The WTO and “reproductive outsourcing” by US consumers to India?
The latest issue of the Journal of World Trade has an India-related article on an unusual topic. It examines the use of poor Indian women as surrogate mothers by rich Americans from a GATS perspective. The abstract is below. Haven’t read the paper yet but do plan to do so, and will comment on it here. My instinctive and non-academic preliminary response was some discomfort with the treatment of this issue from a trade law perspective. Wouldn’t a human rights or health framework be more appropriate for regulation in this area both in the US (the so-called service consumer) as well as in India (the so-called service-provider). Is gestational surrogacy a GATS “service”?
Here is the abstract:
Christina Stephenson, ‘Reproductive Outsourcing to India: WTO Obligations in the Absence of US National Legislation’ (2009) 43 Journal of World Trade pp. 189-208
Summary:
This article examines the World Trade Organization (WTO) obligations that inhere from US persons or couples contracting with Indian women for gestational surrogacy. Surrogacy contracts are considered in the context of the General Agreement on Tariffs and Trade (GATT) and the differing laws on surrogacy of different US states. By exploring WTO Appellate Body (AB), Panel and GATT Panel decisions, this article endeavors to determine what WTO obligations bind the US in circumstance of cross–border surrogacy contract. This article addresses how the varying state laws on surrogacy affect the WTO obligations of the US in market access, national treatment and most–favoured–nation (MFN) treatment. The article concludes that there are a variety of ways in which the different state laws have the capacity to violate US trade commitments in relation to international surrogacy contracts. In addition, the analysis serves to illuminate the process under which US trade obligations can be scrutinized to determine what commitments are relevant to a service not contemplated in the US Schedule.
Update:
Am still to read this article for the WTO angle, but a recent Indian Supreme Court decision seems to throw a child’s rights mantle over surrogacy at least in Indian domestic law.
Last year, a child was born to an Indian surrogate mother from Japanese parents. The Japanese couple separated and when the child was born, neither parent was in India except of course the natural birth mother.
A public interest habeas corpus petition was filed in the Rajasthan High Court. Eventually, the matter reached the Supreme Court when the Japanese grandmother filed a petition. The Supreme Court gave its decision on 29 September 2008. The decision is available at http://judis.nic.in/supremecourt/helddis.aspx
The Court in effect allowed the baby to leave India with the Japanese grandmother. It did this by stating that any concerns relating to the rights of the baby should be raised before the commission constituted under the Commissions for Protection of Child Rights Act, 2005, and noted that no complaint had been made before this Commission. The Supreme Court also went on to state that the surrogacy procedure "is legal in several countries including in India where due to excellent medical infrastructure, high international demand and ready availability of poor surrogates it is reaching industry proportions".
I find this Supreme Court decision very unsatisfactory. The Court was keen to let the baby leave India (which I don’t have an issue with), but it seems to have laid down the law here (that surrogacy is legal) in the absence of legislation and while a bill was pending before Parliament on the same issue. (See the Assisted Reproductive Technology (Regulation) Bill 2008.)
The Court also abdicated its constitutional responsibility to protect fundamental rights of a child by suggesting that the appropriate forum was the Commission under the Commissions for Protection of Child Rights Act, 2005.
Well, this whole surrogacy issue raises questions of citizenship, which mother’s name will go on the birth certificate under Indian law, immigration, reproductive rights, and child rights. Not too sure of the trade angle.
Indian elections: political party manifestos and the WTO
With Indian national elections due from 16 April, most major political parties have released their election manifestos. I looked at some of these to see if they mentioned the WTO.
The CPI (M) 2009 manifesto does mention the WTO and says this:
WTO and Trade Issues
The CPI (M) stands for:
Protecting Indian interests and that of the developing countries in the ongoing Doha Round of WTO; no further tariff cuts in agriculture and industrial goods.
Restore measures to protect small and marginal peasants, including quantitative restrictions
Keep sectors like health, education, water resources, banking and financial services out of GATS; Press for review of the TRIPS agreement.
Review existing Free Trade Agreements (FTAs); Make public India’s negotiating positions in the FTA negotiations with EU and EFTA.
The Indian National Congress does not mention the WTO in its 2009 election manifesto. The manifesto does talk about its approach to governance and professes a “middle way”:
The Middle Path – the Congress’s way
Balance—or the middle path–has always been the hall-mark of the policies of the Indian National Congress.
As the world experiences a severe recession, it is this balance that is standing India in good stead.
It is a balance between the public sector and the private sector, with an important role assigned to cooperatives and self-help groups.
It is a balance between building a modern economy and imparting a new thrust to traditional industries.
It is a balance between promoting employment in the organized sector and protecting livelihoods in the unorganized sector.
It is a balance between addressing the needs of urban India and improving the quality of life and standard of living in our villages and towns.
It is a balance between taking advantage of globalization and ensuring that these benefits flow to local communities.
It is a balance between regulation by the government and unleashing the creative spirits of our entrepreneurs and professionals.
It is only the Indian National Congress that cherishes and practices this balance in all spheres of our national life including in the conduct of economic and foreign policy.
This balance is needed now more than ever.
Surprisingly, the BJP is still to release its manifesto.
It would be interesting to look at political party manifestos for all Indian general elections since 1990 and trace how the Indian political debate on the WTO has evolved.
In its 1998 election manifesto, the Congress did mention the WTO. An extract:
The Congress will continue to fight for India’s interests in world forums like the WTO. At the same time, it will honour all international commitments in a responsible manner.
In its 1999 manifesto, the Congress talked extensively about exports, trade and the WTO. This manifesto from 1999 is an interesting document and in its detailing and scope goes way beyond what election manifestos in India usually amount to. Some extracts:
A stable, long-term policy on exports of agricultural products and commodities will be adopted. Apart from increasing incomes for farmers this will also generate new employment.
The Congress will impart a whole new look to the Khadi and Village Industries Commission (KVIC) that has significant potential for generating employment in rural and semi-urban areas. KVIC will be transformed into a modern, research-based, technology-oriented, customer- focussed organisation. New programmes for the development and modernisation of the coir industry, handlooms, powerlooms, handicrafts, food processing, sericulture, wool development, etc. – all of which have a high employment potential – will be launched.
A greater thrust on labour-intensive exports of textiles, handicrafts, gems and jewellery, leather, software, light engineering and consumer goods manufacturing will also significantly boost employment. These industries have considerable export potential, which will be taped.
…
Tourism is yet another major employment generator, apart from being a low-cost way of earning foreign exchange. Considering what we have to offer the world, we must aim at no less than doubling international tourist traffic into India in the next four to five years and facilitating an exponential increase in domestic tourist traffic.
…
The services sector, as a whole is another major employment generator. So is the self-employed sector. Both will be expanded and encouraged with the easy availability of finance and reforms of laws and regulations that stand in the way of their growth.
…
The terms of trade will always be kept in favour of agriculture. While remunerative procurement and support prices constitute a key element of this strategy, it is essential to sustain favourable terms of trade through productivity gains and marketing support.
…
India is one giant common market and must function as one. Unfortunately, there are still many fiscal and other barriers, which are preventing the emergence of a truly national common market. These barriers will be eliminated in consultation with state governments. The objective will be to move towards a system of value-added taxation (VAT) and uniform rules for the treatment of interstate trade.
…
Considering the crucial importance of the textiles industry in India, particularly from the point of view of employment and exports, the Congress will come out with a comprehensive, forward-looking textile policy. This policy will, among other things, deal with issues relating to improving the productivity of cotton cultivation, … substantially increasing the global market share of Indian textiles, etc.
