The fate of two mandated decisions from last year’s World Trade Organization
12th ministerial conference on the extension of the TRIPS Agreement to cover COVID-19 diagnostics and therapeutics and the termination of the 1998 electronic commerce moratorium will dominate the proceedings when the General Council meets on December 14-15.
Failure to reach decisions as per the MC12 mandates at this week's GC meeting could cast a dark shadow on the MC13 meeting that is going to start in Abu Dhabi on February 26, said people familiar with the developments.
Some members opposed to terminating the e-commerce moratorium on electronic transmissions want a two year renewal. At the same time, those same members oppose extension of the TRIPS Agreement to COVID-19 testing and drugs – particularly Switzerland and the United Kingdom.
The MC12 outcome on e-commerce states: “We agree to maintain the current practice of not imposing customs duties on electronic transmissions until MC13, which should ordinarily be held by 31 December 2023. Should MC13 be delayed beyond 31 March 2024, the moratorium will expire on that date unless Ministers or the General Council take a decision to extend.”
The MC12 decision on the TRIPS Agreement, in paragraph eight, spells out that “No later than six months from the date of this Decision, Members will decide on its extension to cover the production and supply of COVID-19 diagnostics and therapeutics.”
The decision on the TRIPS Agreement ought to have been implemented by December 17, 2022, as per the MC12 mandate. But a group of countries, including Switzerland, the United Kingdom and the United States, appear to have engage in diversionary tactics to delay the outcome until now, said people who asked not to be quoted.
Supporters of Continuing Moratorium
Members opposed to terminating the e-commerce moratorium and now seeking an extension for
two more years include Australia, Canada, Chile, Costa Rica, Georgia, Hong Kong China, Iceland, Israel, Korea, Liechtenstein, Moldova, Montenegro, Norway, New Zealand, Paraguay, Peru, Singapore, Switzerland, Taiwan, Ukraine and the United Kingdom.
In a proposal (WT/GC/W/909) circulated on December 1, supporters of continuing the moratorium argued that it provides “certainty and predictability for business and consumers.”
They want “continue the work under the Work Programme on Electronic Commerce, based on the mandate as set out in WT/L/274.”
They also set a timeline for the General Council “to hold periodic reviews of the Work Programme in its sessions of July and December 2024 and July 2025 based on the reports that may be submitted by the relevant WTO bodies and report to the next session of the Ministerial Conference.”
Supporters of continuing “the current practice of not imposing customs duties on electronic transmissions” want the moratorium to remain in place until the 2026 14th Ministerial Conference.
Opponents Want Termination at MC13
In sharp contrast, members wanting to end the moratorium argue that it must be terminated at
the MC13.
South Africa, on behalf of several supporters of the MC12 decision to end the moratorium,
circulated a proposal on December stating why the moratorium has to be terminated at the MC13. Given the paucity of time for submission of the proposal for the General Council meeting
beginning on December 14, several supporters, including India, Indonesia and others could not include their names in the South African proposal, said a negotiator of the supporters group, while preferring anonymity.
In its proposal (WT/GC/W/911), South Africa proposed a draft ministerial decision be adopted at the MC13.
According to South Africa, the draft ministerial decision on the 1998 work program, particularly the moratorium for not levying customs duties on electronic transmissions, caused “the deep digital and technological divide afflicting developing countries including least-developed countries (LDCs).”
It says that developing and least-developed countries remain concerned “by the impact of the moratorium on customs duties on electronic transmissions which provides the global tech firms with a distinct unfair tax advantage over local competitors in developing countries and hampers digital industrialization.”
Moreover, the “transactions of most global platforms are channeled through to a global entity, thus depriving the importing country of corporate tax revenue, hindering developing countries in their efforts to support digital industrialization initiatives.”
South Africa stressed that “the OECD/G20 initiative to address the tax challenges, whilst a useful step, will not result in developing countries individually benefiting to any material extent and does not resolve the fundamental problem generated primarily by the lack of digital tariffs which can enable more sustainable promotion of investment in developing countries.”
While acknowledging “the importance of work under the Work Programme in examining trade-related issues relating to global electronic commerce, taking into account the economic, financial, and development needs of developing countries,” South Africa called for preserving “policy tools to promote digital industrialization and inclusive participation in the digital economy.”
It asked the trade ministers who will participated in MC13 to “terminate the moratorium on the
imposition of customs duties on electronic transmissions.”
South Africa urged the trade ministers “to re-invigorate the work under the Work Programme on
Electronic Commerce, including the development-related issues under it, based on the mandate set out” in the 1998 e-commerce work program.
South Africa said trade ministers must “instruct the General Council to deliver concrete outcomes on the implementation of the Work Programme on all the issues allocated to the relevant WTO bodies by December 2024.”
South Africa emphasized that trade ministers must “establish a Fund that accepts voluntary contributions from developed countries and developing countries in a position to do so to provide developing countries including LDC Members with targeted support to address the digital divide and promote investments in developing domestic SME platforms in developing countries.”
