Examination of witnesses (Questions 60
- 82)
THURSDAY 3 FEBRUARY 2000
MR DAVID
BATT, MR
JOHN ROBERTS
and MR CHARLES
BRIDGE
60. Finally on this issue, the United States
and the European Union with other countries, have made statements
indicating that they support the compulsory licensing of essential
drugs on the WHO list. That is a fine statement of intent. How
has that become actuality?
(Mr Roberts) I think that this is a matter for domestic
decision-making and for domestic patent legislation in each individual
country. The TRIPs agreement allows laws to be WTO compatible,
to be TRIPs compatible, if they provide for compulsory licensing
but subject to adequate remuneration of the licence holder and
a few other restrictions about the temporary character of the
licence and also about the absolute necessity for it in terms
of national emergency or the refusal of the patent holder to license
voluntarily. These are the restrictions. But if national law reflects
these possibilities within the TRIPs agreement then compulsory
licensing can go ahead. If not, then perhaps there may have to
be some amendment to national law case-by-case.
61. It sounds pretty slow, does it not?
(Mr Roberts) I think some of the difficulties arising
in South Africa came from the attempt by the South African authorities
to amend their domestic patent law and the objections which are
raised in the court to this by the pharmaceutical companies, yes,
indeed.
(Mr Batt) Can I come back to one point. I think you
said earlier something along the lines of given the scale of the
health problem another WTO Round was not a particularly good or
effective way of dealing with this. The only point I would want
to make there is we should not place on TRIPs and WTO the burden
of resolving these issues. If we look at the international institutions
it is the responsibility of WHO. What we need to be satisfied
with is that the provisions within TRIPs, particularly in this
area relating to pharmaceuticals and licensing, are not an obstacle
to the decisions that national governments and authorities may
need to take, but to imply that somehow the burden of resolving
these problems can rest on TRIPs would I think be a mistake.
62. But we are also saying, though, that it
is not very clear who is going to do the analysis, the monitoring,
in a sufficiently effective and dynamic way in order to bring
to the attention of the WTO the consequences of TRIPs.
(Mr Batt) I think that is a very fair point. In response
there I echo Mr Roberts' point earlier on that we have got provisions
that were due to kick in this January 2000 and where there were
a lot of problems with implementation. To return to one of my
earlier points, there is an exemption clause that extends that
implementation period for products in the pharmaceutical and agro-chemical
sectors not previously patented until 2005. I am not disputing
anything you say about the need for monitoring. It is something
that we must take away from this discussion and think more about,
but I think the practical ways of doing this may prove quite difficult
if what we are seeing is extremely patchy implementation of those
articles.
Mr Khabra
63. Can I ask you a question. Do you agree with
me particularly on this question of patent protection, which stipulates
it should be for a period of a minimum 20 years, that this puts
the developing countries at a disadvantage when the technologies
are growing fast in those countries?
(Mr Roberts) There is an exception to the 20 years
in respect of agriculture. In agriculture the TRIPs agreement
very importantly allows for so-called sui generis protection
of intellectual property in those countries which choose to exclude
agriculture from that patent law. So you can be TRIPs compliant
as a country while excluding agriculture from your patent law
but having a sui generis form of protection instead. That
sui generis form of protection may, subject to national
choice, provide for a lesser period of exclusive rights for the
intellectual property right holder and obviously in agriculture
there may be less need for a long period of protection than in
pharmaceuticals. Very often in pharmaceuticals it may take a company
eight to ten years to bring a product to the market by the time
they do the tests and trials necessary and evidence has been collected
in order to convince the authorities that the product is safe.
That patent protection period would include that period of time
before the product is brought to the market. So one can see the
need in that case for a longer period of time of patent protection.
Chairman
64. We just need to turn to capacity building.
We have touched on this during the course of our discussions and
there is one aspect of it I would like to ask you about. Some
of the Uruguay Round agreements, like customs valuation, sanitary
and phyto-sanitary regulations and TRIPs you have just been talking
about can cost more than a year's development budget for the poorest
countries. Is there a programme or should there be a programme
to assist developing countries to enable them to administer the
WTO rules? The other question related to this is is there evidence
available to you that shows giving the extra capacity, either
in the form of technical assistance or, alternatively, by giving
them money to employ people, that this makes a difference?
