POLICY BRIEF - The South Centre
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
POLICY BRIEF
No. 88 █ March 2021
Need for Extension of the LDC Transition Period Under
Article 66.1 of the TRIPS Agreement Until Graduation and
Beyond
By Nirmalya Syam*
Abstract
Least developed country (LDC) Members of the World Trade Organization (WTO) have submitted a duly motivated
request for the extension of the transition period under Article 66.1 of the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS), which exempts LDCs from implementing the obligations for protection and en-
forcement of intellectual property rights under the Agreement, in view of their vulnerabilities, special needs, economic,
administrative and financial constraints, and the need for a sound and viable technological base. This request, submitted
prior to the expiry of the current transition period on 1 July 2021, seeks a further extension for as long as those Members
remain LDCs, and also for an additional period of 12 years after their graduation. This request is legitimate in view of
the varied challenges that LDCs face, which have been aggravated through the reversal of development gains due to the
public health and economic impact of the COVID-19 pandemic. These vulnerabilities will also continue to afflict the
LDCs even after graduation, as recognized in several reports by different United Nations (UN) agencies as well as reso-
lutions of the UN General Assembly. Therefore, WTO Members must display political will and translate global solidari-
ty pledges into action and unconditionally support the request for extension of the transition period for LDCs under the
TRIPS Agreement.
***
Les pays les moins avancés (PMA) membres de l'Organisation mondiale du commerce (OMC) ont présenté une demande dûment
motivée de prolongation de la période transitoire prévue par l’article 66 alinéa 1 de l'accord sur les aspects des droits de propriété
intellectuelle qui touchent au commerce (ADPIC), qui permet aux PMA, étant donné leur vulnérabilité, leurs besoins et impératifs
spéciaux, leurs contraintes économiques, financières et administratives et le fait qu'ils ont besoin de flexibilité pour se doter d'une
base technologique viable, de ne pas appliquer les dispositions en matière de protection et de respect des droits de propriété intellec-
tuelle prévues dans l'accord. Cette demande, qui a été soumise avant l'expiration de la période de transition actuelle fixée au
1er juillet 2021, vise, pour les membres concernés, à obtenir une nouvelle prolongation aussi longtemps qu’ils demeureront des PMA,
ainsi qu'une période supplémentaire de 12 ans après la perte de ce statut. Cette demande est légitime compte tenu des divers défis
auxquels les PMA sont confrontés, qui ont été aggravés par la pandémie de COVID-19 dont les conséquences sur la santé publique
et l'économie ont réduit à néant les acquis du développement. Comme le reconnaissent plusieurs rapports de différentes agences des
Nations unies (ONU) ainsi que des résolutions de l'Assemblée générale des Nations unies, la perte du statut de PMA ne marque pas
nécessairement la fin des vulnérabilités. C’est pourquoi il est essentiel que les membres de l'OMC fassent preuve de volonté politique
et traduisent en actes leurs engagements en matière de solidarité internationale et soutiennent inconditionnellement la demande de
prolongation de la période de transition formulée par les PMA au titre de l'accord.
***
Los países menos adelantados Miembros de la Organización Mundial del Comercio (OMC) han presentado un petición debidamente
motivada para que se prorrogue el período de transición previsto en el párrafo 1 del artículo 66 del Acuerdo sobre los Aspectos de los
Derechos de Propiedad Intelectual relacionados con el Comercio (ADPIC) de la OMC, por el que ninguno de los países menos ade-
lantados Miembros está obligado a implementar las obligaciones de protección y aplicación de los derechos de propiedad intelectual en
virtud del Acuerdo, habida cuenta de sus vulnerabilidades, necesidades especiales, limitaciones económicas, administrativas y finan-
cieras, y la necesidad de establecer una base tecnológica sólida y viable. Esta petición, presentada antes del vencimiento del actual
período de transición previsto para el 1 de julio de 2021, pretende conseguir otra prórroga durante el tiempo que esos Miembr os
sigan siendo países menos adelantados, así como durante un período adicional de 12 años tras su graduación. Esta petición es legíti-
ma en vista de las amplias dificultades que afrontan los países menos adelantados, que se han visto agravadas por el retroceso en los
logros de desarrollo debido a la repercusión de la pandemia de COVID-19 en la economía y la salud pública. Estas vulnerabilidades
continuarán afligiendo igualmente a los países menos adelantados incluso después de la graduación, tal como se reconoce en varios
informes de distintos organismos de las Naciones Unidas, así como en resoluciones de su Asamblea General. Por consiguiente, los
Miembros de la OMC deben mostrar voluntad política y traducir las promesas de solidaridad mundial en medidas, y brindar su
apoyo incondicional a la petición de prórroga del período de transición previsto en el Acuerdo sobre los ADPIC para los países menos
adelantados.
