Time for a Collective Response to the United States Special 301 Report on Intellectual Property
By Viviana Muñoz-Tellez, Nirmalya Syam and Thamara Romero
This policy brief discusses the annual Special 301 report issued by the Office of the United States Trade Representative (USTR). The report is a unilateral tool of the US to pursue its foreign intellectual property (IP) policy by exerting pressure on countries to reform their IP laws and practices. Developing countries are particularly susceptible to this threat. The report identifies countries that are considered by the US as not providing adequate and effective protection of IP of rights holders from the US. The selection of countries is biased to the concerns raised by segments of the US industry. The report targets balanced provisions in countries’ legislations to ensure that IP rights do not hinder the ability of the government to adopt measures for promoting development priorities, particularly in the area of public health. A uniform and collective international response by the affected countries is long overdue. The way forward is to continue dialogue in appropriate multilateral fora, recognizing the need for all countries to maintain policy space to use IP as a domestic policy tool.
Improving Transfer Pricing Audit Challenges in Africa through Modern Legislation and Regulations
By Thulani Shongwe
Auditing multinational enterprises often involves a broad range of complex technical issues, and transfer pricing (TP) is often the most important one. This policy brief looks at some of the key aspects of the modern TP legislation and illustrates how different drafting of regulations can assist in additional revenue collection as well as increased compliance. It further provides practical examples from real cases to show where poor legislation has given rise to tax planning and to profit shifting. Lastly, the brief offers practical solutions to some of the transactions illustrated through the African Tax Administration Forum (ATAF) Suggested Approach to Drafting Transfer Pricing Legislation.
The USMCA must be amended to ensure access to affordable drugs in Mexico
By Maria Fabiana Jorge
The intellectual property rights (IPRs) chapter of the U.S.-Mexico-Canada-Agreement (USMCA) grants longer and broader monopolies to originator pharmaceutical companies than those currently in force in Mexico, at the expense of patients and taxpayers. Among other things, Mexico would be required to provide patent term extensions both for delays in the granting of patents and for those incurred in the regulatory approval process, broader and longer exclusivity periods, including for expensive biologic drugs, as well as to adopt broader patentability standards, for example by requiring the granting of patents for new uses. Mexico is, without doubt, the country in the USMCA that will be most negatively impacted, but if the Democratic Members of the US House of Representatives are able to renegotiate some of these provisions to restore some balance between the need to foster innovation and competition, the Administration of President López Obrador and the Mexican Congress can still make a difference.
‘Phase 1B’ of the African Continental Free Trade Area (AfCFTA) negotiations
By Peter Lunenborg
The African Continental Free Trade Area (AfCFTA), which entered into force on 30 May 2019, represents a unique collaborative effort by African countries to bolster regional and continental economic integration, in a world marked by increasing protectionism and use of unilateral trade measures.
In order to make the agreement operational for trade in goods, negotiations on tariff concessions need to be concluded and negotiating outcomes need to be inserted into the agreement. This policy brief focuses on the expected economic impacts of tariff liberalization under the AfCFTA, the tariff negotiation modalities and discusses some legal and practical issues related to the implementation of these modalities.
Legitimacy Concerns of the Proposed Multilateral Investment Court: Is Democracy Possible?
By José Manuel Alvarez Zárate
Growing concerns in Europe about international investment regimes and investor-state dispute settlement systems pushed the European Union into pursuing the creation of an investment court system and a multilateral investment court. The European Union (EU) started this reform through the Comprehensive Economic Trade Agreement, the Vietnam-EU Free Trade Agreement, and by direct persuasion of other countries to start negotiations at the United Nations Commission on International Trade Law. Visible reasons for the change include concerns over the perception of a lack of transparency, coherence, and arbitrators’ partiality, all of which diminish the legitimacy of the multilateral investment court. Other reasons might be laid on the budgetary risks of more than 213 claims against EU countries. To address these legitimacy concerns, the EU wants to replace traditional party-appointed arbitrators with a two-tiered investment tribunal system comprised by a roster of members selected by the state parties on the treaty. This Essay argues that the creation of the multilateral investment court needs to follow democratic principles in order to be legitimate. History has shown us that the EU has abused its power in the past when implementing resolution systems. Foregoing negotiation, comment by member nations, and implementing a tribunal at its own behest has shown this. The EU multilateral investment court proposal has legitimacy deficiencies because the EU has relied on its power to impose its views so far, i.e. its proposal was not previously negotiated multilaterally amongst other member nations. It is thus possible that the appointment of the future judges to this court will likely be subject to the political constraints and veto that the International Court of Justice or World Trade Organization appointments suffer today. This could leave small economies at a disadvantage because they might be subject to permanent, politically biased judges. A superior solution would be to adopt better arbitrator disqualification rules, clear interpretation directives to avoid law creation, and stricter arbitrator qualifications.
Intellectual Property and Electronic Commerce: Proposals in the WTO and Policy Implications for Developing Countries
By Vitor Ido
This policy brief explains the mandate of the World Trade Organization (WTO) on electronic commerce under the work program on e-commerce, which was adopted by the WTO Ministerial Conference in 1998 and periodically renewed by subsequent Ministerials. It describes what has taken place on intellectual property related issues pertaining to e-commerce in the WTO TRIPS (Agreement on Trade Related Aspects of Intellectual Property Rights) Council. It also summarizes various proposals and suggestions that have been advanced in the Council since the Nairobi Ministerial Conference in December 2015 as well as recent proposals that have been advanced in the General Council until December 2018, some of which contain specific intellectual property (IP) related issues. As part of the recently launched plurilateral negotiations on e-commerce, a forum that is likely to become more prominent for this discussion, proposals have been re-submitted in March 2019, as well as others which have been tabled in April and May 2019. Finally, this brief presents an explanation of how IP issues may also affect other elements of e-commerce and the digital economy. Such issues are not the subject of existing proposals in the WTO, but may feature in future discussions.