(Mr Batt) Thank you, Chairman. We need capacity building
to do several things in fact: to help countries participate in
the negotiation, to implement their agreements and crucially build
up the productive sector in order that they can then take advantage
of the opportunities offered, and also in cases where adjustment
is involved we need to help them manage that process of adjustment.
Is there a programme? As I think the Committee will know from
earlier discussions, this is something to which the Government
has given greatly increased emphasis in putting additional resources
over the last two to three years and we have a substantial programme
operating both at a bilateral level with individual capitals or
with regional groups and also through the multi-laterals. This
is not something which one government can or should do alone,
particularly as we are one of the parties at the table or part
of one of the parties at the table and therefore it has to be
a multi-lateral effort. We, as I think you know Chairman, have
put in a substantial amount of effort into encouraging the World
Bank as well as the Geneva-based agencies like WTO, UNCTAD and
ITC to increase their effort in this area. We were encouraged
by the joint statement which was made by the heads of WTO, IMF
and the World Bank at Seattle. If the Committee does not have
a copy of this we can certainly make one available[7]
and that did talk about improving the co-operation between the
agencies in trade related areas, both policy and capacity building,
and we will certainly be pressing, as I think I said earlier in
evidence, in all of those different institutions, and including
at the spring meetings, for that coherent programme of capacity
building to be taken forward.
65. Does WTO have a fund available to it for
this purpose because it did not used to have?
(Mr Batt) WTO has a very small part of its budget
available for this purpose but relies very heavily on extra budgetary
contributions and we have been one of the donors making those
extra budgetary contributions. The previous and current Directors-General
have both made the point that it is unsatisfactory for the organisation
to have to rely on extra budgetary contributions like this. We
agreed with this and therefore backed the proposals which were
current at Seattle for a four- or five-fold increase in the regular
WTO budget for technical co-operation and we hope we can get it
delivered despite the break-down at Seattle.
66. This is a combination of bilateral assistance,
of multi-lateral assistance, European Union assistance, World
Bank assistance and now a WTO fund?
(Mr Batt) In terms of the total sums involved WTO
is quite a small player but a crucial player. That is why we think
its resources need to be increased. I would also mention to the
Committee the important work of the other Geneva-based trade organisations
including UNCTAD and including the International Trade Centre.
One of the particular projects which I might mention to the Committee
that we were involved in supporting with the International Trade
Centre and the Commonwealth Secretariat involved the production
of an updated guide to the Uruguay Round agreements and to current
issues on the table in the form of a manual which could be then
made available very widely to developing countries. Indeed, the
ITC is actually going around mounting a road show in developing
countries and helping to explain to people out there what the
agreements actually involve.
67. I found a seminar being held by WTO officials
in St Lucia when I was there in October for Caribbean countries
and they were working on that manual.
(Mr Batt) And the following month the WTO hosted what
was known as the Geneva week. It was for countries who were not
members of the WTO who did not have representations in Geneva
and it was really to brief them on the issues that were coming
up in the Round. I was not able to get to the meeting myself but
I looked at the programme and thought it was an extremely good
programme with high quality speakers and we put in financial backing
for that week as well. You asked the question how do we know if
it makes a difference? I think that is a difficult question to
answer. I think that clearly building up capacity in Geneva, building
up representations in Geneva is a vital part of the picture but
only one part of the picture. Countries need to have representations
there but they need to have the capacity in capitals as well,
so there is back-up trade policy capacity there and effective
links between Geneva and capitals. We also think that they need
to have some access to specialist expertise and advice in Geneva.
It is not practical for every delegation to have as part of its
own delegation all of the detailed expertise; it is not efficient
to try. We think that the Commonwealth is one particularly good
route for trying to make that sort of expertise available across
the board and through our support of the Commonwealth Secretariat
we have been helping to fund an expert based in Geneva who seeks
to provide a common expert advisory service to Commonwealth delegations.
These are all areas in which very much more needs to be done.
I could not say that we have completed an evaluation of what might
need doing but the anecdotal evidence we have got back—I
think that some of this may be known to the Committee as well—for
instance from the Caribbean has been that people, the users, have
found this really very useful. To return to one of Mr Worthington's
earlier points, drawing the comparison between Lome and Seattle,
we would like to feel that one of the reasons which helped Lome
to be a success was the support which we were able to provide
for the Caribbean negotiating machine and that enabled them to
come to the table and enabled them to play a proper part in the
negotiations.
