RESTRICTED
WORLD TRADE WT/CTE/W/66
29September 1997
ORGANIZATION(97-4024)
Original: English Committee onTrade andEnvironment
CLUSTER ONMARKET ACCESS
ITEM 8:THE RELATIONSHIP OFTHE TRIPS AGREEMENT TOTHE DEVELOPMENT,
ACCESS AND TRANSFER OFENVIRONMENTALLY-SOUND
TECHNOLOGIES AND PRODUCTS (EST&PS)
Input from India
I. BACKGROUND
1. Therelationship between Trade-Related Aspects ofIntellectual Property Rights (TRIPS), the
environment andthepromotion ofsustainable development isanintegral partofthework programme
oftheCommittee onTrade andEnvironment (CTE). ThisCommittee ischarged byMinisters at
Marrakesh withmaking appropriate recommendations onanymodifications oftheprovisions ofthe
multilateral trading system thatarerequired forthepromotion ofsustainable development andshall
insodoing give, interalia,special consideration totheneeds ofdeveloping countries. Theissue
discussed inthispaper istherelationship oftheTRIPS Agreement toaccess andtransfer oftechnology
andthedevelopment ofenvironmentally-sound technology.
2. India hadstated lastyearinthediscussions heldintheCTEthatthere appeared tobeareal
problem inreconciling WTO provisions onintellectual property protection, aslaiddown inthe
TRIPS Agreement, withtheobjectives andprovisions ontransfer oftechnology incorporated insome
MEAs. Based onthediscussions onthisissue, theCTEreported totheMinisters thatfurther work
isrequired onthisissue. Suchfurther work would consider whether andhowthese provisions relate,
interalia,tofacilitating theaccess toandtransfer anddissemination ofEST&Ps.
II. INTRODUCTION
3. Thispaper isfocused onthedevelopment, access andtransfer ofenvironmentally-sound
technologies and/or products (EST&Ps) produced withsuchtechnologies, which arecovered byIP
protection. Theneedforsuchcoordination arises asthere aretechnologies, incorporating oneorthe
other typeofIP,which directly affect theenvironment. TheTRIPS Agreement doesnotfullyaddress
thequestion ofencouraging theglobal useofproprietary EST&Ps. Thisgapneeds tobefilled atleast
inthelimited context where proprietary EST&Ps aremandated tobeusedbythirdcountries under
national orinternational law. Thisisbecause ifsuchtechnologies areinthepublic domain, interms
ofnotbeing covered byanytypeofIPprotection, onecanexpect acertain amount ofcompetition
inthemarket place toleadtoeasyaccess andreasonably lowprices ofEST&Ps, especially given the
volumes required formandatory global consumption. If,ontheother hand, these areproprietary
technologies covered byIPprotection, thescope forcompetition israther limited. Itisobvious that
WTO Members areexpected toabide bytheTRIPS Agreement. Some havepointed outthatprotection
ofIPisrequired forgenerating EST&Ps andTRIPS envisages suchprotection. Therefore itisobvious
thattheissuethatneeds tobeexamined inthecontext oftheprovisions oftheTRIPS Agreement involvesWT/CTE/W/66
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reconciling, ontheonehand, thedevelopment orgeneration ofsuchtechnologies with, ontheother
hand, theireasyaccess andwidedissemination, on"fairandmost favourable terms".
4. Thequestion ofeasyaccess toandwide dissemination ofproprietary EST&Ps through the
transfer ofsuchtechnologies andsaleofsuchproducts on"fairandmost favourable terms" isof
particular interest todeveloping countries. Thispaper limits thediscussion toonlythree important
situations, namely:
(a) where proprietary EST&Ps aremandated tobephased indirectly orindirectly byan
MEA (anMEA referred tohereinterms ofitsdefinition asisbeing discussed under
Item1ofthework programme oftheCTE);
(b) where proprietary EST&Ps arerelated tonational environmental standards ormeasures
affecting imports intoacountry having such standards, especially imports from
developing countries; and
(c) where proprietary EST&Ps arerelated tomultilaterally agreed environmental standards
ormeasure affecting imports intoacountry having suchstandards, especially imports
from developing countries, evenifthese arevoluntary innature.
Thereasons forselecting these threesituations andthelikely solutions totheissues raised are
described inSections IIItoVIthatfollow.
