WORLD TRADE
ORGANIZATIONIP/C/W/385
30 October 2002
(02-5979)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  Spanish
NON-VIOLATION AND SITUATION NULLIFICATION OR IMPAIRMENT
UNDER THE TRIPS AGREEMENT
Communication from Argentina, Bolivia, Brazil, Colombia, Cuba, Ecuador, Egypt,
India, Kenya, Malaysia, Pakistan, Peru, Sri Lanka and Venezuela
The following communication, dated 4 October 2002, has been received from the Permanent
Mission of Peru on behalf of Argentina, Bolivia , Brazil, Colombia, Cuba, Ecuador, Egypt, India,
Kenya, Malaysia, Pakistan, Peru, Sri Lanka and Venezuela with the request that it be circulated toMembers.  An earlier version of this document was circulated as an advance copy during the TRIPS
Council meeting held on 17-19 September 2002.
_______________
EXECUTIVE SUMMARY
We share the interest, expressed by other Members, in a transparent, predictable and equitable
mechanism for settling trade-related disputes concerning intellectual property.  Like many WTO
Members, however, we believe that the application of non-violation and situation complaints to theTRIPS Agreement raises fundamental concerns, which are summarized below and set out in the
attached paper.
Application of non-violation and situation complaints is unnecessary
− The TRIPS Agreement, unlike other WTO agreements, is a sui-generis  agreement which is
not designed to protect market access or the balance of tariff concessions but rather toestablish minimum standards of intellectual property protection, which, if abused, may even
undermine market access (see, e.g., Article 8).
− Non-violation and situation complaints are unnecessary to protect any balance of rights and
obligations inherent in the TRIPS Agreement,  as these are reflected in the Agreement's
principal obligations and flexibilities, and the Agreement explicitly states that WTO Members
are not obliged to implement more extensive protection (Article 1).
− Non-violation and situation complaints are unnecessary to protect market-access
commitments embodied in the GATT or GATS, or any other notion of a balance of
concessions struck in the Uruguay Round, as these are adequately protected by thoseagreements and other Annex 1 agreements.
− Rights and obligations in the TRIPS Agreement are best performed through good faith
application of its provisions, in accordance with established principles of international lawIP/C/W/385
Page 2
recognized by the Appellate Body, and do not require recourse to the legally imprecise notion
of non-violation and situation complaints.
Application of non-violation and situati on complaints raises systemic concerns
As well as being unnecessary to achieve the Agreement's goals, we believe that applying non-
violation and situation complaints to the TRIPS Agreement is undesirable and threatens to:
− Introduce incoherence among WTO agreements by allowing something which a WTO
Member has agreed to accept in one part of the single undertaking (e.g. the GATT or the
GATS) to be challenged on the basis that it could nullify or impair benefits in another area
(e.g. TRIPS);
− upset the delicate balance of rights and obligations in the TRIPS Agreement by elevating
private rights over the interests of the users of intellectual property – both within and betweencountries – and over other important public policy considerations in a manner inconsistent
with Article 3.2 of the DSU;
− undermine regulatory authority and infringe sovereign rights by exposing to challenge any
measure that affects intellectual property and that could not have been foreseen  at the time of
the Uruguay Round;
− limit use of the flexibilities inherent in the TRIPS Agreement to secure objectives relating to
public health, nutrition, the transfer of technology and other issues of public interest in sectorsof vital importance to socio-economic and technological development.
Nature of the benefit
− As stated in the attached paper, we believe that benefits accruing under the TRIPS Agreement
are adequately described in its text, including its preamble, objectives and principles, and takefull account of the development dimension.  Such benefits accrue to Members rather than
private entities, are adequately protected through good faith application of the Agreement'srights and obligations, and do not require recourse to the legally imprecise notion of non-
violation and situation complaints.
Nature of measures that can give rise to non-violation complaints
− We welcome attempts by other Members to clarify and narrow the definition of measures that
may give rise to non-violation complaints.  However, defining the term "measure" evennarrowly would not address concerns that the remedy will infringe sovereign rights and
undermine the Agreement's flexibilities.  These concerns arise not merely from a lack of
clarity about which measures could be challenged, but more fundamentally from legal
uncertainty inherent in the concept of non-violation and situation complaints, and theirapplication through the TRIPS Agreement to any measure.
Remedies and dispute settlement
− We continue to believe there is insufficient guidance in Article 26 of the DSU and in GATT
dispute practice for panels and the Appellate Body to apply non-violation and situation
complaints in the context of the TRIPS Ag reement.  Expanding the non-violation and
situation remedy – and with it the right to challenge measures that are otherwise consistentIP/C/W/385
Page 3
with WTO obligations – may imbalance the proper distribution of responsibilities between
WTO Members, and panels and the Appellate Body.
− We believe that, viewed individually and collectively, these concerns raise fundamental
challenges to the multilateral trading system.  Introducing non-violation and situation
complaints in the TRIPS context is unnecessary, because it would undermine the security andpredictability provided by the multilateral trading system and is in our view inconsistent with
the long-term best interests of the multilateral trading system and all its Members.
Proposal
− In light of the concerns expressed above and set out in detail in the following paper, we
propose that the TRIPS Council recommend to the 5
th Ministerial Conference that the
violations of the type identified in Article XXIII:1(b) and (c) of the GATT 1994 bedetermined inapplicable to the TRIPS Agreement.IP/C/W/385
Page 4
NON-VIOLATION NULLIFICATION OR IMPAIRMENT
UNDER THE TRIPS AGREEMENT
I. INTRODUCTION
1. The discussion on scope and modalities of non-violation nullification or impairment
complaints under the TRIPS Agreement was initiated in 1999 in the TRIPS Council.  Since then,
several WTO Members have submitted communications on this issue.  Nevertheless, the TRIPS
Council has been unable to reach any conclusions on the application of these complaints to the
Agreement.