Chairman
68. Certainly they said that to me. San Juan
and many other countries in the Caribbean have said that it has
been a huge help to them.
(Mr Batt) The anecdotal evidence of other activities
is good in other countries in Sub-Saharan Africa, in Zimbabwe,
and indeed one of the members of the Malawi delegation to the
WTO, an expert member of that delegation, was funded by our regional
office in Central Africa.
Chairman: The next thing is whether the
WTO will steal those people to be part of their bureaucracy, which
is what I object to. Mr Rowe?
Mr Rowe
69. I listened with interest to part of DFID
telling us how important it is when other parts of DFID have said
that they cannot find the money for university or higher education
in these countries because they are concentrating on primary education.
Perhaps the thing to do is to have some kind of civil service
staff college or something of this kind in some of these countries
to which other countries could have the finances to send to people.
Are you talking to the Open Universities around the world because
it seems to me that these institutions are peculiarly well placed
to assist in the development of capacity? What about the NGOs?
They are very keen to develop capacity. It seems to me that this
is an absolutely central opportunity for them to come together
in a collaboration, which sometimes they find difficult, with
you and other governments to actually create the kind of ongoing
institutions that would enable us to build capacity rather than
simply doing it for particular purposes.
(Mr Batt) We have not had discussions with the Open
Universities but I am sure that they and the NGOs do have a potential
part to play in all this. Our focus has really been on how we
can deepen our collaboration with the multilateral institutions,
particularly the Bank and the Geneva base. We have seen this as
a key part towards getting something which is genuinely sustainable.
We also think that through multilateral institutions we have a
route which is more likely to command the confidence of developing
countries because they are not actually a party to the institutions
or perceived, as other parties may be, as promoting a particular
cause of one sort or another. So we think their particular position
does make them a very, very good route for doing this sort of
work. We have placed a lot of emphasis on the World Bank because
what we want to see is this kind of work spreading out into all
of the Bank's country programmes because with implementation we
are not just talking about the policy capacity building, we are
talking about building the institutions on the ground which have
got the regulatory capacity and the administrative capacity to
implement these agreements. Here we are talking about things which
then need to be mainstreamed into the Bank's activity. On your
first point, I think I would say that some reasonably modest sums,
well chosen and working with the right partners, can go a long
way and that is what we are trying to do.
Chairman
70. Can I just talk about the larger countries
delegations to the negotiations and to the WTO. Christian Aid
has told us that 96 out of the 111 members of the US delegation
negotiating on intellectual property rights were from the private
sector and note that businesses were offered the opportunity to
meet with key negotiators. Does this practice not suggest that
in fact delegation members should have to disclose all agreements
with, and payments from, private sector bodies, NGOs, trade unions
and other bodies?
(Mr Batt) Could I invite Mr Bridge to respond to that.
(Mr Bridge) Thank you. I cannot vouch for the numbers
on the American delegation and how many of them were negotiating
on TRIPs. The first point to make is certainly my Secretary of
State has been very keen to involve businesses and also non-businesses,
non-governmental organisations. I think the evidence you have
had from some of the NGOs indicates that his plan worked quite
well. It was widely appreciated first that we had three non-governmental
individuals on our delegation, one representing business, one
representing the unions and one representing the NGOs proper,
if I may use that expression. Transparency and the proposal that
we should, as it were, require declarations of who is on delegations
and what interests they represent and how much they have paid
and how much access they have had to negotiators and so on, I
think that is something that we have not taken a formal view on
and frankly we are feeling our way about how to handle the participation
of non-governmental organisations. I certainly well recognise
the underlying thought and I think we broadly endorse it. If we
are going to allow more and more people in who are not directly
accountable through their governments, and ultimately parliaments,
we had better know who they are, not only business people but
others as well. One concern I have is there is a danger of going
a bit over the top in this.
71. Talk to Lord Neill about it.
(Mr Bridge) I could not possibly comment on that.
The advantage that we found in the British delegation in Seattle
was that there was not a problem about getting a business view
on a particular proposal because we had someone on our delegation
participating in all of our discussions. This would be worth a
very large number of meetings between businesses and negotiators.
