‘Quad’ raise hopes of a COVID-19 deal and revival for the beleaguered WTO

Not done yet, but the group-of-four could give the WTO some long-awaited success

Photo of a man holding out his hand for a handshake

Updates
June 17, 2022 — members agree on the waiver at the Ministerial Conference.

From mid-May to June 10 — members work on the compromise draft and discuss further revisions. The text submitted to the Ministerial Conference is here. Earlier versions are here.

May 19, 2022 — An informal meeting to take stock of two days of real negotiation on the compromise among about 30 delegations on May 16 and 18, described by chair Lansana Gberie (Sierra Leone’s ambassador) as “arduous”.

WTO Director-General Ngozi Okonjo-Iweala urged members on all sides to sort out their reservations over the proposed compromise, so that a deal on waiving some intellectual property protection for COVID-19 can be struck by the Jun 12-15 Ministerial Conference. See this Twitter thread.

May 3, 6 and 10, 2022 — The compromise text was finally put to the rest of the membership at a May 3 informal meeting — WTO news story, and the text (html or pdf) — and discussed in a May 6 formal intellectual property council meeting and in the General Council on May 10. Both bodies consist of the full WTO membership.

Members were non-committal about accepting or rejecting the text. But this compromise draft allowed them for the first time to agree broadly to start negotiating on a text in the search for a solution. None of the Quad presented the text as their own, just an attempt to secure an agreement.

See this twitter thread and this WTO news story on the General Council meeting, and this earlier Twitter thread and WTO news story on the intellectual property council. The blog post below had been updated accordingly.

March 28, 2022 — Three of the “Quad” could still be consulting internally on whether to accept the compromise, according to Geneva trade sources.

South Africa is said to have told members in an informal General Council meeting on March 28 that the draft was still being discussed domestically. Only the EU is understood to have completed its internal processes and to have accepted the draft, while India and the United States had not yet confirmed their support for it.

The draft would still have to go to the full membership in the intellectual property council, but no date has been set for the council’s next meeting.

By Peter Ungphakorn
POSTED MARCH 17, 2022 | UPDATED JUNE 17, 2022

Behind-the-scenes negotiations by four key members have raised the prospect of an agreement on intellectual property and the COVID-19 pandemic, which would also help lift the World Trade Organization out of one of its worst crises.


For nearly a year, the United States, […] has worked constructively with other WTO Members to facilitate discussions and bridge differences that might lead to […] consensus across the 164 Members of the World Trade Organization to help end the pandemic.

In the days ahead, […] we look forward to continuing our engagement with members of Congress and stakeholders as all WTO Members consider the text released by the WTO Director-General.

Statement by US ambassador to the WTO María Pagán, May 3, 2022

News broke in mid-March 2022 that the four — the EU, India, South Africa and the US — had agreed on a compromise text on waiving the obligation to protect intellectual property related to the COVID-19 pandemic.

A slightly modified text was circulated to members on May 3, 2022. A cover letter from WTO Director-General Ngozi Okonjo-Iweala summarised how the proposed compromise was negotiated.

Although members offered some initial reactions in meetings over the following week, it still had to be negotiated, agreed, and possibly amended by the WTO’s membership of 164. (See this twitter thread and this WTO news story on the General Council meeting, and earlier this Twitter thread and this WTO news story on the intellectual property council.)

Anything can happen in that process, but so far the compromise has not been rejected outright — it has been accepted as a basis for negotiations. After all, most of those driving the main positions are among the four.

The likelihood of a breakthrough was first reported by Priti Patnaik of Geneva Health Files on March 11.

A month earlier she had broken news of what turns out to be an important part of the compromise — to limit the countries eligible to use the waiver. She reported that India and China would be excluded and that India would resist. How accurate that was at the time is unconfirmed, but the outcome would exclude China and not India.

What are the implications of the proposed compromise? How does it fit into the earlier debate about the waiver? How does it differ from the original proposal?

These are some immediate thoughts. Underlying them are two fundamental questions. Both, in totally different ways, are important:

  • What would this do for dealing with the pandemic?
  • What would this do for the WTO?

Some of the answers will emerge when the full membership gets down to negotiating the compromise in the WTO body responsible for intellectual property, the TRIPS Council. (TRIPS is trade-related aspects of intellectual property rights.)

Continue reading or jump down the page to:

PART 1. THE BIGGER PICTURE
Boost for the WTO | But will they agree? | Talking quietly in small groups works | Will it help vaccinate the world?