2. As noted by several WTO Members, the non-violation remedy should remain an exception
and be applied with considerable caution.1  This remedy, which has existed since the inception of the
GATT but which has rarely been applied, permits a WTO Member to challenge another's measure,
not because it contravened any agreed obligation, but on the basis that a benefit arising under a WTO
agreement has been "nullified or impaired" by an otherwise WTO-consistent measure.
3. We share the interest, expressed by the other Members, in a transparent, predictable and
equitable mechanism for settling trade-related disputes concerning intellectual property.  The concept
of allowing non-violation complaints in a rules-based system, however, remains controversial with a
number of WTO Members and legal scholars and commentators.  The potential application of these
remedies to the TRIPS Agreement raises an additional set of challenges and is in our view
unnecessary to secure the Agreement's effective implementation.
4. Following this introduction, this communication sets out some legal and historical
background to non-violation complaints.  It identifies systemic questions arising from the application
of non-violation remedies to the TRIPS Agreement.  It explores specific issues arising from
discussions of scope and modalities, including uncertainty regarding the nature of any "benefits"
arising under the TRIPS Agreement, the nature of "measures" that may give rise to non-violationcomplaints, and available remedies.  The communication then offers some brief observations on
situation complaints, and concludes by proposing that the TRIPS Council should recommend to the
Ministerial Conference that situations of the type identified in Article XXIII:1(b) and (c) of the GATT
1994 be determined inapplicable to the TRIPS Agreement.
II. BACKGROUND
A. 
RELEVANT WTO PROVISIONS AND MANDATES
5. A number of WTO agreements, decisions and declarations refer to non-violation complaints.
GATT Article XXIII establishes the basic rules on the remedy.  It states:
"If any contracting party should consider that any benefit accruing to it directly or indirectly
under this Agreement is being nullified or impaired or that the attainment of any objective of
the Agreement is being impeded as the result of …
                                                     
1 According to the United States "non-violation nullification or impairment should remain an
exceptional concept.  Although this co ncept had been in the text of Article XXIII of the General Agreement
from the outset, a cautious approach should cont inue to be taken in applying the concept."  EEC – Oilseeds ,
BISD 37S/86, 118 paragraph 114.  Similarly, the European Economic Community has stated "recourse to the'non-violation' concept under Article XXIII:1(b) should remain exceptional, since otherwise the trading world
would be plunged into a state of precariousness and uncertainty."  Idem , paragraph 113.IP/C/W/385
Page 5
(b) the application by another contracting party of any measure, whether or not it
conflicts with the provisions of this Agreement, or
(c) the existence of any other situation …".
6. Article 26.1 of the Dispute Settlement Understand ing provides that the DSU's procedures will
apply to non-violation complaints subject to cer tain stringent requirements including that "the
complaining party shall provide a detailed justific ation in support of any complaint".  Article 26.2,
and the dispute settlement rules and procedures contained in the Decision of 12 April 1989
(BISD 36S/61-67), stipulate that in the case of situation complaints "the practice to adopt panel
reports by consensus shall be continued".
7. Article 64 of the TRIPS Agreement addresses the application of non-violation complaints to
settlement of disputes under the TRIPS Agreement.  Paragraphs 2 and 3 of Article 64 provide the
following:
2. Subparagraphs 1(b) and 1(c) of Article XXIII of the GATT 1994 shall not apply to
the settlement of disputes under this Agreement for a period of five years from the
date of entry into force of the WTO Agreement.
3. During the time-period referred to in paragraph 2, the Council for TRIPS shall
examine the scope and modalities for complaints of the type provided for under
subparagraphs 1(b) and 1(c) of Article XXIII of the GATT 1994 made pursuant to
this Agreement, and submit its recommendations to the Ministerial Conference forapproval.  Any decision of the Ministerial Conference to approve such
recommendations or to extend the period in paragraph 2 shall be made only by
consensus, and approved recommendations shall be effective for all Members without
further formal acceptance process.
8. Taking into consideration that no decision has yet been adopted on scope and modalities, the
4
th Ministerial Conference adopted a Decision on Impl ementation-Related Issues and Concerns stating
that:
The TRIPS Council is directed to continue its examination of the scope and modalities for
complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of
the GATT 1994 and make recommendations to the Fifth Session of the Ministerial
Conference.  It is agreed that, in the meantime, Members will not initiate such complaintsunder the TRIPS Agreement.
2
9. This decision is referred to in the Ministerial Declaration, which provides that "outstanding
implementation issues shall be addressed as a matter of priority by the relevant WTO bodies, which
shall report to the Trade Negotiations Committee … by the end of 2002 for appropriate action".3
B. ARTICLE 64 REQUIRES CONSENSUS BY WTO M EMBERS
10. We believe that achieving consensus on the re lationship between non-violation and situation
complaints and the TRIPS Agreement is an essential pr iority for WTO Members.  It is required by the
                                                     
2 WT/MIN(01)/W/10, paragraph 11.1.
3 WT/MIN(01)/DEC/W1, paragraph 12.IP/C/W/385
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Agreement in Article 64.3.  Ministers, similarly, have directed the TRIPS Council to make
recommendations to the 5th Ministerial Council.4
11. One Member has suggested that after the expiry of the time-period under Article 64.2, non-
violation and situation complaints should automatically apply to the TRIPS Agreement irrespective of
whether a consensus has been reached by a Ministerial Conference on the issue of scope andmodalities.  It has been further suggested that no purpose will be served by continuing to discuss the
issue of application or non-application of non-violation and situation complaints to the TRIPS
Agreement.  We believe that in the Doha Decision on Implementation-Related Issues and Concerns
Ministers have dispelled this suggestion by reiterating the importance of continuing the examination
mandated under Article 64.3.
