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Opening Statement Introduction History of the Committee T o p i c A r e a A : T RIP S and Global health Statement of the Problem History and Discussion of the Problem Past UN Actions Proposed Solutions Questions a Resolution Must Answer Bloc Positions Suggestions for Further Research Topic Area B: the WTO and Labor R i g h ts Statement of the Problem History and Discussion of the Problem Past UN Actions Proposed Solutions Questions a Resolution Must Answer Bloc Positions Suggestions for Further Research C l os i n g S t a t e m e n t Position Papers Final Remarks Appendix Bibliography WTO Director: Akshay Ganju [email protected]

World Trade Organization March 24 - March 28 , 2008

Dear Delegates, My name is Akshay Ganju, and I am quite excited to be your director for the 2008 WorldMUN conference in Puebla, Mexico. Having directed SpecPol last year in Geneva, I know that WorldMUN 2008 will be an incredible experience, both substantively and socially. First, a little bit about myself – I am a senior at Harvard College, and I concentrate in Social Studies. At home, “social studies” is the standard term for elementary school history; unfortunately, I don’t have it that easy. Social Studies is a cross-disciplinary field involving most of the liberal art departments of the school (with a focus on political science, philosophy, history, economics, and sociology) that specializes in the study of society and its functioning. I am also pursuing a secondary field in health policy; this year I am working on a thesis about the views of the American public towards healthcare reform. Along these lines, I am also pre-med, and one day I hope to attend medical school. Though I grew up in Boston, next year I will end up in California upon graduation. I am really looking forward to this session of the WTO, and I hope you are as well. This study guide provides a good overview of the topic areas, but remember that this is only an outline of information, and you should do further research on your country and your positions to be a productive and knowledgeable member of committee. Of course, I hope that we can have a great MUN experience, with a creative, dynamic, and constructive committee. But my primary goal for this conference is that we can get to know each other and have a great time in Switzerland. I look forward to meeting you all this spring!

Till then, Akshay Ganju

World Trade Organization

Opening Statement

Opening Statement Introduction In a globalizing world, issues surrounding international trade have assumed increasing prominence in the lives and livelihoods of our planet’s citizens. The world’s economies are sophisticated and interlinked: the farmers outside Puebla are no longer simply affected by the actions of consumers in Puebla or even in Mexico City – they are now manipulated by economic policies crafted in France and India. With this new global reality, the trade-regulating actions of the WTO are of utmost importance, affecting the lives of billions worldwide. The two topic areas under discussion reflect the newfound importance of trade issues beyond the economic well-being of global inhabitants, delving into people’s social and human rights. The first topic area, TRIPS and Global Health, asks how international patent rights can be amended to help provide access for the developing world to important, innovative, and expensive new treatments often developed by Western countries. Though we wish to protect the work of companies and inventors worldwide, the WTO stands at the forefront of the push to save millions of lives through the provision of inexpensive drugs to the Third World. The second topic area, the Trade and Labor Standards, again hits at the line between economic trade regulation and human rights. Though explicitly under the jurisdiction of the International Labor Organization (ILO), some argue that trade regulation, and thus the WTO, should play an important role in ensuring workers’ rights worldwide.

The WTO’s role in our lives is growing significantly, and as members of this committee we can help ensure that its impact is positive and lasting. Good luck! History of the Committee Before the WTO During the economic devastation of World War II, the major world powers gathered at Bretton Woods, New Hampshire, USA, in 1944 to preemptively discuss the financing of post-war restructuring projects. The Bretton Woods conference produced the International Bank for Reconstruction and Development (IBRD), the forerunner of the World Bank, which was designed to provide longterm capital to rebuilding states, and the International Monetary Fund (IMF), for short-term financing to stabilize exchange rates.1 With this newfound multilateral economic cooperation, the countries sought to supplement the new organizations with a third branch that would oversee international trade; 50 nations negotiated an ambitious draft charter to create a new branch of the United Nations, the International Trade Organization (ITO) – it was to be officially discussed and ratified in Havana, Cuba, in 1947.2 At the same time, 15 of the largest trading countries had separately started talks in 1945 to reduce tariffs amongst themselves; by 1947, 23 nations had signed the provisional “General Agreement on Trade and Tariffs” (GATT). When the Havana Conference started in 1947, the international goal was to create an ITO that complemented the GATT. Unfortunately, the ITO charter ran into hurdles during the individual national ratification processes; when the United States government refused to seek Congressional ratification of the charter, the ITO movement fell apart. Though refined multiple times over the next forty-five years, the provisional and limited GATT solely governed international trade until the formation of the WTO in 1995.3 The Formation of the WTO It took seven and a half years, almost twice the original schedule. By the end, 123 countries were taking part. It covered almost all trade, from toothbrushes to pleasure boats, from banking to telecommunications, from the genes of wild rice to AIDS treatments. It was

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Opening Statement quite simply the largest trade negotiation ever, and most probably the largest negotiation of any kind in history.4 The Uruguay Round started in 1986, and after years of negotiations between countries and trading blocks (such as the European Union), most of the 123 governments signed the agreement in Marakesh, Morocco in 1994. The biggest outcome was the official founding of the World Trade Organization on January 1, 1995.5 Since its inception, the WTO has consistently revised its trade agreements through various multilateral negotiations. Currently, the WTO is involved in one of its largest negotiation rounds yet, the Doha Round, which is still ongoing.

Topic Area A: TRIPS and Global Health Statement of the Problem Last year, AIDS killed 8,000 people every day, and 14,000 more daily victims were infected with HIV.6 AIDS is just one of dozens of treatable diseases that devastate poor countries. Citizens of the developing world suffer and die every day because of the prohibitive cost of drugs developed and marketed by western corporations. TRIPS, or the Agreement on Trade-Related Aspects of Intellectual Property Rights, was negotiated during the Uruguay rounds of 1986 – 1994,7 stipulates the minimal patent and intellectual property legislation necessary for a country to join the WTO, and regulates inter-country trade of patented products. By the mid-1990s, one of the effects of TRIPS was that patented drugs, often developed in Western nations, could not be cheaply replicated and sold in developing countries; instead, patients all over the world were forced to purchase drugs at the price set by the patent-holding company. These often-prohibitive prices restricted access to the drugs for the world’s poor populations. Faced with overwhelming outcry at these needless deaths, on 30 August 2003 the WTO temporarily waived certain sections of TRIPS, which now allowed countries to produce cheaper generic versions of patented drugs which could be imported into developing countries with significant health problems. This seemed to solve the underlying problem, allowing poorer citizens of the Harvard WorldMUN 2008

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For many, access to drugs affects their daily lives.

world cheaper access to patented life-saving therapies. In December 2005, the WTO decided that these waivers would become a formal amendment to the TRIPS agreement when it is accepted by 2/3 of the WTO membership, with a deadline of 1 December 2007.8 Nevertheless, as of 28 September 2007, only 11 of the 151 WTO countries had accepted this amendment to the TRIPS agreement. Many developing countries, including most of the African block, claim that the current system has too much red tape, and the burdensome regulatory mechanisms prevent adequate delivery of generic drugs; the African block has submitted their own formal proposal removing many of these procedural requirements. Despite the progress that has been made, the WTO has reached another roadblock – is this amendment the best way to provide affordable drugs to the world’s poor? If so, why have only eleven member countries signed on? If not, how should it be reworked? History and Discussion of the Problem TRIPS and Intellectual Property Rights Patents are a legislative means of protecting the rights of inventors over their inventions, or their “intellectual property,” giving inventors a period of time (often twenty years), where they control the manufacturing and distribution rights over their inventions. In today’s world of quick information distribution, patent rights are seen as necessary to maintain innovation – the ability to patent an invention gives financial incentive to invest in creativity; otherwise, all the work and money spent in the creation World Trade Organization 3

