Building capacity to help Africa trade better

The proposed TRIPS Waiver to respond to the COVID-19 pandemic


The proposed TRIPS Waiver to respond to the COVID-19 pandemic

The proposed TRIPS Waiver to respond to the COVID-19 pandemic
Photo credit: United Nations

In early October 2020, India and South Africa presented a proposal to the TRIPS Council requesting a temporary waiver from the implementation, application, and enforcement of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in relation to the prevention, containment, and treatment of COVID-19.[1] Their attached Draft Decision notes that “the COVID-19 global pandemic requires a global response based on unity, solidarity and multilateral cooperation” … and that in the light of the exceptional circumstances, waivers from the obligations of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement are justified. They proposed that “the obligations of Members to implement or apply Sections 1, 4, 5 and 7 of Part II of the TRIPS Agreement or to enforce these Sections under Part III of the TRIPS Agreement, shall be waived in relation to prevention, containment or treatment of COVID-19, for [X] years from the decision of the General Council”. The Members of the World Trade Organisation (WTO) should therefore not challenge any measures taken in conformity with the provision of the waivers granted or through the WTO’s Dispute Settlement Mechanism.

WTO waivers are governed by Article IX of the WTO Agreement. In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member, provided that any such decision shall be taken by three fourths of the Members unless otherwise provided for. (Waivers are usually decided on the basis of consensus.)

A request for a waiver concerning the Multilateral Trade Agreements shall be submitted initially to the Council for Trade in Goods, the Council for Trade in Services, or the Council for TRIPS, respectively, for consideration during a time-period which shall not exceed 90 days. At the end of the time-period, the relevant Council shall submit a report to the Ministerial Conference.

A decision by the Ministerial Conference granting a waiver shall state the exceptional circumstances justifying the decision, the terms and conditions governing the application of the waiver, and the date on which the waiver shall terminate. Any waiver granted for a period of more than one year shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereafter annually until the waiver terminates. In each review, the Ministerial Conference shall examine whether the exceptional circumstances justifying the waiver still exist and whether the terms and conditions attached to the waiver have been met. The Ministerial Conference, on the basis of the annual review, may extend, modify, or terminate the waiver.

It has been ruled that WTO waivers must be interpreted strictly: Although the WTO Agreement does not provide any specific rules on the interpretation of waivers, Article IX of the WTO Agreement and the Understanding in Respect of Waivers of Obligations under the General Agreement on Tariffs and Trade 1994, which provide requirements for granting and renewing waivers, stress the exceptional nature of waivers and subject waivers to strict disciplines. Thus, waivers should be interpreted with great care.[2]

The proposal by India and South Africa has initially been blocked but in early May 2021 the new US administration under President Biden expressed support for a global waiver on patent protection for coronavirus vaccines. When Katherine Tai, the US trade representative, made this announcement, she said: “This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures.”[3]

Difficult negotiations still lie ahead. While the US supports the waiver of COVID-19 vaccine patents, other countries like the United Kingdom, Japan, and the European Union oppose it.[4] Their main arguments are about protecting the incentive for future pharmaceutical innovation. It is claimed that companies will be reluctant to invest in new technology if they cannot reap the full financial benefit from their successes. However, it has also been pointed out that public funds are often used for research to develop essential medicines.

Experts have warned that while the American decision is a step in the right direction it will not be enough. Medecins Sans Frontieres says the temporary waiver will cover COVID-19 vaccines only, but that developing countries also need laboratory test kits and treatments.[5] Others have warned that there are significant shortages in supply chains, and that few existing factories are capable of producing the required vaccines. Solving these problems will require more than the waiving of multilateral trade rights. They emphasise that significant investments from high-income countries will be necessary. Waiving patents alone is unlikely to increase global vaccine production because low- and middle-income countries still lack manufacturing capacity, technology, skills, and raw materials.[6]