5
12. In addition, the assertion that the expiry of the time-period under Article 64.2 makes non-
violation and situation complaints automatically applicable to the TRIPS Agreement is in our viewincorrect.  Article 64.1 establishes that GATT Article XXIII applies to the TRIPS Agreement except
as otherwise provided in Articles 64.2 and 64.3.  Notwithstanding the expiry of the time-period under
Article 64.2, non-violation and situation complaints only apply to the TRIPS Agreement in
accordance with the procedure established under Article 64.3.  Complying with this procedure, the
importance of which Ministers reaffirmed through their adoption of the Decision on Implementation-Related Issues and Concerns, should be a matter of priority for the TRIPS Council.
C. H
ISTORICAL BACKGROUND
13. Why was the possibility to bring complaints about otherwise legal measures originally
introduced into the GATT?  The non-violation and situation remedies stemmed from early bilateral
trade agreements.  The GATT's drafters realized that the intended effect of a tariff reduction could befrustrated by measures that the GATT did not regulate, such as domestic subsidies.  Since the GATT
did not contain any substantive commitments on such internal measures, procedures for the
adjustment of tariff concessions following the introduction of such measures were required.
14. The purpose of Article XXIII:1(b) and (c) was thus to protect the balance of tariff
negotiations by addressing the misuse of non-tariff and other trade-restrictive measures that, whileconsistent with basic GATT disciplines, may have affected agreed market-access commitments.  The
non-violation and situation concepts were not part of  the corpus of international law.  Rather, they
were specific concepts developed for the GATT.
6  To date, the non-violation concept has been applied
in only a limited number of GATT cases, most of which addressed subsidies that undermined agreed
market-access commitments.  There is no history of situation complaints under the GATT.
15. Since the early days of the GATT, the evolution of the multilateral trading system and the
establishment of the WTO – including the adoption of extensive rules on non-tariff measures and abinding dispute settlement system – has weakened  the traditional justification of non-violation
complaints.  Disciplines on subsidies and other non-tariff measures have largely removed the need for
such complaints to protect tariff concessions.
7  The non-violation remedy has also been narrowed in
                                                     
4 See paragraph 11.1 of the Decision on Implementation-Related Issues and Concerns.
5 Idem .
6 P.J. Kuyper, The Law of GATT as a Special Field of International Law , in Netherlands Yearbook of
International Law, pp.227-257, Volume XXV, 1994 ("The so-called 'non-violation nullification and impairment'
is a unique legal phenomenon that occurs only in the GATT, although it would seem that provisions comparableto Article XXIII:1(b) of the GATT have figured in pre-World War II treaties of commerce.").  Notably, the non-violation remedy has now transposed into the NA FTA.  See also Note by the WTO Secretariat, Non-Violation
Complaints and the TRIPS Agreement (IP/C/W/124).
7 See Kuyper, op. cit.  (stating "since GATT/WTO law is becoming more and more comprehensive and
complete, and since what was called the 'legal vacuum' around GATT is shrinking, in particular in respect ofIP/C/W/385
Page 7
scope under GATS Article XXIII:3, which limits complaints to benefits accruing from specific
commitments undertaken by Members.  Additionally, non-violation complaints would rarely be
necessary to protect the exchange of rights and obligations in the TBT and SPS Agreements, and the
other agreements in Annex 1 of the Marrakesh Agreement, as these include substantial flexibility
within their rules to address borderline cases, without resorting to the legally imprecise notion of non-violation and situation complaints.
16. Today, resort to these remedies is difficult to justify within the rules-based WTO system.
They have become progressively less necessary as a tool to protect market-access commitments.  By
introducing legal uncertainty they undermine the predictability and security that the system seeks to
guarantee.  We believe that application of non-violation complaints to the TRIPS Agreement raises an
additional set of problems.  It is unnecessary to achieve the Agreement's effective implementation.  It
may upset the delicate balance struck within the TRIPS Agreement.  And it may undermine the
balance struck more broadly within the multilate ral trading system, with implications for the
predictability and security that the system seeks to provide all WTO Members.
III. SYSTEMIC CONCERNS ABOUT NON-VIOLATION NULLIFICATION OR
IMPAIRMENT UNDER THE TRIPS AGREEMENT
17. Application of non-violation claims to the TRIPS Agreement raises a number of systemic
concerns both for the TRIPS Agreement and for the multilateral trading system more generally.
A. 
INTRODUCING INCOHERENCE BETWEEN WTO AGREEMENTS
18. WTO Members have noted with concern that non-violation complaints under the TRIPS
Agreement may give rise to incoherence among the WTO agreements.  The danger of incoherence
was raised in a paper by Canada, the Czech Republic, the European Communities and their memberStates, Hungary and Turkey, which noted that otherwise WTO consistent measures such as taxes and
advertising requirements could potentially be challenged under the TRIPS Agreement.  It noted that
"it is highly questionable whether WTO Members would be in favour of leaving the option open for
countries to file a non-violation complaint under the TRIPS Agreement, if the measure is found to be
in full compliance with ... the GATT and its annexed agreements or the GATS."
8
19. It has been argued in response that "it is highly unlikely … that a panel would determine that
something a WTO Member agreed to accept under one part of that single undertaking could nullify
and impair benefits in another area".9  This, however, fails to acknowledge that, as part of a single
undertaking, WTO obligations apply cumulatively and so a measure consistent with one WTO
agreement (e.g. the GATT) can still be found to nullify and impair benefits under another
(e.g. TRIPS).  Similarly, the response that Article 3.2 of the DSU will prevent the dispute settlement
body from adding to or diminishing the rights and obligations under existing WTO agreements10 begs
the question and fails to recognize that applying non-violation complaints to the TRIPS Agreement
amounts to establishing a new cause of action under the TRIPS Agreement.
