly demonstrates the difficulty of enforcing foreign judgements based on contractual obligations in the United States that are not expressly regulated in the United States though legislation. There is no law enacted by the United States to date to ensure that non-compliance with the CBD obligations by US nationals in other countries can be remedied under US jurisdiction. The existing system allows patents to be claimed at the USPTO for inventions relating to genetic resources and associated traditional knowledge without any concern for access and bio prospection rules in the countries of origin of those resources and knowledge.

II. General Comments on Proposals for New Patent Disclosure Requirements

5. The United States argues that the proposed disclosure of origin requirement would lead to uncertainty. [4] It cites examples where the resource is indigenous to one country, but freely available in several other countries; the degree of relationship between the claimed invention and the relevant genetic resources or traditional knowledge; and whether the national courts or national IP offices would have to interpret other nations’ laws etc. This cloud of uncertainty, in the view of the United States, would be potentially detrimental to innovation and technological development, the economic incentives of the patent system and benefit sharing under the ABS regime. Such arguments, however, are based on a misreading of the proposed disclosure of origin requirement. There are three types of disclosure requirements proposed. They are: (1) disclosure of source and country of origin of the genetic materials and associated traditional knowledge used in developing the invention claimed in the patent application; (2) disclosure of the evidence of prior informed consent; and (3) disclosure of the evidence of a benefit-sharing agreement. As is evident, these disclosure requirements are intended to achieve different yet interrelated objectives of the CBD. The US submission tries to read these requirements together, which creates confusion. Such unnecessary confusion cannot be a basis to avoid internationally binding solutions to the very real problems of misappropriation and bio piracy.

6. It is clear from the proposals that the disclosure of source and country of origin is primarily aimed at preventing the grant of bad patents that do not fulfil the patentability criteria of novelty and/or inventive step. Introducing such a requirement in the TRIPS Agreement would not lead to uncertainty but to greater legal certainty, as it would ensure that the patent system does not issue bad patents. This is evident from the number of cases that have come up before the USPTO and the EPO. [5] It is much better for the patent system to prevent the issue of bad patents rather than to take a laissezfaire attitude that would shift on to society and aggrieved third-parties the burden of revoking such bad patents after they have been issued. The procedure for revocation of patents is more expensive and burdensome than merely requiring patent applicants to disclose the source and country of origin of the genetic resources and associated traditional knowledge. The frequent revocation of patents would surely create more uncertainty for the patent system and prevent technological innovation and the facilitated flow of information that may be of great importance to bioprospecting and the biotechnological industry. The disclosure of origin obligation, on the other hand, would only require reasonable efforts on the part of patent applicants to obtain the relevant information. Since such information would normally be part of a larger batch of information collected by the patent applicant for filing an application, it is not correct to argue that disclosure of origin would constitute an additional and/or burdensome obligation.

7. The United States puts forward that erroneously granted patents are rare exceptions rather than the rule, [6] but the high rate of erroneously granted patents on inventions involving biological resources and associated traditional knowledge tells the other side of the story. In any case, there is no case for doing nothing to prevent issuance of bad patents when our international obligations demand it and the adverse effect is primarily on developing country stakeholders. In all the above situations, we can see that the new disclosure requirement, being crucial in the determination of novelty and inventive step, can effectively remedy the problem of issuance of such bad patents involving genetic resources and associated traditional knowledge. In other words, it would act as a crucial factor in the determination of the patentability of biotechnological inventions. As has also been pointed out previously, [7] disclosure of origin will be relevant in helping patent examiners to determine whether the claimed invention constitutes an invention that is excluded from patentability under Article 27, paragraphs 2 and 3 of TRIPS; would serve as part of a process to systematize available information of biological resources and traditional knowledge that will continuously build the prior art information available to patent examiners and the general public; and will be useful in cases relating to challenges to patent grants or disputes on inventorship or entitlement to a claimed invention as well as infringement cases.

8. The mandatory requirement of disclosure of source and country of origin would solve the problem raised by the United States regarding genetic resources that may be indigenous to one country but freely available in different countries. In such cases, the source would be the country from where the applicant received the genetic material and the country of origin is the country to which the genetic resource is indigenous. It is not clear how the patent office would be forced to interpret the law of other countries in such cases.

9. It is also not correct to argue that the other two disclosure requirements would create uncertainties and additional burdens for the patent office. The obligation is only to produce evidence issued by the legally recognized authority of the country where access to the relevant material and information takes place. The same applies to the case of the benefit-sharing agreement. Disputes would not arise if this is obtained based on the requirements of the law of the country. Only in cases where the applicant committed fraud could there be a dispute. The raising of disputes during the opposition proceeding for failure to satisfy the requirements of the patent law is not new to the patent office. In such cases, parties would provide adequate and convincing evidence to the patent office to establish their claims. The job of the patent office is only to evaluate such evidence and decide the claim. The patent office is not expected to interpret the content of these documents but only to ascertain, through the claims and counterclaims, whether such evidence has been provided where a national regime requires such evidence. It is difficult to appreciate how interpretation of foreign law is involved in such cases.