Moderna, one of the producers of a COVID-19 vaccine, has said it will not enforce its COVID-19-related patents against those who will make vaccines during this pandemic. However, while waiving some vaccine patents may allow third-party manufacturers to make and sell COVID-19 vaccines, the transfer of skills and technology that will allow them to manage production is not a simple matter. The Pfizer-BioNTech vaccine, for instance, required 280 different components sourced from 86 suppliers across various countries. Manufacturing the vaccine would require highly specialized equipment and complex technology transfers. Manufacturers must have the proper equipment to test the quality and consistency of their vaccines. The World Health Organisation (WHO) has announced plans to facilitate the establishment of technology hubs to transfer “a comprehensive technology package and provide appropriate training” to manufacturers from lower- and middle-income countries.[7] That will take time and require substantial resources.

The ensuing debate is about more than the financial gains of “big Pharma” or how to get production started in developing countries. There are serious governance implications, in particular in Africa. This will not be the last pandemic; COVID-19 has exposed Africa’s dependence on imported vaccines in a dramatic manner. Africa’s 1.3bn people offer a huge market for medicines; it imports 99% of the vaccines it uses and 70% of its pharmaceutical products.[8] This dependence cannot suddenly be reversed when there is a pandemic.

Over the years a country such as South Africa has lost its ability to manufacture vaccines.[9] It has become more attractive to import vaccines from abroad, including from India. However, this time around this is not a viable solution. India has stopped exporting COVID-19 vaccines in order to serve its own citizens. Because setting up the sophisticated facilities required for the production of vaccines takes time and money, Africa’s COVID-19 jabs will still need to come from overseas for years. To be viable, new production projects apparently need contracts to supply vaccine for 10 to15 years, according to officials from the African Development Bank.[10] Financiers also look at “soft” infrastructure, such as good governance, stable politics, government spending on health care and support for scientific research.

There are also important multilateral reform issues at stake here. COVID-19 has rekindled a long-standing debate. The strict patent regimes required by the TRIPS Agreement allow pharmaceutical companies to set prices for patented medicines at very high levels. The monopolies granted under TRIPS allow the suppression of competition from low-cost producers. There has been a long debate about these TRIPS provisions and public health. Developing countries have proposed, as part of the Doha Development Round discussion, that steps must be taken “that the TRIPS Agreement does not in any way undermine the legitimate right of WTO Members to formulate their own public health policies and to implement them by adopting measures to protect public health”.[11] They want clarification of the use of provisions in the TRIPS Agreement regarding the right to determine the grounds on which compulsory licences may be issued, the right to parallel importation, and a moratorium on disputes aimed at preventing or limiting access to medicines.[12] The COVID pandemic lends an unexpected and urgent dimension to longstanding issues about the accommodation of the demands of the Developing World.

[1] pdf Waiver from certain provisions of the TRIPS Agreement for the prevention, containment and treatment of COVID-19: Communication from India and South Africa (133 KB)  (WTO Document IP/C/W/669 2 October 2020)

[2] W.1.3 EC — Bananas III, para. 185 (WT/DS27/AB/R)

[3] BL Premium 10 May 2021.

[4] Experts Say Patent Waivers Aren’t Enough To Increase Global Vaccination (verywellhealth.com)

[5] BL Premium 9 May 2021.

[6] Experts Say Patent Waivers Aren’t Enough To Increase Global Vaccination (verywellhealth.com)

[7] Ibid.

[8] https://www.economist.com/middle-east-and-africa/2021/05/08/

[9] Adèle Sulcas, Why South Africa stopped making vaccines, Daily Maverick 5 May 2021; https://www.dailymaverick.co.za/article/2021-05-05-why-south-africa-stopped-making-vaccines/

[10] https://www.economist.com/middle-east-and-africa/2021/05/08/

[11] https://www.wto.org/english/tratop_e/trips_e/paper_develop_w296_e.htm

[12] Lester, Mercurio and Davies op cit and Van den Bossche and Zdouc, The Law and Policy of the World Trade Organization, Cambridge University Press, 3rd edition at 999.

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

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