20. Moreover, the rebuttal of specific examples of incoherence identified in the Canadian paper is
unconvincing;  it merely asserts that a non-violation complaint could not be established in those
                                                                                                                                                                    
subsidization, there will be less and less scope for 'non-violation' […].  Unfortunately, it was not possible to
convince the legal fantasists during the Uruguay Round of negotiations;  it was not possible to agree on a
definition of 'non-violation' which would have restricted its application to the classic cases.  Only some special
procedural rules for 'non-violation' cases were agreed upon.  Any restraint on the concept will have to be judicialrestraint by panels and the Appellate Body.").
8 IP/C/W/191, paragraph 11 ("Canadian paper").
9 IP/C/W/194.
10 Idem .IP/C/W/385
Page 8
instances as "no benefit would arise" upon which to base a claim.11  As yet, we have seen no examples
of when a non-violation complaint would  be considered justified, or why such a situation could not be
addressed through application of the Agreement's substantive rules.  In the absence of clear arguments
to the contrary, the concern that non-violation complaints may give rise to incoherence among WTO
agreements remains.
B. UPSETTING THE BALANCE OF RIGHTS AND OBLIGATIONS IN THE TRIPS AGREEMENT
21. As well as introducing incoherence between WTO agreements, the application of non-
violation complaints may upset the balance of rights and obligations in the TRIPS Agreement by
elevating private rights over the interests of the users of intellectual property – both within and
between countries – and over other public policy considerations.  The provisions in the TRIPS
Agreement, as noted in its objectives, seek to promote the mutual advantage of producers and users of
technological knowledge, and to provide a careful balance of rights and obligations.
22. Application of a non-violation complaint to any general, non-renegotiable obligation (such as
those under the TRIPS Agreement) may have the effect of creating new unnegotiated responsibilities.
Unlike tariff bindings, obligations under the TRIPS Agreement cannot be revised as between
individual parties.  Consequently, the non-viol ation remedy may allow the Member claiming non-
violation to expose the impairing Member to the th reat of retaliatory actions equivalent to those
available in the case of a violation of the TRIPS Agreement if the impairing measure is not
withdrawn.  Under the TRIPS Agreement, the remedy  of nullification and impairment would thus not
operate as an obligation to renegotiate but as a legal principle capable of creating unknown new
benefits and corresponding responsibilities.
23. Members failing to agree on any such benefits may be subject to retaliation equivalent to the
retaliation applicable in the case of a violation.  Again, the creation of unnegotiated obligations is
inconsistent with Article 3.2 of the DSU, which provides that rulings of the DSB must not "add to or
diminish the rights and obligations provided in the covered agreements".
C. UNDERMINING REGULATORY AUTHORITY
24. We remain concerned that application of non-violation complaints to the TRIPS Agreement
threatens to undermine regulatory authority and to infringe sovereign rights.  A number of developing
countries have stated that they "share Canada's concern that applying the non-violation remedy in
intellectual property may constrain Member's ability to introduce new and perhaps vital social,
economic development, health, environmental and cultural measures.  It may also have a profound
effect on existing policies in these areas".12
25. In response to these concerns, one Member has said that when considering measures to
promote such goals Members should consider "what effect, if any, those measures might have on theintellectual property rights of foreign nationals.  If an adverse effect is likely , the Members should
then consider whether the measures being contemplated could have been foreseen  when the Uruguay
Round negotiations were under way " (emphasis added).
13  Yet, if literally applied, this approach to
non-violation complaints would require one WTO Member to compensate another for measures that
adversely affect  foreign holders of intellectual property rights and that were not foreseen  during the
Uruguay Round.  Such an approach would arguably cover a range of domestic measures, may
                                                     
11 Idem .
12 See Proposal from Cuba, the Dominican Republic, Egypt, Indonesia, Malaysia and Pakistan, Non-
Violation or Impairment under the Agreement on Trade-Related Aspects of Intellectual Property Rights(TRIPS) , paragraph 4 (IP/C/W/141).
13 Job No. 4437, page 5.IP/C/W/385
Page 9
undermine the Agreement's flexibilities, including in the area of public health, and could "chill" the
enjoyment of WTO Members' sovereign right to develop new laws to protect the public interest.
26. We also note that, unlike the GATT and the GATS, the TRIPS Agreement fails to protect
measures designed to achieve important national policy goals, such as protecting health and the
environment, through a general exception.  These measures are likely to be placed at a furtherdisadvantage if open to challenge through non-violation complaints.
D. L
IMITING THE FLEXIBILITY INHERENT IN THE TRIPS AGREEMENT
27. The application of non-violation complaints may also undermine the flexibility inherent in the
Agreement.  Ministers affirmed the importance of such flexibility in the Declaration on the TRIPS
Agreement and Public Health, which reaffirms the "right of WTO Members to use, to the full, the
provisions in the TRIPS Agreement, which provide flexibility" in order to "protect public health and,
in particular, promote access to medicines for all".  The Declaration provides a non-exhaustive list offlexibilities including that "each provision of the TR IPS Agreement shall be read in light of the object
and purpose of the Agreement as expressed, in particular, in its objectives and principles".  The
importance of flexibility to least-developed countries is also noted in the Agreement's preamble,
which recognizes the "special needs of the least-developed country Members in respect of maximum
flexibility in the domestic implementation of laws and regulations in order to enable them to create asound and viable technological base".