* Senior Programme Officer, Health, Intellectual Property and Biodiversity Programme (HIPB), South Centre.Need for Extension of the LDC Transition Period Under Article 66.1 of the TRIPS Agreement Until
Graduation and Beyond
I. INTRODUCTION ble Development Goals (SDGs), the LDCs have requested
for such an extension of the transition period for as long
The least developed countries (LDCs) benefit from an as they remain LDCs. Moreover, noting that the vulnera-
important provision under the World Trade Organiza- bilities of LDCs do not disappear merely due to gradua-
tion (WTO) Agreement on Trade-Related Aspects of tion from LDC status, and requests made by the United
Intellectual Property Rights (TRIPS) (see Box 1) – an Nations (UN) General Assembly to the WTO to consider
extendable transition period during which they are not the continuation of the flexibilities specifically available to
required to implement the provisions of the Agreement LDCs upon their graduation (see below), the duly moti-
(except for Articles 3, 4 and 5 which contain provi- vated request by LDCs also proposed an additional peri-
sions pertaining to national treatment and the most od of 12 years after graduation, during which graduated
favoured nation treatment obligations). This flexibility LDCs will be exempted from implementing the provi-
was given to LDCs in recognition of their special needs sions of the TRIPS Agreement other than Articles 3, 4
and requirements, the economic, financial and adminis- and 5.
trative constraints faced by LDCs, as well as their need
for flexibility to create a sound and viable technological This brief explains the reasons behind the requested
base. duration of the transition period by LDCs, in the light of
their vulnerabilities, economic, administrative and techno-
Article 66.1 of the TRIPS Agreement accorded the logical challenges and the need for sustained availability
LDCs an initial 10-year transition period, which could of policy space through the use of the TRIPS transition
be extended further by a decision of the TRIPS Council period even after their graduation from the LDC status.
on the basis of a duly motivated request for such exten- The brief also explores the legal feasibility of such exten-
sion by any LDC. According to Article 66.1 of the sion for the LDCs under TRIPS and the Agreement Estab-
TRIPS Agreement “[t]he Council of TRIPS shall, upon lishing the WTO.
duly motivated request … accord extensions of this
period” (emphasis added). The language used in Arti- II. THE RATIONALE BEHIND
cle 66.1 is compulsory, in that the TRIPS Council has THE TRANSITION PERIOD
no discretion to deny a request for extension of the
Inclusion of the TRIPS Agreement as part of
transition period and nor does it have any legal basis
the WTO Agreements was the direct result of demands
to impose further conditions on LDCs. However, in
made by developed countries during the Uruguay Round,
practice the terms of the extensions of the transition
in response to the powerful lobby of a handful of indus-
period that have been granted to the LDCs so far have
tries (e.g. the entertainment industry, the chemical and
been subjected to negotiations.
pharmaceutical industry)3 that would greatly benefit from
The initial transition period expired in 2005. On re- heightened intellectual property (IP) protection world-
quest of the LDCs, the transition period was extend- wide. Very few LDCs (only Bangladesh, Tanzania and the
ed in 2005 by a decision of the TRIPS Council1 for 7 Democratic Republic of Congo) were actively involved in
years and 6 months. A further extension of this transi- these negotiations.4
tion period was granted by another decision of the
The TRIPS Agreement globalized minimum standards
TRIPS Council till 1 July 2021.2
of IP protection that all Members of the WTO had to pro-
As the current transition period nears its end, LDC vide for, thus paving the way for an upward harmoniza-
Members have submitted a new duly motivated re- tion of substantive IP standards. As a consequence, devel-
quest to the TRIPS Council for a further extension of oping country Members of the WTO had to amend their
the transition period. In view of the impact of the IP laws to provide stronger levels of IP protection. In or-
COVID-19 pandemic on the economic and social devel- der to facilitate implementation of the TRIPS Agree-
opment of LDCs in particular, including the reversal in ment, developing countries were given 5 years to comply
the development gains towards achieving the Sustaina- with the Agreement (i.e. by 1 January 2000), with the pos-
BOX 1
TRIPS Part VI Transitional Arrangements
Article 66
Least-Developed Country Members
1. In view of the special needs and requirements of least-developed country Members, their economic, financial and
administrative constraints, and their need for flexibility to create a viable technological base, such Members shall not be
required to apply the provisions of this Agreement, other than Articles 3, 4 and 5, for a period of 10 years from the date
of application as defined under paragraph 1 of Article 65.
The Council for TRIPS shall, upon duly motivated request by a least-developed country Member, accord extensions of
this period.
Page 2
POLICY BRIEFNeed for Extension of the LDC Transition Period Under Article 66.1 of the TRIPS Agreement Until
Graduation and Beyond
sibility of delaying for another 5 years (i.e. until 1 Janu- from stronger standards of IP protection are absent in the
ary 2005) the grant of product patents in technology LDCs. Strong IP protection in such a context can actually
areas that were not patentable as on 1 January 2000, the stifle technological learning which can severely impede
date of entry into force of the WTO Agreement. the development of a technological base.