One wants to retain a certain amount of flexibility for that to
happen. If the WTO is to move towards greater involvement from
non-governmental organisations, and I am sure it is, then I entirely
agree that it needs to be thought about and structured a little
bit more clearly than it has been so far.
Chairman: I think we need to move finally
to the Ruggiero proposal.
Mr Worthington
72. As you know, the previous Director-General
of the WTO, Renato Ruggiero, had a proposal to improve market
access conditions for products exported by least developed countries
on as broad and liberal a basis as possible, he wanted to move
ahead on that. What do you think is the chance of that proposal
going forward?
(Mr Bridge) Could I distinguish first between the
chances of Europe going through with that proposal and the chances
of it being accepted more widely. In Europe we have an internal
commitment already to give duty free and quota free market access
to "essentially all products" from the LDCs. There is
a commitment that the Commission should come forward with proposals
to start in that direction this year, 2000, with a view to its
being fully implemented by 2005. I have full confidence that Europe
will turn that broad plan into a reality although the fact is
there does remain a negotiation to be had internally as to the
rate of removal of products from duty.
73. My memory is that something similar to that
was written into Lome.
(Mr Bridge) The Council decision which incorporates
this commitment was actually a part of the preliminaries to the
Lome negotiation, that is right.
74. It sounded like Ruggiero meant everything
and then what has come back is this strange little phrase "essentially
all products".
(Mr Bridge) Yes.
75. "Essentially all" allows the people
who want to protect their agriculture or textiles to come in,
does it not?
(Mr Bridge) We are actually talking about agriculture
almost entirely as far as the EU is concerned. Textiles arises
in the case of the US. In the case of the EU we are talking about
agriculture. I would not blame anybody for being just a little
bit wary of that phrase because obviously things could get sneaked
in which one would rather were subject to the full discipline
of the proposal. We in the UK have not got an absolutely firm
view yet about what is likely to need to be excluded in this way
but we certainly have a strong shared assumption among departments
in government that we are talking about a very, very small number.
Sugar is the classic one where the fact that we have an EU price
way above the world price would mean that there could be a requirement
for sugar to be diverted to the European market and go straight
into intervention stock which would be rather costly for the CAP
and not entirely acceptable. Sugar is the classic. The others
that have been mentioned, that are mentioned in some of the memoranda
which you have received from the NGOs, are beef, bananas, and
there is another one which momentarily escapes me.
Chairman
76. Possibly rice.
(Mr Bridge) Thank you very much, Chairman. We have
not got a firm decision in the UK but we hope that we can keep
it down to something like that list. In reality I am sure others
will come with more ideas.
Mr Worthington
77. To weaken it further. Those are quite big
things to exclude, are they not?
(Mr Bridge) Yes, they are not excluded lightly. Perhaps
I could add a further point at this stage which is that one or
two Member States, including the UK, have actually made a public
commitment that we should go to excluding all without exception.
That is the good news. The not so good news is that I am afraid
we have not put a date on the achievement of that target. Certainly
the Prime Minister in his Mansion House speech last November made
this pledge that we should go for all. Nevertheless, I think realistically
in European terms we are bound to stick with "essentially
all" for the moment. Shall I go on to talk very briefly about
the other WTO members and their attitudes?
78. Yes.
(Mr Bridge) This is an area where it is quite easy
to get broad statements but perhaps a little harder to get firm
commitments. I think all the Quad members, for example, are committed
in one way or another to the general idea. The United States,
for example, does not seem to have anything more in mind at the
moment than it has had on the stocks in Congress for some little
while, some legislation on African and Caribbean Basin producers
for whom they would try to give some enhanced preference over
other developing countries, thereby leaving out, of course, Asia,
the least developed countries, and Bangladesh is the one that
comes particularly to mind. We will keep on working on them, trying
to persuade them that they should follow us, but the mood in Congress
is not tremendously conducive just at the moment so it may take
a little while. That is one reason why we have made it quite clear
that the EU should be going ahead on a unilateral basis and that
will happen.
79. Which it does in Lome but then you would
have to extend other countries into that.
(Mr Batt) There are nine least developed countries
outside Lome. Bangladesh is the largest economy.