III. Proposed options for achieving appropriate access, benefit sharing, and preventing erroneously granted patents.

10. The United States proposes many options to achieve the objectives of the CBD [8]and provides that a contract-based national regime with an international outlook, supplemented by the guidelines of international instruments would be an ideal one. The CBD system, as it exists now, is in line with the proposition of the United States i.e. "CBD supplemented by the Bonn Guidelines." [9] Despite this, the number of bad patents and instances of misappropriation are increasing and the objectives of PIC and benefit sharing are not often met. Since the problem is the issue of bad patents and failure to respect the rights and obligations of holders of the traditional knowledge on the basis of which the patent is issued, as well as the rights of the countries of origin of the genetic resources, the solution must also be based on patent law and, in particular, the TRIPS Agreement. Since the contribution of the custodians and holders of the genetic resources and associated traditional knowledge is not recognized and is clearly manifested in the misappropriation of the knowledge, a TRIPS-based solution is only just and reasonable. The new disclosure requirement can bring to a great extent uniformity and certainty in relation to these concerns. A contract-based system, howsoever perfect it may be, cannot ensure the effectiveness and mandatory enforcement at the international level. There is, therefore, a need for a binding international disclosure requirement regarding the source and country of origin (to deal with bad patents) and evidence of PIC and benefit sharing (to promote PIC and benefit sharing) under the TRIPS Agreement to enforce national norms. There is no need for opting for a multipleforum solution or international arbitration when there can be a "one-stop shop" at the WTO. In any case, we are committed to resolve this problem in the Doha Development Agenda as part of our mandate, and we are obliged to do so to the extent that the TRIPS Agreement requires any interpretation to fulfil this mandate. Arguing otherwise would tantamount to shifting a component of the Doha mandate to outside the WTO, a proposition that may not be acceptable in other areas of negotiations.

IV. Specific objectives on achieving widely shared objectives

A. PIC and Misappropriation

11. The United States argues that the submissions of India and Brazil that the new disclosure requirement would not be a stand-alone system, makes it clear that, in the absence of a national regime, the new disclosure requirement would be of little or no utility and so the primacy is to establish national regimes. [10] It is submitted that this line of argument does not take into account the aim of the proposed requirement of disclosing the source and country of origin. This requirement is to ensure that misappropriation of genetic resources and associated traditional knowledge is not encouraged through grant of patents on inventions relating to genetic resources without recognizing the contributions of the holders of traditional knowledge. Given the different nature of the prior art and inventive step involved in cases of genetic resources and traditional knowledge associated with them, disclosure of source and country of origin can surely help the patent office to request more information from the patent applicant during examination of the application to ensure that bad patents are not issued. This can surely prevent bio piracy and misappropriation of traditional knowledge by the patent applicant. This is clearly one of the objectives of the CBD and this can be achieved only if changes are introduced in the global regime governing the patent law and not through national access legislation alone. This also adds to the certainty and legitimacy of the patent system. The disclosure requirement is also not as costly as the contract-based system envisaged by the United States.

12. Disclosure of source and country of origin also facilitates realization of the CBD objectives of PIC and benefit sharing. Production of the evidence of PIC and benefit sharing along with the patent application are proposed specifically to achieve this. It is in this context that the proposal from India and Brazil emphasized the need for national systems to support the international obligation in this regard. Thus, it is incorrect to state that the object of the new disclosure requirement of source and country of origin is of "little or no utility" if national regimes on PIC and benefit sharing are not in place. Even in the absence of a national ABS regime, disclosure of source and country of origin could surely help prevent bio piracy and misappropriation of traditional knowledge associated with genetic resources by preventing the issue of bad patents. Additionally, in the cases where national ABS regimes have been established, disclosure ensures that the requirements of these national regimes are met by bio-prospectors.

13. The options contained in a contract-based system as proposed by the United States, viz. choice of forum, choice of law, international arbitration provisions governing transboundary issues, enforcement issues etc., are concerns of private international law. Since the problem of misappropriation of genetic resources and associated traditional knowledge is a truly global one, requiring international intergovernmental norms, solutions-based on private international law are inadequate. It is submitted by the United States that a contract-based system "can be international in its outlook" with "provisions relevant to cross-boundary dispute or enforcement issues". The United States is thus admitting to the limitations of relying solely on national systems, and is agreeing that additional steps need to be taken to rectify the limitations of the existing regime. Clearly, the best and most effective way to address the shortcomings of the existing system is through the establishment of an internationally binding obligation rather than the simple use of private international law principles within the national regime. This binding international obligation can easily be achieved by integrating it within TRIPS obligations. It is this aspect that India and Brazil emphasize when arguing for a binding requirement of disclosure of evidence of PIC and benefit sharing in the patent application.

1. Monitoring System

14. The United States also opines that a contract-based ABS regime can be an effective monitoring system by mandating disclosure of any commercial application utilizing the resources or traditional knowledge. [11] It is to be noted that in the case of genetic and biological resources, monitoring is a very difficult task and may not be technically feasible especially when it leaves the country of origin [12] due to the nature of the product being purloined. One of the major uses of genetic resource and traditional knowledge associated with it takes place through the patent system. The patent system acts as an incentive to the commercial use of genetic resources and associated knowledge by creating a private monopoly over goods which are either public or owned by civil society rather than corporate interests who are able to prevent abuse. The objective of a disclosure of source and country of origin mechanism in the patent system is the prevention of misappropriation of knowledge by preventing the grant of bad monopolies. So a solution within the patent system for monitoring the use of genetic resources and associated knowledge is more appropriate and effective than a fragmented private stakeholder-based contractual system.