LDCs, however, were treated differently due to their It is for this reason that Article 66 was crafted to give
special circumstances and were given a separate transi- LDCs maximum flexibility to develop a viable technologi-
tion period under Article 66, with the aim of providing cal base, meet their special needs, and overcome their vul-
them maximum flexibility to create a sound and viable nerabilities, economic, financial and administrative con-
technological base. The special status of LDCs is recog- straints.
nized in the preamble of the TRIPS Agreement, which
recognizes “… the special needs of least-developed country III. TRIPS COUNCIL’S DECISIONS ON EX-
Members in respect of maximum flexibility in the domestic TENSION OF THE TRANSITION PERIOD
implementation of laws and regulations in order to enable Thus far, the TRIPS Council has grant-
them to create a sound and viable technological base”. ed five separate extensions of the transition period under
Clearly, the negotiators of the TRIPS Agreement Article 66.1. In 2002, the transition period was extended
were mindful of the special needs of LDCs and until 2016 only for certain obligations with respect to
the unique challenges they would face in the process of pharmaceutical products. In 2005, the TRIPS Council
technological catch-up as latecomers to technological granted a general extension of the transition period for 2
development. It was recognized that intellectual prop- years at the request of Maldives, until its scheduled grad-
erty rights (IPRs) cannot be effective as an incentive uation in 2007. Later in 2005, the transition period was
mechanism in the absence of a sound and viable tech- extended generally until July 2013 for all LDCs, pursuant
nological base and generate more costs than bene- to a joint request by LDC Members. In 2013 the TRIPS
fits.5 In order to be effective, IPRs need to apply in a Council further extended this general transition period till
context where there is a significant market size, suffi- 1 July 2021. The transition period that was extended in
cient capital, qualified personnel at the firm level, and a 2002 in respect of pharmaceutical products was further
productive sector that demands innovation, as well as a extended in 2015 until 1 January 2033.
solid scientific and technological base. As noted by the It should be noted here that both the extension of the
United Nations Conference on Trade and Development transition period for pharmaceutical products in 2002, and
(UNCTAD) (see also Box 2), “[w]ithout an adequate the general extension in 2005, did not make the transition
knowledge infrastructure and institutional framework period expire early for an LDC upon graduation. This was
to capture the potential benefits of new ideas and infor- consistent with the language of Article 66.1 which also did
mation, the benefits claimed for IPR-induced technolo- not make a transition period expire before its full term for
gy transfer are not likely to be forthcoming”.6 Techno- a graduating LDC. Only in the extension decision of the
logical catching-up requires sufficient levels of absorp- transition period in 2013 and 2015 the condition of early
tive capacity – the ability to assimilate and adopt tech- expiry of the transition period upon graduation was in-
nological know-how, which is substantially lacking in serted.
the LDCs.7 These primary conditions for benefiting
BOX 2
UNCTAD, Least Developed Countries Report, 2007, p.120
IPRs provide an incentive to innovate, but like any other incentive, it works only in certain contexts. IPRs are not a
magic tool that can boost innovation without other essentials, such as a critical level of skills, information, capital and
markets. Generally, it seems clear that patents stimulate innovation only marginally, if at all, in countries with weak
scientific and technological infrastructure (at the initiation stage of technological learning).
UNCTAD, Least Developed Countries Report, 2015, p.138
Successful economic transformation also depends on making special and differential treatment more effective, beyond
merely allowing longer implementation periods to LDCs for obligations under WTO agreements. LDC obligations in
any future WTO agreements should be tailored to their particular circumstances and their needs for achieving the
planned SDGs sustainably through structural transformation. There should also be an unequivocal commitment to
allowing LDCs the maximum flexibility available under existing and any future WTO agreements (emphasis add-
ed).
UNCTAD, Least Developed Countries Report, 2020, pp.145-6
… adequate policy space continues to be necessary if LDCs are to foster structural transformation and break their depend-
ence on primary products. …At the very minimum existing flexibilities relating to the obligations under the TRIPS
Agreement should be renewed beyond 2021…(emphasis added).
POLICY BRIEF Page 3Need for Extension of the LDC Transition Period Under Article 66.1 of the TRIPS Agreement Until
Graduation and Beyond
IV. REQUEST BY LDC MEMBERS FOR FUR- pandemic, the LDCs need a long-term continuation of the
THER EXTENSION OF THE TRANSITION PE- transition period until their graduation and beyond. Thus,
RIOD the LDCs have requested that the transition period be
available to them until their graduation, and thereafter for
The LDC Members of the WTO submitted a duly moti- a period of 12 years.