28. The application of non-violation complaints is  incompatible with maintaining the flexibility
of the TRIPS Agreement.  It may encourage unilateral pressure and speculative claims to force
countries to raise protection beyond minimum requirements or to refrain from using TRIPS-consistent
measures such as compulsory licensing to ensure access to essential medicines (to implement thehuman right to health) or guarantee access to technology.  It may facilitate unilateral pressure to
constrain the adoption of domestic measures under Article 8 to protect public health and nutrition and
to promote the public interest in sectors of vital importance to socio-economic and technological
development.  The uncertainty surrounding the non-violation remedy will make it harder for Members
to rely on the agreed text of the TRIPS Agreement to define their rights and obligations in the face ofunilateral pressure by other, more powerful WTO Members.
29. These systemic concerns about non-violations in the TRIPS context are underpinned by a
number of more specific concerns regarding the pos sible elements of a non-violation claim, which are
discussed in the following section.
IV. SPECIFIC CONCERNS ARISING FROM DISCUSSIONS OF SCOPE AND
MODALITIES
A. D
ISCUSSIONS REGARDING THE SCOPE AND PURPOSE OF NON -VIOLATION COMPLAINTS
30. Extending the scope of the non-violation remedy to the TRIPS Agreement is inappropriate for
a number of reasons.  As noted by a number of WTO Members, the TRIPS Agreement is a sui generis
agreement within the WTO system, and consequently the non-violation remedy is unnecessary to
protect the balance of rights and obligations inherent in the TRIPS Agreement, the market-access
commitments made in other agreements, or any other balance of rights and obligations inherent in theUruguay Round package.
31. First, as a sui generis  agreement within the WTO system, the TRIPS Agreement is
significantly different from the GATT and the GAT S.  The non-violation remedy has traditionally
been applied to maintain the balance of concessions made during tariff negotiations.  Unlike the
GATT and the GATS, the TRIPS Agreement does not involve such an exchange of concessions, andIP/C/W/385
Page 10
it remains unclear how non-violation complaints would apply to minimum regulatory standards that
protect private property rights.  It has been argued, however, that differences between the TRIPS
Agreement and other WTO agreements are not as significant as they may seem.  The view has been
expressed that the TRIPS Agreement helps to reduce market distortions and that this is supported by
its preamble, which commences with the words "… Desiring  to reduce distortions and impediments to
international trade".14  While intellectual property rights may in some cases facilitate international
trade and investment, the TRIPS Agreement's obligations cannot be characterized as market access
concessions in the same way as obligations can be characterized under the GATT or the GATS.  The
results of WTO market access negotiations are recorded in the respective GATT and GATS
schedules, but not in the TRIPS Agreement.  Indee d, in some cases intellectual property rights may
undermine market access;  Article 8, for example, explicitly notes that domestic measures may be
needed "to prevent … the resort to practices which unreasonably restrain trade".  That the remedy hasbeen applied under the GATT and the GATS does not render it appropriate for the TRIPS Agreement.
32. Second, non-violation complaints are not required to protect any balance of rights and
obligations inherent in the TRIPS Agreement.  As  noted, the TRIPS Agreement is not a market access
agreement.  It has been argued nevertheless that the TRIPS Agreement embodies an exchange of
rights and obligations, including longer implementation periods for developing countries and certainexceptions and limitations to intellectual property rights that should be protected by the non-violation
remedy.  To the extent that the Agreement does involve an exchange of rights and obligations, these
differ in kind from tariff concessions, as they principally define the balance between the producers
and users of intellectual property and not between WTO Members.  This delicate balance is
adequately reflected in the Agreement's principal obligations, and in the flexibilities inherent in theAgreement, and does not require the non-violation remedy for their protection.  Indeed, applying such
a remedy may introduce uncertainty and upset this delicate balance of rights and obligations.
33. Third, applying non-violation complaints to the TRIPS Agreement is not required to protect
market-access commitments made in other WTO agreements.  The primary goal of the TRIPS
Agreement – unlike other agreements in Annex 1 of the Marrakesh Agreement – is not to protectmarket-access commitments under other agreements.  It has been argued that the rules established by
the TRIPS Agreement determine the way in which a WTO Member's goods and services are treated in
other Member's territory and that such treatment benefits the Member in the same way that it benefits
under the rules established by other WTO agreements.  We remain unconvinced by this assertion for a
number of reasons.  One is that the nature of the effect is different.  Whereas other Annex 1 WTO
agreements protect market access for the like products of all Members, the TRIPS Agreement's
minimum standards enable private interests in one Member to exclude all others from using thesubject-matter of the right.  A second difference is that while Annex 1 agreements such as the TBT
and SPS Agreements do not contain explicit commitments to certain levels of market access,
maintaining market access is their primary objective, and their substantive provisions are designed
specifically to secure market-access commitments.  The TRIPS Agreement's rules, by contrast, do not
focus on protecting market access but are designed specifically to establish minimum standards ofintellectual property protection.  Whereas other WTO agreements tend to increase competition, the
basic effect of the TRIPS Agreement's rules is to reduce competition to provide incentives for
innovation.
34. Fourth, non-violation complaints are not required to protect any overall package of
concessions made under the Uruguay Round.  One Member asserts that concessions given in theTRIPS Agreement were granted in exchange for benefits gained in another area/sector, implying that
non-violations are somehow required to protect this exchange.  If indeed the argument that the TRIPS
Agreement "reduces distortions and impediments" to international trade were correct, then the
Agreement actually reduces the need for non-violation complaints in the WTO system.  And as noted
                                                     
14 Job No. 4437, page 4.IP/C/W/385
Page 11
above, the development of WTO rules on non-tariff barriers reduces the "legal vacuum" around the
GATT, and hence the need for the legally imprecise mechanism of non-violation complaints to protect
market-access commitments.  The argument that non-violation complaints are required in the TRIPS
Agreement to protect market-access commitments made in other WTO agreements or to protect the
agreed minimum standards in the TRIPS Agreement is thus difficult to accept.