2. Enforcement of ABS Systems

15. The United States equates disclosure of origin, as well as evidence of PIC and benefit sharing, with separate regulatory measures in the areas of health, environment and other matters. It is submitted by the United States that like the national regulatory measures enacted in those areas, PIC and benefit sharing could be monitored through separate national regulatory authorities and that the patent system need not be strained for this. [13] As noted above, the prevention of illegal access to genetic resource through regulatory measures is difficult given the ease with which such resources can be purloined. So what is attempted through mandatory disclosure requirement is to ensure that the implementation of the TRIPS Agreement and of the obligations under the CBD should take place in a mutually supportive manner. As explained, this requires internationally binding legal obligations rather than national regulatory measures alone. The US contract-based solution sidelines this issue. The United States also submits that the patent system does not condone or legitimize misappropriation of genetic resources or traditional knowledge in violation of domestic requirements and that as in the case of other regulatory requirements, inclusion of civil or criminal liability for non-compliance can adequately take care of the question of enforcement. This seems to be an over simplification of the issue. One of the primary justifications for the disclosure proposal as an internationally binding norm is precisely the realization that the effort to get bad patents revoked or PIC/ABS issues addressed in the countries of grant of patents has proven to be costly, burdensome and more complicated than what could be offered by the mutual harmonization of the approaches of TRIPS and CBD through the disclosure requirement.

B. Benefit Sharing

16. The United States observes that "establishing national access and benefit-sharing systems is essential before engaging in discussion of supplemental patent disclosure requirements. Furthermore, it would seem prudent to determine areas of inadequacy, based on experiences, of existing national systems in order to more fully consider these matters." [14] Of course, a national ABS regime is necessary for the proper running of the benefit sharing aspects of the system. But it is not correct to argue that establishment of national access systems is a pre-requisite for discussing an international framework for the disclosure requirement. There are many instances where international norms are set before national systems are put in place. This is all the more true with new and emerging areas, including in the field of intellectual property. An example is the Treaty on Intellectual Property in Respect of Integrated Circuits (the Washington Treaty), which was adopted in 1989 and has never entered into force. No Member states of WIPO at the time had national legislation or experience in implementing that Treaty during the negotiations of the TRIPS Agreement, but its provisions were nevertheless adopted as minimum standards of protection within TRIPS as part of those negotiations. Another example is the protection of copyright in the digital environment. The issue was internationally discussed and the so-called "WIPO Internet Treaties" (WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty) adopted at a Diplomatic Conference in 1996 before many countries, particularly developing and least-developed countries, could even experience and grasp the full extent of the problem, let alone establish an appropriate legal framework to find solutions. [15]The justification for that normative effort had been the need to prevent violation of rights and misappropriation of profits. [16]The international framework, once established, led to the introduction of national systems, including in the United States, where legislation to implement the "Internet Treaties" came into operation only in 2000. [17] Similarly, to prevent violation of rights over genetic resources and associated traditional knowledge, national regimes, howsoever effective they may be, can only require that PIC and benefit sharing should be linked to the grant of access. The effective enforcement of such national regimes will be very weak, unless they are supported by an international legally binding obligation. Moreover, such national ABS regimes cannot prevent the grant of bad patents involving genetic resources and associated traditional knowledge. But if disclosure is made obligatory at the international level, all the concerns will be properly addressed. So the establishment of an international obligation assumes primacy. Furthermore, it is to be noted that many countries have already enacted national laws for ABS and others are in the process of doing so.

17. Another conclusion asserted by the United States is that "the remedy proposed itself (invalidation due to non-compliant disclosure, etc.) would destroy or have significant negative consequences on the benefit being sought, rather than ensuring that the benefit would be shared with the appropriate party. This would clearly fail to meet the shared objective of ensuring the equitable sharing of benefits arising out of the utilization of genetic resources and/or traditional knowledge." [18]The goal of the disclosure requirement primarily is to prevent misappropriation of genetic resources and associated traditional knowledge. Disclosure of origin, coupled with disclosure of evidence of benefit sharing and PIC, promotes the equitable sharing of benefits. When there is patent protection involved in the commercialization of genetic resources and associated traditional knowledge, an enforcement mechanism within the patent framework will be more effective in ensuring that fair and equitable benefit sharing takes place. The disclosure requirement will ensure that PIC and fair and equitable benefit sharing agreements are obtained in compliance with the national law of the country of origin of the genetic resources. The consequences of non-disclosure, such as invalidation of patent rights, will flow only in cases of fraudulent claims, not bona fide ones. The intention is to protect the legal rights of the custodians and holders of the knowledge or the resources. The nature of the benefit shared, the mode of its sharing etc., are concerns to be addressed under the national regime. For example, if the person providing the genetic resources is giving only the raw material and he does not have any knowledge of its use value, he can claim benefit sharing for the mere supply of the resources. It is a wrong notion that patent monopoly is essential for the sharing of benefits and that if there is no patent, no benefits can be shared. Furthermore, remedies for non-compliance with disclosure are not limited to invalidation, as they may include other possibilities, such as the full or partial transfer of rights.

18. The United States also argued that "rather than attempting to single out applications involving patents and trying to deal with them with a new patent disclosure requirement that may negatively effect technological development, a more appropriate solution would be strengthening national regimes outside the patent systems in order to take a comprehensive, holistic approach and address all instances of commercialisation of misappropriated resources and/or traditional knowledge that need to be addressed outside the patent system in any event." [19]It is true that misappropriation of traditional knowledge and genetic resources may or may not include patent protection. The new patent disclosure requirement can only deal with situations where there is misappropriation through patents. The instances of other forms of commercialization are dealt with under the national ABS regimes. But it is erroneous to argue that since the patent disclosure requirement does not cover all instances of commercialization, such a requirement is not necessary. The fact that misappropriation may not always involve the granting of patents does not mean that, when patents are actually involved, disclosure of origin may not make a significant contribution to preventing misappropriation. Moreover, when there is a patent, it is only through the disclosure requirement that we can better assess the novelty and inventive step in the claimed invention and thereby prevent the grant of patents to ineligible claims. The ABS regime can do nothing in relation to the grant of bad patents. It is clear, therefore, that we cannot undermine the significance of the new patent disclosure requirement on the ground that it does not cover all instances of commercialization.