III. PROPRIETARY EST&PS AND MEAS
5. Certain existing MEAs, andsome future MEAs under negotiation, contain obligations tophase
outcertain substances ortechnologies which areprejudicial totheenvironment andreplace themwith
specified substitute EST&Ps within aspecified timelimit. SuchMEAs maycontain certain measures
tohelpdeveloping countries suchaslonger timelimits, amultilateral fundtofinance suchsubstitution,
including fortransfer oftechnologies andanobligation totransfer suchtechnologies on"fairandmost
favourable" terms andconditions. Unfortunately, longer timelimits arenotstrictly contingent upon
obtaining therequired financial assistance ontechnologies anddeveloping countries areinvariably faced
withfastapproaching deadlines withnohopeofeither adequate financial assistance topurchase the
substitutes technologies/products oroftransfer ofsubstitute technologies on"fairandmostfavourable"
terms andconditions.
6. SincethemotivationoftheIPownerismostunlikelytocoincidewiththeenvironmentalobjective
oftheMEA, thehigher costs ofsubstitute EST&Ps inIP-related monopoly situations mayleadto
developing country members oftheMEA notbeing abletomeetthenecessary timeschedules specified
intheMEA. Thisisbecause theresult ofthemandated useofEST&Ps byanMEA islikely toresult
inanincreased demand forthem, while thepresence ofIP-related monopolies islikely toleadto
restrictions insupply. Thus, there would beassured markets forthese IPowners withhigher price
levels butrestricted supplies totheusers. Thissituation would affect producers andusers, particularly
fromdeveloping countries, whodonothaveaccess toadequate financial resources, andaffect theefforts
ofthesecountries toadapt theireconomic activity tomeettheagreed multilateral objective ofsustainable
development.
7. Therefore, thedilemma faced bydeveloping countries isthatwhile compliance withMEAs
byallitsmembers istobeensured tomeetglobal environmental objectives, thenecessary access to
themandated proprietary EST&Ps ismade more difficult bythenewrulesofthemultilateral trading
system.WT/CTE/W/66
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IV. PROPRIETARY EST&PS AND MANDATORY NATIONAL ENVIRONMENTAL
STANDARDS ORMEASURES AFFECTING IMPORTS, ESPECIALLY IMPORTS FROM
DEVELOPING COUNTRIES.
8. Thediscussion ofissues under thisItemisrelevant tothesituation where proprietary EST&Ps
areincorporated innational environmental standards andmeasures affecting imports intoacountry
having suchstandards, especially imports fromdeveloping countries. Itiseasytounderstand thatthe
exporters, particularly fromdeveloping countries, whodonothavetherequisite financial ortechnical
resources todevote tosubstitute technologies, would beadversely affected ifsuchmandatory national
environmental standards orother measures areimposed ondomestic andimported products alike.
Inthissituation, safeguarding ofexisting market access would hinge ontheeasyaccess toEST&Ps
on"fairandmost favourable" terms.
9. Existing market access isnotlikely toberetained merely because developing countries are
allowed toparticipate inthepre-notification procedures ofevolving mandatory national environmental
standards ormeasures. Thus, transparency procedures arenotthesolution totheproblem faced by
developing countries infinding arapid andreasonably low-cost resolution tosuchnon-tariff barriers
imposed intheirexport markets. Thetimeandcostfactors areofspecial importance insuchsituations
andarguments forcommercial pricing haveagain tobeweighed against thecertainty ofincreased sales
inthedomestic aswellasinthirdcountry markets, duetotheincorporation ofproprietary EST&Ps
inmandatory national environmental standards andmeasures.
V. PROPRIETARYEST&PSANDMULTILATERALLYSETVOLUNTARY
ENVIRONMENTAL STANDARDS ORMEASURES
10. Weareaware thatthere are,atpresent, nomultilaterally setenvironmental standards thatare
universally orevenwidely subscribed to.However, thispaper attempts todealwithissues linked to
thedevelopment, access andtransfer ofproprietary EST&Ps atpresent, andanticipated tooccur in
thefuture. Theverysameproblems described inSection IVofthispaper mayfacedeveloping countries
when complying withmultilaterally setvoluntary environmental standards andmeasures intheirexport
markets. Evenifsuchstandards areadopted onavoluntary basisintheimporting country, theexporting
country mayhavetocomply withthese inorder tosafeguard itsexisting market access. There isa
difference between voluntary, nationally determined environmental standards andmeasures, andthose
thataremultilaterally determined. Inthesituation where these aremultilaterally setstandards, the
onusshould lieontheinternational community toensure thatinreturn forincorporating proprietary
EST&Ps intoaninternational standard, theowner oftheIPbeobliged togrant easyaccess toits
technology on"fairandmostfavourable terms", assuchaperson benefits interms ofthelarger size
ofthemarket.