vated request to the TRIPS Council on 1 October 2020
for further extension of the transition period under Ar- This period, as requested, is not undetermined, but
ticle 66.1 of the TRIPS Agreement. The request by the based on definite criteria. If granted, it would ensure that
LDCs points to the difficulties that LDCs continue to all LDCs have an assured transition period until gradua-
face in reaching their development goals and signifi- tion, without the need to return periodically to the TRIPS
cant setbacks that they have experienced towards Council to seek an extension of a fixed term period during
achieving the SDGs, which have been further aggravat- which the LDCs are (unrealistically) presumed to have
ed by the COVID-19 pandemic, as acknowledged by reached technological maturity. An additional period of
the UN Secretary-General and a number of reports by 12 years is also requested after graduation, to ensure that
the UN Department of Economic and Social Affairs the transition period remains available for a definite peri-
(DESA).8 The request by LDC Members specifically od after graduation. This is important because graduation
notes that the COVID-19 pandemic will adversely im- from the LDC category is based on criteria that are not
pact the economies of all LDCs, including those LDCs related to the development of a technological base or ex-
that are on the verge of graduation, due to decline in pansion of productive capacities (see below). The 2016
exports, fall in commodity prices, supply chain disrup- UNCTAD LDC report stated in this regard that LDCs
tions and the bleak prospect of an impending balance need to develop productive capacities to achieve
of payments crisis. “graduation with momentum”, through technological
upgrading of existing productive capacities, and expan-
For example, the 2020 UNCTAD LDC Report states sion into new productive sectors and activities.13 Hence,
that the economic growth forecast for LDCs has been even after graduation, the need for developing a techno-
revised due to the economic shock caused by the pan- logical base will remain. This could be facilitated by an
demic from 5 per cent to a negative growth rate of -0.4 additional transition period after graduation, as requested
per cent.9 This is estimated to lead to a substantial de- by the LDCs.
cline in average income levels in most LDCs. There has
been a sharp decline in demand for goods and services The request also points out that sustainable and smooth
from LDCs which depressed the price for their primary transition to graduation for LDCs necessitates the continu-
exports and slump in inflows of external resources. ation of flexibilities available to the LDCs beyond gradua-
This has impacted all LDCs, including those on the an- tion, as acknowledged in the 2016 UNCTAD LDC Report.
vil of graduation, including LDCs that are dependent Two UN General Assembly Resolutions (resolution
on export of commodities such as fuels, metals and 59/209 of 20 December 2004 and resolution 67/221 of 21
minerals, as well as those that depend heavily on ex- December 2012) concerning smooth graduation of LDCs
ports of manufactured products such as textiles and have also specifically requested the WTO to consider the
garments.10 This threatens to increase the number of possibility of continuation of the LDC flexibilities beyond
people living in extreme poverty in LDCs by about 32 graduation.
million.11 V. WHY EXTEND FURTHER THE LDC
To address these aggravated challenges and in- TRANSITION PERIOD?
creased vulnerabilities, LDCs need to enhance their
As the current extension of the transition period is set to
productive capacities. The UNCTAD LDC Report sug-
expire on 1 July 2021, the question arises whether there is
gests that “… the international community and LDCs
a need to further extend the transition period. Since the
should concentrate their future actions and policies for
rationale behind the transition period under Article 66 is
LDCs on the expansion, utilization and strengthening
to provide LDCs maximum flexibility (by exempting them
of productive capacities in these countries …”, adding
from most TRIPS obligations) in view of
that the productive capacity deficiency is at the root of
their constraints, special needs and require-
the vulnerability of LDCs to external shocks, such as
ments including a viable technological base, the need to
the COVID-19 pandemic.12 The development of a
extend the transition period will continue to exist so long
sound and viable technological base is crucial for the
as these elements have not been addressed. Thus,
productive capacity expansion of LDCs.
it is important to see whether the economic conditions on
As Article 66.1 of the TRIPS Agreement seeks to sup- the ground have improved for LDCs since the extension
port the LDCs in the establishment of a sound and via- of the transition period in 2013.
ble technological base, extension of the transition peri-
It is important to note that though the transition period
od exempting LDC Members from implementing the
for LDCs was extended only till 1 July 2021, the original
substantive obligations under the TRIPS Agreement is
request of the LDCs at the TRIPS Council in 2013 was to
necessary. As the development of such a technological
extend the transition period for as long as they remain
base is a long-term process, progress towards which
has been hampered and reversed by the COVID-19
Page 4
POLICY BRIEFNeed for Extension of the LDC Transition Period Under Article 66.1 of the TRIPS Agreement Until
Graduation and Beyond
LDCs. Indeed, the 2011 Least Developed Countries Re- BOX 3
port from UNCTAD had stated that
Excerpt from UNCTAD LDC report 2016: Graduation
… LDCs continue to play a very marginal role in with momentum requires the development of productive
the world economy, and that their growing inte- capacities and structural transformation of the economy.
gration in the global market was accompanied by This, not the fulfilment of the statistical criteria for grad-
very limited advances (if any) in their relative uation, should be the primary objective of graduation
position compared with the rest of the world…. strategies.14
From a long-term perspective, it appears that
their marginalization is in many ways worse WTO agreements should be tailored to their particu-
than in the early 1970s…. More generally, the lar circumstances and their needs for achieving the
picture that emerges … is that the LDCs … have planned SDGs sustainably through structural trans-
not been able to develop their productive capac- formation. There should also be an unequivocal
ities and beneficially integrate with the world commitment to allowing LDCs the maximum flexi-
economy (emphasis added). bility available under existing and any future WTO
agreements (emphasis added).