…
International Trade and Investment
Immediate steps will be taken to revive the export momentum in the economy that was so much in evidence in the latter half of the eighties and the mid-1990s. India’s exports must grow by at least 15-20% per year on a sustained basis. All policy and procedural barriers to faster exports must be dismantled. Exports create employment and greatly assist in the diffusion of prosperity but high transaction costs and restrictive policies in areas like the small-scale sector are preventing India from increasing her exports and generating new employment.
Government and industry will work closely together to help prepare a plan of action to cope with the new and emerging challenges in the international trading system. A special effort will be mounted in the areas of agriculture, textiles and pharmaceuticals. The Information Technology sector, specifically software, which has emerged as India’s newest motor of growth for exports, will be given every encouragement.
India will continue to meet all her international treaty and multilateral agreement obligations in a responsible and time-bound manner and will continue to work to use the WTO to gain additional market access for products and services of interest to India. It will proactively participate in all existing and proposed global discussions with a view to influencing the agenda and enhancing its bargaining strength. It will work with other countries to push for faster dismantling of controls on trade in textiles and agriculture. The objective of tariff policy will be to reach levels prevalent in south-east and East Asia in the next two to three years and global levels shortly thereafter.
India will continue to proactively encourage investment from foreign companies and overseas Indians. There is an entirely new generation of entrepreneurial overseas Indians, which is making a mark in countries like the United States. A special effort will be mounted to attract this group of investors and build enduring networks with them. In the last few years, India has received a direct foreign investment inflow of around $ 3 billion per year. This is a very low figure considering India’s requirement for investment and considering the global availability of capital. Our target should be to reach at least 8-10 billion dollars of foreign direct investment inflows early in the next decade.
Farmer suicides in India and Doha round agricultural negotiations
India’s insistence on an adequate special safeguard mechanism for agriculture is widely viewed as one of the contributing factors to the failure of the July framework talks in 2008. Indian trade Minister Kamal Nath often describes India’s position on agriculture, including its demands for reduction in agri-subsidies by the developed world, as a question of livelihood (and not of business) on which India cannot compromise.
What interests me is the connection between farmer suicides in India and the formulation of Indian trade policy on agriculture and the formulation of India’s Doha round negotiating position on agriculture. News reports in India about the Doha agricultural negotiations and Mr Nath’s various speeches do not directly refer to the spate of farmer suicides in India. Indeed, the political discourse in India itself (as visible in news publications) has not remained consistently engaged with this issue. Small periods of noisy outrage exist between longer periods where the issue is almost absent from the mainstream political discourse.
Though the numbers on these farmer suicides are disputed, yet even allowing for these variations, the figures are high enough to warrant a serious political impact and to expect an engaged political discussion. One would also expect that the issue would seep into agricultural trade policy issues and into Indian demands and sensitivities in the Doha round. (For example see my previous post about India wanting to be included in cotton subsidy talks – surely farmer suicides by cotton farmers in India show the serious impact of cotton subsidies for India and justify its inclusion. But I would suppose the emerging India story makes it embarrassing for the Government to flaunt this issue on the international stage).
Are farmer suicides an issue in the coming national elections? At least not in the English national press.
So what are the facts? Where is the academic and policy research on these issues? Where are the domestic consultations with farmers groups over India’s position at Doha?
I plan to keep an eye out for what I come across on this and will post about what I find on this blog. But for the moment, the following would be of interest:
A March 2008 paper by Nagaraj of the Madras Institute of Development Studies titled ‘Farmers’ Suicides in India: Magnitudes, Trends and Spatial Patterns’, available online here estimates that between 1997 and 2006, 166,304 farmers have killed themselves in India. For 1995-2006, the figure is close to 200,000. An average of 16,000 farmers have committed suicide in India every year for the last 12 years. The author considers even these figures an underestimation of the full extent of farmer suicides. Farmers without a property title to their farmlands are not included in the official definition of a farmer in some Indian states. The rate of suicides has shown an increase over the years. The farmers who have killed themselves are overwhelmingly male as per official figures. Female farmer suicides are most likely not counted as most female farmers would not have title to the land. Maharashtra, Karnataka, Andhra Pradesh, Chhatisgarh and Madhya Pradesh are the top five states with the most farmer suicides. These are five contiguous states in the India heartland.
While India is now touted as a fast-growing booming economy (or at least was until the recent global recession), it is also undergoing a serious agrarian crisis. What is the link between farmer suicides and India’s agrarian crisis? The paper by Nagaraj points to a multi-causal explanation behind farmer suicides. He describes these as a social phenomenon certainly linked to India’s widespread and persistent farm crisis coupled with pre-existing conditions of vulnerability and an absence of alternative livelihood opportunities. Nagaraj dismisses sporadic, disjointed and single-point policy interventions and suggests that the crisis needs comprehensive policy intervention and a complete reorientation of agrarian policies. So where is the research on what should be India’s agricultural trade policy in the context of these suicides?
Also see the Final Report on Causes of Farmer Suicides submitted to the Mumbai High Court from 2005 by the Tata Institute of Social Sciences.
Leaves me wondering who is accountable for these large number of deaths?
For more see this Counterpunch story, this New York Times story
India seeks inclusion in cotton subsidy talks between the US and the Cotton-4
Indian Commerce Secretary says India cannot be kept out of Doha talks on reducing cotton subsidies. The Economic Times reports:
India has said it should be included in the exclusive meetings which the US has been holding with West African cotton producing countries on subsidy cuts as part of the on-going Doha round of multilateral trade talks at the World Trade Organization (WTO). As India is the second largest cotton producing country in the world, it said that it should be made part of all discussions on reduction of the high US subsidies on cotton.
Addressing a seminar on threat to multilateralism in the evolving global scenario organised by Ficci on Friday, commerce additional secretary R Gopalan said that India wants to be part of the discussions taking place between the cotton four countries (which includes Benin, Chad, Burkina Faso and Mali) and the US on subsidy reductions in cotton. “We, too, want to be part of the discussions as we too are a major cotton producing country. We cannot be kept out of the talks,” he said.
Well this is interesting. India ought to worry about a special deal on subsidy cuts being offered by the United States to the Cotton four (all least developed countries) as part of WTO special or differential treatment or as what it is more fashionably called these days, –“variable geometry”.
It also shows how despite India becoming a part of the so-called “core group” in Doha round talks, it can still be excluded from talks on issues that directly affect it and where its stance is likely to be viewed as hindering a deal. Of course these are bilateral talks between the United States and the Cotton 4, yet once a deal is reached there and with Brazil the other main stakeholder in this issue, India might get sidelined and be confronted with a deal that it will find difficult to renegotiate.