19. The United States believes that any international effort should not be focused on new patent disclosure requirements but rather, on efforts to encourage the establishment of appropriate access and benefitsharing systems that (1) improve compliance by providing users with clear rules for collection of genetic materials; and (2) help ensure that where uses of genetic resources or traditional knowledge are made, benefits are equitably shared with the appropriate parties. [20]Thus the
United States also accepts the need to establish an ABS regime with rules for strict compliance ensuring equitable benefit-sharing. The effective way of promoting effective compliance with such national regimes is to create internationally binding obligations in the field, clearly spelling out the requirements of disclosure of source and country of origin, prior informed consent and benefit sharing as proposed. Also, the various situations cited by the United States in footnote 20 of document IP/C/W/449 do not undermine the relevance of establishing an international disclosure requirement. In fact, these examples support the need for a disclosure requirement on PIC and benefit sharing. They show that there is a distinction between commercialization without a patent, where there is no exclusivity and public domain knowledge is exploited by all, including the original owners, and commercialization with a patent, where despite lack of novelty or inventiveness, a monopoly has been created in favour of the patent applicant and against other legitimate exploiters.

C. Preventing Erroneously Granted Patents

20. It is heartening that "the United States generally shares concerns regarding erroneously issued patents." [21] But document IP/C/W/449 refuses to accept that the proposed disclosure requirement would address the issue of bad patents. [22] As explained by India in the TRIPS Council meeting in
June 2005, disclosure of origin is crucial in determining novelty and inventive step, giving useful hints in relation to the existing prior art and a way to inquire into the extent of inventiveness. As noted by Brazil in its statement in the same meeting, the patent disclosure requirement is "…critical in ascertaining whether or not the applicant has invented what he claims in the patent, or has just found it in nature or obtained it from traditional cultures. This is especially important when the traditional knowledge used in the invention is undocumented and exists in oral form, or is documented in a local language. Disclosure of source and country of origin of the resource and traditional knowledge would enable a better assessment by the patent examiner of the novelty and the inventive step involved in the invention". The role of disclosure requirement as information material to patentability in assessing novelty and non-obviousness is clear and the United States accepts this as important in their submission. [23] But in its latest submission the United States misses the point that if the disclosure requirement is made mandatory, the patent examiner can require the applicant during the processing of the application to furnish more information to ensure that patents are not issued for ineligible inventions. This would significantly contribute to addressing the problem of bio piracy and misappropriation. The absence of details such as the ones that would have to be provided by the patent applicant under the proposed disclosure of origin requirement makes the prior art search almost impossible and the patent office is often compelled to issue patents for inventions that do not fulfil the relevant criteria. The revocations of the turmeric and neem patents are cases in point.

21. IP/C/W/449 also argues that determination of inventorship, prior art etc. are rooted in a country’s patent law. (Inventorship based on acts of invention; novelty and inventorship based on the country’s relevant art). It argues that information regarding the country of origin or the source i.e. country locations or ex situ collection sites etc., is not relevant to considerations like inventorship or prior art and would therefore be of little value in that process. [24] One of the primary aims of the proposed disclosure requirement is to check the issue of erroneously granted patent by rooting the patent examination on novelty and inventiveness. In this regard, information on source and country of origin can give useful hints in relation to the holders of the resources and/or the knowledge associated with them. The United States does not accept the fact that this information clearly facilitates the identification of the person skilled in the art and whether there exists a prior use or prior publication of the properties of the claimed invention involving the resources. This is also linked with the practices of a country. Especially when the resource is collected from one country and is indigenous to another country, the information of both source and origin proves to be more helpful in assessing the application on the patentability criteria. So the United States is not correct in arguing that the information that would be provided under a disclosure of origin requirement has nothing to do with considerations like novelty and inventiveness.

22. The United States further argues that "the options of organized searchable databases, information material to patentability, and use of effective post-grant and re-examination procedures" [25] better serve the purpose of preventing the issuance of bad patents. Assuming but not accepting that such systems could be effective, disclosure of source and country of origin is also important for their effective use. For example, disclosure of origin will surely help the patent examiner to more effectively use the searchable databases in finding out the prior art and undertaking its further analysis. Disclosure of origin also contributes effectively to post-grant and re-examination procedures, since the disclosure would help the opponents collect adequate information on the prior art and obviousness. This is evident from the opposition proceedings in the neem case before the EPO. [26] The disclosure of country of origin helped the opponents to prove the teachings in India during opposition proceedings regarding the healing properties, which led to the revocation of the said patent.

23. The United States submitted that post-grant and re-examination procedures play an important role in rectifying erroneously granted patents. [27] It is an established fact that despite the existence of such procedures, many bad patents are still issued in relation to genetic resources and the knowledge associated with them. This shows that post-grant and re-examination procedures alone are not sufficient to effectively deal with the situation. The procedure as proposed by the United States is also complex, lengthy, expensive and burdensome. In addition of being more costly and burdensome, post-grant reexamination and revocation are curative mechanisms for the ailment of the issue of bad patents, rather than preventive steps. What we argue for is an effective procedure to prevent the issue of erroneous patents, which is preferable to relying on the costly post-grant rectification of mistakes committed by patent offices in issuing bad patents. In this context, the proposed disclosure system is an effective preventive mechanism to the increased problem of issue of bad and questionable patent specifically in the area of biotechnology. [28] The above-mentioned post-grant and re-examination procedures could be truly helpful only if coupled with disclosure of origin, which is clearly a more direct, simple and cost effective measure.

24. The United States also argues that information that directly relates to the genetic resources and traditional knowledge provided by organized databases would be more comprehensive than information regarding the source and/or country of origin [29] of the genetic resources, provided under a disclosure of origin requirement. There is no logic in this argument. It is not possible to document the whole knowledge available in a country let alone in the world. Also, the knowledge that is kept confidential by some communities cannot be documented. Since documentation as proposed cannot be exhaustive and comprehensive, it cannot remedy erroneously granted patents. On the other hand, the proposed disclosure requirement gives useful links to the novelty and inventive step in the claimed invention, thereby preventing the grant of bad patents.

25. It is quite interesting to note that the United States concludes that "in other words, it is not the act of patenting or applying for patent, but rather the fact that traditional knowledge or genetic resources were accessed in violation of a national access regime and are being exploited, based on that improper access, without obtaining prior informed consent and without providing for equitable benefit-sharing that is the cause of any potential misappropriation". [30] This conclusion is incorrect, first because erroneous patents are wrongly granted patents, even within the patent system. Second, this conclusion also suppresses the issue of violation of the property rights and misappropriation of genetic resources and associated traditional knowledge by the granting of bad patents.

26. In addition to the issue of benefit sharing, the CBD tries to bring out the global issue of misappropriation of genetic resources and associated traditional knowledge through different means including granting of patents good and bad. This is evident from Article 16 of the CBD that mandates the need to use international intellectual property norms supportive of the objectives of CBD. By using the genetic resources or the knowledge associated with them, many actors have been taking out patents, including those that do not even fulfil the criteria of novelty or inventive step. The US submission fails to convince that a contract-based national system could provide solutions to these problems. We submit that only a patent disclosure requirement including the evidence of PIC and benefit-sharing agreement can effectively check the problem of misappropriation of genetic resources and associated traditional knowledge.

D. Additional Issues

27. The United States also addresses other concerns like additional burden created by the new patent disclosure requirement on the patent offices and the applicants. [31] It is to be noted that the applicant is required to submit only information of which he is, or in any case should be, well aware. In most countries having national regimes, the evidence relating to PIC and benefit sharing are conditions precedent for the grant of access. So the new patent disclosure requirement does not impose on him/her any cost or administrative burden while proceeding for a patent. Likewise, the patent office is also not asked to test the veracity of the evidence furnished in relation to PIC or benefit sharing. These serve as prima facie evidence of compliance. Disclosure of source and country of origin of the genetic material or associated traditional knowledge, enhances the capacity of the patent office in examining the patent applications involving biological resources or traditional knowledge and serves as a critical tool in tracking down applications involving them. [32] This gives the patent office useful hints to enquire into the novelty and inventiveness claimed in the invention.

28. Similarly, the United States does not consider the "requirement for source and/or origin to be a requirement to disclose information material to patentability" and adds that thus it cannot remedy the granting of bad patents. [33] As discussed earlier, this requirement alone can deal with the problem of bad patents whereby the patent office can require the applicant to furnish more information during the processing of the application. It checks the grant of bad patents by testing them against novelty and inventive step, being crucial in the determination of the criteria of patentability, it is of course an information material to patentability.

29. Another argument extended by the United States is that "…the disclosure requirement would be new and would provide an additional avenue to litigation and other uncertainties that would undermine the role of the patent system. Particularly where the sanction would be, as has been proposed, revocation of the patent right, this would cause undue uncertainties in these patent rights, even where a good faith attempt has been made to comply with such requirements." [34] It also adds the statement of the Biotechnology Industry Organization to the WIPO Intergovernmental Committee on Genetic Resources, Traditional Knowledge and Folklore that patent exclusivity is justified on the risks and investment involved in discovering and developing inventions and that the proposed requirement and sanctions, that may block the patent of an otherwise eligible invention, would create unacceptable risks. [35] It also argues that it would have detrimental effects on the developmental incentives of the patent system and benefit sharing. However, it is an accepted fact that an invention is eligible for patent protection only if it satisfies the universally recognized criteria of novelty, inventive step and industrial applicability. An invention that lacks these basic elements cannot be protected under patent law only on the ground that there is a huge investment behind it. Thus the new requirement is not creating any unacceptable risk, but adds to the legitimacy and certainty of the patent system that only the eligible inventions are protected. The sanctions are only affecting fraudulent claims, without any uncertainty as alleged and a bona fide researcher need not worry about the same. On benefit sharing also, no ambiguity is created. It is not true that the proposed requirements will have negative effects on the possible benefit sharing. If a patent is granted, the benefits arising out of such monopoly should be shared with the resource providers. It is true that if there is no patent, benefits from a patent cannot be claimed. But, it does not undermine the possibility of getting benefits from commercialization or the grant of access itself.

Notes:

[01] IP/C/W/449 paragraph 4.

[02] IP/C/W/449 paragraph 6.

[03] See http://www.guardian.co.uk/international/story/0,3604,893642,00.html

also see http://www.theinquirer.net/?article=21207,

http://www.cyber-rights.org/

documents/yahoo_ya.pdfp://www.vnunet.com/

personal-computer-world/news/2042963/yahoo-backs-nazi-case

[04] IP/C/W/449 paragraph 8 and IP/C/W/434 footnote 7.

[05] A sample list of cases attached at Annex.

[06] IP/C/W/449 paragraph 9.

[07] IP/C/W429/Rev.1.

[08] IP/C/W/434.

[09] There exists no recommendation from the WIPO IGC on the matter.

[10] IP/C/W/449 paragraph 14.

[11] IP/C/W/449 paragraph 18.

[12] Glowka, "The Next Rosy Periwinkle Won’t be Free: Emerging Legislative Framework to Implement Article 15", Environmental Policy and Law, 27/6 (1997) p.445.

[13] IP/C/W/449 paragraph 21.

[14] IP/C/W/449 paragraph 23.

