WTO Members Approve TRIPS Non-Violation Extension, Debate E-commerce Language

26 November 2015

WTO negotiators have agreed to extend a moratorium on “non-violation and situation” complaints under the organisation’s intellectual property rules for an additional two years, forwarding the planned decision to the global trade body’s upcoming ministerial conference for adoption.

The news comes as WTO members continue discussing the extension of another moratorium on customs duties on electronic commerce, as well as a decision regarding next steps for an ongoing, related e-commerce work programme. These are also being eyed as outcomes for the ministerial, scheduled for 15-18 December in Nairobi, Kenya.

Both the “non-violation” moratorium and e-commerce areas have long been standing items on ministerial conference agendas. Meanwhile, with the Nairobi meet just weeks away, WTO members are looking to see what other deliverables they will be able to put together for their highest-level meeting, as well as how to structure their future work.

TRIPS non-violation

Under the current “non-violation and situation complaints” moratorium, WTO members are only allowed to file a complaint about an intellectual property issue if the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) has allegedly been breached.

In other words, the moratorium is designed to prevent members from suing each other over damage arising from alleged violations of the spirit – but not the letter – of the organisation’s intellectual property rules, such as through an action that a government takes or another situation that arises.

Non-violation complaints are permitted under WTO rules in other trade areas, such as goods and services. Under these complaints, it is considered valid for one member to challenge another member’s domestic measure under the organisation’s dispute settlement mechanism, should such policy deprive the former of a legitimately expected benefit.

Whether such a remedy can be applied to intellectual property rights, however, was debated extensively ahead of the WTO’s establishment two decades ago under the Uruguay Round negotiations. Ultimately, the TRIPS Agreement established that non-violation complaints would not apply for a period of five years from when the overall WTO Agreement entered into force – in other words, not until the year 2000.

During this period, the TRIPS Council was instructed to make recommendations to the WTO’s ministerial conferences regarding the scope and modalities for addressing non-violation and situation complaints under the organisation’s intellectual property rules. The moratorium has been extended repeatedly since.

Whether the moratorium would indeed be renewed for another two years at the Nairobi ministerial had earlier been in question, given that both the US and Switzerland had again argued for lifting the moratorium on the grounds that there could be a place for such complaints under the TRIPS Agreement.

Some other members had reportedly argued that allowing for such non-violation and situation complaints would still require developing modalities for their inclusion. An October meeting of the TRIPS Council had been suspended in order to reach agreement on this item, given the disagreement over whether to end the moratorium or to extend it indefinitely.

At a meeting on 23 November of the WTO’s Council on Trade-Related Aspects of Intellectual Property (TRIPS), members ultimately agreed to forward to Nairobi a draft decision extending for two years the moratorium on non-violation and situation complaints, with various members saying at the meeting that talks on a permanent solution should begin following the ministerial.

According to an addendum to the TRIPS Council’s annual report issued following this meeting, the recommended language for the ministerial decision would take note of the Council’s work in this area since the last extension, which was approved at the 2013 ministerial conference in Bali, Indonesia.

The language then directs the TRIPS Council “to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of [the General Agreement on Tariffs and Trade, or GATT]1994 and make recommendations to our next Session, which we have decided to hold in 2017. It is agreed that, in the meantime, members will not initiate such complaints under the TRIPS Agreement.”

E-commerce discussions ongoing

The news on the non-violation moratorium may bode well for the extension of the moratorium on e-commerce duties, sources say, given that the two have traditionally been linked, albeit informally.

Under the e-commerce moratorium currently in place, WTO members have agreed not to impose customs duties on electronic transactions, with the existing moratorium set to end in Nairobi unless ministers agree to extend it.

The original moratorium dates back nearly two decades, when members agreed during the WTO’s May 1998 ministerial conference to “continue their current practice of not imposing customs duties on electronic transmissions,” with this commitment being renewed repeatedly at subsequent ministerials.

In September 1998, following the direction given by ministers earlier that same year, the General Council agreed on a work programme on e-commerce, launching discussions on the subject under certain WTO bodies – specifically, the Council for Trade in Services, the TRIPS Council, and the Committee on Trade and Development, which would then report back to the General Council.