Topic Area A and perfection of an invention would be lost when it was easily duplicated and sold by a different opportunist. The WTO was founded to regulate trade between countries. Intellectual property rights provided a difficult instance of international cooperation – some countries had patent laws, whereas others did not. This proved quite important in international trade: if Kenya has no patent laws but Finland does, then Kenyan imitators can copy Finnish inventions and sell them in Kenya, in essence “stealing” profit from Finnish innovators. The WTO’s response was TRIPS, the Agreement on Trade-Related Aspects of Intellectual Property Rights, which arose from the Uruguay rounds of 1986 – 1994.9 TRIPS mandates certain minimal levels of copyright, patent, and trademark protections within each member nation of the WTO.10 Intellectual Property Rights and Pharmaceuticals Intellectual property rights are especially salient for the pharmaceutical industry. It is quite difficult and expensive to develop an effective drug, starting from the basic biochemistry and ranging through huge clinical trials – many drug companies spend billions of dollars per year on drug discovery and development. But once a drug is perfected, it can often be manufactured very cheaply. Thus, it is quite easy for “generic” drug companies – companies that do not manufacture the drug under patent or trademark – to copy a drug’s formulation, figure out a manufacturing process, and produce cheap copies. This is done all the time today; for example, paracetamol and acetaminophen are generic forms of a drug commonly marketed under the trademark “Panadol” or “Tylenol.” One can find generic brands of many off-patent drugs, such as acetylsalicylic acid (“Aspirin”), or ibuprofen (“Advil,” “Motrin,” “Brufen”). Importantly, however, drugs for which generics are available are all “off-patent,” meaning that their patent-life has expired. All newer drugs, including those for HIV/AIDS, are still under patent protection. Patent protection is crucial for the pharmaceutical industry. Since development is so extraordinarily difficult and expensive, without the lucrative prospect of sole manufacturing and marketing rights there would be little incentive for companies to create the innovative new therapies that improve modern medical care. Unfortunately, these patent rights also mean that new drugs can be very expensive – out of reach without insurance help for most Harvard WorldMUN 2008

World Trade Organization Western citizens, and unfathomable for most residents of the developing world. This raises an important question – how can we provide low-cost drugs to the developing world, while maintaining enough intellectual property protection to enable Western drug companies to continue therapeutic innovation? TRIPS and Public Health TRIPS allows several exceptions where governments can refuse to grant a patent, including for “ diagnostic, therapeutic and surgical methods for treating humans or animals” in Article 27.3a.11 Along with this exception, TRIPS also allows for “compulsory licensing,” where “the law of a Member allows for other use of the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government” in Article 31.12 Compulsory licensing is at the heart of the current debate on TRIPS and public health. According to TRIPS, a country in the throes of a public health crisis can suspend patent rights on therapeutic products. This can be very important – Kenya, for example, can suspend patent protections on HIV/AIDS treatments so the “government” or “third parties authorized by the government” can produce generic versions of the drugs. But what if Kenya does not have the resources to produce generic versions of the drugs necessary for their population? African nations in particular asked for additional clarification, and the Doha Ministerial Declaration of 14 November 2001 declared that the “TRIPS Agreement does not and should not prevent members from taking measures to prevent public health.”13 But this declaration still failed to address the central issue of countries that could not afford to produce generic versions of patented products. Article 31(f ) of the TRIPS agreement stipulates that compulsory licensing must be primarily targeted to the domestic market.14 But what if Kenya badly needs medication, patented by an American company, generic copies of which can be made cheaply in India? Under the TRIPS phrasing, Kenya could not import generic drugs from India; they were only able to compulsory license and produce drugs for themselves. Many developing countries claimed that in the absence of infrastructure for themselves to produce generic medications, the TRIPS public health exceptions were useless – they needed to be able to import World Trade Organization 4

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Topic Area A generic versions of patented drugs from countries with drug manufacturing capabilities, like Canada and India. On 30 August 2003 the WTO created a new legal system that would solve this problem, adopting paragraph 6 of the Doha Ministerial Declaration, which allows exporting countries to waive the restrictions of Article 31(f ).15 In 2005 the WTO decided to formally amend TRIPS with the 2003 waivers, pending acceptance by 2/3 of the member states with a deadline of 1 December 2007. The Current Debate On 3 December 2005 a group of NGOs, including Oxfam International, Médecins Sans Frontiers, Access to Essential Medicines Campaign, and various African AIDS organizations released a joint statement criticizing the proposal, claiming that “poor countries should not accept a permanent amendment that has not been shown to work in practice.”16 The NGOs continue to contest that the procedures in place for the importation of compulsorylicensed drugs “have been criticized by generic industry experts and activists alike for being too burdensome and unworkable in practice;” in fact, the waiver mechanism has only been used once, quite recently: in October 2007, Canada became the first country to file a compulsory license to export a patented drug – an HIV/AIDS medication for Rwanda.17 NGOs are not the only opponents of this amendment. In the Gabarone Declaration of 14 October 2005, the Ministers of Health of the African Union called upon their “Ministers of Trade to seek a more appropriate permanent solution at the WTO that revises the TRIPS agreement and removes all constraints, including procedural requirements, relating to the export and import of generic medicines.”18 On 1 December 2004, Nigeria submitted a revised version of the amendment on behalf of the African Union, which removes much of the procedural language deemed redundant. A copy of the current WTO waiver agreement and the African Union’s proposal are included in the Appendix. On 30 August 2003, the Chairman of the General Council also read out a statement “setting out members’ shared understandings on how the decision would be interpreted and implemented.”19 In this statement, the Chairman outlined different “good faith” procedures that Harvard WorldMUN 2008

Dr Herman Reuter examines a young girl, Sibonghile Khetiso (aged 8) who was ill with AIDS-related infections and was due to receive her first dose of anti-retroviral medication.

should be followed to prevent drug piracy and the creation of black markets, following industry “best practices.”20 Many Western nations wish to include this statement as part of the amendment, treating the entire amendment as a “package” of all the 30 August 2003 statements. The developing nations, however, especially in Africa, strongly oppose the inclusion of this statement; they claim that it has served its purpose in regards to the temporary waivers, and should not become a permanent feature of TRIPS. This statement is also included in the appendix. Past UN Actions As outlined above, TRIPS, and especially the exceptions of Article 31, provide the current platform for discussion. The included exceptions, including compulsory licensing, are the only permanent intellectual property right concessions for the public health of poor populations. The 30 August 2003 statement of the Chairman of the General Council and the WTO-approved waivers are the central past UN actions that are under debate. When 2/3 of the WTO membership ratifies the temporary waivers, they will become a permanent part of the TRIPS agreement. Nevertheless, the self-imposed WTO deadline for this ratification is 1 December 2007, and only 11 countries have signed on so far. Provisions in paragraph 11 of the waiver, however, indicate that the waivers become ineffective “on the date on which an amendment to the TRIPS Agreement replacing its provisions takes effect for World Trade Organization 5

Topic Area A that Member,” essentially providing that the waivers can be used in the current form past the December deadline.21 Proposed Solutions Currently, there are two main proposals on the discussion table. The first proposal, backed by many of the Western countries, is a package amendment of the current 30 August 2003 waivers (paragraph 6 of the Doha Declaration) and the statement of the Chairperson of the General Council. Both are included in the Appendix. Developing nations, especially the African Union, contend that the current waiver system combined with the statement of the Chairperson contain too many restrictive procedural rules. Instead, they first require that the statement not be included with the amendment. Secondly, Nigeria has put forward a counterproposal on behalf of the African Union that maintains the essence of the 30 August 2003 waivers while removing what they deem unnecessarily prohibitive procedural restrictions. The Nigerian proposal is also included in the Appendix. Nevertheless, perhaps the best solution to the issue is one that is not yet proposed. Many outsiders, including activists, NGOs, and governments, contend that though these proposals are good starting points, much work should be done rethinking the substantive debate around the provision of generic drugs to developing nations. This is where the creative brains of the WTO can shine.

