Inside US Trade | October 12, 2001
Two confidential option papers prepared by the European Union show that the Commission is trying to insert environmental issues back into the World Trade Organization's negotiating agenda by offering to delay the start of actual negotiations and by offering to include issues relevant to developing countries, according to the copies reprinted below.
The EU effort, however, was rejected by developing countries and agriculture exporters who have been steadfast in their opposition to environment talks, and drew support only from the EU's traditional allies on these issues. These are European countries like Switzerland and Norway along with Japan and Korea, who want to ensure the launch of a broad round of negotiations.
The U.S. also appeared nonplussed by the proposals, complaining that there was no mention of addressing fishery subsidies, an EU practice considered to be exacerbating the depletion of world fish stocks.
Outstanding issues like the environment are likely to be raised this weekend when a select group of ministers will discuss the agenda for a WTO round in an informal meeting in Singapore Oct. 13-14. Countries attending are Australia, Brazil, Canada, Colombia, Egypt, the European Union, Gabon, Hong Kong, India, Indonesia, Jamaica, Japan, Korea, Malaysia, Mexico, Pakistan, Qatar, Singapore, South Africa, Switzerland, Tanzania and the U.S.
The EU gave an Oct. 8-9 meeting of delegations two option papers, both of which call for a decision at the November ministerial to launch negotiations on environmental issues. However, both proposals provide for an initial period of an unspecified number of months for countries to submit proposals for negotiations. The EU is insistent there be no delay in a decision that negotiations should take place, arguing this would lead to a downward spiral delaying talks on all controversial issues and jeopardizing the launch of a broad negotiating agenda, one trade source said.
The first EU option paper says negotiations would be on the terms of reference of the Committee on Trade and Environment, which includes two of the EU's key issues, the relationship between trade rules and multilateral environmental treaties and labels for environmental purposes. It also incorporates the "results of dispute settlement" which would bring in the decision on the use of minority science views to justify health measures in the beef hormone dispute. This would give the EU a venue for discussion of the precautionary principle. Further direction to the negotiations would be provided by ministers in 2003, according to the EU proposal.
The second proposal sets out other possible areas for negotiations, including items of interest to developing countries. However, developing countries did not rise to the bait during discussion of this proposal this week, sources said.
The list of possible negotiating items includes the "export of domestically prohibited goods." This focuses on products like certain pesticides that are banned in the developed countries that manufacture them but are sold abroad to developing countries. Another item is the relationship between intellectual property rules and the Convention on Biological Diversity. This would provide a venue for negotiation on the issue of whether indigenous peoples should receive royalties for their traditional agricultural or medicinal knowledge that is incorporated into patented products, which India backs. The second proposal also elaborates the EU's priority items.
Both proposals include language saying that "clarification will be sought in full conformity with the basic concepts and principles of existing WTO agreements," and that the "outcome shall not create scope for protectionist abuse."
The EU is trying to make headway in putting environment back on the negotiating agenda after it was left as a subject for further study in a draft ministerial declaration issued by the General Council Chairman late last month. The EU also made a stab at moving ahead on other elements of the draft declaration, but they proved no less intractable.
On investment and competition, the EU again floated its plurilateral option--allowing countries to opt out from these agreements before they go into effect. But this option, which the EU had floated informally earlier this year, again did nothing to soften opposition to negotiations in these areas. Malaysia and India again spoke against negotiations, and Brazil, considered to be more open to these talks, said it opposed the opt-out option. These countries say this option would derogate from the WTO principle of universally applicable rules, and create two classes of countries--those covered and those not party to agreements.
On competition, the U.S. expressed an interest in having peer reviews, not dispute settlement, to enforce any new rules, which it said should be limited to transparency and non-discrimination.
On extending protection for geographical indications to products other than wine and spirits, new world and old world countries split over whether negotiations should be launched or whether the WTO should merely examine issues related to future talks, the second option in Harbinson's draft declaration. A diverse coalition of old world countries, from the EU, to Switzerland to India to African countries favor negotiations. These talks would lead to protection of agricultural products that have their origin in these countries, with examples ranging from Switzerland's Gruyere cheese to India's basmati rice. But the U.S., Australia, and Latin American countries, which produce their own versions of these products, oppose talks, fearing that the inability to use these names would hurt sales of their products.
Progress on a separate declaration on the relationship between intellectual property rights and public health is also stymied due to a split between developed and developing countries.
The U.S., EU and Switzerland are opposed to language proposed by developing countries that would say "nothing in the [Trade Related Intellectual Property Rights] agreement shall prevent Members from taking measures to protect public health."
Developed countries believe the language would create a giant loophole in the TRIPS agreement because it would serve to guide dispute settlement decisions on areas of TRIPS that are unclear. Developing countries want it for the converse reason, to prevent panels or the Appellate Body from issuing stricter interpretations of ambiguous TRIPS provisions based on their own legal analysis.
The two sides are also at odds over how much weight the declaration should give the principles and objectives of the TRIPS agreement. Developing countries want to make these provisions, which spell out the social objectives like public health and development, predominant in future interpretations, while the U.S. and its backers are resisting this.
On the clarification of specific TRIPS provisions, the countries are also far apart. The U.S., EU and Switzerland are backing language that would narrow interpretation of provisions allowing for parallel imports. Parrallel imports would only be allowed from countries where the product is put on the market with the consent of the patent holder. Importers could buy the product there on the open market since the patent holder had exhausted its rights. Developing countries want the broadest interpretation of the exhaustion of rights. This would allow parallel imports from countries where the patented item is under compulsory license or where there are no patent protections.
The issue of extensions is also divisive. Developing countries want a blanket five-year extension from TRIPS obligations for least developed countries and an additional five years for developing countries before they have to provide patent protections for pharmaceuticals. Developed countries oppose the latter demand, though they are open to case-by-case applications for extensions by least-developed countries.
The U.S. and Switzerland have also signaled that they are skeptical that clarifications of the terms for compulsory licensing can be solved before the ministerial, although the EU is considered more flexible here. The issue centers on whether small, poor countries without manufacturing capabilities can issue a compulsory license to manufacture a needed medicine in a third country. Developing countries want clarifications that would specify that the TRIPS agreement allows this.Inside US Trade:
