EU demanding TRIPS plus in FTA with Mercosur

EU-Mercosur FTA is currently at standstill partly due to demand by EU for stronger IPR protection. In specific, EU is asking for patent term extension for 5 years and 10 years of data exclusivity. EU is also demanding for border control measures that will allow customs officials to detain imports, exports and in transit goods suspected of IP infringement. Mercosur (Argentina, Brazil, Paraguay and Uruguay) has rejected these TRIPS plus standards and has asked EU for impact studies in other countries.

The next round of talks between the EU and Mercosur are set to take place in Brussels in July 2011, followed by negotiations scheduled for November in Uruguay.

TRIPS-Plus IP demands from EU could halt South American trade deal

13 June 2011

scripintelligence.com

Francesca Bruce Free trade negotiations between the EU and the Latin American trade bloc Mercosur (Argentina, Brazil, Paraguay and Uruguay) are at a standstill, in part at least because of demands from the EU that Mercosur introduce tougher measures to protect intellectual property rights. At a time when Brazil is endeavouring to become more self-sufficient in pharmaceutical production and Argentina is imposing bans on drug importation ( scripintelligence.com, 6 June 2011), it is unsurprising that Mercosur opposes EU proposals for 5-year patent extension for drugs and 10-year data exclusivity.

Should Mercosur accept the terms of the EU’s IP text, the impact on local companies “will be completely negative,” says Dr Daniel Gomez, chair of biobusiness at the Quilmes National University in Argentina. “The new standards would affect competition, restricting the number of medicines on the market – pharmaceutical markets in Mercosur are highly competitive.” He added that generic companies would be unable to produce many medicines until patent or data protection expires. Meanwhile, EFPIA, the European Federation Pharmaceutical Industries and Associations, declined to comment on the negotiations but said that it supports the EU’s external trade strategy that endeavours to promote European growth and competitiveness.

Negotiations of “ambitious free trade agreements are of mutual interest to both parties, it said.”We hope the parties can progress towards an agreement that is significant for EU’s pharmaceutical Industry, and which can support innovation towards improved and needed healthcare in the world,” said the association. Sources close to the pharmaceutical sector in Mercosur say, unsurprisingly, that industry opinion on the proposals is divided. While R&D-based multinationals support a deal that could give them added protection, local companies oppose it, claiming it would affect their capacity to manufacture generics.

Demands

The free trade talks resumed last year after hitting a brick wall in 2004. Mercosur countries have already signed up to the World Trade Organisation Trade Related Aspects of Intellectual Property (TRIPS) agreement, but the EU’s demands go beyond the requirements of this agreement, and are “TRIPS Plus,” says Dr Gomez. During the last round of talks in May, the EU presented a text on IP rights that included a provision to allow manufacturers to claim up to five years extra patent protection to compensate for delays in registering a drug. This would extend patent protection beyond the 20 years that Mercosur countries, like other TRIPS signatories, currently offer.

Data exclusivity is another contentious topic. The EU wants Mercosur countries to introduce 10 years’ protection for undisclosed regulatory approval data. At present, no Mercosur country offers data exclusivity on medicines for human use. Some groups, such as public health advocates, argue that data protection is a TRIPS Plus measure, but others, including some industry commentators, claim that a provision on data protection in the TRIPS Agreement includes data exclusivity.

Thirdly, the EU wants Mercosur countries to adopt measures similar to the EC regulation 13/83/2003 on border control, which allows customs officials to detain imports, exports and in transit goods suspected of IP infringement. This regulation is currently under review in Europe following uproar when Dutch authorities seized in-transit generic medicines bound for developing countries. Mercosur countries currently take action largely on imported goods suspected of trademark violation.

However, Mercosur has rejected the text on IP and has asked the EU to justify requesting TRIPS Plus standards, says Dr Gomez. Before it proceeds with any negotiations, Mercosur wants to see impact studies on how similar trade deals have affected other countries although, according to Dr Gomez, the EU claims that such studies do not exist.

Impact

Europe-based industry would stand to benefit from such measures. Mercosur is an increasingly important market for the EU and ranks eighth among its trading partners, according to the European commission. EU exports to Mercosur countries totalled €27.2 billion in 2009, and pharmaceutical exports appear to play an important role.

For example, Europe, including non EU countries, is Argentina’s biggest source of pharmaceutical imports, according to Argentinian government figures. The EU, lead by Germany, is responsible for 40% of the country’s total imports of finished pharmaceuticals and around 29% of the active ingredients imported, say industry sources.

Meanwhile, the EU has traditionally been a very important export market for Mercosur and a big source of European investment. However, the domestic industry in Mercosur countries could stand to lose through a deal. Both Argentina and Brazil have very strong local pharmaceutical sectors, which largely produce generic medicines. Both governments are focusing on bolstering their national industries to reduce dependence on imports. Paraguay and Uruguay, too, are home to domestic companies that specialise in generic medicines, although to a lesser extent.

Public health would therefore suffer too as medicine prices would rise with patients and social security systems having to pay more for their medicines, he said. Medecins Sans Frontières worries that the EU’s IP requirements could prevent a quick and effective response to public health emergencies. “Brazil has set a precedent in how it responded to the HIV/AIDS epidemic and reduced the price of essential medicines. Adopting TRIPS Plus measures will make it difficult to access generic versions of new antiretrovirals,” said Gabriela Costa Chaves, coordinator of Medecins Sans Frontières’ campaign for access to essential medicines in Brazil.

She added that Mercosur was giving signals that it would not be prepared to adopt TRIPS Plus measures and that she hoped the bloc would set a precedent in rejecting such provisions. “This would send a strong message to the EU about how it negotiates with trading partners in the developing world.”

The EU has recently come under fire for demanding that India increase IP protection with TRIPS Plus measures, relating to supplementary protection certificates, patent linkage and data exclusivity.

The EU also faced criticism after Peru and Colombia agreed to heighten their intellectual property protection, with critics of that particular deal claiming that the EU had effectively broken up the unity of the Andean Community of Nations. Bolivia refused to take part in talks from the outset and Ecuador later dropped out of talks in response to a “contentious banana issue”, although IP had proved a stumbling block too ( scripintelligence.com, 24 July 2009).