Questions and Answers: EU Communications to the WTO - EU proposes a strong multilateral trade response to the COVID-19 pandemic
What is the objective of the EU's communications to the WTO?
The first Communication to the WTO General Council primarily aims to ensure equitable access to vaccines globally. It urges WTO members to agree on a declaration with this objective in mind. This declaration invites WTO members to commit on the following:
-
-limit export restrictions and facilitate trade;
-
-encourage the expansion of vaccine and treatment production, in collaboration with industry; and
-
-address intellectual property issues.
These components constitute the core elements of the current debate on equitable vaccine distribution. It is important that WTO members agree on concrete actions in the spirit of international solidarity, and in line with WTO laws and principles.
Discussions at the WTO General Council in July 2021 should kick-off a process dedicated to trade and health-related issues. This discussion should conclude, at the latest, by the next WTO Ministerial Conference in November 2021.
Communication to the WTO TRIPS Council
The EU is also tabling a second Communication on intellectual property to the WTO body in charge of implementing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Council). Here, the EU provides more detail and clarity on each of the three points on intellectual property of its broader Communication to the WTO General Council and links them with the specific provisions in the TRIPS Agreement.
What concrete actions does the EU propose on export restrictions?
If at all needed, countries should use export restrictions sparingly. They should be transparent, proportionate, and limited in time. These concepts have been developed further in the Draft Declaration on Trade and Health that the EU, along with 12 other like-minded WTO members (‘Ottawa Group'), submitted to the WTO General Council for discussion in December 2020.
The Draft Declaration on Trade and Health should focus more on the ongoing problems with vaccine production and equitable distribution. WTO members should not restrict supplies to the COVAX Facility, and should ensure that inputs necessary for COVID-19 vaccine and treatment production can cross borders freely. The Commission will work with the current co-sponsors of the draft Declaration on Trade and Health to develop it further.
Vaccine and treatment-producing countries should avoid disruptions to global supply chains, and ensure that a fair share of their production is destined for exports.
WTO Members should ensure transparency by notifying all measures that have an export-restricting effect, even if the measures are not explicitly targeting exports.
How does the EU suggest to expand production?
Building on the various forms of industrial cooperation already in place, the EU calls on all actors to work together to meet demand and increase the resilience of the global health system.
For example, the EU is already planning to support an increase of manufacturing capacity in Africa, a continent 99% reliant on imports of vaccines. Here, the EU focuses on developing the health system as a whole. This can be fostered through public-private partnerships between governments, banks and industry.
As President von der Leyen announced during the Global Health Summit in May 2021, the EU and its Member States (Team Europe) are launching an initiative to develop vaccine production in Africa. The initiative entails investment in infrastructure and production capacities as well as skills development, supply chain management, and the necessary regulatory framework. The objective is to develop a number of regional hubs distributed across the continent. We have already identified promising projects in South Africa, Senegal and Rwanda, while we continue to work with other partners. EUR 1 billion has already been allocated from the EU budget and EU finance institutions for this purpose.
The EU encourages the industry to enter into licensing and manufacturing agreements with producers in developing countries, with a potential for scaling up vaccine production. Such agreements would allow producers to share their expertise, put in place tiered pricing, involving non-profit sales to the low-income countries, outsource parts of the production chain, and make new investments in manufacturing facilities in those countries.
Finally, the EU expects all vaccine producers and developers to make concrete pledges to increase supplies to vulnerable developing countries. As announced by President von der Leyen at the Global Health Summit, our industrial partners - BioNTech-Pfizer, Johnson & Johnson and Moderna - have already committed to delivering 1.3 billion doses this year at no profit to low-income countries and at lower cost for middle-income countries. Such efforts are very much welcomed, as they contribute to the initiative advanced by the WTO Director-General. We strongly encourage all vaccine and COVID therapeutics producers to follow suit.
What is in the EU's proposal on intellectual property rights?
Intellectual property rights should enable equitable vaccine distribution, rather than being an obstacle to it. The EU proposes a number of key principles to help implement the flexibilities provided for by the existing WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) more effectively.
Our objective is to ensure that intellectual property allows for:
-
-deploying existing production capacity;
-
-creating new production capacity ,and;
-
-providing fair access to vaccines and treatments.
At the same time, we want to maintain the levels of protection required for investment in innovation, so we can fight against new strains of COVID-19 and any future disease. The EU does not consider that the broad waiver proposed by a number of WTO members is the right response to the pandemic. We are arguing for a different and more targeted approach.
The EU believes that voluntary licences are the most effective instrument to facilitate expansion of production and share the necessary know-how. There are more than 280 partnerships worldwide which can make the fullest use of these licences.
In the absence of voluntary licences, compulsory licences are a legitimate tool to ensure that intellectual property rights do not hinder the expansion of production during the pandemic. The EU therefore calls on WTO members to agree that:
-
-the pandemic is a circumstance of national emergency, and therefore the requirement to negotiate with the rights holder may be renounced;
-
-we need to support manufacturers who are ready to produce vaccines or treatments at affordable prices under a compulsory licence, and that the level of remuneration paid by that manufacturer to the patent holder should reflect such affordable prices;
-
-the compulsory licence could cover any exports to countries that lack manufacturing capacity, including via COVAX.