[15] See www.wipo.org/treaties/en/ip/wct/ - 26k

[16] For a detailed discussion, see Mahaly Ficsor, The Law of Copyright and the Internet, Oxford University Press, 2002.

[17] See www.copyright.gov/legislation/dmca.pdf.

[18] IP/C/W/449 paragraph 25.

[19] IP/C/W/449 paragraph 26.

[20] IP/C/W/449 paragraph 27.

[21] IP/C/W/449 paragraph 29.

[22] IP/C/W/449 paragraph 28 & 29 read with IP/C/W/443 paragraph 17.

[23] ip/c/w/449 paragraph 36.

[24] IP/C/W/449 paragraph 30.

[25] IP/C/W/449 paragraph 31.

[26] For a detailed discussion, see

http://www.womenandlife.org/

WLOEen/information/globalization/neembriefmar05.html or

http://www.ifoam.org/press/press/pdfs/Briefing_Neem.pdf

[27] IP/C/W/449 paragraph 33.

[28] See US FTC Report on Patent October 2003 "To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy".

[29] IP/C/W/449 paragraph 32.

[30] IP/C/W/449 paragraph 35.

[31] IP/C/W/449 paragraph 36.

[32] Statement by Brazil in the TRIPS Council in June 2005

[33] IP/C/W/449 paragraph 37.

[34] IP/C/W/449 paragraph 38.

[35] IP/C/W/449 footnote 31.

Annex - Footnote 5 - A Sample List Of Bad Patents

1. The Quinoa Case - US patent 5,304,718 Source: Graham Dutfield, Intellectual Property, Biogenetic Resources and Traditional Knowledge, Earth Scan, UK and USA, 2004, Chapter 5, p. 53

2. The Enola Bean Case - US patent 5,894,079

Source: Graham Dutfield, Intellectual Property, Biogenetic Resources and Traditional Knowledge, Earth Scan, UK and USA, 2004, Chapter 5, p. 54 –55.

3. Dupont’s Biopiracy Challenged - EP 744888, issued to Dupont Aug. 2001

Source: "Dupont claims patent monopoly over natural maize traits", Greenpeace press release, May 29th 2001 http://www.greenpeace.org

4. Ayahuasca patent - U.S. Plant Patent 5,751 on June 17, 1986

Source: Glenn M. Wiser, PTO Rejection of the "Ayahuasca" Patent Claim: Background and Analysis, Center for International Environmental Law, November 1999, http://www.ciel.org/Biodiversity/ptorejection.html

5. "Ampalaya" – Philippines - US 5484889, JP 6501089 and EP 553357

Source: http://lists.essential.org/pipermail/upd-discuss/2001q1/000127.html

6. Turmeric Patent - US patent 5,40,504 on 28 March 1995

Source: Mashelkar, R. A., Intellectual Property Rights and the Third World, Journal of Intellectual Property Rights, Vol.7, July 2002, p.317.

7. The Hoodia Case - WO 9846243

Source: Graham Dutfield, Intellectual Property, Biogenetic Resources and Traditional Knowledge, Earth Scan, UK and USA, 2004, Chapter 5, p.52

8. Toxin of the Amazon frog Epipedobates tricolour -

Source: http://www.metu.edu.tr/~mengu/biopiracy_mengu_odev.pdf

9. Maca - Source: http://fletcher.tufts.edu/research/2003/MaliniGoel.pdf

10. Patent for composition of bringal, Karela, Jamun and Gurmar - US patent 5,900,240

11. Patent for Arhar or Pigeon pea or Cajanus – US patents 6,410,596 and 6,541,522

12. Patents for Pepper – US patents 5,536,506, 5,744,161 and 5,972,382

13. Patent for Amla - US patent 5,529,778

NAMA 11 Ministerial Communiqué

In this development Round, developing countries are being asked to undertake tariff reductions of 60% to 70% while developed countries themselves are offering only 20% to 30%. This inverts the mandate of "less than full reciprocity in reduction commitments" by developing countries, say developing country Ministers taking the lead on the WTO negotiations on non-agricultural market access (NAMA). They issued the following communiqué 29 June 2006 in Geneva on behalf of Argentina, Bolivarian Republic of Venezuela, Brazil, Egypt, India, Indonesia, Namibia, Philippines, South Africa and Tunisia

"Ministers of the NAMA 11 group of developing countries met in Geneva on 29 June 2006, to assess the progress of negotiations and to contribute to the objective of achieving a fair, balanced and development oriented set of NAMA modalities predicated on the following mandated principles:

· placing development concerns at the heart of the negotiations;

· ensuring "less than full reciprocity in reduction commitments" for developing countries;

· comparable level of ambition with agricultural market access; and

· appropriate flexibilities to manage adjustment costs and address development needs.

Ministers call attention to the comprehensive set of proposals submitted by NAMA 11 on all elements of the modalities, including those of concern to other developing countries. Our endeavour will be to address all these concerns for a fair and balanced outcome.

Ministers recall the unprecedented agreement for all Members to undertake tariff cuts in NAMA using a Swiss formula with coefficients. Whatever the coefficients agreed, this formula will entail deep line-by-line cuts, particularly on the higher tariffs. This represents a significant contribution by developing countries.

Ministers noting that the objective of an ambitious outcome can be achieved only through tariff reductions greater than those in previous Rounds, express concern that developed countries are offering a reduction of only 20% to 30%. In sharp contrast, in this development Round, developing country Members are being asked to undertake tariff reductions of 60% to 70%. This inverts the mandate of "less than full reciprocity in reduction commitments" by developing countries.

Ministers recall that some proposals have sought to ensure "less than full reciprocity in reduction commitments" through an appropriate spread between the coefficients. A Swiss formula with two coefficients, based on reductions from bound rates, may also deliver on this mandate, provided that there is a difference of at least 25 points between the coefficients for developed and developing countries. This is imperative to take into account their respective levels of industrialization and competitiveness; social and economic situations; and their capacity to bear the costs of adjustment.

Ministers note the substantial autonomous tariff liberalisation by developing countries since the Uruguay Round resulting in dramatic increases in imports; whereas developed countries continue to retain tariff peaks, high tariffs and tariff escalation, particularly on the products of export interest of developing countries. This imbalance has to be rectified.

Ministers stress that the numbers in brackets in paragraph 8 are the bare minimum and as such a higher number of tariff lines and larger trade coverage would be required by developing countries to address specific situations. We reiterate that a fair mark-up on unbound tariffs is needed to address the sensitivity attached to both low and high unbound tariff lines.

Ministers underscore that an ambitious result in NAMA is possible, but not at the expense of the development dimension of the Round. Developing countries cannot be expected to pay for the Round whilst developed countries make minimal reductions to their own industrial tariffs and continue to retain their subsidies and allow only limited market access in Agriculture."

South Centre News

Board Members

Four members of the South Centre Board - Chief Emeka Anyaoku, Deepak Nayyar, José Antonio Ocampo, and Norman Girvan participated in the two day brain-storming on ‘New Challenges For The South: Opportunities And Risks’ organised by the South Centre in Geneva. Two members of the South Commission - Solita Monsod (Philippines) and Aldo Ferrer (Argentina) also took part in the discussions.

For more details, please refer to

http://www.southcentre.org/sip/sipindex.html.

Trade for Development

- The staff interacted with the following at the South Centre:

· A group of Turkish Government officials on the 29 of June. They were explained the historic background of the Centre and different areas of its work programme. Brief presentations were also made on the participation of developing countries in the multilateral trading system and on the current state of play in the WTO agriculture and non-agricultural market access (NAMA) negotiations.

· A group of UK Parliamentarians on Wednesday 5 July. The staff shared their perspective with respect to the WTO Doha round of negotiations and responded to specific questions from parliamentarians on a wide range of issues including some related to the way negotiations are conducted at the WTO and the main challenges for developing countries for effectively engaging and influencing the negotiation process in the WTO.

Global Governance

- Recent research and publications

· Published the Second Quarter issue of "The South Centre Quarterly on Trade Disputes" (2006). The Quarterly analyses WTO case law from a developing country perspective and highlights the implications of the case law for developing countries, including the links between the cases and the current negotiations.

· Published an Analytical Note titled "Development and Human Rights: Promoting the Human Rights Council’s Development Mandate". Discussing the linkage between poverty reduction, development and the full enjoyment of human rights, the Analytical Note suggests that the new UN Human Rights Council should adopt a developmental approach to its work in promoting and protecting civil, political, economic, social and cultural rights.

- Work with delegations in Geneva

· Prepared informal comments for a delegation on legal issues arising from the services domestic regulation negotiations, 11 July 2006.

- The staff participated in the following conferences and meetings:

· A briefing on the Brazil - Retreaded Tyres case by Brazilian Minister of the Environment on 5 July 2006.

· With Services Team, in meetings between intergovernmental organizations and LDCs on the issue of creating a mechanism for according special priority in market access in sectors and modes of interest to LDCs. The meetings were held on 6, 7 and 12 July 2006.

· Together with the Services Team, in LDCs’ meeting on the special priority mechanism on 10 July 2006.

· Discussed South Centre work, WTO dispute settlement and RTA negotiations with an official from the Pakistani Ministry of Commerce on 3 July 2006.

Innovation, Access to Knowledge and IP

The staff under this Program:

· Presented a paper on "WTO TRIPS Agreement and its Impact on Access to Medicine", at the Islamic Development Bank (IDB) seminar, held from 10-12 July, at Dakar, Senegal. Presentation was also made on "Current IP Debates including WIPO Development Agenda" at the informal meeting with participants in the "WIPO & WTO colloquium for Teachers of Intellectual Property" organised by QUNO and ICTSD on 6 July, 2006 in Geneva.

· Also attended the South Intellectual Platform meeting organised by the South Centre from 10-11 July 2006, in Geneva.

Africa’s Natural Wealth Key to Economic Prospects

Nairobi, 27 June - Poverty in Africa can be made history if the region’s wealth of natural resources is effectively, fairly and sustainably harnessed a new report by the United Nations Environment Programme (UNEP) says.

Outstanding issues like rapid rates of deforestation, high levels of land degradation, wasteful water use in agriculture and climate change remain and need to be urgently addressed. Other challenges are emerging. These range from genetically modified organisms and the costs of alien invasive species up to a switch of chemical manufacturing from the developed to the developing world, says the Africa Environment Outlook-2.

However many African countries are now parties to a wide range of international environment treaties and new cooperative agreements are being born covering shared river and ecosystems like the Limpopo up to the management of the Congo basin’s globally important forests.

Meanwhile initiatives like the African Union’s New Partnership for Africa’s Development (NEPAD) promise to propel the region and its people onto a more prosperous path that balances economic, social and environmental concerns.

Several African countries, like the Gambia and Zambia, are mainstreaming the environment in their Poverty Reduction Strategy Papers and other countries are starting to use tax and other market mechanisms to conserve ecosystems like forests.

Only last week Tanzania announced, in its budget, VAT exemptions for liquefied petroleum gas in order to reduce energy production from charcoal and wood. Kenya has announced that solar panels and related equipment will be zero rated.