Chairman
80. I think somebody deserves a prize if they
can get the Japanese to agree to rice being included in this since
I understand their tariff on rice is the highest in the world.
(Mr Bridge) It may very well be, Chairman. I was assuming
that rice was a product that we could regard as an exception for
some little while.
Mr Khabra
81. Many of the NGOs are concerned that the
principle of Special and Differential Treatment is being eroded.
How will the Government be seeking to ensure that this principle
is preserved in the forthcoming Round?
(Mr Batt) Could I have a first shot at that and distinguish
five different types of Special and Differential Treatment. The
term is used but actually incorporates a number of different things,
so it may be helpful for the Committee if I try to set those out.
One is preferential market access through the 1979 Enabling Clause
which allows discrimination to be made in favour of developing
countries. The second is greater flexibility in making commitments.
The third is longer transition periods to implement commitments.
Then there are, if you like, some best endeavour clauses on the
part of developed countries relating to the provision of technical
assistance, and restraints for instance in the use of anti-dumping.
There are these several different dimensions to it. There is a
fairly lively debate around all this and how useful it actually
is for developing countries. This is another case where I am able
to inform the Committee that DFID commissioned a review by a leading
international expert.[8]
That concluded that Special and Differential Treatment had not
actually benefited developing countries very much. It pointed
out that the world has changed since the original concept of Special
and Differential treatment back in the 1960s, it has changed in
a number of respects, one of which is the much greater heterogeneity
of developing countries. Another is there is a certain oddness
in a sense in Special and Differential Treatment for 100 or so
of the members of an organisation of 135. It is a concept which
one can understand growing up in a situation where developing
countries are a minority of the membership but when they are the
majority of the membership there is something intuitively just
a little bit odd about the concept. That is not to junk it but
it is to say that it is worth thinking about what it is, why we
have got it and what the benefits are. Certainly the study that
we commissioned suggested that the priorities for developing countries
might lie elsewhere. What we need to beware of is allowing the
WTO to develop into a two tier system in which you have got developed
countries and then special considerations for developing countries.
We want to see the development angle being part and parcel in
the mainstream of negotiation of the agreements. I think we would
also say that whilst we recognise with everything we have learned
over the past couple of years in particular the difficulties about
implementation and, therefore, the need for capacity building,
we would also emphasise the point that many of the gains for developing
countries come from their own liberalisation so we must be careful.
That process needs to be managed and the adjustment strings need
to be looked at. We must be careful of allowing the concept to
drift into a two tier system, to drift into a generalised exemption
for developing countries from those obligations. I am sorry because
it is a slightly round about answer to a very, very direct question
but it has been that because there are a number of different things
wrapped up here and the position is not quite as clear cut as
it might first look. Certainly if you take something like preferences,
the first of the concepts within this group of Special and Differential
Treatment, that the Enabling Clause permits us to give to developing
countries, obviously we see the importance of the continuation
of that clause and the continuation of those preferences but those
preferences will be eroded over time as liberalisation, the opening
of markets, continues because that clause and those preferences
were in that sense the creatures of their times and of the high
levels of protection that existed in that period.
Chairman
82. It seems to me that in the new Round this
needs to be revisited and redefined because the world has changed
and will change by virtue of the Uruguay and the current Round.
Can I thank you on behalf of the Committee for starting us off
extremely well in this investigation on what we should do for
developing countries in the WTO Round. It is a very important
issue. It has always been said that developing countries would
prefer trade and not aid and this is the means of providing that
opportunity through trade. We are going to take a very major interest
in this subject which I know you will be leading, Mr Batt, from
the Department for International Development, with Mr Roberts'
help. Can I also thank Mr Bridge for coming from the DTI. I understand
that DFID is helping you come to terms with these issues.
(Mr Bridge) It certainly is.
Chairman: Thank you for coming to see
us and for talking to us. Thank you for your paper too.
Mr Rowe: It gives a whole new meaning
to the term "opening bat".
Chairman: Thank you very much.
7 Not printed. Back
8 Centre for the Study of Globalisation and Regionalisation (1999),
Working Paper No. 30/99: Special and Differential Treatment in
the Millennium Round. The study is available on the internet at
www.warwick.ac.uk/fac/soc/csgr/wpapers/wp3099. Back
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