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OP-ED: TRIPS flexibility extension for LDCs - What does this imply for Bangladesh?

  • Published at 12:17 am July 8th, 2021
Garment employees workers RMG apparel Gazipur
File photo of Garment employees work in a sewing section of the Fakhruddin Textile Mills Limited in Gazipur, Bangladesh, February 7, 2021 Reuters

Bangladesh should take necessary initiatives to strengthen domestic human and institutional capacities to ensure and enforce TRIPS compliance

At the meeting of the Trade-related Aspects of Intellectual Property Right Council (TRIPS Council) of the World Trade Organization (WTO,) held on 29 June this year, WTO members agreed to extend the transition period for the LDCs as regards implementation of the TRIPS Agreement for another 13 years, till July 1, 2034. 

The decision was taken in the backdrop of the earlier extension granted for eight years, effective from July 1, 2013, which was to expire on July 1, 2021. 

What does this decision mean for Bangladesh? 

This is a pertinent question to ponder on.

As may be recalled, the TRIPS Agreement of the WTO came into force with the establishment of the WTO in 1995. 

The agreement covers a range of areas in the areas of copyright, trademarks, industrial designs, patents and others that are related to protecting intellectual property rights (IPRs) related to trade. 

The TRIPS Agreement covers both undertaking of obligations and enforcement of disciplines in IP-related areas. 

A member country is entitled to take recourse to the WTO’s dispute settlement mechanism (DSM), against another member, on the ground of violation of the agreement’s provisions by a member country.

However, taking cognizance of the likely challenges that LDCs could face in implementing the agreement, the TRIPS agreement allowed these countries a transition period of ten years under the TRIPS Article 66.1. 

As part of this, LDCs were allowed exemption from most of the obligations under the agreement (excepting national treatment and most favoured nation treatment). 

Members recognized that LDCs were confronted with formidable economic, financial and administrative constraints and they would need additional time and flexibility to be able to create a viable technological base, put in place enforcement mechanisms, build institutional capacities and develop human resources to comply with the TRIPS obligations.

The transition period provided Bangladesh and other LDCs much needed breathing space from the compulsion of enforcing IPR related disciplines as envisaged under the TRIPS agreement. 

Undertaking obligation and enforcing compliance requirements related to copyright, patent, design etc. would have been highly onerous and virtually impossible on the part of the LDCs such as Bangladesh. 

Indeed, business, investment and trade interests in LDCs were able to reap significant benefits from the TRIPS transition decision through flexibilities in the areas of compliance and enforcement and consequently by keeping production related costs low.

Actual scenario

However, the reality is that LDCs have not been able to overcome many of the challenges associated with strengthening their capacities in IPR related areas, in spite of the repeated extensions. 

Also, developed countries have failed to come up with the promised support to enhance LDC capacities in concerned areas.

In view of the continued difficulties faced by the LDCs in TRIPS compliance areas, by invoking Article 66.1, the exemptions for the LDCs were extended for the first time in 2006 when the initial ten year transition period came to an end. 

Thus, the transition period for the LDCs was extended for an additional 7 years, till July 1, 2013. 

This was extended a second time, for eight years, till July 1, 2021.

The abovementioned June 29, 2021 extension for thirteen years, the longest till now, ought to be seen as a victory for the LDCs. 

They had earlier submitted a proposal in the TRIPs Council, taking advantage of Article 66.1 which stated that an LDC could submit a duly-motivated proposal to the TRIPS Council backed by arguments justifying the request for an extension of the flexibilities. 

While such a proposal was submitted by Chad, on behalf of the LDCs as Coordinator of the LDC group in the WTO, it needs to be pointed out that Bangladesh had played a critically important leadership role in steering the proposal in the TRIPS Council. 

It was not an easy task though. 

Many developed WTO members, including the USA and the EU, had earlier expressed reservation about granting the LDCs yet another extension. 

However, in the end, the TRIPS Council decision for extension was a consensus-based one, thanks to LDCs’ strong collective stand, and the support from developing and developed member countries who took note of the exacerbation of difficulties experienced by the LDC economies particularly in the backdrop of the ongoing Covid-19 pandemic.