The US-Mexico-Canada Agreement: Putting Profits Before Patients
By Maria Fabiana Jorge
In the US-Mexico-Canada Agreement (USMCA, NAFTA 2.0), the U.S. Trade Representative negotiated intellectual property provisions related to pharmaceuticals that would enshrine long and broad monopolies. This policy brief focuses primarily on the negative effects of the USMCA intellectual property provisions on access to medicines in the U.S. Such effects may be even worse for Canada and Mexico. The impact of this trade agreement goes well beyond the three countries involved as this is the first one negotiated by the Trump Administration and is likely to set a precedent for future trade agreements. A careful review of the USMCA text raises very serious concerns about the impact that this agreement would have on the generic/biosimilar industry and therefore on access to more affordable drugs throughout the world.
Exploding Public and Private Debt, Declining ODA and FDI, Lower World GDP and Trade Growth—Developing Countries Facing a Conundrum
By Yuefen LI
Recently international institutions repeatedly cut the projections for world gross domestic product (GDP) growth of 2019, revealed further worsened accumulation of debt, reported declining official development assistance (ODA), highlighted consecutive drops of foreign direct investment (FDI) flows and showed decelerated international trade and intensified trade tension. A closer examination of the performance of developing countries in these datasets shows clearly the economic conundrum that developing countries are facing. The most dangerous sign is the rising levels of public and private debt, and debt sustainability challenges for developing countries. It is worrisome that over 40 percent of low income countries are facing a high risk of debt distress or are in debt distress. The cloudy patches over the world economy are gathering together and getting darker. It seems a storm is coming soon for those developing countries which are facing a combination of weak economic fundamentals. Yet, there seems to be limited room for policy makers to take actions as downward pressure is coming from different directions at the same time and creating constraints which would make policy measures ineffective or feeble. In some cases, policy tools used to limit negative effects of one problem could trigger negative impact on other problem(s) in hand.
Challenges of Investment Treaties on Policy Areas of Concern to Developing Countries
By Kinda Mohamadieh
Country experiences have revealed that international investment agreements (IIAs) could have an adverse policy impact on various policy areas that are generally important for developing countries in relation to the achievement of their development objectives. This policy brief gives an overview of challenges resulting from IIAs to major policy areas of concern to developing countries. These policy areas include industrial policy, tax reform, handling debt crisis, the use of capital controls, intellectual property rights, public-private partnerships, and climate change action in relation to investment in clean technologies.
The ‘obvious to try’ method of addressing strategic patenting: How developing countries can utilise patent law to facilitate access to medicines
By Olga Gurgula
The current patentability standards for pharmaceutical inventions, as well as strategic patenting used by pharmaceutical companies, have substantially impacted access to affordable medicines. This has been especially detrimental for developing countries, which are under significant pressure to remain compliant with their international and bilateral obligations, while also providing their people with essential drugs. In order to improve access to medicines, developing countries may choose from a range of various mechanisms that may help to facilitate such access, while also allowing them to remain compliant with their international and bilateral obligations. This policy brief suggests that one of such mechanisms is to strengthen the obviousness requirement by applying the ‘obvious to try with a reasonable expectation of success’ test to pharmaceutical follow-on inventions. It is argued that the application of this test may be an effective tool in addressing the negative effect of strategic patenting. It may help to prevent the extension of patent protection and market exclusivity of existing drugs by pharmaceutical companies and, as a result, may open such medicines up to generic competition.
The Future of Investor-State Dispute Settlement Deliberated at UNCITRAL: Unveiling a Dichotomy between Reforming and Consolidating the Current Regime
By Kinda Mohamadieh
Reform of investor-state dispute settlement (ISDS) is being deliberated at the United Nations Commission on International Trade Law (UNCITRAL) Working Group III, which will be meeting in New York between the 1st and 5th of April 2019. For several years, the ISDS regime has been under scrutiny from voices in both developed and developing countries. ISDS reforms have been addressed in multiple forums, including national, bilateral, regional and multilateral levels, such as the United Nations Conference on Trade and Development (UNCTAD). Reforms could include moving away from arbitration as the norm for dispute settlement between foreign investors and host states or end up by introducing adaptations that might make arbitration in ISDS cases perform in a more acceptable way. Finding one-size-fits-all solutions in these deliberations is unlikely. Advancing relevant reforms would require full and effective participation of interested countries, equal opportunity for different points of views to be heard and integrated into the design of any potential outcome, and effective mechanisms to address any potential conflicts of interest within this forum.
UNCITRAL Working Group III: Can Reforming Procedures Rebalance Investor Rights and Obligations?
By Lorenzo Cotula and Terrence Neal
The work of the United Nations Commission on International Trade Law (UNCITRAL) provides an opportunity to rebalance the international investment regime – but only if the full gamut of key issues are identified. Requiring investors to uphold standards of responsible business conduct (RBC) is largely a function of substantive rights and obligations, but it also presents procedural dimensions that fall within the purview of the UNCITRAL process. This policy brief explores the issues and discusses possible options for reform.