Joseph Stiglitz in his film ‘The World According to Stiglitz’, draws a direct connection between such subsidies and the drop in cotton prices in India which led to thousands of poor farmers committing suicide last year. See here
Meanwhile Brazil has reportedly asked the United States for $2.5 billion in sanctions for losses caused to Brazilian cotton producers on account of illegal US cotton subsidies between 1998 and 2000. The report:
GENEVA: Brazil is asking the World Trade Organisation to approve $2.5 billion (1.97 billion euros) in sanctions against the United States in a dispute over US cotton subsidies, the Brazilian ambassador said Monday. Roberto Azevedo said the request was lodged at a meeting of the WTO’s Dispute Settlement Body in Geneva. “We have asked the WTO to ensure that Brazil is compensated $2.5 billion for the prejudice … suffered by our cotton producers between 1998 and 2000,” Azevedo, Brazil’s ambassador to the WTO, said after the meeting. “If the big countries are not sanctioned for violations of WTO rules, that would affect the credibility of the organisation,” he added. Last June, a WTO panel upheld a Brazilian complaint that the United States had breached trade rules over its subsidies for cotton farmers. Brazil first brought the case to the trade bloc in 2002. It estimates that total US cotton subsidies were worth 12 billion dollars between 1999 and 2002. Compared with the value of cotton produced, which reached $13.9 billion during the period, it means that subsidies came to about 89.5 percent. After the WTO ruled in its favour, Brazil had said it could seek more than $1 billion in retaliatory sanctions. The subsidies paid by Washington to US cotton farmers have been criticised by non-governmental groups, who say they depress world cotton prices, thereby penalizing producers from poorer countries, particularly in Africa. The C4 group of West African cotton-producers — Benin, Burkina Faso, Chad and Mali — has since 2003 been fighting for the cotton issue to be included in the Doha Round of negotiations for a global free trade pact.
So is this as compensation or retaliation? Also, if granted, will such sanctions apply on an MFN basis to benefit cotton farmers in third countries like India?
Making Indian trade policy: Indian NGOs demand access to India’s FTA negotiations
The sixth round of India-EU FTA negotiations in New Delhi has Indian NGOs demanding access to “secret” FTA negotiating texts. The Times of India reports that protestors were detained outside the office of the European Commission in New Delhi. A body called the Forum on FTAs (described elsewhere as an umbrella group of 75 organizations) is spearheading these Indian civil society protests. An entity called FTA Watch-India has sprung up recently.
While I cannot comment specifically on the demands of this group in the EU-India FTA context, a discussion on how India makes its trade policy and whether it adequately consults with domestic stakeholders in formulating negotiating positions is much needed. Domestic stakeholders who ought to be consulted include not only NGOs, but also parliament, business, labor unions, farmers groups and consumers. Not much literature is available on the Indian trade policy-making process. There is however an interesting paper by Biswajit Dhar on this in a publication by IISD available here. See Biswajit Dhar and Murali Kallummal, “Trade policy off the hook: The making of Indian trade policy since the Uruguay Round”, in Halle and Wolfe (eds.) Process Matters: Sustainable Development and Domestic Trade Transparency, IISD 2007.
I had earlier posted on a news report on the low appetite in India these days for new FTA commitments given imminent elections and the domestic impact of the global economic downturn. An Economic Times story shows that the concerns about the EU-India negotiations are not limited to civil society, but also emanate from business and agricultural economic interests.
Speaking to ET last week, a commerce ministry official sought to allay the growing concerns in domestic circles over the proposed India-EU economic agreement. “There are strong complementarities between the EU and India. After all, we have not yet reached the stage of making the trade-offs and so the fears being expressed now are unfounded,” said the official, who was busy preparing for the sixth round of India-EU bilateral talks beginning Tuesday.
This, however, could be an over-simplistic view. There is clearly a need for greater involvement of all stakeholders in the negotiation process. The high-level trade group which had drawn the broad contours of the agreement was not representative enough.
The EU is India’s largest trading partner, accounting for a fifth of India’s total trade and also one of the largest sources of foreign investment in India. As opposed to this, India currently accounts for less than 2% of the EU’s total trade.
Clearly, as things stand now, India has much to lose (or gain) from the agreement as compared to the EU. Note that the agreement would cover a gamut of areas—trade in goods and services, IPRs, cross-border investments, competition policy, government procurement etc. So India’s policymakers ought to be more chary of the proposed pact than their European counterparts. There is a need for more transparency as well as greater involvement of all stakeholders in the negotiations.
Going by the high-level group’s report, India might need to go WTO-plus in the area of trade in goods, with no commensurate reciprocal gestures from the EU side. The agreement would, as things stand now, allow India to keep just 10% of the tariff lines—which include both agricultural and industrial goods—outside its scope.
It may be noted that India has been resisting the multilateral (WTO) trade liberalisation deal even as it did not have to cut tariffs on 5%f agricultural tariff lines and only make less-than-average reductions in another 7%, and looked close to getting the freedom to keep 5% of industrial tariff lines outside tariff reduction formula. Besides, India has already got preferential (zero) access to EU in case of several tariff lines under the GSP system, which reduces the scope for India to gain in terms of reduction in tariff barriers by the EU.
India China establish joint panel to defuse trade tension and resolve toy imports issue
India and China are in bilateral official-level talks in New Delhi. China is now India’s largest trading partner and India is China’s 10th largest trading partner. There is a huge trade surplus favoring the Chinese side, but China says it does not intentionally seek a trade surplus with India. From the new developments it seems unlikely that China will go in for formal WTO dispute settlement on the toy imports issue. The Indian government has admitted that the safety standards applicable at present exclusively to toy imports from China, need to be extended to imports from other countries and that comparable standards need to be put into place for Indian-made toys as well.
Xinhua reports:
During the talks, both sides agreed to set up a joint working team to coordinate and communicate regularly on the problems of bilateral trade, said the sources
The Chinese side expressed great concern over India’s frequent trade remedy probes against Chinese products, especially the prejudicial restrictive measures against Chinese toys, and asked India to avoid abusing trade remedy measures to over-protect its domestic products, and to uplift the restrictive measures on Chinese products, which were imposed merely out of prejudice and contradicted the WTO rules, said the sources.
The Chinese side also hoped that the two sides should solve bilateral trade disputes through government-to-government communications and coordination and strengthening of dialogue between the industrial sectors of the two countries, said the sources.
Vice Minister Zhong said at a media conference that China reserves the right to resort to the WTO dispute solution authorities over India’s ban of Chinese toys, but still believes the two sides have the capability and wisdom to solve this problem through communications and coordinations
Secretary Pillai said that according to Chinese statistics, bilateral trade between India and China has attained a volume of 51.8 billion U.S. dollars in 2008, so China has overtaken the United States as India’s largest trade partner.
Pillai expressed his hope that both sides expand bilateral trade and investment, and stand up against trade protectionism, saying India is willing to solve the problem of on-going anti-dumping and anti-subsidy investigations against Chinese products through coordination at the level of the joint working team.
In order to avoid possible prejudice against Chinese toys, India will also study and make up as soon as possible the safety standards for toy products, so that all imported toys and domestically made toys will all abide by the standards, he added.
The Indian side also hopes that China will solve as soon as possible the problem of quarantine and safety tests for Indian agricultural products and beef products bound for Chinese market, and take concrete measures to expand import of such products from India.
The Chinese side said that China does not intentionally seek trade surplus with India and wants to have a balanced development of bilateral trade and push forward the solution of the problem of quarantine for Indian food products.
According to statistics of Chinese Ministry of Commerce, from October 2008 to February 2009, India has launched 17 trade remedy probes, including those of anti-dumping and anti-subsidy, against Chinese products, covering industrial salt, steel, auto parts, coal products, porcelain products, textile and rubber products, which means a total loss of more than 1.5 billion U.S. dollars for the Chinese producers and traders.
Moreover, the Indian government has imposed restrictions on imports of Chinese steel, chemical and textile products and declared a six-month ban of Chinese toys in January. But due to opposition of home toy dealers, India has eased the ban on boys and allows import of products with international safety certificates.