A lab at the Farmanguinhos pharmaceutical company produces Ribavirina, an AIDS medication which inhibits the replication of DNA and RNA.

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World Trade Organization Questions a Resolution Must Answer Any proposed solution must comprehensively address several questions. First, it must clearly resolve the debate surrounding the current waiver system implemented by the 30 August 2003 agreement. Should that template become a permanent amendment to TRIPS? Should that amendment also include the statement of the Chairperson of the General Council? In addressing this question, issues raised by developing nations, including the Nigerian plan, must be resolved. In the creation of any new generic import/export system, many issues must be considered. Though developing nations would love easy access to cheap, generic drugs, many Western nations fear that their pharmaceutical industries can be destroyed by careless and imperfect implementation of such patent-overriding systems. Not only will their companies lose much revenue in sales in the developing world, but there is a strong fear of the creation of black and grey markets, where cheap generic drugs will be picked up in the developing world and resold in Western countries for much lower than the trademark price, reducing profits not only in the developing world, but in Western countries as well. This can stifle innovation and kill the industry, as companies will no longer have incentive or the funding to research and develop new therapies. Bloc Positions The battle lines in this debate are really drawn between developing and developed nations. As of 28 September 2007, only 11 countries have signed on to the amendment in its current form: (in temporal order) the United States, Switzerland, El Salvador, Republic of Korea, Norway, India, Philippines, Israel, Japan, Australia, and Singapore. Many Western countries, especially pharmaceutical centers like the United States, Switzerland, and Japan, strongly support the amendment in its current form, including the statement of the Chairperson of the General Council, as an effective means of providing generic medicines to the poor of the developing world while maintaining patent protections in the Western countries. Developing nations, however, and most specifically the African Union, claim that the current amendment is so restrictive that it is useless, and that only one drug has been able to clear its hurdles in the past two years since World Trade Organization 6

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Topic Area A its implementation. These countries strongly support the Nigerian counterproposal. Upon first discussions of the Nigerian proposals, the United States, the European Union, Switzerland, Japan, Canada, the Republic of China, and Australia were among the countries that criticized the suggestions and called for the continued closure of negotiations.22 Other developing nations, however, were less disapproving. Malaysia called for more consultations on the matter, and India welcomed a move back from procedure to substance – moves applauded by Argentina, Brazil, Mexico, Thailand, and Israel. Some other developing nations, like Pakistan, fully support the Nigerian proposals.

Suggestions for Further Research This study guide is only intended to be a brief introduction to the topic of political imprisonment, and it is essential that you conduct additional research on the history and policy surrounding the issue, especially as it relates to your country in committee. The WTO website is a wonderful resource on the topic, and contains helpful non-technical and technical descriptions of the various documents and issues relating to TRIPS and public health. There is also a good collection of past and present news articles with up-to-date information on the progress of the issue. One problem with the WTO website, however, is its bias towards the current amendment on the table permanently implementing paragraph 6 of the Doha Declaration – information on counterproposals must be found elsewhere. Because of the very contemporary nature of this debate, news articles are the best source of information. I would recommend digging through online archives and databases of news and journal articles as the best source of information on the various valences of the current discussion, as well as the position of specific countries. Learning more about patent-protections and international trade, as well as issues of public health and the provision of generic medications, can help you devise novel and creative solutions to the problem that will help push debate forward.

Topic Area B: The WTO and Labor Rights Statement of the Problem

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ll WTO countries agree to certain basic regulations regarding labor rights: freedom of association, no forced labor, no child labor, and no work discrimination (such as discrimination on the basis of race and gender).23 Unfortunately, the WTO has done little to address labor rights beyond these core guidelines, and does nothing to enforce members’ adherence to these principles. The current official stance of the WTO dates from There is a tradeoff between the costs and potential benefits of lifesaving pharmaceuticals. the 1996 Ministerial Conference in Singapore, where the WTO announced that “the International Labor Organization (ILO) is the competent body to set and deal Harvard WorldMUN 2008

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with these standards, and [the WTO affirms its] support for [the ILO’s] work in promoting them.”24 But although the ILO is technically responsible for upholding worldwide labor rights, the secretariats of the two organizations often work together to maintain “coherence” in international policy.25 Some countries feel that it is time for the WTO to take stronger steps in this issue. Many argue that the trade actions possible in the WTO are strong and necessary tools to force countries to uphold international labor standards. Furthermore, many developed countries argue that countries with lower labor standards enjoy unfair trading advantages, which is an issue that should be addressed by the WTO. Employees making shoes at a factory in Zhongshan, China The WTO has historically done little on the issue of international labor standards. Now the organization arm of the United Nations. The link between organized free trade and labor faces two major questions: should the WTO address labor rights began in 1947, with the ill-fated International Trade issues at all? And if so, how? Organization (ITO), a precursor to the current WTO. The charter of the ITO included a provision on Fair History and Discussion of the Problem Labor Standards, including that “the members recognize that unfair labor conditions, particularly in production History The history of the issue of labor rights dates back for export, create difficulties in International Trade and, to the Industrial Revolution in England and the United accordingly, each member shall take whatever action may States, where large factories and poor working conditions be appropriate and feasible to eliminate such condition necessitated the first steps towards labor rights legislation within its territory.”28 But, foreshadowing official policy with a Child Labor Act in England in 1833 and the to come, the ITO “shall consult and cooperate with the Clayton Act in the United States in 1914 protecting International Labor Organization” in “all matters relating to labor standards that may be referred to the [ITO].” organized labor. International cooperation about labor rights started The GATT never contained any explicit provisions about with the International Association for Labor Legislation, trade actions against labor rights violations. Nevertheless, founded in Basel in 1901; these ideas eventually formed Article XX, which permits trade actions that protect the basis for the Constitution of the International Labor public morals, and human health and safety, has often Organization (ILO), which was founded as part of been used to establish some link between GATT-allowed the Treaty of Versailles ending World War I in 1919.26 trade actions and workers’ rights.29 Over the last half of the twentieth century, and The Constitution included many provisions that are still upheld as the standard for labor rights legislation, especially during the transition from the GATT to the including regulations of working hours, living wages, WTO, developed countries, including the United States, unemployment and sickness protection, child/women/ the European Union, and the Scandinavian nations, made elderly labor, worker association, and discrimination. many forceful attempts to integrate labor standards or a At the time, however, the formation of the ILO was social clause into the GATT and/or the WTO. Developing largely driven by and applicable to developed nations, countries have blocked any such clause, and even the and adapting these ambitious frameworks to developing formation of working groups every such time, arguing that countries has always since posed a challenge.27 In 1944, “the demand for a social clause is disguised protectionism, towards the conclusion of World War II, the ILO that it would erode their competitive advantage in labour again added to its Constitution with the Declaration of costs, that the best method of improving labour standards Philadelphia, and in 1946 the ILO became a specialized is export-led growth and development (the ‘trickle-down’ Harvard WorldMUN 2008