VI. POSITIVE MEASURES TOBECONSIDERED BYTHE CTE
11. Inallthethreesituations listed above, positive measures should beconsidered andrecommended
bytheCTEtoreconcile therulesofthemultilateral trading system tomeetenvironmental objectives.
Thiswould beinlinewiththeconsultations andrecommendations ofthisCommittee toMinisters,
ascontained particularly inparagraph 173ofWT/CTE/1. What should these positive measures be
andhowshould theybeimplemented bytheinternational community?
12. Indecidingonpositivemeasures,thedistinctionbetweencopiableandnon-copiabletechnologies
made intheSecretariat document WT/CTE/W/22 must beborne inmind. Wewould gofurther to
make themore relevant distinction between thetechnological capabilities ofdifferent countries tocopyWT/CTE/W/66
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proprietary EST&Ps. Thus, there maybesome proprietary EST&Ps thatmost countries havethe
technological capability tocopy, andthere maybeyetother cases where thetechnology issonovel
andsoclosely heldthatnocountry canhopetocopyitinareasonable period oftime. Inthecase
ofproprietaryEST&Pswhichareconsideredcopiablebycertaincountries,acertainamountofflexibility
maybenecessaryinapplyingtheprovisionsoftheTRIPSAgreement.Certainmeasuresmayberequired
tobetaken forthetransfer oftechnologies andsaleofproducts incases where voluntary transfer is
either nottaking place orisnottaking place under "fairandmostfavourable terms", noristhesale
offinalproducts onreasonable terms.
13. Onesolution envisaged under theTRIPS Agreement isusewithout theauthorization ofthe
rightholder, including compulsory licensing forpatents. Aswepointed outinourearlier contribution,
itisinthiscontext thatMembers mayfindtheprovisions ofArticle 31oftheTRIPS Agreement
extremely cumbersome. While grant ofcompulsory licences ongrounds ofencouraging transfer of
environmentally beneficial technologies isTRIPS-compatible, asArticle 31doesnotrestrict thegrounds
onwhich compulsory licenses maybegranted, thusallowing thegrounds fortransfer oftechnology
forenvironmentallybeneficialtechnologies,someTRIPSprovisions,inparticularArticle31(b)regarding
efforts toobtain prior permission; Article 31(g) regarding termination ofsuchlicence; Article 31(h)
regarding taking intoaccount theeconomic value ofthelicence; andArticle 31(l) regarding strict
conditions fordependent patents, mayprove tobehurdles inthequick andeffective transfer ofsuch
technologies where environmental standards andmeasures needtobecomplied withwithin fixed time
limits. Inviewofthis,theCommittee could examine whether Article 31oftheTRIPS Agreement
canbeapplied insuchawaysoastoserve environmental interests.
14. Ifitisnotpossible ordesirable torecommend anyamendment ofArticle 31oftheTRIPS
Agreement, another measure which could beexamined bythisCommittee inorder tobalance the
protection ofIPandtheencouragement ofuseforthebenefit oftheenvironment could bethereduction
intheterms ofprotection fortheIP.Forexample, while thetermofprotection forapatent under
Article 33oftheTRIPS Agreement isaminimum period of20years fromthedateoffiling, Members
maybeallowed, through asuitable provision intheTRIPS Agreement, toreduce thistoamuch shorter
termofprotection soastoallow freeaccess topatented EST&Ps within ashorter period inorder to
dealrapidly withenvironmental problems. Thisallows thenecessary incentive topotential owners
ofIPtogenerate EST&Ps, while allowing users ofsuchEST&Ps competitive access inthethree
situations listed above within areasonable period. Thissolution ishighly recommended byIndia as
thiscould typically beconsidered a"win-win" solution which safeguards theinterests ofgenerating
EST&Ps aswellasofwidedissemination ofatleastthose thatarecopiable.