It should be mentioned in this connection that the original submission of the LDCs in the TRIPS Council had called for extension of the transition period for “as long as the member remained an LDC and for an additional period of 12 years from the date of graduation of a member from the LDC group.”

As may be noted, the last part of this submission was of particular interest to Bangladesh. 

If the LDC submission was accepted, Bangladesh would have been able to enjoy the TRIPS flexibilities for another 12 years following its graduation scheduled for 2026 (i.e. till 2038). 

Not surprisingly, Bangladesh and other LDCs that are slated for graduation pursued this case vigorously in the TRIPS Council, with support from the LDC group and a number of other WTO members. 

However, while some of delegations were inclined to extend the flexibilities to graduated LDCs, albeit perhaps for a lower time horizon than was requested in the submission, others argued that extending the transition period for LDCs after their graduation would go beyond the mandate of the TRIPS Council as provided under Article 66.1. 

In the end, failing to reach a consensus, it was agreed that the post-graduation flexibility component of the LDC proposal should be pursued in the WTO General Council (WTO-GC). 

To recall, LDCs have already submitted a proposal to this effect in the GC in its December 2020 meeting. 

Here also, Bangladesh had played a leading role in preparing the proposal and in arguing the case forcefully at the aforesaid GC meeting.

Implications

What are the possible implications of the TRIPS flexibility decision of June 29, 2021 for Bangladesh?

First, by any count this was an important achievement for the LDCs – they were able to get a consensus-based extension of the transition period for the LDCs, for a third consecutive time. 

While the LDCs were not able to achieve their program maximum (to enjoy the flexibilities as long as a member remained an LDC), they were able to negotiate an extension of thirteen years, the longest till now.

Second, as noted, members were not able to reach a consensus as regards the LDC proposal for extension of the transition period for the LDCs, following their graduation, for twelve years. 

However, that the members have agreed to discuss the proposal in the WTO GC should be seen as a welcome signal. 

LDCs should pursue the case in the GC in all earnest, with Bangladesh continuing to provide the intellectual leadership in this context. 

It is conceivable that in the course of the discussions LDCs may be asked to make concessions as regards the time frame for any possible extension for the graduated LDCs and agree to a shorter transition period. 

The upcoming WTO Ministerial Conference in Geneva, to be held during November 30-December 3, 2021, will be an appropriate opportunity to proactively pursue this cause at the highest (Ministerial) level. 

Here also Bangladesh is expected to play an active role, with the necessary diplomatic background work to be carried out before the Ministerial meeting. 

Bangladesh has a high stake in this issue.

Third, even if there is no extension of the TRIPS exemption for the graduated LDCs, the June, 2021 decision itself allows Bangladesh an additional five years to prepare for the TRIPS compliance regime prior to its anticipated graduation in 2026. 

Bangladesh should chart out what TRIPS compliance would entail in terms of regulatory framework, analyze the implications for the patent, copyright and other trade-related IPR policies and regulations and identify how the country’s investment, trade and business may be impacted. 

Bangladesh should take necessary initiatives to strengthen domestic human and institutional capacities to ensure and enforce TRIPS compliance.

There will be a need to incentivize the private sector to pursue TRIPS-compliant business and investment practices.

Fourth, even if Bangladesh (and other graduating LDCs) are able to get an extension of the TRIPS exemptions, for a certain period, following graduation from the LDC group, it will be prudent to prepare and gradually move towards a TRIPS-compliant policy regime. 

Bangladesh is currently in the process of negotiating Free-Trade Agreements (FTAs) and Comprehensive Economic Partnership Agreements (CEPAs) with other countries. 

Partner countries in such Agreements often tend to push for WTO plus obligations in areas concerning enforcement of intellectual property rights. 

Foreign investors and multinational companies also tend to prefer to do business with countries where intellectual property rights are complied with and duly enforced.

Thus, it will be prudent for Bangladesh to go for a two-pronged strategy: to vigorously pursue the cause of extension of TRIPS flexibilities for the LDCs following their graduation from the LDC status, at the WTO-General Council and the upcoming MC12, and at the same time take necessary steps to gradually put in place TRIPS compliant policy regime and strengthen institutional and human capacities towards IPR compliance.   

The author is a distinguished fellow at the Centre for Policy Dialogue (CPD)