The EU has listened to WTO members who say that the implementation of the existing rules on compulsory licences (Article 31bis) is too complex, and that the lack of legal certainty stands in the way of using them effectively. In its Communication to the TRIPS Council, the Commission proposes to tackle this issue, facilitate the use of this system and provide legal certainty about its key elements.
Vaccines and intellectual property - Flash Explainer
Voluntary licensing: The vaccine developer and producer agree voluntarily to work together. This is usually coupled with a transfer of know-how and technology. It is driven by needs, and fosters cooperation and efficiency.
Compulsory licensing: Government grants a targeted licence allowing a willing producer to make a vaccine without the consent of the patent holder. The patent holder receives adequate remuneration. Transfer of know-how is not ensured.
Waiving IP rights: All relevant rights are waived, i.e. the protection granted by patents, copyright or other IP rights ceases to exist for the duration of the waiver. The vaccine developer is not remunerated and has no role or information on the product. The absence of interaction between the vaccine developer and the producers makes the transfer of know-how unlikely.
What is the EU doing to incentivise the voluntary cooperation and transfer of technology?
Cooperation between different vaccine producers and manufacturers in the EU has already brought significant results. More than 50 manufacturing sites in the EU are now involved in vaccine production, all based on voluntary partnerships.
The European Commission's Vaccine Task Force is playing an important role in identifying all of the manufacturers interested in cooperation and assisting them in creating partnerships. These partnerships range from full licensing and transfer of technology to agreements on separate manufacturing elements; e.g. fill and finish.
Globally, there are more than 280 partnerships already identified, including with manufacturers in a number of developing countries such as India and South Africa. This should continue and vaccine developers should be ready to enter into arrangements that facilitate the supply at manufacturing cost of vaccines to low- and middle-income countries.
In the short term, the two most important objectives are increasing production capacity where it is already available as soon as possible and distributing COVID-19 vaccines in an equitable manner. In the medium to long term, it is also important that the production of vaccine and medical products come from several sources - the diversification of locations - in particular in Africa.
How does the compulsory licence system under the TRIPS Agreement work?
The intellectual property framework is a system of checks and balances. There are limitations and exceptions to every intellectual property right foreseen in the TRIPS Agreement, as well as the domestic implementing legislation.
The TRIPS Agreement provides for relevant exceptions and flexibilities necessary for WTO Members to ensure that, in particular, access to medicines is not hindered. The 2001 WTO Doha Declaration on the TRIPS Agreement and Public Health acknowledges the link between the obligations under the TRIPS Agreement and the public health needs of the WTO Members.
The Doha Declaration identifies specific options already in the TRIPS Agreement, open for governments to address public health needs - also known as “flexibilities.” Among those flexibilities, least developed countries are not obliged to implement the TRIPS Agreement until July 2021 (the EU supports a further extension of this exemption) and are specifically exempted from implementing the provisions relating to pharmaceutical products until 2033.
The main type of flexibility under the TRIPS Agreement is a compulsory licence. The two main types of compulsory licences are:
-
-Licences for predominantly domestic supply (Article 31) - products manufactured under the licence are designated predominantly for the domestic market.
-
-Licences for exports (Article 31bis) - products manufactured under the licence can be exported to countries that lack manufacturing capacity. This compulsory licence for export applies to pharmaceutical products only and sets out mainly procedural requirements; for example, specific notifications to the WTO by the importing and the exporting member.
Can compulsory licensing be an effective tool in ensuring access to medicines and vaccines? Has compulsory licensing worked in the past?
Compulsory licensing can be effectively used in a situation where intellectual property, and in particular patents, are used as means to prevent other companies from producing patent-protected products, including vaccines or medicines.
The use of compulsory licence can only be effective if intellectual property - and not other factors - are a barrier to the expansion of production. There may be a barrier when a company that is willing and ready to produce products that are patent-protected cannot obtain a voluntary licence from the patent holder. A government must then assess whether the conditions for a compulsory licence are met and may grant it under the domestic rules that implement the TRIPS Agreement. The conditions for a compulsory licence include that the scope and duration of use under the licence is limited to the purpose for which it was authorised, while the use must be non-exclusive.
The compulsory licensing system has been used several times in the past. Many examples of compulsory licences result from the HIV/AIDS crisis. New anti-viral products against HIV/AIDS were not available at the time or simply unaffordable for some of the low and middle-income countries after almost a decade since their launch in the high-income countries. Brazil, Congo, Cuba, Ecuador, Gabon, Ghana, Georgia, Indonesia, Malaysia, Mozambique, Myanmar, Pakistan, Philippines, Thailand, Ukraine, Zambia and Zimbabwe are examples where compulsory licences for HIV/AIDS medicines were issued between 2000 and 2012. Many of these became either voluntary licences or sales at discounted prices. The crisis also led to the change in the practice by the pharmaceutical companies (e.g. sales at tiered pricing) and the creation of the Medicines Patent Pool - which helps the producers of generic medicines to obtain voluntary licences.
Ecuador, Thailand, Italy, India, Russia and Taiwan have all issued compulsory licences for other medicines for the treatment of cancer, arthritis, kidney diseases, avian flu, bacterial infections, etc. In a number of other cases - including in Canada, the US, the UK, South Korea, Switzerland and several other countries - recourses to compulsory licences also helped obtain access to medicines, even in the absence of a formal decision.
During the HIV/AIDS crisis, the only compulsory licence for export was issued in a case between Canada in Rwanda in 2007.
For More Information