15. Intheextreme case,where neither compulsory licensing norshortening ofthetermofprotection
arefeasible, Members mayhavetorevoke orcancel patents already granted inorder toallow forfree
production anduseofsuchtechnologies asareessential tosafeguard orimprove theenvironment, at
leastunder thethree situations listed above. ThisisTRIPS-compatible asnogrounds forrevocation
ofpatents areprescribed under TRIPS, thusleaving Members freetoinvoke anygrounds. However,
suchrevocation canonlybedoneinconsonance withtheprovisions oftheParis Convention andmust
besubject tojudicial review. Inaccordance withArticle 5A(3) oftheParis Convention, Members
willhavetoexplore theroute ofcompulsory licensing before revocation isresorted toongrounds of
preventing abuses which might result fromtheexercise oftheexclusive rights conferred bythepatent,
including forexample, failure towork thepatent. Since thismaynotbegrounds forcompulsory
licensing inthiscase,thisprovision maynotberelevant. Thismeans thatallWTO Members arefree
tousetheroute ofrevocation inthepublic interest eveniftheTRIPS Agreement doesnotpermit easy
andeffective useofcompulsory licensing northeshortening ofthetermofpatent. However, revocation
ofpatents isadrastic solution anditmaybeintheinterest ofthose whowishtosafeguard IPprotection
toallow other more reasonable solutions tothisveryrealproblem.WT/CTE/W/66
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16. Even assuming thattheTRIPS Agreement canallow forthecopying ofproprietary EST&Ps
forcertain countries andforcertain copiable technologies, wemust, intheinterest ofreconciling IP
protection under theTRIPS Agreement withmandatory environmental measures, examine possible
solutions inthisCommittee forsuchother countries andforsuchother technologies where theEST&Ps
havetobeconsidered non-copiable intherequisite timeperiod. India suggests thatinthese cases,
thefollowing obligation could beimposed ontheIPowner availing oftheprovisions oftheTRIPS
Agreement:
"TheownersoftheEST&Psshallsellthesetechnologiesandproductsatfairandmostfavourable
terms andconditions, upon demand, toanyinterested party which hasanobligation toadopt
these under national lawofanother country orunder international law."
17. If,insodoing, alossisincurred bytheIPowner, itcanapply through itsowngovernment
totheinternational organization, oraninternational standardization body, ortotherelevant national
government imposing themeasure, foranappropriate subsidy. Thecaseoftheapplicant should be
considered onitsmerits andthesubsidy granted orrejected, taking intoaccount allrelevant
circumstances.
18. Atpresent,itisfordevelopingcountriestoaskforfinancialassistanceundermultilateralfinancial
mechanisms tocross subsidise payment forthetransfer oftechnology. Given thelackofmotivation
forproviding funds forsuchpurposes, experience hasshown thatthisisnotaverypracticable oreven
feasible solution. Thishasbecome more evident from theresults ofthereview ofimplementation
ofAgenda 21intherecent UNGeneral Assembly Special Session. Itmaybemore practical toplace
theonusofresponsibilityonnationalgovernmentsandinternationalbodiesresponsiblefortheimposition
ofmandatory environmental measures tosubsidize orcompensate owners ofsuchEST&Ps forany
losses incurred, thuspersuading them withmore favourable financial terms towidely disseminate
proprietary EST&Ps. While imposing suchanobligation onowners ofproprietary EST&Ps insuch
situationsundertheTRIPSAgreement,theCTEshouldbeginworkoncoordinatingbetweeninternational
organizations andnational governments toensure effective financial mechanisms. Intheabsence of
suchmechanisms andwiththepositive obligation onIPowners, assuggested above, theonuswould
anyway lieontheMembers oftheWTO tocomply withthisprovision oftheTRIPS Agreement.
19. Inthecaseofmultilaterally setstandards, theCommittee should discuss theissue ofthe
competent international standardization organisations inengaging innegotiations withIPowners to
either agree toincorporation oftheirEST&Ps intothestandards ormeasures andallow easyand
reasonably priced access on"fairandmostfavourable terms" toallinterested parties inexchange for
suchincorporation (asthiswould virtually guarantee amuch expanded market), orallow theorganisation
concerned tolower theinternational standard ormeasure toinclude several competing
technologies/products.
VII. CONCLUSION
20. Thisproposal hasbrought outtherelationship between WTO provisions onintellectual property
rights andtheenvironment, andaddressed theneedfortheCTEtoexamine andrecommend positive
measures inorder toachieve theenvironmental objective ofencouraging theglobal useof
environmentally-sound technologies andproducts thatbenefit orprotect theenvironment, atleastin
thelimited cases where these aremandated tobeusedunder anMEA orbynational authorities, or
where standards orother environmental measures arelaiddown bymultilateral bodies.
21. These areonlysome points raised asabasisforfurther discussion onthemarket access cluster
inthecontext ofItem8ofthework programme oftheCTEanddoesnotpreclude Indiafrommodifying
these orraising other points inrelation tothissubject inthepresent orfuture meetings oftheCTE.
Itisreemphasized thatenvironmental concerns should nothavetrade-distorting effects.