PART 2. THE CONTENT with comparison table
1. Would a waiver be counterproductive? | 2. Would waiving patents help vaccinate the world? | 3. Should the waiver only cover patents? | 4. Should the waiver only cover vaccines? | 5. How should the waiver end? | 6. What was missing from the original draft? Transparency. Legal certainty. Products leaking to non-waiver markets. | 7. Is it time to negotiate the text? | 8. Are there alternatives to a waiver? | And finally, one for the lawyers

PART 1. THE BIGGER PICTUREBack to top
1. Boost for the WTOBack to top

If agreed by the membership this will be a major boost for the WTO at a time when it’s plagued by inability to conclude negotiations, its dispute settlement system is handicapped, and some meetings are now disrupted by wrangling over the invasion of Ukraine between the US, EU and their allies versus Russia.

The more routine parts of trade under the WTO are functioning reasonably well. But they never hit the headlines and the public are never made aware of what is working, only the problems.

So news of agreement on the waiver for something as important and current as the pandemic will go down well, particularly when much of the public debate has been binary — waiver: yes or no?

2. But will they agree?Back to top

Japan, Switzerland and the UK will still dislike any form of waiver. This is a compromise, so a lot of their concerns have been allayed. Not all, though. But with the EU and US on board they will find it difficult to resist.

Likewise with countries that might have argued that the compromise is too weak. India and South Africa initiated the campaign for a waiver, and now the two leading countries have accepted the compromise. 

We can expect some minor revisions and a lot of moaning from both sides, but for now the chances of a deal look good.

3. Talking quietly in small groups worksBack to top
“Long and difficult hours”: WTO chief Ngozi Okonjo-Iweala (left) and her deputy Anabel González coordinated
“Long and difficult hours”: WTO chief Ngozi Okonjo-Iweala (left) and her deputy Anabel González coordinated. See WTO news story and Okonjo-Iweala’s May 3 cover letter

If this is eventually agreed, it is a vindication of the much-maligned use of small groups in negotiations.

It’s too much to hope that we’ll hear no more moaning about lack of inclusiveness, but at least there should be less.

Few thought a compromise was possible between the India-South Africa proposal for a waiver and the EU on using existing flexibilities instead.

But in a way, that’s what this draft does. It’s allows countries to suspend some rights on patents (Article 28.1 in the WTO intellectual property — TRIPS — agreement) while extending some existing flexibilities (Article 31 of the TRIPS Agreement on using an invention without the owner’s permission). It waives some parts, but keeps some others such as the need for remuneration.

If this succeeds, the credit also goes to Director-General Ngozi Okonjo-Iweala who set up the small group, and her deputy Anabel González, who helped coordinate it. The four themselves made some tough concessions. At this stage we don’t know where the inventive thinking on various parts of the compromise came from.

4. Will it help vaccinate the world?Back to top

If this is agreed we get to “proof-of-the-pudding” time. Expert opinion is divided on whether suspending patent protection helps transfer COVID-19 vaccine technology because it is complex and involves trade secrets that companies are reluctant to share. Those opinions can now be tested.

Focusing on the substance of the compromise, rather than the implications for the WTO, Geraldo Vidigal tweeted a scathing comment: “the ‘clarifications and waivers’ formula is the worst of both worlds.”

In his Twitter thread, he said “the text feels largely symbolic and retrospective, when what is useful two years into Covid is forward-looking action.”

James Love, director of Knowledge Ecology International, slammed the compromise as “limited and narrow”, making the Article 31 flexibilities “more restrictive and burdensome”.


PART 2. THE CONTENTBack to top
Table: ‘TRIPS waiver’ texts: how they compare, part 1
Table ‘TRIPS waiver’ texts: how they compare, part 2
‘TRIPS waiver’ texts: how they compare. Click the images to see them full size, or download pdf version here

WTO members have raised broadly eight issues where they differ. How does the new text affect the debate?

For a start, this is no longer called a “waiver” as such. It is now a “decision” containing “clarifications and waivers” for eligible members to use.

More specifically, the obligation to protect patents is not waived. Instead, some patent rights can be limited.

However, some conditions that normally apply when governments use the flexibilities of the TRIPS Agreement (Article 31) are “waived” presumably in a generic meaning of the word (new text paragraph 1 and 3(c)).

Legally, that seems to shift the package within Article 9 of the WTO Agreement, up from paragraphs 3 and 4 (on waivers), to paragraph 1 (on decision-making in general). It would remove some of the disciplines that apply to waivers, although the draft sticks to requiring an annual General Council review.