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Topic Area B theory),” and that there is not even a link between labor standards and trade.30 The first steps of the WTO to include a clause on labor standards occurred at the 1996 Ministerial Meeting in Singapore. Even though the WTO Director-General had already ruled out the possibility of possible sanctions against any country, the developing country opposition to the discussion itself was so vehement that an invitation to the ILO Director-General to simply address the meeting was withdrawn.31 The final result was the Singapore Ministerial Declaration: We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalization contribute to the promotion of these standards. We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly lowwage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO Secretariats will continue their existing collaboration.32 The Singapore Ministerial Declaration opened many doors: this was the first time that the WTO acknowledged a connection between trade and its social consequences; it puts the comparative advantage of low wage countries beyond question; and the declaration forces countries to recognize core labor standards as members of the WTO, rather than simply as members of the ILO.33 Nevertheless, in more than ten years no further explicit action has been taken by the WTO with regards to workers’ rights. The issue was raised again in the Seattle ministerial conference of 1999, though no further action was taken, and the current Doha rounds of negotiation simply reaffirmed the 1996 declaration.34 Current Interpretations of WTO Laws The Singapore ministerial declaration is an (arguable) attempt by the WTO to establish some sort of “social clause” into its bylaws. Nevertheless, there is a deeper question of enforcement – should countries be allowed to take trade action within the WTO to enforce labor standards? Though it is commonly assumed that this is not allowed, some of the current regulations can be somewhat Harvard WorldMUN 2008

World Trade Organization murky. GATT Article I does not allow nations to provide more favorable treatment to some countries instead of others with regard to “like products,” which is known as the “Most Favored Nations” (MFN) clause; Article I thus prohibits dissimilar treatment of the same good from different countries simply on the basis of national origin – this rules out, for example, a nation levying additional taxes on goods from a country because of the exporter’s labor laws.35 And tariffs are generally the sole means of regulating trade, as Article XI excludes the use of most non-tariff border restrictions, like licenses and quotas. GATT Article III allows importing governments to impose regulations on products, as long as these imported products face the same regulations as domestic products. In this sense, countries tried to claim that the manner in which a product was produced constituted part of the product itself, and set up restrictions with these distinctions. For example, countries would argue that Russia could set up extra tariffs on beef produced with growth hormones, as long as both imported and Russian hormone-fed beef faced the same tariffs; in this sense, hormone-fed beef and non-hormone-fed beef were considered different products, even if they were technically the same good. This was used to set up restrictions on products made with poor labor conditions versus similar products made with better labor standards. GATT panels put an end to this practice, however, by ruling that regulatory measures on products were different than regulatory measures on the manner in which products were produced; if products were basically identical but were produced with different standards, then an importing country could not create tariff distinctions between them.36 Perhaps the closest the WTO comes to permitting trade enforcement mechanisms is in Article XX, which permits otherwise unallowable measures that are “necessary to protect public morals” and “necessary to protect human life and health.”37 Arguably, this measure could allow for countries to use trade sanctions to enforce labor standards, which could fall within the realm of protecting “public morals” and “human life and health.” Nevertheless, such measures would have to be “necessary,” and labor standards would have to fall within the bounds of human health or public morality. This issue has never been explicitly addressed in the WTO or its appellate bodies, and many questions remain. For example, does World Trade Organization 9

Topic Area B

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Is There a Need for the WTO to Address Labor Standards? The WTO understands that its role in the issue of labor rights revolves around four main policy questions:39 • Do lower labor standards give a country’s exports unfair trading advantages? Would this lead all countries to a “race to the bottom,” where countries are forced to lower their labor standards to remain competitive both domestically and internationally? • To maintain parity, should countries only trade with other countries with similar labor standards? • Should the WTO explicitly allow countries to use trade actions to enforce labor standards in trading-partner countries? • Is the WTO even the correct institution to craft labor policy and enforcement? Should this be left to the ILO? The first question sets the stage for the remaining issues, and addresses the substantive economic policy at issue in this debate – is there even a need for the WTO to address global issues of labor rights? Neoclassic economic theory about competitive advantage and game theory would argue that countries with lower labor standards do have a trading advantage, and that such advantages would force all countries to consequently lower their standards. A country with lower labor standards theoretically has much lower production costs – fewer benefits mean lower wages, and poorer working conditions mean that less money needs to be invested in infrastructure and keeping employees happy. Child, women, and elderly workers also command smaller salaries, and preventing the unionization of labor is a powerful means of controlling wage increases. With fewer production costs, identical goods can be produced cheaper in low-standard countries, which give the products a competitive advantage in the global marketplace. The “race to the bottom” argument follows a classic game theory formula. Suppose country “A” has low labor standards and can produce a good at very low cost. Country “B” and country “C” also produce An Afghan girl removes weeds from a poppy field near the road from the good indigenously, but with higher labor standards, and all three countries trade freely with each other. Since Kabul to Jalalabad. country A can produce the good cheaply with its low labor standards, it saturates the market and all buyers in all three countries buy the product from Country A,

“necessary” mean that such action can only be a last resort after the exhaustion of other diplomatic means? Does enforcement of labor standards count as protecting public morals and health? Another possible route is the use of the WTO’s trade preferences for developing countries. Despite its MFN policy, the WTO does allow developed countries, under the “general system of preferences” (GSP), to unilaterally give some preferential tariff rates to developing countries in an effort to aid development.38 Since these are voluntarily given by the developed country, they can also be withdrawn for a reason such as poor workers’ rights; such withdrawal would leave that developing country to face standard tariff rates while other developing countries enjoyed some GSP benefits. When contested, a WTO panel found that such GSP preferences had to be extended to all developing countries, but could discriminate between developing nations if there were objective criteria to show that some developing countries needed the GSP treatment more than other developing nations. Since this now allows differentiation of GSP based on objective social criteria, such as observance of basic human rights, preferential GSP treatment might be a possible means of enforcing labor standards on developing countries within the WTO framework. Nevertheless, this still remains ambiguous, and the GSP program is only unilateral and is not a WTO-wide policy.

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Topic Area B which kills domestic production and sales in countries B and C. In order to compete, both countries B and C must lower their standards to match those of country A, and parity resumes with each country producing the good at similar costs. But why stop there? To gain additional advantage, one of the countries can simply reduce their labor standards further, which gives them a temporary cost benefit; the other two countries must then follow suit. In this “race to the bottom,” free international competition necessitates that all countries continually lower their labor standards. Some argue that this neoclassical economic story is false. A 1996 study by the Organization for Economic Cooperation and Development (OECD) found that, the view that argues that low-standards countries will enjoy gains in export market share to the detriment of high-standards countries appears to lack solid empirical support. These findings also imply that any fear on the part of developing countries that better core standards would negatively affect either their economic performance or the competitive position in world markets has no economic rationale.40 This conclusion is supported by many further studies in the field; a working paper available online by Drusilla Brown (2005) outlines many of these papers and their arguments.41 This result is ambivalent with regards to the WTO discussion, however: it provides a rationale for developing countries to assert that the “race to the bottom” is unfounded and WTO action is unnecessary, while at the same time giving developed countries ammunition by asserting that developing countries should not fear competitive repercussions from the WTO instituting strict labor standard legislation. This argument concludes that the best way to improve labor standards in developing countries is not through trade sanctions but just the opposite – encouraging economic development and rising wages through foreign investment that will (inevitably) raise labor standards as countries become more developed. Developing countries argue that the push for the WTO to address labor standards is just a veiled excuse for developed countries to practice protectionism. Many domestic industries in developed countries suffer from the low-cost competition afforded by developing countries, which attract investment out of developed countries and then lower global prices through strong competition. Harvard WorldMUN 2008