New blog category added for posts on recent Indian safety measures against Chinese toy imports
Due to the continuing interest in the discussion on the recent Indian measures against imports of toys from China on safety considerations (first the ban and then its revision to new mandatory safety standards), I have created a new blog category Indian safety measure for Chinese toys where all posts and comments on this issue can be accessed. I hope this will facilitate retrieval of information for those interested.
China criticizes new Indian mandatory standards for Chinese toys before TBT Committee
The Economic Times reported yesterday that China has raised the issue of the mandatory safety standards imposed by India on imported Chinese toys before the WTO Committee on Technical Barriers to Trade.
In its complaint to the WTO, China has alleged that India’s quality checks violate the condition of “national treatment” laid down under WTO’s trade rules as they did not apply to toys manufactured in India or imported from any other country.
In its submission to the WTO committee on technical barriers to trade, China pointed out that since the restrictions apply only to Chinese toys, it could be viewed as a general ban on and a discriminatory measure against Chinese toys.
This breached a series of fundamental principles embodied in the WTO agreement, including that of most favoured nation treatment (every member country will be treated on a par with other member countries), and national treatment (product from a member country will be given the same treatment as that given to a product made locally), along with provisions of technical barriers to trade (TBT) agreement.
China also pointed out that India did not inform WTO about the restrictions, a procedure necessary under the transparency obligations of TBT agreement.
“China strongly requests that India revoke its discriminatory and WTO-inconsistent restriction on Chinese toys immediately,” the submission stated.
So China is alleging that even the revised Indian notification violates both MFN and national treatment. Further, it violates the notification requirement in the TBT agreement. For more background, see earlier posts on this subject under the category –public health. See http://indiainthewto.wordpress.com/2009/03/02/indian-government-relaxes-ban-on-chinese-toy-imports/
Why did the Indian government not use Clause 2.10 of the TBT agreement permitting the issue of safety standards in urgent cases with post-facto notification to the WTO secretariat and other members? Such a notification requires the statement of objectives and the rational for the standards. India will probably argue that these are international standards not requiring notification, but the application of these standards exclusively to imports from China does raise potential violations of MFN and NT.
The Indian authorities could have avoided a lot of trouble if only they had also followed the letter of WTO rules in this matter. The flexibility to take action against imports for safety reasons is fully available, but the Indians seem to have messed up on procedure. Is this an example of lack of capacity in Indian government institutions to use the WTO rules effectively? Why do they not consult lawyers more?
The Hindu meanwhile has an interesting take on the matter:
China is likely to convey its concern to India over New Delhi trying to restrict import of Chinese goods, even though Beijing has not "yet" dragged its neighbour to the World Trade Organisation on the issue.
Chinese Vice Minister of Commerce Zhong Shan is expected to convey his country’s strong resentment over India resorting to protect its industry against imports from China, when he meets Commerce Secretary G K Pillai here this week, sources said.
"We have nothing on this yet," WTO spokesperson said in an e-mail from Geneva when asked whether China has lodged any formal complaint against India. China was upset over India slapping a ban on import of Chinese toys on January 23, which was partially eased within six weeks, provided the toys conformed to international health and safety standards.
The official Chinese media had reported that the country was mulling to drag India to WTO for contesting the ban. However, Mr. Pillai is expected to confront Mr. Zhong with data showing surge in imports from China.
While the bilateral trade has seen a sharp rise in the fiscal 2008-09, it is highly skewed in favour of China. In 2007-08, India’s exports to China stood at USD 10.83 billion, while imports was USD 27.11 billion.
So why would Indian Commerce Secretary talk to the Chinese about surging imports in a matter to do with safety issues? To be fair, the discussions between the Indian Commerce Secretary and the Chinese Vice Minister of Commerce will likely cover all the recent trade tensions between the two countries. And the discussion of import surges will probably feature in that context.
US International Trade Commission launches fact-finding investigation into India’s agricultural trade barriers
At the request of the U.S. Senate Committee on Finance, the US International Trade Commission has launched a fact-finding investigation into whether US agricultural exports to India are being impeded due to Indian tariff and non-tariff barriers. The ITC news release has more:
The investigation, India: Effects of Tariff and Nontariff Measures on U.S. Agricultural Exports, was requested by the U.S. Senate Committee on Finance.
In its letter requesting the investigation, received on January 13, 2009, the Committee stated: "U.S. agriculture depends on reliable access to global markets. Strong economic growth in developing countries like India presents opportunities for U.S. agricultural exports…. While U.S. exporters can provide individual examples of trade measures that prevent their sales to India, the extent to which trade and investment measures account for the disproportionately low U.S. share of India’s agricultural imports remains largely undocumented."
As requested, the ITC, an independent, nonpartisan, factfinding federal agency, will provide an overview of the Indian agricultural market; a description of the principal measures affecting Indian agricultural imports; information on Indian government regulations, including state regulations, covering agricultural markets and foreign direct investment affecting U.S. agricultural products in India; an evaluation of the impact of India’s food marketing and distribution system; and a quantitative analysis of the economic effects of Indian tariffs, and to the extent possible, nontariff measures on U.S. agricultural exports to India.
The ITC will submit its report to the Committee by November 12, 2009.
The ITC will hold a public hearing in connection with the investigation at 9:30 a.m. on April 21, 2009. Requests to appear at the hearing should be filed no later than 5:15 p.m. on March 24, 2009, with the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. For further information, call 202-205-2000.
The ITC also welcomes written submissions for the record. Written submissions (one original and 14 copies) should be addressed to the Secretary of the Commission at the above address and should be submitted at the earliest practical date, but no later than 5:15 p.m. on June 26, 2009. All written submissions, except for confidential business information, will be available for public inspection.
Further information on the scope of the investigation and appropriate submissions is available in the ITC’s notice of investigation, dated February 9, 2009, which can be obtained from the ITC Internet site (www.usitc.gov) or by contacting the Office of the Secretary at 202-205-2000.
ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the Senate Committee on Finance, or the House Committee on Ways and Means. The resulting reports convey the Commission’s objective findings and independent analyses on the subject investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the ITC submits its findings and analyses to the requester. General factfinding investigations reports are subsequently released to the public, unless they are classified by the requester for national security reasons.
Text of Indian statement on Generics seizure before TRIPS council
INTERVENTION by INDIA at TRIPS Council meeting on 3 March 2009
Agenda item ‘M’ – OTHER BUSINESS – Public Health dimension of TRIPS Agreement
Chair,
My delegation would like to draw the attention of Members to developments which undermine the public health dimension of TRIPS Agreement. In the last few months, several consignments of Indian generic drugs have been seized in transit at EC ports. We made an intervention on this issue in the General Council meeting of February 3, 2009. The intervention has been made available to Members at the back of this room.
I will like to mention that my government has taken up the issue bilaterally with the EC and the Dutch Government to urgently review the relevant regulations and the actions of the national authorities based on such regulations, and bring them in conformity with the letter and spirit of the TRIPS Agreement, the rules based WTO system and the DMD on Public Health. We are still awaiting a response.
In addition to the salient aspects of our intervention in the General Council, we would like to make some specific points today in the context of TRIPS Council. Dutch customs authorities have ‘confiscated’ these consignments on grounds of alleged violations of domestic patents and trademarks. This is not a case of ‘temporary detention’ since some consignments continue to be held for over months. Moreover, procedures for their destruction were also initiated. Four such instances have come to the notice of my Government and all these four instances have been reported from the Netherlands. These consignments were headed for Brazil, Peru and Colombia. While one consignment has been returned to the exporter after being held for over a month, the fate of the other three is still unclear. We pointed in GC last month about the consignment of losartan seized in transit in the Netherlands while it was headed for Brazil. The generic drug in question was perfectly IP legitimate generic drug in both India and the destination country. Also, trade of generic drugs is perfectly legitimate.
The action of the Netherlands customs authorities to seize generic drugs, traded between developing countries in full conformity with international disciplines, runs counter to the spirit of the TRIPS Agreement and the resolution 2002/31 of the Commission on Human Rights on the right to enjoy the highest standards of physical and mental health. Measures of this nature have an adverse systemic impact on legitimate trade of generic medicines, South-South commerce, national public health policies and the principle of universal access to medicines. The importance of generic drugs to public health in developing countries and particularly in the LDCs is obvious. Such barriers to legitimate trade of generic drugs will also seriously impair the efforts of civil society organisations engaged in providing medicines and improving public health in the least developed parts of the world. MSF has recently stated that they regularly transport and temporarily store medicines in Europe, en route to users in developing countries. In a letter to the EC Trade Commissioner, MSF has expressed concern over the potential consequences of the seizure of medicines in transit in the EU, which are destined for developing countries. MSF has also asked the EC to clarify its position regarding the implementation of the EC Regulation No 1383/2003 with regard to pharmaceutical products.
In addition to going against the spirit of a rules based trading system and impeding free trade, such acts represent a distorted use of the TRIPS Agreement and the international IP system and circumscribe flexibilities enshrined in TRIPS. Let me elaborate.
Article 41.1 of TRIPS provides that enforcement procedures “shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse” and Article 41.2 provides that the procedures shall be “fair and equitable.” These are ‘General Obligations’ which run through Part III of TRIPS Agreement on Enforcement of IPRs. As I just said, trade of generic drugs is perfectly legitimate. Measures taken by Dutch authorities, clearly, create barriers to such legitimate trade, particularly where there is no risk of diversion to the internal market.
Members have always strived for a balance between public health concerns and protection and enforcement of IPRs. The Doha Ministerial Declaration on TRIPS and Public Health recognized “the gravity of the public health problems afflicting many developing and least-developed countries” and stressed “the need for the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) to be part of the wider national and international action to address these problems.” In Paragraph 4 of that Declaration, WTO members agreed that “the [TRIPS] Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.” We are aware of EC’s stated commitment to the full implementation of the Doha Declaration on TRIPS and Public health and the WTO August 30th decision. Measures taken by the EC therefore, create serious confusion in our minds.
It is ironical that while on one hand WTO has taken steps to promote access to affordable medicines and remove obstacles to proper use of TRIPS flexibilities, on the other hand some Members seek to negate the same by seizing drug consignments in transit and creating barriers to legitimate trade. Among other things, the implementation of the WTO’s Decision of 30 August 2003 regarding the export of pharmaceutical products to countries with inadequate manufacturing capacity (the Para 6 system), will become even more problematic if patent rights, which are territorial by definition, are enforced for goods in transit. As it is, the Para 6 system has been used only once so far in the last five years.
The concept of ‘territoriality’ is a key stone in the edifice of the TRIPS Agreement. There are no indications that the drug consignment was meant for the markets of the EC. Seizure, and initiating procedures for destruction of such consignments, violates this key principle.
The WTO rules based system provides for freedom of transit by the most economical and convenient routes and without unnecessary delays and restrictions. The act of seizure by the Dutch authorities is therefore, a denial of the rules based system which we seek to build and strengthen in the WTO. Repeat of such actions may have an impact on exporters’ choice of transit routes, which may affect the economics of trade of pharmaceutical products and consequently, have a deleterious effect on access to essential drugs and public health budgets of recipient countries.
My delegation would also like to draw the attention of Members to another trend that is acquiring huge dimensions. This is the effort to implement the protection and enforcement of IPRs in a maximalist manner and thereby upset the delicate balance between rights of IPR holders and the public policy objectives under the TRIPS Agreement. A coordinated approach is being witnessed in several international fora like the World Customs Organisation, World Health Organisation, Universal Postal Organisation etc. to promote the IP maximalist agenda. We also note with dismay efforts by some Members to link safe and efficacious but low cost generics with counterfeit medicines, which is essentially an IPR issue. There is an attempt to enlarge the definition of counterfeits beyond its definition in the TRIPS Agreement, to set maximalist enforcement norms, and to include TRIPS plus provisions in RTAs. These are subtle and concerted ways of circumscribing the flexibilities of the TRIPS Agreement. They also run counter to the spirit of the TRIPS Agreement which is a minimum standards agreement. And, this is certainly counter to the understanding given to developing countries when the TRIPS Agreement was being negotiated.
Mr. Chairman, India attaches the highest importance to protection and enforcement of IPRs in accordance with the TRIPS Agreement. However, we do not see the Agreement as divorced from the Objectives and Principles set out in Art 7 and 8 of the Agreement. Efforts to enshrine new, maximalist TRIPS plus provisions in other forums will seriously undermine the delicate balance in the TRIPS Agreement and raise systemic issues.
Mr Chairman, my delegation will like this Council to take note of these points.
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Agenda item ‘M’ – OTHER BUSINESS – Effective operation of Para 6 system.
India has always been of the view that the Doha Declaration on TRIPS and Public Health constituted a major landmark in the short history of the WTO because it recognized the primacy of public health needs and the sensitivity of this organization to the problems faced by the poor in the less developed countries. Alongwith several other Members, India worked relentlessly on DMD on Public Health (2001) and the Decision of August 30, 2003 on implementation of Para 6 of the DMD.
The hope was that the Aug 30 Decision would genuinely and completely address the problems faced by WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector to address public health problems. It may have sounded prophetic at that time when India voiced certain apprehensions in the GC meeting of August 2003. India sounded a word of caution and hoped that “the results accruing from this mechanism would not be negated by the creation of cumbersome systems that would lead to huge delays in getting medicines across at reasonable cost to those that needed them or discourage Members from using the system for the benefit of the people. In order to make this system successful, a sincere collective effort was required on the part of all Members and the entire pharmaceutical industry.” Regrettably, we have been proven right.
We note from our collective experience of 5 years that the export of HIV/AIDS drug "ApoTriavir" by the Canadian pharmaceutical company Apotex to Rawanda in Sept 2008 was the first and only use of the Para 6 system. Here too it took the Company 3 years to supply the medicine. It is time for reflection on the obstacles to use of the system. The Para 6 system, it may be recalled, was supposed to be an ‘expeditious solution’ to the crisis in access to medicines by countries with insufficient or no manufacturing capacity.
Paragraph 8 of the waiver Decision provides that “the Council for TRIPS should review annually the functioning of the system set out in the Decision with a view to ensuring its effective operation and should annually report on its operation to the General Council.” During the 5th Annual Review in the last Council meeting, factual information regarding the implementation and use of the 2003 Decision and the acceptance of the Protocol Amending the TRIPS Agreement was circulated. There was limited discussion on why the Para 6 system had been used only once in the last 5 years. My delegation would call for a wider discussion on legal, procedural, commercial or other obstacles to the ‘effective operation’ of the Para 6 system. In this connection we would request the Chair to consult with concerned Members in order to ascertain the obstacles and prepare recommendations for effective implementation of the Para 6 system. These recommendations could then be considered in the year end meting of the TRIPS Council as a part of the Annual Review.
India, Brazil raise EU seizure of generics in transit in TRIPS council
The Economic Times reports:
… The EU defended the actions of the Dutch authorities, claiming they were acting for the “benefit of mankind”, and said it would continue to do so, as the issue of counterfeit drugs is a public health issue. The EU Customs regulations are in complete conformity of the TRIPS agreement and the WTO disciplines. The European Commission claimed that one-third of the four million counterfeit medicines seized by EU authorities come from India.
Brazil stated that though both countries brought up what they considered was a serious violation of WTO rules at the General Council, as the TRIPS council was the forum dealing with intellectual property matters it could give a better analysis of the factual circumstances of the episode and legal implications. Seizure of goods in transit, regardless of if they were medicines or not, on grounds that they could violate IP rights registered in the country of transit, violates the GATT Article V and other GATT obligations. It is up to Brazil, and not any other country, to inspect whether the goods that Brazil was purchasing were substandard or fake.
Dutch authorities have been regularly acting ex-officio, based on EU procedures of 2003 on the infringement of IP rights, said Ambassador Roberto Azevedo, adding this was a case of extraterritorial application of Dutch patent rights.
Well, the EU is interpreting its action as an anti-counterfeiting exercise. I wondered in an earlier post about whether the EU seizure was an anti-counterfeiting action or an anti-infringement action. This clarifies that the counterfeiting issue was important. Here is a link to an earlier post that mentioned the ongoing disagreements surrounding the work of the WHO agency IMPACT or International Medical Products Anti-Counterfeiting Taskforce.
More posts on this issues can be found under the category public health
Prashant Reddy of SpicyIP has an interesting post on the Indian government’s position on the IMPACT negotiations, read here
Where will cars get made?
In his speech to Congress, Obama made the following statement on bail-outs for the US automobile industry:
As for our auto industry, everyone recognizes that years of bad decision-making and a global recession have pushed our automakers to the brink. We should not, and will not, protect them from their own bad practices. But we are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win. Millions of jobs depend on it. Scores of communities depend on it. And I believe the nation that invented the automobile cannot walk away from it.
None of this will come without cost, nor will it be easy. But this is America. We don’t do what’s easy. We do what is necessary to move this country forward.
This immediately brought back to my mind, somewhat “undiplomatic” comments made by Indian trade minister Kamal Nath last year when he declared during the July Doha talks that "The future of automobiles is not in Detroit or Stuttgart, it’s in Asia.". Apparently, Nath had once stated in an interview to Outlook Magazine:
The developed countries must understand that the rules of trade and the leverage that they got from trade have always been in their favour. And these countries, which are the champions of globalisation, are now realising that they are no longer globally competitive, whereas countries like India, which are becoming globally competitive, have started demanding that there should be no curb on globalisation. So they (the developed world) are looking at various ways and means to ensure that there is no change in this balance of leverage. So I said where industrial products are concerned, I am going to protect my infant industries, protect my automobile industry because no more can you make automobiles in Detroit and Stuttgart and sell them in India. You have to make your automobiles in India.
A time will come when the automobiles will be made in India and sold in Stuttgart and Detroit. This is how the trade winds are changing. So my position on industrial products is clear: tell me how much of your duties and tariffs you will reduce and as per the WTO principle, I will reduce it slightly less. If they say they will reduce it by 50%, then I will do so by 40%. But it can’t be that they do (reduce their tariffs) by 20% and expect us to reduce it by 70%.
Watch out for some big battles over where cars will get made – in the land that invented them or where they can get made cheaper! Politics often trumps economics and therefore I think cars will continue to be made both in the US and in India and elsewhere. Who will own the car companies is quite another question of course.
Indian exports and imports fall, trade declines, rupee falls, trade deficit wavers, huge job losses predicted and elections loom
The Economic Times reports:
… India’s exports tumbled 15.9% in January — its fourth straight monthly fall — and the acceleration in the pace of its decline amid a deepening recession in key markets such as the US, Europe and Japan has put into doubt prospects of a near-term revival.
Economists expect the downward trend to continue for the remainder of the current fiscal year to end-March and even spill over into the next fiscal. “The export figures for February are expected to be on the same line as the January figures. There is a contraction in world demand and it is obvious that exports will get affected,” a senior government official said.
Merchandise exports fell to $12.38 billion in January against $14.72 billion in the same month a year ago. The hardest-hit sectors include handicrafts, carpets, cotton yarn & fabrics, gems & jewellery, computer software, coal and minerals, oil meals and rice.
Providing further proof that the Indian economy was slowing down, imports also moved into negative territory for the first time this fiscal year, falling 18.1% in January, with non-oil imports slipping by 0.5%. The trade data comes close on the heels of weaker third quarter economic growth figures of 5.3% and a 2% drop in industrial production.
The sharp drop in imports had a flattering effect on the trade deficit, which at $6.07 billion in January 2009 compared favourably with $7.84 billion in the same month a year ago. …
AFP has more on the job losses and elections link:
India’s trade performance is of critical concern to the Congress-led government as the export sector is one of the country’s biggest employment generators.
The export dive, underlining the slowdown in India’s buoyant economic expansion, came as India’s election commissioner announced that national polls would be held in stages from April 16 until May 13.
Imports tumbled 18.2 percent to 18.46 billion in January, falling for the first time this fiscal year, data showed. Oil imports plunged 47.5 percent from a year earlier to 4.46 billion dollars.
Imports are falling because of a "slowdown in industrial production which is growing at close to zero percent," as well as a downturn in domestic demand and a fall in global commodity prices, said Crisil principal economist D.K. Joshi.
Last Friday, the government reported India’s economy expanded by 5.3 percent in the third quarter to December, down from 8.9 percent in the same period a year earlier.
However, the drop in imports helped the trade gap narrow to 6.1 billion dollars in January from 7.8 billion dollars a year earlier.
The commerce ministry last week lowered its export target for this fiscal year to March 31, citing the deepening global economic slowdown.
The ministry cut its export goal for this year to 170 to 175 billion from an initial target of 200 billion dollars, projected when the global economy was booming.
"In an interconnected world, India cannot escape unscathed" from the global recession, Commerce Minister Kamal Nath said.
India logged 30 percent year-on-year export growth between April and September last year. But foreign shipments started shrinking in October as the worldwide financial crisis set in.
Nath, however, set an export target for the 2009-10 financial year of 200 billion dollars, the same as he had initially forecast for this financial year, insisting the outlook would pick up.
The Indian government has announced various measures to try to shield exporters from the slump including cheaper financing and duty refunds.
The Federation of Indian Exporters Association has forecast 10 million job losses in the export sector to the end of March.
India in the USTR 2008 Annual Report – a spotlight on India-US bilateral trade ties
The USTR has released its 2009 Trade Policy Agenda and 2008 Annual Report (these can be accessed here) and the section on India would be of interest to this blog’s readers. This is extracted below:
5. India
a. General
The United States and India completed another year of active dialogue on trade policy in 2008. The bilateral trade agenda continued to expand to support the significant opportunities for bilateral trade and investment that U.S. and Indian companies are pursuing. The Civil Nuclear Agreement signed on October 10, 2008, opens the door even wider for U.S. exports to help India meet its tremendous energy needs. That said, many challenges to trade and investment in India persist, and USTR continued to work with the Indian government to address such concerns as India’s tariff and tax regime, intellectual property rights policies, investment climate and regulatory hurdles. India continues to limit market access in various sectors through non-tariff barriers such as high border taxes and tariffs, foreign direct investment caps, non-transparent procedures, and discriminatory treatment of imports. Despite these barriers, trade expanded rapidly. In 2008, bilateral goods trade totaled $45 billion. Bilateral services trade totaled $19 billion in 2007.
b. Trade Dialogue
Ambassador Schwab and India’s Minister of Commerce and Industry Kamal Nath convened the fifth ministerial-level meeting of the United States-India Trade Policy Forum (TPF) in February 2008 in Chicago, Illinois. The discussions under the TPF cover bilateral trade, investment and related issues and also address multilateral issues such as the ongoing WTO Doha Round negotiations. The TPF is part of the overall Economic Dialogue between India and the United States. Through regular dialogue under the TPF, the United States and India seek to remove impediments to bilateral trade and investment by anticipating potential trade problems and jointly resolving concerns.