1. Would a waiver be counterproductive?Back to top

This still has to be tested in practice. The EU opposed a waiver and has now accepted the compromise, presumably in the belief that the limitations introduced have reduced what it considers to be the downsides. We’ll see if Japan, Switzerland and the UK follow suit.

> Members’ previous positions


2. Would waiving patents help vaccinate the world?Back to top

Again, this still has to be tested in practice. If it has little impact, we can expect a debate about whether the problem comes from the limitations in the compromise or whether the claimed benefits of any waiver are overrated.

China: opt out versus exclusion

One of the potentially crucial limitations is buried in a footnote (paragraph 1 footnote 1), although in practice, it is unlikely to have a major impact.

The footnote has too parts, each in a pair of square brackets, indicating they are not agreed and are drafted options — in the final version one would stand and the other would be deleted unless some other formulation was agreed.

The first option calls for developing countries that can export vaccines to opt out of the decision voluntarily. The second option would bar China automatically. It says a country eligible to apply this decision must:

  • be a developing country
  • not have exported more than 10% of world exports of COVID-19 vaccine doses in 2021

China was the second largest exporter after the EU in 2021 with almost 34% of exported doses. No other developing country exceeded 10%. India exported about 2.5% and South Korea about 3.5%.

Screenshot of chart of COVID-19 vaccines by country from WTO-IMF COVID-19 Vaccine Tracker
China excluded? all other developing countries exported less than 10% of doses | WTO-IMF COVID-19 Vaccine Tracker

Those figures, from the WTO-IMF COVID-19 Vaccine Tracker, cover the whole period when vaccines were available until the end of January 2022 — essentially 2021 plus a month or two. The difference for 2021 alone is likely to be small.

As several people have pointed out, India banned vaccine exports for part of the time because of its own domestic crisis with the pandemic.

One of China’s objections raised in the TRIPS Council on May 6, 2022 was that the second option for footnote 1 could be an incentive for developing countries to restrict exports so that they stayed below the 10% threshold and were not excluded from the decision.

In the General Council on May 10, 2022, China saidon the record — it would opt out voluntarily if the second part of the proposed footnote were deleted.

This is consistent with China’s approach to its status as a developing country in other WTO agreements. For example, it implemented the Trade Facilitation Agreement essentially as a developed country without relinquishing its status as a developing country.

If WTO members agree to keep the voluntary opt-out and delete the 10% bar, that could put some pressure on India, South Korea and South Africa to do opt out as well.

(In the original draft from March, footnote 1 did not have the opt-out option)

> Members’ previous positions


3. Should the waiver only cover patents?Back to top

The compromise is essentially only for patents. That that includes patents on necessary ingredients and processes (paragraph 1 and footnote 2).

The May 3, 2022 version circulated to members adds square brackets around paragraph 3(a) and a new footnote. The square brackets and footnote mean that whether or not to include the paragraph is still being considered. If included, the paragraph would propose that only a single authorisation is needed to cover multiple patents, which would have to be listed and could be updated.

The text also tries to ensure a provision on trade secrets does not obstruct the authorities from approving a vaccine produced under the waiver (paragraph 4).

This applies to information that companies supply so that their products can be put on the market. For vaccines it is data from clinical trials.

Can confidential data supplied to a government, for example by Moderna, be used by a company producing a copy of the vaccine under the waiver?

The relevant provision is paragraph 3 of Article 39 (of the WTO’s intellectual property agreement) on trade secrets, which seems to say: “No. But maybe yes. For legitimate purposes. You know what? It depends. For example, yes, the data can be used if Moderna didn’t have to work hard to produce it.

More legalistically, Article 39.3 refers to data “the origination of which involves a considerable effort”, a mind-boggling legal concept. In this case, the data have to be protected “against unfair commercial use”. On the other hand the data can be disclosed “where necessary to protect the public”, or if “steps are taken to ensure that the data are protected against unfair commercial use.”

The new compromise tries to help: “Nothing in Article 39.3 of the Agreement shall prevent a Member from taking measures necessary to enable the effectiveness of any authorisation issued as per this Decision.”

But what on earth is “the effectiveness of any authorisation”? Over to the lawyers.

> Members’ previous positions


4. Should the waiver only cover vaccines?Back to top

For now, it only applies to COVID-19 vaccines (paragraph 1).

Within six months, members would consider whether to extend the waiver to COVID-19 diagnostics and therapeutics (paragraph 8). That would seem to exclude equipment, particularly if usable for other conditions (such as ventilators). An agreement to extend the coverage to other products would require a consensus decision, as would the decision on the present text.

> Members’ previous positions


5. How should the waiver end?Back to top

The original proposal was never going to fly. The proposed compromise removes objections by reversing the decision-making process (paragraph 6).

Here, the group of four have not agreed on how long the waiver (now called the “decision”) should last, so [3] and [5] years are proposed. The square brackets mean members should delete one of them in the final text, although they could go for some other number (such as 4).

The General Council could decide to extend the duration, which would require consensus to do so. The original India-South Africa draft would have required consensus to terminate the waiver, meaning it would need only one country to keep the waiver alive.

> Members’ previous positions


6. What was missing from the original draft?Back to top

Here, three issues have been raised: transparency, legal certainty and products leaking to non-waiver markets.

Transparency

India is among the countries that have complained that transparency requirements in similar situations are “onerous”, which some other countries reject. The original proposal did not mention it. The compromise text now does (paragraph 5 and footnote 4).

The new text would require a government applying the decision to inform other WTO members (by notifying the TRIPS Council) as soon as possible when it authorises use of patented inventions without the permission of the patent owner, and any other related measure.

The required information includes: the name and address of the authorized entity (company, agency, organisation, etc), the products covered and for how long.

Transparency would also be achieved through the authorisation that the government announces. The draft’s text on this is in square brackets (added in the official May 3 version) indicating it is more controversial, including the requirement to list all the patents involved (paragraph 3(a)).

Some members have also questioned that requirement in initial reactions in the TRIPS and General Councils, although some observers has queried how an authorisation could be issued if the government did not know what the patents are.

The quantities authorised and the countries supplied should also be notified to the WTO membership as soon as possible after the information is available.

WTO notifications are always publicly available.

Legal certainty

Transparency helps deal with some aspects of legal certainty. So does restricting the text to patents and only part of trade secrets. The question of what happens to new inventions made while the waiver applies is not addressed.

Products leaking to non-waiver markets

As predicted, this is now also included but without anything specific such as distinctive packaging. If a country imports a vaccine produced under the decision, it would have to “undertake all reasonable efforts to prevent” the vaccine being re-exported. All governments must also have legal procedures available to deal with products produced elsewhere under the decision, that are improperly imported into their countries. (Paragraph 3(d).)

> Members’ previous positions


7. Is it time to negotiate the text?Back to top

Clearly the group-of-four think so. Since they have produced this compromise, it will be difficult for others to resist.

> Members’ previous positions


8. Are there alternatives to a waiver?Back to top

The original answer from the EU was “yes”, the flexibilities that already exist in the TRIPS Agreement.

Many of these have now been merged into the compromise text. Those flexibilities have limits.

In the new text, some of the limits are relaxed further. For example an eligible government does not need to negotiate voluntary licensing with the patent-owner first (paragraph 3 (b)). But because the pandemic is an emergency, this requirement could probably have been bypassed anyway.

Vaccines produced under the decision can be exported more freely — they no longer have to be produced “predominantly” for the domestic market (TRIPS Agreement Article 31(f)). The conditions in a recently-agreed amendment on exporting under compulsory licence will not apply to the decision either.

One condition remains but with a clarification. Normally, a compulsory licence or other means of using a patent without the owner’s permission still requires payment for the use. How much that payment should be is debated.

Here the text says deciding the amount to pay can take into account “humanitarian and not-for-profit” purposes aimed at providing the vaccines at affordable prices. Among the guidelines that can be used are those of the World Health Organization, written, incidentally, by James Love (paragraph 3(e) and footnote 3).

> Members’ previous positions


And finally, one for the lawyersBack to top

One specifically for the lawyers: action under the decision cannot be challenged under “nullification or impairment” rules (GATT Article 23, sub-paragraphs 1(b) and 1(c)) — where an expected right is harmed even though no rule has actually been broken (paragraph 7).

> More on this


More on the waiver


Updates:
June 6–17, 2022 — updating “update” box at the top, now with a link to the agreed text
May 3–4, 6, 11 and 20, 2022 — revising with links for the official circulated version of the compromise text, and with reactions in the TRIPS and General Councils. Minor edits including on how the idea of a “waiver” or “waivers” is handled.
March 28, 2022 — adding the update box at the top
March 18, 2022 — adding the table comparing the texts

Image credits:
● Handshake | Pexels licence

Author: Peter Ungphakorn

I used to work at the WTO Secretariat (1996–2015), and am now an occasional freelance journalist, focusing mainly on international trade rules, agreements and institutions. (Previously, analysis for AgraEurope.) Trade β Blog is for trialling ideas on trade and any other subject, hence “β”. You can respond by using the contact form on the blog or tweeting @CoppetainPU

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