Achim Steiner, UNEP’s Executive Director, said today: "The report challenges the myth that Africa is poor. Indeed, it points out that its vast natural wealth can, if sensitively, sustainably and creatively managed, be the basis for an African renaissance—a renaissance that meets and goes beyond the internationally agreed Millennium Development Goals. But this is not inevitable and, as the AE0-2 points out, African nations face stark choices".

"If policies remain unchanged, political will found wanting and sufficient funding proves to be elusive, then Africa may take a far more unsustainable track that will see an erosion of its nature-based wealth and a slide into ever deeper poverty," he added.

"Such a track will have disturbing consequences not just for many of the 800 million people here but for the rest of the world. Nevertheless, I am convinced that we are fast reaching a watershed in Africa’s response and that the pieces of a sustainable jigsaw puzzle are being steadily put into place" said Mr Steiner.

Editorial

WTO: High Time to Deliver on Promises

It was in the shadow of terrorism that the Doha Work Programme - also referred to as a Development Round - was born. Now, when it is getting time to complete this Round, added to terrorism are menacing flashpoints of war. But the outside environment cannot serve any pretext for lack of progress in advancing the cause of this international trade round. Great hopes were raised for the developing countries with the Doha Round. It was marketed incessantly as the Doha Development Agenda. But the going has not been easy. On each momentous occasion when the Trade Ministers assembled – including the July Framework (2004) or the Hong Kong Declaration – developing countries are at pains to count the development benefits that are going to be coming their way as a result of re-writing the international trade rules.

The latest Ministerial gathering of end June 2006 was supposed to have served as an important milestone. But it did not. Trade Ministers from the South were not just disappointed; they now seem to be carrying the mantle of keeping multilateralism alive at the WTO. It appears, after all, that the rich industrialised nations of the North want to get more out of this Development Round than what the developing world can get. By continuing to resist from making decent offers that go in line with the agreed mandate of this round, some industrialised countries have reportedly resorted to questioning issues that had already been wrapped up before. "This is a Round very clearly defined in paragraph 24 of the Hong Kong Declaration – where market access is to be enabled for developing countries into developed countries. This is a Round for trade flows and trade gains so that developing countries benefit. But if developed countries come to Geneva with the hope and belief that market access will be available in developing countries – not just market access of agricultural products but market access of subsidies – then of course there will be no negotiating space," said Minister Kamal Nath of India. "We have made it clear: we cannot negotiate subsistence and livelihood security. We are willing to negotiate commerce but not subsistence and livelihood security. That is basic – and we should not even be asked to negotiate this. But unfortunately, that has not been so."

In fact, the most substantial results have to be achieved in the areas where the greatest distortions lie, in particular on trade-distorting subsidies in agriculture, that displace developing country products and threaten the livelihoods of hundreds of millions of poor farmers. Even at this late stage in the Round, the big subsidisers refuse to come out with numbers that would suggest that there is going to be some significant cuts in these tens of billions of dollars worth subsidies – which in the final analysis, are robbing poor peasants of their livelihood. As Minister Mari Pangestu of Indonesia said, "The flexibilities that we have demanded in SP (special products) and SSM (special safeguard mechanisms) are not about market access. They are about protecting targeted sectors that are vulnerable on the three criteria that we have already set out - livelihood security, rural development and food security. These are not to be re-negotiated. They are sectors to address the real concerns of developing countries as they open up for greater trade. So this is something that we feel should be addressed properly and looking at the real concerns of developing countries. It is about effective instruments of flexibility – effective instruments for SDT (special and differential treatment), SP and SSM. It is not about loopholes and erosion of market access." She also pointed out that in low-income countries, 70 per cent of our employment is still in agriculture, and for middle-income countries it is 30 per cent – compared to 1 to 4 per cent in the developed countries.

The trade distortions caused by such subsides as in agriculture have been prohibited for industrial goods for several decades. That is an interesting contrast. It implies international trade rules have been inequitable – they have been for a long time. Domestic support is legal for agriculture and illegal for industrial production. "This is something that implies a fundamental inequity in the rules of international trade and this Round was supposed to change that. This is the origin – that we have this Doha Round in the first place. If we are not changing this, this Round does not have any reason at all to exist." That was the firm view of the Trade Minister from Argentina, Alfredo Chiaradia.

Market access will be an important component of a successful Round, but market opening in the developing countries must take into account their social and economic realities. A number of developing country trade ministers have cautioned that a Development Round should not lead to the deindustrialization of the developing world. There has got to be a basis to say that – as indeed the Minister from South Africa Rob Davies pointed out that the burden of adjustment being asked of developing countries by of cutting industrial tariffs is far greater than what the industrialised countries themselves are going to be doing! WTO Director General Pascal Lamy appears to have abandoned his fascination for using the aviation analogy – cruising altitude and jet fuels. He is now apparently talking about building the pieces of a Gothic architecture. But coming back to the crux of the matter – the rich industrialised North, which is the one in a position to make the first desired right moves in this Round – must deliver on its promises. Any attempts to shift the burden on to emerging big developing countries would be just another diversion.

Attached please find the latest issue of the 
South Bulletin no.128 in pdf and word formats. 
Focus on progress in Doha round 
plus amending TRIPS agreement.

Best regards,

See attached file: bulletin128.pdf
See attached file: South Bulletin 128Word.doc

Someshwar Singh

Senior Editor
South Centre
Ch. du Champ d'Anier 17
1211 Geneva 19
Switzerland

Tel-(4122)7918044
Fax-(4122)7988531

singh@southcentre.org
web site: www.southcentre.org

Latest issue of the South Bulletin no. 128

singh@southcentre.org

Attachment: bulletin128.pdf (0.17 MB), SouthBulletin128Word.doc (0.28 MB)

Friday, July 14, 2006