Besides the UNCTAD LDC Report, the Istanbul Pro-
gramme of Action for the Least Developed Countries Further, the 2016 UNCTAD LDC Report pointed to a
for the Decade 2011-2020 adopted by the Fourth UN widening of the gap between LDCs and other developing
Conference on LDCs stated that “[l]east developed and developed countries in economic, social and produc-
countries’ productive capacity is limited, and they have tivity indicators, and noted in particular, that graduation
serious infrastructure deficits (emphasis added).” The from LDC category should be seen in the context of a
Istanbul Programme of Action also stressed the im- broader and longer development process. It states that the
portance of science and technology for LDCs in this achievement of the statistical criteria of graduation is not
context and stated that an end in itself. In order to ensure that graduation is sus-
tainable, all LDCs, including graduating LDCs, need to
[a]ll LDCs are lagging behind in these critical are-
continue developing productive capacities and upgrad-
as which are key drivers for transformation and
ing productive base. The report calls this a permanent
have great potential to change the development
need for all LDCs (see Box 3).
landscape of least developed countries if devel-
oped and harnessed properly. Least developed When the conditions for graduation of an LDC are met
countries have not been able to move beyond is not determined within the WTO. It is based on the
outdated technologies that characterize their achievement of certain development criteria on a con-
production processes and outputs. Acquiring sistent basis over a period of time, as reviewed by the UN
new technologies and building domestic capaci- Committee for Development Policy (CDP).15 These criteria
ty and knowledge base to be able to fully utilize are: achievement of per capita gross national income
acquired technologies and promoting indige- (GNI) of $1222 or higher, a human assets index (HAI) rat-
nous capacity on a sustainable basis for research ing of 66 or higher, and economic and environmental vul-
and development are needed to enhance the nerability index (EVI) rating of 32 or lower. The HAI rat-
productive capacities in least developed coun- ing is based on sub-indices for health and education. The
tries (emphasis added). health index is determined on the basis of under-five mor-
Nevertheless, the LDCs were only granted a short tality rate, prevalence of stunting, and maternal mortality
extension until 1 July 2021. This approach of periodical ratio. The education index is determined on the basis of
extension of the transition period has proven to be un- gross secondary school enrolment ratio, adult literacy ra-
realistic and impractical given the enormous hurdles tio and gender parity for gross secondary school enrol-
that most LDCs have faced to reach the graduation lev- ment. Economic vulnerability of LDCs is assessed against
el, a situation that has only worsened with the COVID- the extent to which they are dependent on agriculture,
19 pandemic. The new proposed approach by the forestry and fishery, remain dependent on concentrated
LDCs, establishing the extension for as long as a coun- merchandise exports, etc.
try remains an LDC and following graduation for a Significantly, the CDP may recommend to the UN Eco-
definite period, is the most rational in this context, and nomic and Social Council the graduation of an LDC if it
fully compatible with Article 66.1 of the TRIPS Agree- meets at least two of the three criteria consistently for 2
ment. triennial reviews by the CDP. Thus, a country may be rec-
Indeed, even during this current transition period, ommended for graduation even if it has a high economic
the 2015 UNCTAD LDC Report stated that: and environmental vulnerability rating, if it consistently
meets the other two criteria. Moreover, none of these crite-
Successful economic transformation also depends ria include an assessment of the technological capacities of
on making special and differential treatment more LDCs. Thus, LDC graduation is a statistical achievement
effective, beyond merely allowing longer imple- of certain indicators over a period of two triennial reviews
mentation periods to LDCs for obligations under (6 years). While this statistical achievement is a significant
WTO agreements. LDC obligations in any future milestone for the LDCs, this does not necessarily imply
POLICY BRIEF Page 5Need for Extension of the LDC Transition Period Under Article 66.1 of the TRIPS Agreement Until
Graduation and Beyond
that the economic and other vulnerabilities of such In this context, LDCs need to take measures to expand
LDCs, or their need for developing a technological base and diversify their productive capacities into sectors for
are resolved. This has been unequivocally recognized manufacturing higher value-added products, increase
by the UN development agencies. For example, investment in research and development, train their work-
UNCTAD acknowledges that force and technicians, etc. in order to overcome their vul-
nerabilities.