Developing countries believe that developed countries wish to use labor standard intervention to artificially raise the costs of production in developing countries to bolster their own domestic industry by reducing the cost advantages enjoyed by developing nations. The second, third, and fourth questions delve into the specific actions of the WTO. Should the WTO address the issues of labor rights? And if it should, how? This reaches beyond the arguments above surrounding the “race to the bottom.” For even without a race to the bottom, with the 1996 Singapore ministerial declaration, the WTO affirmed its social and moral duty to uphold core labor standards. And the ILO has historically been quite ineffective in mandating and implementing global change. The WTO, however, has the unique opportunity to harness the power of international trade tariffs and sanctions to remove the benefits of low labor standards and force countries to improve their attention to this crucial aspect of human rights. But should the WTO do so? Past UN Actions

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he History section above provides a good overview of the (lack of ) past WTO action on the issue of labor rights. The ILO has been designated by the United Nations as the central institution regarding labor rights, but cooperation and enforcement is still a great issue worldwide. The only explicit reference to labor standards by the WTO is in the 1996 Singapore ministerial declaration, which reads: We renew our commitment to the observance of internationally recognized core labour standards. The International Labour Organization (ILO) is the competent body to set and deal with these standards, and we affirm our support for its work in promoting them. We believe that economic growth and development fostered by increased trade and further trade liberalization contribute to the promotion of these standards. We reject the use of labour standards for protectionist purposes, and agree that the comparative advantage of countries, particularly lowwage developing countries, must in no way be put into question. In this regard, we note that the WTO and ILO Secretariats will continue their existing collaboration.42 The appellate bodies of the WTO have also added to this discussion, by ruling that actions to limit trade of World Trade Organization 11

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Topic Area B particular goods because of their manufacturing process is not allowed under the current wording of Article I and III. Article XX, however, remains as an ambiguous tool that could perhaps be used to influence trade policy around labor standards. Proposed Solutions

C

embargo on Myanmar because of its labor and human rights abuses, and there has been no backlash or criticism of this technically illegal policy from the WTO, any member states, or Myanmar itself.43 There are also several less radical possibilities.44 At the 1999 Seattle ministerial conference, the United States supported the formation of a WTO Working Group on Trade and Labor within the WTO itself. The European Union advocated the creation of a joint ILO/WTO Standing Working Forum that would work with the ILO, WTO, and other international institutions. Nevertheless, the mandates were vague and discussion was tabled. The WTO can also work to strengthen its relationship with the ILO. Though the ILO is an observer at the World Bank and the International Monetary Fund, it has not achieved observer status in the WTO (the WTO is given observer status by the ILO).45 And while the WTO negotiates agreements with the World Bank and the IMF, it does very little with the ILO. Increasing institutional cooperation with the ILO is a good place for the WTO to start in an effort to improve its position with regards to labor rights.

urrently, the biggest proposed solution is for the WTO to do nothing, and to accept that the issue of global labor standards is beyond its relevant sphere of action. This, however, does not help the untold millions of abused workers worldwide forced to endure debilitating working conditions without any international support. One possible remedy would be to institute a “normative floor” for the WTO – to create a set of core standards by which all countries must abide. This floor can be enforced through WTO membership itself – to be a trading member of the WTO a country must have certain minimum labor standards – or through trade actions against certain transgressors. The latter route is the most plausible, and does not necessarily involve any active role of the WTO. That is to say, the WTO does not need to use trade sanctions to enforce labor Questions a Resolution Must Answer standards, but simply needs to remove itself as an obstacle to such actions by member states. This can be achieved ny comprehensive resolution regarding the WTO’s through written exceptions to Articles I and III, or simply position with labor rights must address several crucial through more explicit language in Article XX. Careful questions: wording, however, is necessary to protect such a clause • Should the WTO institute a “normative floor” from abuse by protectionist nations. Such trade actions for labor standards to which all member states are not unprecedented and might not be as controversial must adhere? as is assumed. For example, the United States has a trade • Should countries only be allowed to trade with others with similar labor standards, to avoid a “race to the bottom?” • Should the WTO help enforce global labor standards? How? Should WTO explicitly allow member states to use trade policy to pressure trading partner nations to comply with core labor standards? How should this be accomplished (i.e. exceptions in Article I/III or perhaps explicit wording in Article XX)? • Should the WTO increase its links with the ILO? How? Should the ILO be granted observer status within the WTO?

A

Women labor at a silk factory in Hotan, China

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Topic Area B Bloc Positions

Closing Statement

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Position Papers

he bloc positions in the argument over the WTO and labor policy are almost exclusively divided between developing and developed countries. Developed countries strongly wish to promote labor rights in the developing world, either due to an embedded liberal wish to extend basic human rights or in a push to protect their domestic industries from the competition from cutthroat practices in developing countries. Developing nations see no need for WTO involvement in their indigenous labor practices – they argue that there is no substantive basis for such meddling (there is no “race to the bottom” for competitive advantages), and that by interfering in developing countries’ domestic labor policy, developed countries are simply trying a different approach to protectionism. Obviously, the higher a country’s labor standards, the less they have to fear from WTO intervention, and the more they have to gain from all countries competing on an even playing field. Suggestions for Further Research

A

s always, this study guide is only intended as a brief overview of the many issues surrounding this topic area. The link between trade policy and labor rights is currently a hot subject in international discourse. I highly recommend the WTO website, which is very well organized and offers much information. Its resources on this topic can be limited, however, simply because currently the WTO does very little with employee rights. The footnoted sources in this guide are a good start to research, and I recommend following source trails (i.e. their citations) within these references to find other good articles and books on the topic. Journal articles are perhaps the best source; I would simply keyword “WTO” or “trade” and “labor standards” or “labor rights” – a simple Google search of “WTO labour standards” returns 1.6 million sites. One note is the spelling of “labor” vs. “labour” – I would try both spellings in your searches to get different results. And if you are American, I strongly remind you to remember the alternate spelling, which often returns more results. As always, be careful about the validity and biases of your sources. The key to a good debate is the research that you perform beforehand. Harvard WorldMUN 2008

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ll delegates are required to submit position papers online by 16 March. These papers should reflect the stance of your country on both the topic areas given and should be about a double spaced page in length (Times New Roman, 12 point font) per topic area. These documents will be published on the WorldMUN website to allow other delegates to review their co-delegates’ views about the topics at hand, and will also be read by your directors. Writing the position papers will also allow you to crystallize your own thoughts and focus on the salient issues of the extremely complicated topics at hand. For these reasons, you should spend some time thinking about and writing the position papers, ensuring that you cover each topic accurately and evenly, even though you might have a strong preference for one over the other. While you are empowered and encouraged to make decisions in the committee, they have to be in accordance with your country’s policy and should not be colored by personal prejudices. Your positions on the topics should be substantiated by secondary research which can include press releases, official documents, and speeches and representative editorial articles in newspapers and journals. It is expected that your position will reflect the position of your country’s official government, regardless of the existence of any opposition or dissent against that stance. If you encounter any confusion or ambiguity about the stance of your country, please email me so that I can refer you to the appropriate sources. The format of the position papers should ideally conform to the following guidelines: ǹǹ State your country’s stand on the issue, using any secondary research mentioned above. Also, enumerate any major or concrete steps taken by your country pertaining to the issue. ǹǹ Feel free to mention any concerns/ findings which you would like to present before the committee as a starting point. ǹǹ Mention the countries that you would be willing to form alliances with, taking into account your country’s relationship with them and the specifics World Trade Organization 13

