PHARMACEUTICAL INDUSTRY IN EUROPE
6. TRIPs and pharmaceuticals
6.2 A BRIEF HISTORY OF THE TRIPS AGREEMENT
Round.3 The inclusion of IPRs in the negotiating agenda in the first place, as indeed presented by the ministerial declaration of 20 September 1986, was primarily initiated by the US, backed by the EC, Switzerland and Japan.4 These countries, particularly the US and the EC, exerted heavy pressure, including threats of unilateral trade retaliation, on some key developing countries such as India, Korea and Brazil, forcing them to agree to negotiate on a comprehensive IP agreement under GATT auspices. Naturally, there were also disagreements within the north–north agenda, such as between the US and the EC concerning the ʻfirst to inventʼ vs. the ʻfirst to fileʼ patent system.5 Yet, while such disagreements focused on the more subtle issues of the agreement, negotiations as a whole on the essence of TRIPs and on its practical outcome were ultimately linked to, and dictated by, the north–south divide.6
Chronologically, the decision to accept the joint Swiss-Colombian proposal, which also pushed for the inclusion of IPRs, as the primary platform for the Uruguay Round negotiations posed a serious problem for the developing countries.7 As a result, negotiations on the TRIPs agreement during the early stages (1986–1988) were in complete deadlock and the gap between developed (US, EC, Switzerland and Japan) and developing countries (notably Brazil and India) seemed unbridgeable.8 Whereas the developed countries presented a highly ambitious agenda, aimed at a rigorous rule-based IP system, the developing countries fiercely questioned the logic of ʻinsertingʼ IPRs into the GATT framework.9 India, in particular, opposed the granting of patents in numerous technological fields, such as pharmaceutical and chemical products and micro-organisms (biotechnology).10
Following extensive bilateral pressures, mostly from the US but also from the EC, developing countries, at the Uruguay Round mid-term review of April 1989, agreed to negotiate on a wide rule-based framework for GATT IPRs.11 The Draft contained most of the relevant elements of TRIPs: institutional arrangements, including the principles of national treatment and most-favoured- nation (MFN) treatment, dispute settlement, substantive standards of protection for different forms of IPRs, enforcement and the relationship between the GATT IPR agreement and WIPO.12 In many respects the 1989 draft framework marked the shift from negotiations according to north–south lines to IP negotiations on north–north issues.13
During 1990, comprehensive negotiations between members of the TRIPs Working Group took place, resulting in five draft texts (from the US, the EC, Japan, Switzerland and a group of 14 developing countries).14 Towards the end of 1990 (22 November), the GATT IPRs Working Group presented the first draft agreement of TRIPs.15 Many issues still remained unresolved, including patent protection on pharmaceutical products, compulsory licences, trade secrets, copyrights and transitional arrangements.16 The difficulty of settling pharmaceutical patent differences between developed and developing countries
is emphasized by the Director of WTO Division for Investment and Intellectual Property, Adrian Otten:
The question of protection of pharmaceutical patents was one of the key issues in the negotiations as a whole and perhaps the key issue in the North–South axis of the negotiations…At the time, it was clear that there would be no TRIPs Agreement without commitment to make available patent protection for twenty years in virtually all areas of technologies, including pharmaceuticals, and that without a TRIPs Agreement it was doubtful that the Uruguay Round could be concluded.17
Throughout 1990 and 1991, negotiations continued with no significant progress, as indeed noted in the TRIPs Progress Report issued by GATT Director General, Arthur Dunkel (November 1991).18 Aiming to cut the IP ʻGordian knotʼ, and taking matters into his own hands, Dunkel decided to incorporate a compromise IPRs text agreement in his proposed Final Draft Act dated 20 December 1991 (Dunkel Draft).19 In retrospect, the Dunkel Draft went a long way towards the IP interests of developed countries. On this point it is worth citing Reichman:
The momentum of the multilateral negotiations during the Uruguay Round carried the developed countries well beyond their initial goal, which was to limit the capacity of free-riding copies of high-tech goods produced at great cost. Instead, by the time the Dunkel Draft appeared in 1991, the developed countriesʼ strategic goal was to impose a comprehensive set of intellectual property standards on the rest of the world.20 However, despite their ability to secure a landmark agreement on IPRs (TRIPs) the IP-based industries, particularly the pharmaceutical and film industries, did not approve of the Dunkel Draft.21 Among the objections expressed by the advanced pharmaceutical industry, both in the US and in Europe one could find the following: (1) objection to the extension periods granted to developing and least developed countries for the implementation of TRIPs; (2) strong opposition to TRIPs provisions relating to the international exhaustion of IPRs (parallel imports), and (3) dissatisfaction with TRIPs provisions relating to the transitional arrangements required from developing countries and LDCs, particularly with respect to the protection of existing subject matter (ʻpipeline protectionʼ).22
Nevertheless, following an agreement between the US and the EC on agricultural policies that enabled Uruguay Round discussions to resume as a whole in 1992, negotiations on the TRIPs agreement proceeded according to the lines of the Dunkel Draft. Eventually, the agreement reached in Marrakesh in April 1994 was almost identical to the Dunkel Draft.
That the TRIPs agreement represents the interests of IP-based industries in developed countries is discussed in depth in the following sections. Paradoxically both the mandate text provided by the Uruguay Round ministerial declaration
in 1986, which was evidently put forward by the developed countries, and the opening statement of TRIPs are highly similar.23