[t]he economies of graduating LDCs, while demon-
strating forms of structural economic progress, often This need is also there for LDCs that are in the process
remain little diversified and dependent on a small of graduation. In a statement released in May 2012, the
number of products or commodities for export. The UN CDP expressed concern about the possible negative
transformation these countries aim to achieve or pur- impacts of COVID-19 on LDCs, and its impact on the
sue implies a range of structural economic changes, preparations of LDCs that are graduating or are expected
notably from lower to higher levels of productivity to be considered for graduation at the next triennial re-
and value addition. Most graduating countries with view. In this respect, the CDP noted that in addition to the
an agenda for such progress will need post-LDC LDC criteria scores (GNI per capita, HAI, economic and
support measures, possibly new forms of special environmental vulnerability index) till 2019, it will also
treatment after LDC status (emphasis added). consider supplementary information that will include an
assessment of the impact of COVID-19 for ensuring
Thus, if developing productive capacities is a perma-
smooth transition after graduation, in case any LDC is
nent need for all LDCs, including graduating LDCs, the
recommended for graduation at the next triennial re-
availability of a sound and viable technological base is
view.20 Moreover, on 11 February 2021, the UN General
critical for the same. Therefore, there is substantial ra-
Assembly adopted a resolution to grant Angola, which
tionale for seeking an extension of the transition period
was scheduled to graduate in 2021, an additional prepara-
for LDCs and ensuring that they obtain maximum flexi-
tory period of three years before its effective date of grad-
bility to develop a sound and viable technological
uation, in view of the negative impact of the COVID-19
base.
pandemic on Angola.21
VI. IMPORTANCE OF THE TRANSITION At a time when even the UN body that determines the
PERIOD IN LIGHT OF THE COVID-19 PAN- LDC status of a country is considering moving beyond the
DEMIC generally followed criteria and includes consideration of
The vulnerabilities faced by LDCs have been aggravat- the impact of COVID-19 on LDCs, and even the General
ed by the COVID-19 pandemic. A study by UN DESA Assembly has adopted exceptional measures to defer the
on the impact of COVID-19 on LDCs states that graduation of an LDC to mitigate the impact of COVID-
COVID-19 threatens to undo the progress made to- 19, it is imperative that some WTO Members do not give
wards sustainable development by LDCs in recent dec- primacy to narrow political and commercial interests and
ades, and unless bold policy actions are taken by the address the real situation that all LDCs (including poten-
international community, achieving the SDGs by the tially graduating LDCs) face. It is time for WTO Members
2030 deadline will likely slip out of reach.16 The num- to translate pledges of global solidarity into action.
ber of infections is still increasing in the LDCs. As the
VII. FEASIBILITY OF THE EXTENSION RE-
pandemic unravels in Africa,17 many of the LDCs will
QUESTED BY LDCS
be most adversely impacted.
Term of Extension
The lockdown and slump in global demand has also
particularly impacted LDCs that are dependent on ex- An extension until graduation is fully within the scope of
port of commodities or finished products. In this con- Article 66.1 of the TRIPS Agreement. Article 66.1 only set
text, UN DESA recommends, among others, the need to the period of the initial extension and did not lay down
adopt measures that go beyond addressing the imme- any limitation, including in terms of duration, on subse-
diate hardships caused by the pandemic and build back quent extensions to be granted by the TRIPS Council upon
better by including policies to expand productive ca- a duly motivated request by any LDC.
pacities to address root causes of limited economic re-
Group Extension for all LDCs
silience, lack of economic diversification and failure to
create decent and productive jobs. It states that such The LDC Members have submitted a request for a com-
policies should focus on “… industrial and technologi- mon extension that will apply to all current LDC Mem-
cal upgrading while ensuring social and environmental bers. This extension is the most appropriate for LDCs as it
protection.”18 will give the most flexibility to accommodate the diversity
of LDCs needs. If an LDC is in a position to implement
UN DESA has also noted that a prolonged global
TRIPS or certain aspects of the Agreement before oth-
slump will likely reverse the gains from poverty reduc- ers, they could still do so, without constraining other
tion and undermine structural transformation of LDC LDCs from benefiting from the full term of the exten-
economies, and a balance of payments crisis looms
sion. All the past extensions of the transition period have
large.19 also been granted as group extensions for all LDCs.
Page 6
POLICY BRIEFNeed for Extension of the LDC Transition Period Under Article 66.1 of the TRIPS Agreement Until
Graduation and Beyond
Conversely a country specific extension is not a desira- ered by the relevant body of Member States. Thus, a waiv-
ble option for LDCs. This will require each individual er from TRIPS would have to be also considered by the
LDC to make a specific duly motivated request for ex- TRIPS Council. Hence, what is more pertinent at this stage
tension, and it will be very difficult if not impossible to is whether the TRIPS Council recognizes the need for ex-
get fair terms for the extension in the negotiations, as tension of the transition period beyond graduation. If
each LDC will have to negotiate on its own with devel- there is agreement that such an extension is required, but
oped countries. Similarly, a thematic extension may not could only be operationalized through a waiver, the
address the diverse needs of all LDCs. TRIPS Council could itself recommend the adoption of
such a waiver to the General Council.
No conditions
Ultimately, the most important question before the
The request submitted by the LDCs seeks an extension
WTO Members is whether there is political will to extend
of the transition period without conditions. This is fully
the transition period for LDCs until graduation, and for
consistent with Article 66.1 of TRIPS which does not
an additional period of 12 years thereafter. If there is polit-
place any condition for LDCs to comply with during
ical will, the issue of how to concretize the waiver for the
the transition period. However, in the instance of the
graduation extension is merely procedural.
first general extension of the transition period that was
granted in 2005, conditions to not roll-back the existing Conclusion
levels of IP protection during the transition period was
introduced as part of the extension decision following The TRIPS Agreement fully recognizes that LDC Members
negotiations, at the insistence of the developed coun- need maximum flexibility to address their special needs,
tries. This condition was designed to prevent LDCs and overcome their vulnerabilities, administrative and
from taking full advantage of the transition period and financial constraints, and establish a sound and viable
reverse, where necessary, levels of IP protection that technological base, before they are bound to implement
were inappropriate to their circumstances. This obliga- the TRIPS Agreement. Article 66.1 of the Agreement thus
tion, however, was subsequently withdrawn under the granted an initial period of 10 years during which the
2013 decision to further extend the transition period. It LDCs were exempted from implementing the TRIPS obli-
will be important for the WTO Members to ensure that gations, and also guaranteed further extensions of the
the new extension of the transition period also does not transition without any conditions or limitations, upon a
include any obligation on the part of LDCs to preserve duly motivated request made for such extension by any
or not roll back existing levels of IP protection. LDC. In practice, the transition periods have been extend-
ed for a specified number of years, though the LDCs have
Extension beyond Graduation requested extensions until graduation.
A narrow reading of Article 66.1 could suggest that the As the current transition period nears its end on 1 July
transition period only applies for countries while they 2021, LDCs have again requested an extension until grad-
are designated as LDCs. However, there is no limita- uation. In addition, LDCs have also requested for an addi-
tion under Article 66.1 for an LDC to seek an extension tional extension of the period for 12 years following grad-
of the transition period for a specific period following uation. This is consistent with the reality that graduation
its graduation. An informal note by the WTO Secretari- is merely a statistical achievement of certain indicators
at states that “[w]hile there are no particular measures determined outside the WTO which do not necessarily
in place in order to smoothen the transition for gradu- reflect improvements in technological capacities, and that
ating LDCs, a graduating LDC can always make a re- the challenges that an LDC confronts, including the lack
quest in this respect to the TRIPS Council.”22 of a sound and viable technological base and other vulner-
The request for extension of the transition period abilities, continue to remain after graduation.
beyond graduation is also not unprecedented. Before As noted, several reports by multiple UN agencies and
the end of the initial transition period in 2005, Mauri- two resolutions of the UN General Assembly have re-
tius had submitted a request for extension of the transi- quested the WTO to consider the continuation of the inter-
tion period beyond graduation for a specified term. national support measures that LDCs have under various
Though the TRIPS Council had agreed to only grant an WTO Agreements, including the TRIPS transition period,
extension to Mauritius until its graduation (a decision after graduation. Moreover, the public health and adverse
that subsequently became redundant as the graduation economic impact of the COVID-19 pandemic has been
of Mauritius was postponed by the UN CDP), the most severe on the LDCs, including graduating LDCs.
TRIPS Council did not question the admissibility of a Hence, the request for extension of the transition period
such a request under Article 66.1. under Article 66.1 of the TRIPS Agreement by the LDCs is
Even if some members in the TRIPS Council were of merited, pragmatic, evolutionary and duly motivated.
the view that an extension beyond graduation would Such extension is also legally feasible under the TRIPS
be out of the scope of Article 66.1, such an extension Agreement. Thus, all WTO Members should be expected
could still be granted as a waiver under the Agreement to unconditionally support the request for extension of the
Establishing the WTO. Any waiver decision pertaining transition period by LDCs.
to a covered agreement is first required to be consid-
POLICY BRIEF Page 7Need for Extension of the LDC Transition Period Under Article 66.1 of the TRIPS Agreement Until
Graduation and Beyond
Endnotes: 11 Ibid., p. 13.
1 WTO document IP/C/W/40. 12 Ibid., p. 17.
2 WTO document IP/C/W/668. 13 UNCTAD, The Least Developed Countries Report 2016: The Path to
3 See
Graduation and Beyond: Making the Most of the Process (United Na-
generally, Carlos M. Correa, Intellectual Property Rights, the
tions, New York, 2016), p. 41. Available from
WTO and Developing Countries (Zed Books, 2000), p. 4.
https://unctad.org/system/files/official-
4 See Jayashree Watal and Leticia Caminero, “Least-developed document/ldc2016_en.pdf.
countries, transfer of technology and the TRIPS Agreement”, 14 Ibid., p. 46.