Closing Statement

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of the proposed collaborations/alignments. Decision, the importance of a rapid response to Spell out certain counter-arguments that your those needs consistent with the provisions of this opposition is likely to make and your own defense against Decision; that, so that you are well-prepared for the debate on those Noting that, in the light of the foregoing, exceptional points. Ultimately, the purpose of the position paper is circumstances exist justifying waivers from the to guide you and the rest of committee in their thinking obligations set out in paragraphs (f ) and (h) of and must therefore be written with some thought and Article 31 of the TRIPS Agreement with respect to research. pharmaceutical products; Decides as follows: Final Remarks 1. For the purposes of this Decision: (a) “pharmaceutical product” means any patented As a reminder, this study guide should serve as a product, or product manufactured through starting point for your own research. It should provide a patented process, of the pharmaceutical you with inspiration for other areas of the topic to explore sector needed to address the public health more thoroughly to increase your understanding of the problems as recognized in paragraph 1 of topics at hand. The amount of fun that you have in the Declaration. It is understood that active committee will be directly proportional to the amount of ingredients necessary for its manufacture research you do ahead of time. Thank you very much for and diagnostic kits needed for its use would reading! I look forward to meeting you in March! be included; (1) (b) “eligible importing Member” means any leastdeveloped country Member, and any other Appendix Member that has made a notification (2) to the Council for TRIPS of its intention 30 August 2003 Waiver System46 to use the system as an importer, it being understood that a Member may notify at any The General Council, time that it will use the system in whole or in Having regard to paragraphs 1, 3 and 4 of Article IX of a limited way, for example only in the case of the Marrakesh Agreement Establishing the World a national emergency or other circumstances Trade Organization (“the WTO Agreement”); of extreme urgency or in cases of public Conducting the functions of the Ministerial Conference non-commercial use. It is noted that some in the interval between meetings pursuant to Members will not use the system set out in paragraph 2 of Article IV of the WTO Agreement; this Decision as importing Members (3) and Noting the Declaration on the TRIPS Agreement that some other Members have stated that, if and Public Health (WT/MIN(01)/DEC/2) (the they use the system, it would be in no more “Declaration”) and, in particular, the instruction than situations of national emergency or of the Ministerial Conference to the Council for other circumstances of extreme urgency; TRIPS contained in paragraph 6 of the Declaration   (c) “exporting Member” means a Member using to find an expeditious solution to the problem of the the system set out in this Decision to produce difficulties that WTO Members with insufficient or pharmaceutical products for, and export no manufacturing capacities in the pharmaceutical them to, an eligible importing Member. sector could face in making effective use of 2. The obligations of an exporting Member under compulsory licensing under the TRIPS Agreement Article  31(f ) of the TRIPS Agreement shall and to report to the General Council before the end be waived with respect to the grant by it of a of 2002; compulsory licence to the extent necessary for Recognizing, where eligible importing Members seek the purposes of production of a pharmaceutical to obtain supplies under the system set out in this product(s) and its export to an eligible importing Harvard WorldMUN 2008

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Appendix

 

Member(s) in accordance with the terms set out below in this paragraph: (a) the eligible importing Member(s) (4) has made a notification (2) to the Council for TRIPS, that: (i)  

specifies the names and expected quantities of the product(s) needed (5); (ii)  confirms that the eligible importing Member in question, other than a least developed country Member, has established that it has insufficient or no manufacturing capacities in the pharmaceutical sector for the product(s) in question in one of the ways set out in the Annex to this Decision; and (iii) confirms that, where a pharmaceutical product is patented in its territory, it has granted or intends to grant a compulsory licence in accordance with Article  31 of the TRIPS Agreement and the provisions of this Decision (6);  (b) the compulsory licence issued by the exporting Member under this Decision shall contain the following conditions: (i)   only the amount necessary to meet the needs of the eligible importing Member(s) may be manufactured under the licence and the entirety of this production shall be exported to the Member(s) which has notified its needs to the Council for TRIPS; (ii)  products produced under the licence shall be clearly identified as being produced under the system set out in this Decision through specific labelling or marking. Suppliers should distinguish such products through special packaging and/or special colouring/shaping of the products themselves, provided that such distinction is feasible and does not have a significant impact on

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price; and (iii) before shipment begins, the licensee shall post on a website (7) the following information: • the quantities being supplied to each destination as referred to in indent (i) above; and • the distinguishing features of the product(s) referred to in indent (ii) above; (c) the exporting Member shall notify (8) the Council for TRIPS of the grant of the licence, including the conditions attached to it (9). The information provided shall include the name and address of the licensee, the product(s) for which the licence has been granted, the quantity(ies) for which it has been granted, the country(ies) to which the product(s) is (are) to be supplied and the duration of the licence. The notification shall also indicate the address of the website referred to in subparagraph (b)(iii) above.

  3. Where a compulsory licence is granted by an exporting Member under the system set out in this Decision, adequate remuneration pursuant to Article 31(h) of the TRIPS Agreement shall be paid in that Member taking into account the economic value to the importing Member of the use that has been authorized in the exporting Member. Where a compulsory licence is granted for the same products in the eligible importing Member, the obligation of that Member under Article 31(h) shall be waived in respect of those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member. 4. In order to ensure that the products imported under the system set out in this Decision are used for the public health purposes underlying their importation, eligible importing Members shall take reasonable measures within their means, proportionate to their administrative capacities and to the risk of trade diversion to prevent reexportation of the products that have actually been imported into their territories under the World Trade Organization 15

Appendix system. In the event that an eligible importing Member that is a developing country Member or a least-developed country Member experiences difficulty in implementing this provision, developed country Members shall provide, on request and on mutually agreed terms and conditions, technical and financial cooperation in order to facilitate its implementation. 5. Members shall ensure the availability of effective legal means to prevent the importation into, and sale in, their territories of products produced under the system set out in this Decision and diverted to their markets inconsistently with its provisions, using the means already required to be available under the TRIPS Agreement. If any Member considers that such measures are proving insufficient for this purpose, the matter may be reviewed in the Council for TRIPS at the request of that Member. 6. With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products: (a) where a developing or least-developed country WTO Member is a party to a regional trade agreement within the meaning of Article XXIV of the GATT 1994 and the Decision of 28  November  1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries (L/4903), at least half of the current membership of which is made up of countries presently on the United Nations list of least developed countries, the obligation of that Member under Article  31(f ) of the TRIPS Agreement shall be waived to the extent necessary to enable a pharmaceutical product produced or imported under a compulsory licence in that Member to be exported to the markets of those other developing or least developed country parties to the regional trade agreement that share the health problem in question. It is understood that this will not prejudice the territorial nature of the patent rights in question; (b) it is recognized that the development of Harvard WorldMUN 2008

World Trade Organization systems providing for the grant of regional patents to be applicable in the above Members should be promoted. To this end, developed country Members undertake to provide technical cooperation in accordance with Article 67 of the TRIPS Agreement, including in conjunction with other relevant intergovernmental organizations. 7. Members recognize the desirability of promoting the transfer of technology and capacity building in the pharmaceutical sector in order to overcome the problem identified in paragraph  6 of the Declaration. To this end, eligible importing Members and exporting Members are encouraged to use the system set out in this Decision in a way which would promote this objective. Members undertake to cooperate in paying special attention to the transfer of technology and capacity building in the pharmaceutical sector in the work to be undertaken pursuant to Article 66.2 of the TRIPS Agreement, paragraph 7 of the Declaration and any other relevant work of the Council for TRIPS. 8. The Council for TRIPS shall review annually the functioning of the system set out in this Decision with a view to ensuring its effective operation and shall annually report on its operation to the General Council. This review shall be deemed to fulfil the review requirements of Article IX:4 of the WTO Agreement. 9. This Decision is without prejudice to the rights, obligations and flexibilities that Members have under the provisions of the TRIPS Agreement other than paragraphs (f ) and (h) of Article 31, including those reaffirmed by the Declaration, and to their interpretation. It is also without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under the present provisions of Article 31(f ) of the TRIPS Agreement. 10. Members shall not challenge any measures taken in conformity with the provisions of the waivers contained in this Decision under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994. 11. This Decision, including the waivers granted in it, shall terminate for each Member on the World Trade Organization 16

Appendix date on which an amendment to the TRIPS Agreement replacing its provisions takes effect for that Member. The TRIPS Council shall initiate by the end of 2003 work on the preparation of such an amendment with a view to its adoption within six months, on the understanding that the amendment will be based, where appropriate, on this Decision and on the further understanding that it will not be part of the negotiations referred to in paragraph 45 of the Doha Ministerial Declaration (WT/MIN(01)/DEC/1). [ANNEX] - Assessment of Manufacturing Capacities in the Pharmaceutical Sector Least-developed country Members are deemed to have insufficient or no manufacturing capacities in the pharmaceutical sector.  For other eligible importing Members insufficient or no manufacturing capacities for the product(s) in question may be established in either of the following ways: (i) the Member in question has established that it has no manufacturing capacity in the pharmaceutical sector;  OR (ii) where the Member has some manufacturing capacity in this sector, it has examined this capacity and found that, excluding any capacity owned or controlled by the patent owner, it is currently insufficient for the purposes of meeting its needs. When it is established that such capacity has become sufficient to meet the Member’s needs, the system shall no longer apply. The 30 August 2003 Statement by the Chairperson of the General Council47 The General Council has been presented with a draft Decision contained in document IP/C/W/405 to implement paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health. This Decision is part of the wider national and international action to address problems as recognized in paragraph 1 of the Declaration. Before adopting this Decision, I would like to place on the record this Statement which represents several key shared understandings of Members regarding the Decision to be taken and the way in which it will be Harvard WorldMUN 2008

World Trade Organization interpreted and implemented. I would like to emphasize that this Statement is limited in its implications to paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health. First, Members recognize that the system that will be established by the Decision should be used in good faith to protect public health and, without prejudice to paragraph 6 of the Decision, not be an instrument to pursue industrial or commercial policy objectives. Second, Members recognize that the purpose of the Decision would be defeated if products supplied under this Decision are diverted from the markets for which they are intended. Therefore, all reasonable measures should be taken to prevent such diversion in accordance with the relevant paragraphs of the Decision. In this regard, the provisions of paragraph 2(b)(ii) apply not only to formulated pharmaceuticals produced and supplied under the system but also to active ingredients produced and supplied under the system and to finished products produced using such active ingredients. It is the understanding of Members that in general special packaging and/or special colouring or shaping should not have a significant impact on the price of pharmaceuticals. In the past, companies have developed procedures to prevent diversion of products that are, for example, provided through donor programmes. “Best practices” guidelines that draw upon the experiences of companies are attached to this statement for illustrative purposes. Members and producers are encouraged to draw from and use these practices, and to share information on their experiences in preventing diversion. Third, it is important that Members seek to resolve any issues arising from the use and implementation of the Decision expeditiously and amicably: To promote transparency and avoid controversy, notifications under paragraph 2(a)(ii) of the Decision would include information on how the Member in question had established, in accordance with the Annex, that it has insufficient or no manufacturing capacities in the pharmaceutical sector. In accordance with the normal practice of the TRIPS Council, notifications made under the system shall be brought to the attention of its next meeting. Any Member may bring any matter related to the interpretation or implementation of the Decision, including issues related to diversion, to the TRIPS Council World Trade Organization 17

Appendix for expeditious review, with a view to taking appropriate action. If any Member has concerns that the terms of the Decision have not been fully complied with, the Member may also utilise the good offices of the Director General or Chair of the TRIPS Council, with a view to finding a mutually acceptable solution. Fourth, all information gathered on the implementation of the Decision shall be brought to the attention of the TRIPS Council in its annual review as set out in paragraph 8 of the Decision. In addition, as stated in footnote 3 to paragraph 1(b) of the Decision, the following Members have agreed to opt out of using the system as importers: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and United States of America. Until their accession to the European Union, Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovak Republic and Slovenia agree that they would only use the system as importers in situations of national emergency or other circumstances of extreme urgency. These countries further agree that upon their accession to the European Union, they will opt out of using the system as importers. As we have heard today, and as the Secretariat has been informed in certain communications, some other Members have agreed that they would only use the system as importers in situations of national emergency or other circumstances of extreme urgency: Hong Kong China, Israel, Korea, Kuwait, Macao China, Mexico, Qatar, Singapore, Chinese Taipei, Turkey, United Arab Emirates. [Attachment] - “Best practices” guidelines Companies have often used special labelling, colouring, shaping, sizing, etc. to differentiate products supplied through donor or discounted pricing programmes from products supplied to other markets. Examples of such measures include the following: Bristol Myers Squibb used different markings/ imprints on capsules supplied to sub Saharan Africa. Novartis has used different trademark names, one (Riamet®) for an anti-malarial drug provided to developed countries, the other (Coartem®) for the same Harvard WorldMUN 2008

World Trade Organization products supplied to developing countries. Novartis further differentiated the products through distinctive packaging. GlaxoSmithKline (GSK) used different outer packaging for its HIV/AIDS medications Combivir, Epivir and Trizivir supplied to developing countries. GSK further differentiated the products by embossing the tablets with a different number than tablets supplied to developed countries, and plans to further differentiate the products by using different colours. Merck differentiated its HIV/AIDS antiretroviral medicine CRIXIVAN through special packaging and labelling, i.e., gold-ink printing on the capsule, dark green bottle cap and a bottle label with a light-green background. Pfizer used different colouring and shaping for Diflucan pills supplied to South Africa. Producers have further minimized diversion by entering into contractual arrangements with importers/ distributors to ensure delivery of products to the intended markets. To help ensure use of the most effective antidiversion measures, Members may share their experiences and practices in preventing diversion either informally or through the TRIPS Council. It would be beneficial for Members and industry to work together to further refine anti-diversion practices and enhance the sharing of information related to identifying, remedying or preventing specific occurrences of diversion. The Nigerian Counterproposal (Numbering consistent with Amendment to Article 31 of TRIPS)48 [Article 31] 2. The obligations under subparagraph 1(f ) of this Article shall not apply to such use that is necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) who notifies(4) the Council for TRIPS of its intention to use the system established under this paragraph In accordance with the terms set out below. a.  For the purposes of this paragraph: i.  “pharmaceutical product” means any patented product, or product manufactured through a patented process, of the pharmaceutical sector World Trade Organization 18

Appendix needed to address the public health problems as recognized in paragraph 1 of the Doha Declaration. It is understood that, among others, active ingredients necessary for its manufacture and diagnostic kits needed for its use would be included; ii.  “eligible importing Member” means any least-developed country Member, and any other Member with no or insufficient manufacturing capacity in the pharmaceutical sector that has made a notification to the Council for TRIPS of its intention to use the system as an importer, it being understood that a Member may notify at any time that it will use the system in whole or in a limited way, for example, only in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use; iii. “exporting Member” means a Member using the system set out in this paragraph to produce pharmaceutical products for, and export them to, an eligible importing Member. b.  Where use is made by an eligible importing Member of the subject matter of a patent under this paragraph, adequate remuneration for purposes of subparagraph 1(h) of this Article shall be paid in that Member taking into account the economic value to the importing Member of the use that has been authorized in the exporting Member. Where a compulsory licence is granted for the same products in the importing Member, the obligation of that Member under subparagraph 1(h) of this Article shall be waived in respect of those products for which remuneration in accordance with the first sentence of this subparagraph has been paid in the exporting Member. c.  Products produced under the licence shall be Harvard WorldMUN 2008

World Trade Organization clearly identified as being produced under the system set out in this paragraph through specific labelling or marking. Suppliers should distinguish such products through special packaging and/or special colouring/ shaping of the products themselves, provided that such distinction is feasible and does not have a significant impact on price. d.  Members shall ensure the availability of effective legal means to prevent the reexportation or unlawful importation into, and sale in, their territories of products produced under the system set out under this paragraph, using the means available under Part III of this Agreement. If any Member considers that such measures are proving insufficient for this purpose, the matter may be reviewed in the Council for TRIPS at the request of that Member. e. With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products; where a developing or least-developed country Member is party to a regional trade agreement within the meaning of Article XXIV of the GATT 1994 or the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries (L/4903), at least half of the membership of which is made up of countries on the United Nations list of least-developed countries, the obligation of that Member under subparagraph 1(f ) of this Article shall be waived to the extent necessary to enable a pharmaceutical product produced or imported under a compulsory licence in that Member to be exported to the markets of those other developing or leastdeveloped country parties to the regional trade agreement. f.  Members recognize the desirability of promoting the transfer of technology and capacity building in the pharmaceutical sector in order to help importing Members World Trade Organization 19

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Appendix establish their own manufacturing capacities in this sector. To this end, eligible importing Members and exporting Members are encouraged to use the system set out in this paragraph in a way which would promote this objective. Members undertake to cooperate in paying special attention to the transfer of technology and capacity building in the pharmaceutical sector in the work to be undertaken pursuant to Article 66.2 of this Agreement, paragraph 7 of the Declaration and any other relevant work of the Council for TRIPS. g.  Members shall not challenge any measures taken in conformity with the provisions of this paragraph under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994. 4. It is understood that this notification does not need to be approved by a WTO body in order to use the system set out under this paragraph. The notification will be made available publicly by the WTO Secretariat through a page on the WTO website dedicated for this purpose.

Endnotes 1

2

3 4 5 6 7

8 Ibid. 9 Ibid. 10 “Intellectual-property law.” Encyclopædia Britannica. 2007. Encyclopædia Britannica Online. 5  October  2007   . 11 “Obligations and exceptions.” Fact Sheet: TRIPS and Pharmaceutical Patents. The World Trade Organization. 9 September 2007 http://www.wto.org/ english/tratop_e/trips_e/factsheet_pharm02_e.htm. 12 Ibid. 13 Ibid. 14 Ibid. 15 Ibid. 16 “Joint Statement by NGOs on TRIPS and Public Health.” 3 December 2005. Access to Medicines Project. Essential Action. 9 September 2007 http:// www.essentialaction.org/access/index.php?/archives/28Joint-statement-by-NGOs-on-TRIPS-and-Public-Health. html.

17 “Canada is first to notify compulsory license to export generic drug.” 4 October 2007. WTO: 2007 News Items. World Trade Organization. 1 November 2007 http://www.wto.org/english/news_e/news07_e/trips_ health_notif_oct07_e.htm. 18 Gabarone Declaration. 14 October 2005. The African Union. 10 September 2007 http://www.africa-union.

“Bretton Woods Conference.” Encyclopædia Britannica. 2007. Encyclopædia Britannica Online. 6  September  2007 http://www.search.eb.com/eb/article- 19 20 9016387 “The GATT Years: From Havana to Marrakesh.” Understanding the WTO. The World Trade Organization. 6 September 2007 http://www.wto.org/ 21 english/thewto_e/whatis_e/tif_e/fact4_e.htm Ibid. “The Uruguay Round.” Understanding the WTO. The 22 World Trade Organization. 6 September 2007 http://

org/root/au/conferences/past/2006/may/summit/doc/ GABORONE_DECLARATION.pdf.

“Obligations and Exceptions.” “The General Council Chairperson’s Statement.” WTO News: 2003 News Items. The World Trade Organization. 9 September 2007 http://www.wto.org/ english/news_e/news03_e/trips_stat_28aug03_e.htm. “Joint Statement by NGOs on TRIPS and Public Health.” Raja, Kanaga. “Africa Group Proposes Amendment to TRIPS Agreement in Relation to Access to Medicines.” South North Development Bulletin, 3 www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm December 2004. Ibid. Kristof, Nicholas. “The Deep Roots of AIDS.” The 23 “Labor standards: consensus, coherence, and controversy.” Understanding the WTO. The World New York Times. 19 September 2006. Trade Organization. 11 December 2007 http://www. “Intellectual Property: Protection and Enforcement.” wto.org/english/thewto_e/whatis_e/tif_e/bey5_e.htm. Understanding the WTO. The World Trade Organization. 9 September 2007 http://www.wto.org/ 24 “Ministerial Conference, Singapore, 9 – 13 December 1996.” WTO News: 1996 Press Releases. The World english/thewto_e/whatis_e/tif_e/agrm7_e.htm.

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Endnotes Trade Organization. 11 December 2007 http://www. wto.org/english/news_e/pres96_e/wtodec.htm. 25 “Labor standards: consensus, coherence, and controversy.” 26 “Origins and History.” About the ILO. The International Labor Organization. 13 December 2007 http://www. ilo.org/global/About_the_ILO/Origins_and_history/lang-en/index.htm.

43 44 45 46

27 Howse, Robert, and Langille, Brian. “The World Trade Organization and Labor Rights: Man Bites 47 Dog.” Social Issues, Globalization and International Institutions: Labor Rights and the EU, ILO, OECD, and WTO. Leary, Virginia, and Warner, Daniel, eds. Boston: Martinus Nijhoff Publishers, 2006. 48 28 Howse and Langille. 29 Kaufmann, Christine. Globalization and Labour Rights: The Conflict between Core Labour Rights and International Economic Law. Portland, Oregon: Hart Publishing, 2007. 30 Leary, Virginia. “Worker’s Rights and International Trade: The Social Clause (GATT, ILO, NAFTA, US Laws).” Fair Trade and Harmonization: Prerequisites for Free Trade? Volume 2, Legal Analysis. Bhagwati and Hudec, eds. Cambridge, MA: MIT Press, 1996. 31 Howse and Langille. 32 “Ministerial Conference, Singapore, 9 – 13 December 1996.” 33 Howse and Langille. 34 “Labor standards: consensus, coherence, and controversy.” 35 Howse and Lagille 36 Ibid. 37 Kaufmann 38 Howse and Lagille 39 “Labor standards: consensus, coherence, and controversy” 40 Organization for Economic Cooperation and Development. Trade, Employment, and Labour Standards: A Study of Core Workers’ Rights and International Trade. France: OECD Publishing, 1996. 41 Brown, Drusilla. “International Trade and Core Labor Standards: A Survey of the Recent Literature.” Tufts University. 2005. http://ase.tufts.edu/econ/papers/200005. pdf. 42 “Ministerial Conference, Singapore, 9 – 13 December Harvard WorldMUN 2008

1996.” Howse and Lagille Ibid. Ibid. “Implimentation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health.” General Council. The World Trade Organization. 9 September 2007 http://www.wto.org/ english/tratop_e/trips_e/implem_para6_e.htm. “The General Council Chairperson’s Statement.” WTO News: 2003 News Items. The World Trade Organization. 9 September 2007 http://www.wto.org/ english/news_e/news03_e/trips_stat_28aug03_e.htm. Raja, Kanaga. “Africa Group Proposes Amendment to TRIPS Agreement in Relation to Access to Medicines.” South North Development Bulletin, 3 December 2004.

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