American Journal of Law & Medicine

The WTO dispute settlement understanding: an unlikely weapon in the fight against AIDS.

I. INTRODUCTION

One of the most controversial aspects of the World Trade Organization (WTO) is its trade policy governing pharmaceutical products that treat AIDS and other diseases. (1) Critics contend that the WTO unreasonably restricts the trade of pharmaceuticals in order to protect the profit margin of western drug producers at the expense of infected populations in developing countries. (2) Supporters of the WTO's trade policy argue that protecting the intellectual property (IP) rights of pharmaceutical products is essential to providing an incentive for further drug research and development. (3)

This Note discusses how a narrowly tailored pharmaceutical product licensing program that is aimed at addressing the AIDS crisis in developing countries would be consistent with the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), which governs IP rights within the WTO. (4) This Note analyzes a recent WTO Panel decision in Canada--Patent Protection of Pharmaceutical Products (Canada), (5) to discuss how a public health drug licensing program could fall within the exception to full patent protection contained in Article 30 of the TRIPS Agreement. (6) Additionally, this Note argues that developing nations should use the WTO Dispute Settlement Understanding (DSU) to establish a uniform approach to drug licensing for public health purposes. (7)

Part II of this Note discusses how international trade affects the spread of AIDS in developing countries. Part II also discusses how the WTO functions, its IP regime, special provisions for developing countries and its dispute resolution mechanism. Part III analyzes the public health implications of the protection of IP rights within the WTO. This section discusses the impact of the TRIPS Agreement on the ability of developing countries to fight the AIDS crisis, focusing on the cases of Thailand, South Africa and India. Part IV looks at how the recent WTO Panel decision in Canada suggests that a program granting drug licenses for AIDS drugs could qualify as an exception under Article 30 of the TRIPS Agreement.

This Note focuses on the impact of trade policy on the AIDS crisis because AIDS is a deadly disease that is near crisis stage in developing countries and because it is treatable with the use of pharmaceutical products that are governed by the WTO. This Note concludes that countries should take advantage of the WTO's dispute resolution mechanism to establish a uniform approach to the AIDS crisis in the developing world.

II BACKGROUND

A. BLURRING BORDERS: THE AIDS CRISIS AND INTERNATIONAL TRADE

AIDS is the perfect example of a largely region-specific disease that is of global concern. While AIDS disproportionately affects the developing world, with increased globalization of trade and cultures, experts have acknowledged that AIDS is a real threat to developed nations as well. (8) David J. Rothman, a professor of Social Medicine at the Columbia College of Physicians and Surgeons, noted that AIDS "is the first modern disease to strike the developed and developing world simultaneously and to give both a large stake in finding a cure." (9) With the increased globalization of world markets, public health concerns are no longer isolated to one community, country or region.

International law has recognized that trade increases exposure to disease. Thus, it provides rules that allow domestic governments to protect their populations from trade-related disease. (10) The WTO's Sanitary and Phytosanitary Agreement (SPS Agreement) allows trading members to abrogate trade obligations unilaterally in order to protect public health. (11) The SPS Agreement, which was originally part of the 1947 General Agreement on Tariffs and Trade (GATT), allows WTO members to adopt any sanitary or phytosanitary measure "necessary for the protection of human, animal or plant life or health," provided the measures are not inconsistent with other WTO rules. (12) Under this provision, a country fearing the health-related consequences of importing a certain product, for example, could unilaterally limit its trade obligations related to that product. The SPS Agreement's ability to treat public health crises is limited, however, by the TRIPS Agreement insofar as the TRIPS Agreement governs the trade of pharmaceutical products.

B. THE TRIPS AGREEMENT: AN AWKWARD COMPROMISE BETWEEN IP RIGHTS AND PUBLIC HEALTH CONCERNS

By linking trade and IP rights in the TRIPS Agreement, the WTO introduced a new mechanism for regulating public health. Because the TRIPS Agreement governs the patentability of pharmaceutical products, the WTO controls access to drugs that are critical to treating AIDS and other diseases.

Before the WTO, the World Intellectual Property Organization (WIPO) governed IP rights. (13) The 1947 GATT mentioned intellectual property rights only in passing. (14) However, as the WTO Agreement was being negotiated, the U.S. and other developed nations insisted that the new trade institution link IP rights to the terms of trade for goods and services. (15) As a result, the WTO Final Act included the new TRIPS Agreement as part of a newly conceptualized trade regime. (16)

The TRIPS Agreement is unlike the WTO's other trade provisions because it establishes a minimum degree of protection for IP rights, instead of a maximum amount of protection, as is the case when countries regulate goods or service industries. (17) Under the TRIPS Agreement, WTO members may enact more stringent IP standards than the WTO stipulates, but they cannot fall below the required floor. (18) In contrast, other trade provisions establish the maximum amount of protection a country can provide to protect its goods and service industries from trade. (19)

The impetus for linking trade and intellectual property rights came from developed countries. In the 1980s the U.S. and other developed nations were becoming increasingly dependent on technologies that required a large amount of investment for research and development.20 These industries were particularly vulnerable to competitors who copied their products and sold them at lower prices. (21) Further, in the 1970s and 1980s, U.S. industry increasingly became dependent on the commercialization of technology, which relied on the protection of intellectual property rights for its existence. (22)

Linking IP rights and trade has hindered developing nations' ability to treat public health crises, such as the AIDS epidemic. By protecting the trade interests of pharmaceutical producers, the WTO limits the trade of generic drugs, which are often sold at lower prices. (23) Without generic substitutes, pharmaceutical products are often too costly for infected populations in the developing world. (24) By linking trade to IP protection, the WTO has therefore significantly affected the ability of developing countries to treat the AIDS epidemic and other public health crises.

C. SPECIAL WTO PROVISIONS FOR DEVELOPING COUNTRIES

The WTO accounts for the fact that developing countries are at a disadvantage in trading with developed countries, and therefore the WTO has more relaxed accession rules for developing nations. Members of the WTO are divided into three categories depending on their stage of development, per capita income and U.N. classification. (25) The three categories are least developed countries, developing countries (including transitional economies) and developed countries. (26)

The least developed countries enjoy a long transitional period before they have to comply with WTO law. (27) They have eleven years after the WTO Agreement comes into force or accession to the WTO before they have to comply with the TRIPS Agreement (28) At the end of the eleven-year period, they can request that this transitional period be extended. (29) Within this transitional period, however, the least developed countries cannot remove existing domestic laws protecting IP rights. (30) This is commonly called the "standstill provision." (31) Further, even the least developed nations must still abide by the most favored nation (MFN) and national treatment principles. (32)

The WTO Agreement requires a stricter compliance regime for trade in pharmaceuticals. During the trade negotiations, the U.S. pharmaceutical industry lobbied for "pipeline protection" of products that were already invented but not yet on the market. (33) Developing countries resisted, resulting in a compromise called the "ten-ten rule. (34) Under this rule, inventors who make new inventions within the first ten years after the WTO Agreement comes into force can file patent applications in developing countries, but developing countries do not have to abide by the patent until the end of the ten-year period. …

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