What’s at stake in Hyderabad

India must counter Japan’s U.S.-style pressure at the RCEP talks and ensure affordable generic medicines

Published - July 28, 2017 12:05 am IST

Flat 3d isometric Pills and bottles set. Blank Medicine Prescription Form

Flat 3d isometric Pills and bottles set. Blank Medicine Prescription Form

Leaked texts are like leaked gases — you may never find the one responsible for it, but the mayhem caused by its release is hard to contain. Unsurprisingly, all public discussions on the Regional Comprehensive Economic Partnership (RCEP) are centred around leaked documents. As India negotiates the RCEP — a free trade agreement that looks remarkably similar to the now failed Trans-Pacific Partnership (TPP) but for the absence of the chief protagonist and dissenter, the United States — Japan now appears to be playing the role that the United States is known for: policing the intellectual property (IP) regimes of its trading partners. Unlike the TPP, where India and China were not parties, the RCEP will open two of the world’s fastest-growing economies to new standards of IP protection with some unforeseen consequences.

IP, investment and RCEP

One of the conditions that have been put forth both in the TPP as well as the RCEP is the formation of an Investor State Dispute Settlement mechanism and to include IP as an investment. Treating IP as an investment would allow private companies to raise investment disputes against the host country whenever they feel that the legal regime does not favour them. These disputes could be initiated by MNCs and especially the pharmaceutical industries that have until now had their hands tied in front of the Indian laws and the judiciary. Japan’s insistence on the inclusion of this clause comes as no surprise as it is the third-largest RCEP investor country. Countries like India and China, which will be the destinations for the investments, should include safeguards against these measures.

The IP chapter in RCEP is at risk of including provisions far stricter than those mandated by the World Trade Organisation (WTO) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The leaked IP chapter shows that both Japan and South Korea are mounting pressure to implement a TRIPS-plus regime in IP. Adhering to TRIPS-plus standards would be detrimental to developing countries that have benefited from generic competition and lower-priced medicines through the use of the flexibilities in TRIPS such as stricter patentability criteria and the absence of data exclusivity provisions. The few IP reforms discussed in the RCEP include data exclusivity, patent term extension, and much more lenient criteria for patentability.

This would mean delay in the entry of generic versions of medicines, extension of patent monopoly for a longer time, and exclusivity for drugs that should not be patented if strict patentability criteria were to be applied. The RCEP negotiations on these fronts spearheaded by Japan appear to be an extension of the arm-twisting that developing countries like India have been repeatedly subject to by the U.S. as reflected in the most recent Special 301 Report released by the U.S. Trade Representative.

The strong MNC lobby growing in Japan, especially on the pharmaceutical side, is a reason for its insistence on stricter IP rules. An example of this is the drug patented by Otsuka for the treatment of extensively drug-resistant tuberculosis (TB).

The company has been strategically withholding the registration of the patent in India, thereby preventing a generic version of the drug from being manufactured. In the event that a provision of data exclusivity is passed, the millions of TB patients in India would have to buy the high-priced drugs, which would have no cheaper generic alternative.

MFN clause

The WTO has a most-favoured-nation (MFN) clause that obliges the concessions offered to the MFN to be offered to others. In essence, if India has an agreement with Japan (through the RCEP), India will be obliged to offer the same concessions to the U.S. as well as the other members of the WTO. The negotiating pattern reflects the reality of international law making. It is evident that developed countries are using FTAs to expand the existing standards of IP.

At the 19th round of the RCEP negotiations currently on in Hyderabad, India must resist Japan’s U.S.-style pressure in this regard. Developing countries like India which have taken the leadership in instituting and using balanced intellectual property protection for pharmaceuticals should not only proudly protect their laws in the RCEP negotiations, they should also encourage other countries to adopt and use similar measures that ensure generic competition. The international trading system is not an end in itself and instead of adopting U.S. style lobbying on behalf of multinational companies in the RCEP negotiations, Japan would do well to recall its international commitments on health care and sustainable development and support developing countries in the region in their quest to ensure sustainable access to affordable medicines.

Feroz Ali is the IPR Chair Professor at IIT Madras. He is part of a Shuttleworth Foundation project on access to medicines.

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