The 2001 Doha Declaration then featured an agreement to continue the work programme and moratorium through the next ministerial, given the “importance of creating and maintaining an environment which is favourable to the future development of electronic commerce.”

More recent ministerial conferences, along with renewing the moratorium on e-commerce duties, have also included language on how to reinvigorate the work programme itself, both in terms of approach as well as with any institutional steps.

Compromise proposal

In this context, members are currently negotiating the language for a planned Nairobi ministerial decision regarding the e-commerce work programme. Earlier on Wednesday, a compromise proposal was circulated by various countries at an informal meeting convened by Ambassador Alfredo Suescum of Panama, who chairs the e-commerce talks, regarding a draft decision on the work programme.

This new proposal is now under discussion, with another informal open-ended meeting on the e-commerce negotiations currently slated for Friday.

The compromise document melds together two previous proposals from different groups, though it has dropped various elements from each in a bid to gain consensus. One of these earlier proposals was being backed by Chile, while the other had been submitted jointly by Brazil, Egypt, India, South Africa, and Turkey.

The compromise proposal has the support of all six countries – Brazil, Chile, Egypt, India, South Africa, and Turkey – sources say.

Both of the earlier proposals had included an extension of the moratorium on customs duties on electronic transmissions through to the next ministerial conference, expected in 2017, which has been maintained in the compromise proposal. The two differed, however, in their language regarding the work programme itself.

The earlier communication backed by Brazil, Egypt, India, South Africa, and Turkey recalled both the 1998 e-commerce work programme and subsequent ministerial declarations and decisions. Meanwhile, the Chilean proposal referred both to the 1998 decision and also highlighted specifically the mandate assigned at the 2013 ministerial conference in Bali, Indonesia, to “continue the reinvigoration of that work” on the e-commerce work programme, with the aim of adopting decisions this year.

The compromise version keeps the language from Brazil and others regarding previous decisions and declarations, which sources note does still in effect cover the e-commerce outcomes from the Bali ministerial conference.

The proposal by Brazil and others had reiterated the importance of WTO principles such as non-discrimination, predictability, transparency, and development. Chile’s proposal also referred to such principles, while then going on to outline specific areas for examination by the work programme, such as how e-commerce can support small and medium-sized enterprises and traditional industries, among various others. Both of those respective paragraphs are not included in the compromise version.

Another area where the two sides differed and which ultimately was dropped from the compromise proposal was language in the two earlier proposals regarding what particular developing country needs should be given “special consideration.”

The proposal put forward by Brazil and others had referred to special consideration to “the economic, financial, and development” needs of such countries, while the Chilean proposal had mentioned “special consideration of the situation” in developing countries, referring in particular to those countries that are least developed or least connected.  Neither paragraph is in the compromise proposal.

Regarding institutional framework, the proposal from Brazil, Egypt, India, South Africa, and Turkey would direct the General Council to hold periodic reviews using those reports provided by the WTO bodies charged with implementing the work programme, with a view to providing an update for the next ministerial.

The Chilean proposal, for its part, would similarly direct the General Council to hold periodic reviews, along with considering possible recommendations for the next ministerial. It also featured additional language regarding certain institutional steps, such as encouraging the WTO’s secretariat to provide reports on the activities of other international organisations in this area.

The compromise proposal includes the language on periodic reviews by the General Council and includes dates for such reviews to take place, specifically for July and December of next year as well as July of the following. While much of the additional institutional language from the Chilean proposal is not included in the compromise version on the table, sources familiar with the discussions note that this does not preclude any of those institutional suggestions from being put in place in practice, should members so choose.

Members are reportedly aiming to finalise the language on the e-commerce work programme and moratorium in time for the upcoming meeting of the WTO’s General Council – the highest decision-making body outside of the ministerial conference – currently slated for Monday 30 November.

While sources were optimistic over reaching an agreed outcome, they cautioned that it is not yet clear whether that Monday target will be met. Some members, reportedly the African Group and the Africa, Caribbean, and Pacific country (ACP) Group, are said to have indicated an interest in re-inserting the paragraph referring to “special considerations” of economic, financial, and development needs that was in the earlier proposal by Brazil and others.

ICTSD reporting; “WTO Committee Agrees to Keep IP From Non-Violation Complaints Until 2017,” IP-WATCH, 23 November 2015.

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