Lastly, South Africa said, “all leading platforms must promote greater levels of participation and promotion of historically disadvantaged SMEs on digital infrastructure through among others, funding via fee rebates for onboarding and subscription, and ad credits or targeted promotions and to improve the visibility of developing countries including LDCs apps through a local app curation and provision of ad credits, as well as through promoting technology transfer.”
TRIPs Extension
At the informal TRIPS Council meeting held last week, a group of industrialized countries
appeared determined to stall an outcome on the MC12 decision on the TRIPS Agreement.
The opponents to MC12 decision like Switzerland, the United Kingdom, Japan, the European
Union and even the United States suggested that since there was no intellectual property related barriers to COVID-19 diagnostics and therapeutics, there was no basis for any extension, as agreed by trade ministers in Geneva last June.
The opponents also maintained that the MC12 decision was rather broad and undefined. At the meeting, the opponents said they remain flexible for the extension, noting that consensus was unlikely. In sharp response at the meeting, the supporters of the MC12 decision said the outcome under paragraph 8 was long overdue and should be taken at the General Council meeting in December. This
would also complement and support the work of the World Health Organization on a pandemic treaty. South Africa, India, Indonesia and Brazil reiterated that the COVID-19 pandemic is still alive
and that the risk of new variants remains real.
The developing countries said the WTO’s relevance and credibility depend on implementing the
decisions agreed by trade ministers.
To bolster their case, the supporters circulated their proposal for consideration at next week’s
GC meeting.
Defending TRIPs Extension
In their proposal (WT/GC/W/913, IP/C/W/694/Rev.1), circulated on December 1, the
supporters contended that the MC12 decision “is far removed from the comprehensive TRIPS waiver proposal contained in documents IP/C/W/669 and IP/C/W/669/Rev.1 (“original TRIPS waiver proposal”) co-sponsored by 65 WTO Members (co-sponsors).”
According to the proponents, “A more comprehensive waiver decision as envisaged in the original TRIPS waiver proposal would support the efforts to ensure timely, equitable and universal access to safe, affordable and effective therapeutics and diagnostics, ramping up of production and expanding supply options.”
Further, “the MC12 Ministerial Decision on the TRIPS Agreement (document WT/MIN(22)/30) is the result of over one and a half years of arduous and lengthy discussions on the original TRIPS waiver proposal and intense negotiations heading towards the 12th Ministerial Conference in the midst of a global crisis. It is of limited scope covering only vaccines.”
Given the growing importance of COVID-19 diagnostics and therapeutics, the proponents warned that “Omitting these vital tools will deter the effectiveness of the decision that aims timely and affordable access to effective vaccines against the ongoing COVID-19 pandemic.”
The supporters said, “At a minimum, the extension of the policy tools provided in document WT/MIN(22)/30 to therapeutics and diagnostics will result in a holistic approach to enable developing countries to address those IP barriers that prevent the expansion and diversification of production and increase accessibility to crucial life-saving COVID-19 tools.”
More importantly, according to the proponents, “the current outcome represents a
narrow-conditioned Decision due to demands of some WTO Members, requiring significant compromises on the part of the co-sponsors that had hoped for greater solidarity among WTO Members during a public health emergency and consequently a more comprehensive waiver decision as envisaged in the original TRIPS waiver proposal that would support ramping up of production and expanding supply options.”
In conclusion, the proponents emphasized the importance of paragraph eight of the Ministerial Decision, calling on the “General Council to immediately extend the 17 June TRIPS Decision adopted by the Ministers by consensus after long protracted negotiations, mutatis mutandis to therapeutics and diagnostics.”
By adopting the decision at the upcoming GC meeting, the “WTO Members have an opportunity to show they can act promptly to respond to the ongoing COVID-19 pandemic and the challenge of inequitable access to therapeutics and diagnostics and respond to the criticism that the Decision on vaccines came too little too late,” the proponents stressed.
Proposed TRIPs Decision
They urged the GC “to adopt the annexed decision” to their submission. The annexed decision
is as follows:
General Council Decision on Extension of the 17 June 2022 Ministerial Decision to COVID-19
Therapeutics and Diagnostics (hereafter referred to as ‘Therapeutics and Diagnostics Decision’) The General Council
Having regard to the 17 June 2022 Ministerial Decision on the TRIPS Agreement, document WT/MIN(22)/30
Decides as follows:
The MC12 Decision on the TRIPS agreement is extended mutatis mutandis for the production and supply of COVID-19 therapeutics and diagnostics.
An eligible Member may apply the provisions of this Therapeutics and Diagnostics Decision until 5 years from the date of this Decision. Any extension of the MC12 Decision on the TRIPS Agreement pursuant to paragraph 6 shall apply to this Decision as well.
It remains to be seen whether the opponents or supporters of the termination of the e-commerce moratorium and the extension of the TRIPS Agreement decision to COVID-19 diagnostics and therapeutics will succeed at the GC meeting.
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