35. Lastly, the protection conferred by the TRIPS Agreement does not extend to economic returns
resulting from market access concessions under the GATT or the GATS or to economic benefits
arising from the commercial exploitations of the subject-matter of such rights.  In the case of patents,
the TRIPS Agreement merely grants patent holder s the right to prevent third parties from taking
certain actions.  Article 63.1 of the Agreement defines the "subject-matter of this agreement" as "the
availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property
rights".  Complaints regarding measures pertaining to commercial exploitation, competition or marketaccess should be filed under relevant provisions of the GATT and the GATS;  applying the non-
violation remedy to the TRIPS Agreement is unnecessary to address these cases.  The TRIPS
Agreement does not guarantee the patent holder that it can exploit rights if other legal provisions
consistent with WTO agreements do not allow such exploitation.
36. As yet we have been no convincing explanation why existing provisions of the TRIPS
Agreement are inadequate to protect its minimum sta ndards.  Nor have we seen any clear explanation
of how or when the non-violation remedy would ap ply to the TRIPS Agreement, and how this would
benefit WTO Members.
B. 
UNCERTAINTY AS TO THE NATURE OF THE BENEFITS ADDRESSED BY NON -VIOLATION
COMPLAINTS
37. Despite ongoing discussion in the TRIPS Council there is still a great deal of uncertainty as to
the nature of benefits that would be addressed by non-violation complaints.  The nature of benefits
under the TRIPS Agreement is significantly less clear than in an agreement with specific market-
access commitments.  As a contribution to this discussion, we have the following comments.
38. We believe that any benefits accruing under the TRIPS Agreement are adequately described
in the text of the Agreement.  Article 1 explicitly provides that "Members shall give effect to the
provisions of this Agreement " and that "Members may, but shall not be obliged to , implement in their
law more extensive protection than is required by this Agreement" (emphasis added).  We do not
believe that WTO Members agreed at the end of the Uruguay Round to benefits beyond the
boundaries of the text.  There was not common understanding among the negotiators that this
Agreement creates a legitimate expectation of benefits that go beyond the effective protection of
intellectual property rights.  Indeed, we believe that the purpose of the TRIPS Agreement is achievedwith the good faith performance of the obligations set out in the TRIPS Agreement.  If additional
advantages were accorded to them under Article XXIII:1(b) in response to measures perfectly
consistent with that Agreement, they would be getting more than they "paid" for.
39. Any benefits of the TRIPS Agreement are expressed in its preamble, objectives and principles
and should take full account of the development dimension.  These include: ensuring that measuresand procedures to enforce intellectual property rights do not become barriers to legitimate trade;
promotion of technological innovation and the transfer and dissemination of technology;  mutual
advantage of producers and users of technological knowledge;  social and economic welfare;  a
balance of rights and obligations;  protection of public health and nutrition;  promotion of the public
interest in sectors of vital importance to the Members' socio-economic and technologicaldevelopment;  and ensuring that intellectual property rights do not unreasonably restrain trade or
adversely affect the international transfer of t echnology.  As stated in the text of the TRIPS
Agreement, intellectual property rights play a role in promoting broader development and inIP/C/W/385
Page 12
furthering the achievement of technological and socio-economic objectives.  It is these benefits, if
any, that should be the focus of discussions of "benefits" for the purposes of the non-violation remedy
in the TRIPS Council.
40. Any relevant benefits of the TRIPS Agreement must accrue to Members rather than private
entities.  Rather than addressing the benefits accruing to a Member under the TRIPS Agreement – asset out in Article 26 of the DSU – one Member has focused on a narrower category of benefits
accruing to individual intellectual property holders from acquiring, maintaining and enforcing
intellectual property rights.  It has been argued that the benefits accruing under the TRIPS Agreement
are just as clear as those deriving from the GATT, and include national treatment and most-favoured-
national treatment, the level of protection provided for each form of intellectual property covered by
the TRIPS Agreement, and other benefits.  The two, however, are quite different.  First, both
Article XXIII of the GATT and Article 26 of the DSU identify the benefits as accruing to a Member .
The benefits to Members under the TRIPS Agreement should not be conflated with the interests of
private right holders.  Second, all the benefits to Members are, in our view, reflected in the text of the
Agreement and include socio-economic benefits – not merely the narrower rights of private parties to
acquire, maintain and enforce an intellectual property right (which are merely means of achieving
broader socio-economic benefits).  Lastly, tariff concessions of the kind traditionally safeguarded byArticle 26 of the DSU require multilateral dispute settlement procedures, whereas private intellectual
property rights are enforced through domestic courts in order to safeguard benefits derived from
protection.
41. The notion of "competitive relationship" – often associated with non-violation complaints as
applied to other WTO agreements -–cannot be transposed into the TRIPS context.  It has also beenargued that the benefits may somehow involve the notion of "competitive relationship", which has
been used in GATT panel reports addressing non-violation complaints.  We doubt that this notion can
be transposed into the TRIPS context.  First, the TRIPS Agreement addresses minimum standards of
intellectual property protection rather than establishing a particular level of market access.  Second,
intellectual property rights strike a subtle balance between those of intellectual property holders andusers of intellectual property, the objective being to promote social and economic welfare.  A narrow
focus on intellectual property holders' rights threat ens to upset this balance.  Third, the Agreement's
minimum standards, rather than promoting competit ive relationships, are in effect anti-competitive in
order to reward inventors.