WTO Staff Working Paper, No. ERSD-2018-01, 22 February
2018, p. 4. Available from https://www.econstor.eu/ 15 SeeUnited Nations, Graduation from the LDC category. Availa-
bitstream/10419/176766/1/1016547994.pdf. ble from https://www.un.org/development/desa/dpad/least-
5 Ibid.
developed-country-category/ldc-graduation.html.
16 UnitedNations, “COVID-19 and the least developed countries”,
6 UNCTAD, Least Developed Countries Report 2007: Knowledge,
UN/DESA Policy Brief #66, 1 May 2020. Available from
Technological Learning and Innovation for Development (United
https://www.un.org/development/desa/dpad/publication/un-
Nations, New York, 2007), p. 118. Available from https://
desa-policy-brief-66-covid-19-and-the-least-developed-countries/.
unctad.org/system/files/official-document/ldc2007_en.pdf.
17 SeeWorld Health Organization Regional Office for Africa, Coro-
7 The need for these conditions being in place for effective trans-
navirus (COVID-19). Available from
fer of technology is also recognized by developed countries. See
https://www.afro.who.int/health-topics/coronavirus-covid-19.
e.g., the submission of the European Union on the provision of
incentives for transfer of technology to LDCs in Watal and 18 United Nations, “COVID-19 and the least developed countries”.
Caminero, “Least-developed countries, transfer of technology
19 UnitedNations, “COVID-19 pandemic deals a huge blow to the
and the TRIPS Agreement”.
manufacturing exports from LDCs”, UN/DESA Policy Brief #71,
8 SeeUnited Nations, Covid-19 and the LDCs – resources, moni- 14 May 2020. Available from
toring, articles. Available from https://www.un.org/development/desa/dpad/publication/un-
https://www.un.org/ldcportal/covid19-and-the-ldcs/. desa-policy-brief-71-covid-19-pandemic-deals-a-huge-blow-to-the-
9 UNCTAD,
manufacturing-exports-from-ldcs/.
The Least Developed Countries Report 2020: Productive
Capacities for the New Decade (United Nations, New York, 2020), 20 United Nations, “Covid-19 and graduation from the LDC catego-
p. 7. Available from https://unctad.org/system/files/official- ry”, statement by the Committee for Development Policy, 12 May
document/ldcr2020_ch1_en.pdf. 2020. Available from
10 Ibid.,
https://www.un.org/development/desa/dpad/wp-
p. 9.
content/uploads/sites/45/CDP-Covid-graduation-statement.pdf.
21UnitedNations, G.A. RES/75/259. Available from
https://undocs.org/en/A/RES/75/259.
22 See
WTO, “LDC Graduation and the WTO”, Informal Note, 2018.
Available from https://www.gradjet.org/wp-
content/uploads/2018/03/LDCGraduation_WTOissues-1.docx
The South Centre is the intergovernmental organization of developing
countries that helps developing countries to combine their efforts and Previous South Centre Policy Briefs
expertise to promote their common interests in the international are- No. 82, July 2020— Examining antimicrobial resistance in
na. The South Centre was established by an Intergovernmental Agree-
the light of the COVID-19 pandemic by Mirfin Mpundu,
ment which came into force on 31 July 1995. Its headquarters is in
Geneva, Switzerland. Caline Mattar and Mirza Alas
No. 83, August 2020— United States: An Obsolete Trade
Readers may reproduce the contents of this policy brief for their Practice Undermines Access to the Most Expensive Drugs at
own use, but are requested to grant due acknowledgement to the
More Affordable Prices by Maria Fabiana Jorge
South Centre. The views contained in this brief are attributable to
the author/s and do not represent the institutional views of the No. 84, September 2020— A New Trend in Trade Agree-
South Centre or its Member States. Any mistake or omission in this
ments: Ensuring Access to Cancer Drugs by Maria Fabiana
study is the sole responsibility of the author/s. For comments on
this publication, please contact: Jorge
No. 85, Octubre 2020— Política de industrialización de litio,
The South Centre el caso boliviano por Hortensia Jimenez Rivera
International Environment House 2
Chemin de Balexert 7-9 No. 86, November 2020— The Nagoya Protocol Internatio-
PO Box 228, 1211 Geneva 19 nal Access and Benefit Sharing Regime by Viviana Munoz
Switzerland
Tellez
Telephone: (4122) 791 8050
south@southcentre.int No. 87, February 2021— WIPO Negotiations for an Interna-
https://www.southcentre.int
tional Legal Instrument on Intellectual Property and Genetic
Resources by Nirmalya Syam
Follow the South Centre’s Twitter: South_Centre
Page 8
POLICY BRIEFYou can also read