The TPF serves as the umbrella for five Focus Groups: Agriculture, Tariff and Non-Tariff Barriers, Services, Investment, and Innovation and Creativity (focusing on intellectual property rights issues). Ongoing Focus Group discussions in 2008 addressed priority issues such as foreign direct investment caps, intellectual property rights protection and enforcement, restrictive Indian telecommunications policies and market access for a wide range of manufactured and agricultural products and services. Noteworthy developments in 2008 included the agreement to launch negotiations on a bilateral investment treaty and India’s withdrawal of certain import restrictions on fresh fruit.
Another development in the 2008 bilateral U.S.-India trade dialogue was the Private Sector Advisory Group’s (PSAG) identification of key policy issues on which it would provide strategic recommendations and insights to the TPF. The membership of the PSAG includes trade experts and representatives of private sector organizations in the United States and India with in-depth knowledge of international economic and trade policy. The PSAG identified completion of a bilateral investment treaty as its top recommendation.
In addition to the February 2008 TPF meeting, Ambassador Schwab and Minister Nath met a number of times in the context of the Doha Round negotiations in an effort to find common ground in the pursuit of an ambitious outcome.
With regard to intellectual property rights, the United States has been working constructively with India to improve its IPR regime. The U.S. dialogue with India takes place through the TPF’s Focus Group on Innovation and Creativity, the Commerce Department-led High-Technology Cooperation Group, and work by the U.S. Government’s Intellectual Property attaché stationed in New Delhi and other government officials from multiple U.S. Government agencies. There has been some progress in India’s protection of intellectual property rights, including through the introduction of the proposed Drugs and Cosmetics (Amendment) Bill 2008 that will increase penalties for spurious and adulterated pharmaceuticals, and create a Customs recordation system. However, India still needs to improve its copyright regime to address issues related to protection of digital works on the Internet, strengthen its patent regime, including by clarifying the scope of patentable subject matter, provide effective data protection for pharmaceutical and agricultural chemicals, and increase enforcement against piracy and counterfeiting.
Indian weavers oppose anti-dumping duty by Indian authorities
The Times of India reports that Indian powerloom weavers from Surat city are organizing against the possibility of the Indian antidumping authority imposing anti-dumping duties on imports of Full Draw Yarn from China, Thailand, Taiwan and Vietnam. The story reports:
In a meeting held on Saturday under the aegis of Federation of Indian Art Silk Weaving Industry (FIASWI), weavers said the anti-dumping duty on FDY would exploit the domestic yarn market and domestic spinners would monopolise the trade.
Sources said the finance ministry is yet to issue a notification on anti-dumping duty on FDY. They (ministry) have given 40 days period for suggestions and objections from the industry on the proposed duty.
Meanwhile, the weavers have decided to raise fund from industry stakeholders in order to contest the issue in Supreme Court and World Trade Organization. They plan to hire a cost accountant, a company secretary and lawyers to present their case before the court.
"We can point out various discrepancies in the preliminary finding of the government on the anti-dumping duty law on FDY. We will submit the discrepancies in our case before SC and WTO," said Ashok Jirawala, president, Varachha Weavers’ Association.
Sources said, weavers have heaved a sigh of relief as election dates are likely to be announced in a day or two and this means delay in implementation of anti-dumping duty.
"The implementation of anti-dumping duty will take another three to four months. Till then the actual users (weavers) have the liberty to import yarn provided they have import licences," said Arun Jariwala, chairman, FIASWI.
The preliminary findings of the Directorate-General of Anti-Dumping and Allied Duties can be accessed here. The investigation was initiated on a complaint by the Association of Synthetic Fibre Industry and the outcome is now being challenged by the domestic users of the imported goods.
India creates Traditional Knowledge Digital Library to fight bio-piracy
Indian scientists have completed an eight-year task of translating and compiling Indian traditional knowledge into a database (that lists over 200,000 treatments and extends to 30 million pages) to prevent patents being granted on this knowledge by overseas patent jurisdictions. The library which has an online home will be made accessible to patent examiners in the European Patent office to prevent attempts at patenting existing traditional knowledge. The EPO and the Government of India have entered into an access agreement that should be interesting to look at. Here is the news item from the website of the EPO:
India’s Traditional Knowledge Digital Library (TKDL): A powerful tool for patent examiners
On 2 February 2009 the Indian government granted access to its Traditional Knowledge Digital Library (TKDL), a unique database that houses the country’s traditional medical wisdom, to examiners at the European Patent Office (EPO).
EPO examiners will use the extensive database to prevent attempts at patenting existing traditional knowledge, a practice described as "bio-piracy".
The co-operation between India and the EPO comes at a time when many countries are struggling to protect traditional and respected knowledge against exploitation, primarily in the pharmaceutical sector.
"We take this seriously. Countries with rich traditional and holistic knowledge often have to spend lots of money on opposition procedures. The database could prevent that by helping the EPO to grant properly scoped patents", said Paul Schwander, Director of Information Acquisition at the EPO.
An improved patent granting process
Experts at the EPO say that access to the 30-million-page database will help to correctly examine patent applications relating to traditional knowledge.
"With the TKDL, examiners have improved access to background information at an early stage of patent examination", Schwander said. "In the old scenario, a patent may have been granted and the countries had to present evidence against it after the fact".
Prominent cases of patent disputes include a US patent on the wound-healing properties of turmeric (revoked in 1997) as well as an anti-fungal product from the Indian Neem tree (revoked in 2008). Both herbal practices were evidence of traditional knowledge and the patents were rescinded.
In both instances, the Indian government needed to prove that the patented methods were not novel and were based on traditional knowledge. The process to challenge the granted patents proved lengthy and cumbersome as some traditional knowledge had only been documented in Sanskrit or other ancient writings and thus required extensive translation.
With the advent of the TKDL however, the once onerous process has been transformed into an organised and objective system. The texts, many of which are hundreds of years old, offer extensive details about ancient medical practices and can now be accessed digitally.
Moreover, the TKDL has translated these texts – first written in Hindi, Sanskrit, Arabic, Persian and Urdu – into English, French, German, Japanese and Spanish, granting easier accessibility to examiners.
A unique encyclopaedia
The TKDL is the result of a US$ 2 million joint project between five Indian government organisations, including the Council of Scientific and Industrial Research (CSIR) and the National Institute of Science Communication and Informative Resources (NISCAIR).
Under the direction of Vinod Kumar Gupta, the head of NISCAIR, more than 150 experts in traditional medicine, law and computer science spent the past ten years arranging and classifying the TKDL.