42. Finally, non-violation complaints are not the best way to protect benefits arising from the
Agreement.  We have yet to hear arguments why the provisions of the TRIPS Agreement are not
sufficiently flexible to address the concerns raised by Members who support such a remedy.  Webelieve that, rather than relying on the legally imprecise notion of non-violation, a focus on the text of
the Agreement, supported by other principles in the existing corpus of international law, is a
preferable approach.  According to Article 3.2 of the DSU, one of the purposes of the dispute
settlement system is to clarify the provisions of the agreements covered by the DSU "in accordance
with the customary rules of interpretation of public international law".  According to Articles 26and 31 of the Vienna Convention, all treaties must be interpreted and performed in good faith.  The
Appellate Body has confirmed the importance of the concept of good faith in interpreting obligations
under the WTO Agreement:
[The principle of good faith], at once a general principle of law and a general principle of
international law, controls the exercise of rights by States.  One application of this generalprinciple, the application widely known as the doctrine of abus de droit , prohibits the
abusive exercise of a State's rights and enjoins that whenever the assertion of a right
"impinges on the field covered by [a] treaty obligation, it must be exercised bona fide, that
is to say, reasonably".  An abusive exercise by a Member of its own treaty right thusIP/C/W/385
Page 13
results in a breach of the treaty rights of the other Members and, as well, a violation of the
treaty obligation of the Member so acting.15
43. The principles of international law already require the bona fide, reasonable application of the
TRIPS Agreement by all WTO Members.  This requirement is sufficient to guarantee any benefitsembodied in the TRIPS Agreement and obviates the need for recourse to the legally imprecise and
uncertain notion of non-violation complaints.
C. 
UNCERTAINTY AS TO THE NATURE OF "MEASURES " THAT CAN GIVE RISE TO NON -VIOLATION
COMPLAINTS
44. Article XXIII:1(b) of the GATT 1994 provides that a non-violation complaint may arise over
the application by another Member "of any measure, whether or not it conflicts with the provisions of
this Agreement".  Discussions in the TRIPS Counc il have so far failed to identify the nature of
measures that could be challenged.
45. We share the concerns, expressed by other Members, that a wide range of measures could be
challenged.  These may include government-instituted measures to promote social or economic
development, health or environmental and cultural goals.  They may also encompass actions of courts
or law-enforcement authorities, leading to the use of the non-violation remedy as a means ofappealing national legal decisions and upsetting the balance between State bodies.  In addition to
direct challenges to these measures, we are concer ned that application of non-violation complaints to
the TRIPS Agreement may be used to "chill", through bilateral pressure, the development of a wide
range of domestic measures relating to intellectual property holders.
46. We would welcome examples from the proponents of the non-violation remedy of what they
would consider as falling within and outside the de finition of the term "measure", as a contribution to
the TRIPS Council's work on this agenda item.  We are, however, of the view that defining
"measure", even narrowly, would not address the concerns raised in Section III.C above, which do not
merely arise from a lack of clarity about which "measures" could be challenged, but more
fundamentally from legal uncertainty inherent in the concept of non-violation and its applicationthrough the TRIPS Agreement to any domestic measure.
D. 
CONCERNS REGARDING REMEDIES AND DISPUTE SETTLEMENT
47. There is insufficient guidance – including in Article 26 of the DSU and in GATT dispute
practice – for panels and the Appellate Body to a pply non-violation complaints in the context of the
TRIPS Agreement.  One Member has asserted that:
"The history of disputes under Article XXIII:1(b) … coupled with the guidelines for such
disputes in Article 26 of the Dispute Settlement Understanding … would enable a panel andthe Appellate Body to reach an appropriate conclusion in connection with a non-violation
dispute."
16
Yet, only three successful non-violation complaints were adopted in the entire history of the
GATT, leaving WTO Members with little substantive development and application of the concept.17
                                                     
15 United States –Import Prohibition of Certain Shrimp and Shrimp Products, adopted on
6 November 1998, WT/DS58/AB/R, paragraph 158.
16 Job No. 4437, page 5.
17 See Note by the Secretariat, supra  Note 6.IP/C/W/385
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48. Moreover, Article 26 merely restates the traditional view that any complaint must be
supported by detailed justification and that a find ing of non-violation does not require withdrawal of
the measure but rather some other mutually satisfactory adjustment.  It provides no guidance on the
proper nature and scope of non-violation complaints, the appropriate modalities, or how they may be
applied in the specific context of the TRIPS Agreement.  Consequently, in the absence of appropriateguidance, panels or the Appellate Body would have  to apply the concept of non-violation to the
TRIPS Agreement on an ad hoc, case-by-case basis.  As noted by one author:
" … [T]he concept of nullification and impairment developed under the GATT and
transposed into the GATS could not be applied under the TRIPS Agreement, and … a panel
or the Appellate Body, when requested to ma ke ruling that a legal measure had impaired
benefits accruing under the TRIPS Agreement, would be facing a normative void which
cannot appropriately be filled by judicial fiat."
18
49. In addition to concerns about the lack of guidance for WTO dispute settlement bodies, we
believe that non-violation complaints may give rise to claims for compensation that extend beyond the
confines of the TRIPS Agreement.  We are concerned about the notion, offered by one WTO Member
and noted by the Appellate Body in India-Patents , that achieving a mutually satisfactory adjustment
"is usually achieved through compensation in the form of additional concessions".19  As pointed out
above, there is very little GATT practice on which to base a judgement of what is or should be "usual"
in relation to non-violation claims;  this is especially true in the case of the TRIPS Agreement, where
there is no practice upon which to base such a judgement.  Moreover, Article 26 of the DSU states
that "compensation may be part of a mutually satisfactory adjustment" and that arbitration may
"suggest ways and means of reaching a mutually satisfactory adjustment;  such suggestions shall not
be binding " (emphasis added).