Highlights of the vast database include:
- 54 authoritative textbooks on ayurvedic medicine
- Nearly 150,000 ayurvedic, unani and siddha medicines
- Over 1,500 physical exercises and postures in yoga, more than 5,000 years old
Protecting prior art
The TKDL allows examiners to compare patent applications with existing traditional knowledge. New patent applications need to demonstrate significant improvements and inventiveness compared to prior art in their field. If the medical use of an herb is a traditional practice, and thereby public knowledge, it is considered prior art under EPO regulations.
"Even if a treatment is only available in Sanskrit in an Indian library, it belongs to the prior art because it had been disclosed openly in the public domain at an earlier point in time", Schwander said.
If a company seeks to patent the medicinal use of an herb listed in the TKDL, EPO examiners conduct a thorough investigation. "In some cases this will lead to a reduction of the scope of the patent or its refusal", Schwander said.
However, the company may still be granted a patent on a new method for industrial-scale production of the active ingredient of the herb, for example, if this process is new and inventive, Schwander explained.
"The public may perceive this as bio-piracy, but there is a difference. The patent applicants would not claim ownership of the active ingredient itself. The scope would then be limited to a method of producing or isolating the ingredient".
Shedding light on gray areas
The TKDL is so precise that it lists the time, place and medium of publication for prior art. This new catalogue system, called the Traditional Knowledge Resource Classification (TKRC), ensures meticulous documentation.
The classification sheds light on what used to be considered gray area. Before the advent of the TKDL, any bio-prospector for a pharmaceutical company could dig up ancient medical wisdom and lay claim to the practice’s healing ability without consequence.
Now, thanks to the TKDL, patent examiners can prove exactly when and where a medical treatment became public knowledge, stymieing would-be bio-pirates.
A collection aimed at Patent Offices
Examiners at the EPO will use secure access methods to work with the TKDL. To measure efficiency, the EPO will count cases in which the database proved helpful.
Other countries have also opened their digital archives on traditional medical knowledge to EPO patent examiners. In 2008, the Chinese patent office (SIPO) granted the EPO access to its 32 000-entry database on traditional Chinese medicine.
"It’s a win-win situation for all involved. These databases help the EPO improve the relevance and content of prior art searches, while the countries holding traditional knowledge can protect their assets against misappropriation", Schwander said.
A Mint story gives more background:
The Indian government is also in talks with the US Patents and Trademark Office, or USPTO, to extend the initiative to that country.
The Council for Scientific and Industrial Research, or CSIR, India’s largest state-managed research agency, will begin sharing the home-grown catalogue with EPO later this month. CSIR and EPO recently signed an access agreement to this effect. This will likely result in at least 40 patent filings in Europe getting rejected, which could have otherwise passed muster.
“The EPO doesn’t give a patent for an invention which has already been known in public anywhere else,” Rainer Osterwalder, director, media relations, EPO, told Mint by email.
The Traditional Knowledge Digital Library, or TKDL, has been created by the National Institute of Science Communication and Information Resources, or Niscair, a CSIR body, and contains a 24-million-page searchable database that translates text from Sanskrit into English, German, French, Spanish and Japanese.
“TKDL provides a new major source…in technical fields that are sometimes concerned with questions of traditional knowledge,” Osterwalder said.
CSIR has collaborated with the health ministry’s department of Ayush (Ayurveda, yoga and naturopathy, unani, siddhi and homeopathy) to make this happen.
A CSIR official said that though 2,000 existing patents can now be challenged, there were no plans to initiate litigation. “This is meant as a deterrent…though technically we can initiate litigation saying that these patents are based on well-known formulations, it would be too expensive and long-drawn,” the official said on condition of anonymity.
“This is a very positive step for us in protecting traditional knowledge. It’s a big achievement,” Samir Brahmachari, director general of CSIR, said over the phone. The next step is to take this initiative to the US. S. Jalaja, secretary, department of Ayush, said: “This is a big breakthrough for us and we are also in talks with the United States Patent and Trademark Office for a similar agreement.”
This will likely result in at least 40 patent filings in Europe getting rejected
Patenting of products that are based on of India’s traditional knowledge has long been an issue the government has been struggling to resolve. In a widely reported case, EPO in 1995 granted a patent on the anti-fungal properties of neem. India opposed the patent, which was finally revoked and invalidated after 10 years of litigation. Again in 1995, USPTO had granted a patent on the wound healing properties of turmeric that was revoked in 1997.
“India did fight successfully the revocation of patent on wound healing property of turmeric at United States Patent and Trademark Office and (a) patent on anti-fungal properties of neem at European Patent Office,” Niscair director V.K. Gupta, who is also lead coordinator for the project, said in a 2006 report. “However…(a) legal battle on revocation is extremely expensive and time consuming.”
For anything to be granted a patent, the applicant must prove that it is novel and not previously known. “Indian traditional knowledge is prior art, which means it is already known publicly. Hence, once TKDL opens out to EPO, anyone applying for a patent on which we hold traditional knowledge will not be successful,” said Elizabeth Varkey, an advocate at the Kerala high court.
“Any patents that have been granted already and fall under TKDL can also be revoked, though that would be a long, expensive process,” she said.
EPO, however, is unsure of the extent to which TKDL will be applicable. “Many cases affected by aspects of traditional knowledge are occurring in the field of medicinal preparations. We estimate that at the EPO, about 100 patent applications per year are related to such aspects, but not all of them relate to subjects covered by TKDL,” Osterwalder said.
There is an argument that the database be used other ways too. “The government should also think about negotiating access rights (to TKDL) to private parties and other non-governmental entities. Given that the new chemical entities pipeline is drying up, innovators need to focus more on traditional knowledge that offer potentially unique insights for new drugs,” said Shamnad Basheer, professor of intellectual property law at the National University of Juridical Sciences, Kolkata.
“Also private parties could then challenge patent applications that misappropriate Indian traditional knowledge.”
The comment by Shamnad Basheer quoted above on granting access rights to private parties and NGOs is interesting but likely to raise issues of compensation for use of this knowledge by private parties. The codification of this knowledge in a repository owned by the government will have ramifications for who will now benefit from this.
Capacity building in trade policy for Indian diplomats
The Foreign Service Institute in New Delhi is where Indian diplomats learn about trade policy. Here is the Business Standard story:
Where diplomats learn to talk bread
KS Manjunath / New Delhi February 23, 2009, 0:22 IST
Diplomacy in a globalised world increasingly is about mastering the Heckscher-Ohlin theorem, trade policy, absolute and comparative advantage, and economics of scale. With its year-round programmes, the Foreign Service Institute (FSI) in the capital is the place where an Indian Foreign Service (IFS) probationer with a background in veterinary science is taught the finer aspects of economic diplomacy.
The institute’s international economics and economic diplomacy module is designed not just for the heterogeneous annual batch of probationers. Every year, there are three to four courses for Assistants and three courses for Section Officers, who are taught to handle trade enquiries and disputes, conduct surveys to gather data and arrange buyer-seller meets. And Director-rank officers have a mid-career distance training programme on WTO negotiations and the Indian economy.
But the lion’s share of coursework is for probationers. They get the basics of our trade policy, finer points of economic ties with regional trading partners and big global players, and India’s institutional set-up for export promotion.
The FSI has linkages with IIM-Bangalore, the ministry of commerce, RBI, Exim Bank, Sebi, and various chambers of commerce and some industries. The course is under constant review, says FSI Dean, Ajai Choudhry.
Further, over the years the institute has conducted 47 courses for foreign diplomats, teaching them regional economic issues and on international financial institutes such as the IMF and WB. With such programmes for foreign diplomats, India is not just educating them but also generating goodwill, notes the Dean.
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