50. Finally, we believe that use of complaints based on a "non-violation" of agreed commitments
under the TRIPS Agreement is difficult to reconcile with the binding nature of the WTO's dispute
settlement system.  As noted by one author:
"The negotiators of the GATT thus regarded the concept of non-violation nullification or
impairment as a benchmark guiding consultations, negotiations and multilateral decision-
making.  They did not envisage the application of the concept in binding third-party
adjudication procedure.  The Contracting Parties to the GATT 1947 applied the concept in the
context of procedures under which each contracting party had the possibility to block the
adoption of a finding of nullification or impair ment.  The open-ended nature of the concept of
nullification and impairment therefore did not entail a threat to the sovereignty of the
contracting parties.  Under the WTO Agreem ent, however, the decisions determining the
benefits that might accrue under a provision in addition to the benefit of its observation would
be determined by the Appellate Body, whose decisions must be unconditionally accepted.
What has thus happened, more by accident than by design, is that the power of an
independent tribunal to hand out licences to retaliate is defined by a legal concept that
originally served to define the scope of the obligation to consult under bilateral tradeagreements."
20
51. Similarly, as noted in the Canadian paper, "the uncertainty regarding the application of such
non-violation complaints needs to be resolved so as to minimize the possibility of unintended
                                                     
18 F. Roessler, Should Principles of Compe tition Policy be Incorporated into WTO Law Through Non-
Violation Complaints? , Journal of International Economic Law, page 136, September 1999.
19 IP/C/W/194, page 6.  See also India -Patent Protection for Pharmaceutical and Agricultural
Chemical Products (AB-1997-5) page 4.
20 F. Roessler, op. cit. , page 418.IP/C/W/385
Page 15
interpretation".21  We are also concerned about potentially expansive interpretations of WTO
obligations.  Decisions of panels and the Appellate Body cannot easily be reversed by WTO
Members.  Expanding the non-violation remedy – and w ith it the right to challenge measures that are
otherwise consistent with WTO obligations – may further imbalance the proper distribution of
responsibilities between WTO Members,  and panels and the Appellate Body.
E. EFFECT ON THE PREDICTABILITY AND SECURITY OF THE MULTILATERAL TRADING SYSTEM
52. In light of the concerns arising from the possible elements of a non-violation complaint and
the systemic concerns identified above, we believe that extending the non-violation remedy may
entail consequences for the predictability and security of the multilateral trading system.
53. Applying non-violation complaints to the TRIPS Agreement introduces legal uncertainty that
may exacerbate the difficulties faced by WTO Members when responding to the claims of other
Members.  It will likely increase the number and complexity of claims facing WTO Members, makingit more difficult for them to defend their interests against challenges by more powerful Members.  In
response to such concerns, one WTO Member has argued that the traditional requirements applied to
non-violation complaints "are not easy hurdles to clear".
22  It may also be argued, however, that the
traditional requirements, as well as GATT practice, do not provide a clear indication of how the
remedy will play out in the TRIPS context.  Already, the potential for bringing non-violationcomplaints has been cited in a number of bilateral consultations about intellectual property rights, and
so the view that the remedy would not give rise to an influx of complaints should be viewed with
extreme caution.
54. Applying non-violation complaints to the TRI PS Agreement introduces legal uncertainty into
the WTO system more generally.  Such uncertainty is likely to further increase public concern overthe impact of the TRIPS Agreement on important issues such as public health, biodiversity protection
and the transfer of technology, with implications for the WTO's relationship with the public.  As noted
already, it is also likely to introduce incoherence between WTO agreements and may open a broad
range of domestic measures – including those consistent with other WTO agreements or introduced
under the TRIPS Agreement's flexibility mechanisms – to challenge.  In light of these and otherconcerns, we believe that application of non-violation complaints to the TRIPS Agreement is
inappropriate.  It is unnecessary to achieve its effective implementation.  It is likely to upset the
delicate balance struck within the TRIPS Agreement.  And it can be expected to have a range of
broader implications for the multilateral trading syst em that may affect the predictability and security
which the system seeks to provide for all WTO Members.
V. SITUATION COMPLAINTS
55. The concerns expressed above apply equally to situation complaints.  The concept of situation
complaint is predicated upon the existence of any other situation that nullifies or impairs benefits to a
Member or that impedes the attainment of an objective which is not covered by
Article XXIII:1(a) or (b) of the GATT.  In more than 50 years of GATT history there has been no
dispute based on a situation complaint.  In view of this, and in light of the profound uncertainty that
would be introduced into the TRIPS Agreement and the multilateral trading system more generally byallowing claims under the TRIPS Agreement based on "any situation", we believe there is no
justification for introducing this remedy into the TRIPS Agreement.
                                                     
21 See Communication from Canada, the Czech Republic, the European Communities and their
member States, Hungary and Turkey, Non-Violation Complaints under the TRIPS Agreement – Suggested Issues
for Examination of Scope and Modalities under Article 64.3 of the TRIPS Agreement , paragraph 13
(IP/C/W/191).
22 IP/C/W/194, page 9.IP/C/W/385
Page 16
VI. PROPOSAL
56. In light of the aforementioned issues, we believe that introducing non-violation and situation
complaints into the TRIPS Agreement is unnecessary and inconsistent with the interests of the WTO
Members.  Any benefits arising from the Agreement can be adequately protected by applying the text
of the Agreement in accordance with accepted principl es of international law, and without introducing
the legally uncertain notion of non-violation and si tuation complaints.  Consequently, we propose that
the TRIPS Council recommend to the 5th Ministerial Conference that complaints on the grounds of
nullification or impairment of the type identified in Article XXIII:1(b) and (c) of the GATT 1994 be
determined inapplicable to the TRIPS Agreement.
__________