Cuba

Trade and Health at the WTO’s 12th Ministerial Conference

· November 22, 2021 · COVID-19 vaccinations, trade and health · , , , , , , , , , , , , , , , , , , , , , , , , , , · No Comments

An area of focus the last two years at the WTO has been addressing the COVID-19 pandemic. This has included various statements from Members, monitoring by the Secretariat of export and import actions either impeding or expediting the flow of medical goods and services, and various proposals for actions to address the pandemic or for future preparation. The proposal for a waiver from various TRIPS obligations from India and South Africa (and now supported by a range of countries) is one proposal. A number of countries (Ottawa Group) have put forward a proposal for a trade and health initiative to permit a more rapid response by WTO Members in the future. See COVID-19 AND BEYOND: TRADE AND HEALTH, COMMUNICATION FROM AUSTRALIA, BRAZIL, CANADA, CHILE, THE EUROPEAN UNION, JAPAN,
KENYA, REPUBLIC OF KOREA, MEXICO, NEW ZEALAND, NORWAY, SINGAPORE AND SWITZERLAND, 24 November 2020, WT/GC/223; November 27, 2020:  The Ottawa Group’s November 23 communication and draft elements of a trade and health initiative, https://currentthoughtsontrade.com/2020/11/27/the-ottawa-groups-november-23-communication-and-draft-elements-of-a-trade-and-health-initiative/. The WTO Director-General and the Members have engaged in a number of meetings with other multilateral organizations and the private sector exploring options for expanding production of COVID-19 vaccines and expanding distribution to countries in need.

Amb. David Walker of New Zealand has been tasked to work with Members to see if a declaration on trade and health can be agreed to at the 12th WTO Ministerial Conference that starts on November 30.

A former Deputy Director-General of the WTO, Alan Wolff, provided his thoughts on likely outcomes at the 12th Ministerial during a WITA virtual event on November 18th and opined that a declaration on trade and health was likely only if there was some resolution of the waiver proposal for vaccines. See PIIE, Alan Wm. Wolff, Defining Success for MC12, 18 November 2021, Presented at WITA, slides 5, 7, 10-11. Slide 10 is presented below.

I have written before on the challenges of the waiver of TRIPs obligations proposal put forward by India and South Africa. See, e.g., November 2, 2020:  India and South Africa seek waiver from WTO intellectual property obligations to add COVID-19 – issues presented, https://currentthoughtsontrade.com/2020/11/02/india-and-south-africa-seek-waiver-from-wto-intellectual-property-obligations-to-address-covid-19-issues-presented/.

The EU and some others have not agreed to a waiver but have focused on making compulsory licensing more effective. See, e.g., DRAFT GENERAL COUNCIL DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC HEALTH IN THE CIRCUMSTANCES OF A PANDEMIC, COMMUNICATION FROM THE EUROPEAN UNION TO THE COUNCIL FOR TRIPS, 18 June 2021, IP/C/W/681.

Thus, the outcome on trade and health heading into the Ministerial is uncertain. See WTO News Release, Members to continue discussion on a common COVID-19 IP response up until MC12, 19 November 2021, https://www.wto.org/english/news_e/news21_e/trip_18nov21_e.htm.

A driver behind the waiver proposal has been the limited availability of vaccines to least developed and some developing countries. Vaccine equity is the shorthand term for the concerns about availability and affordability of vaccines for all people. While the issue of availability and access is complicated and beyond just WTO competence, the world’s vaccine manufacturers have ramped up capacity and production, governments have belatedly gotten involved in expanding donations and some of the major bottlenecks to getting vaccines to COVAX in 2021 appear to be resolved going forward, though many LDCs and developing countries will not get large volumes of vaccines until 2022.

The pandemic and the challenges of ramping up production and ensuring access to all people has been the subject of dozens of my prior posts. See, e.g., October 12, 2021: See WTO Information Notes on COVID-19 Vaccine Production and Potential Bottlenecks, https://currentthoughtsontrade.com/2021/10/12/wto-information-notes-on-covid-19-vaccine-production-and-potential-bottlenecks/; September 27, 2021:  Global efforts to expand COVID-19 vaccine production and distribution — an all hands on deck effort being led by the U.S. and EU with active support of many governments and others, https://currentthoughtsontrade.com/2021/09/27/global-efforts-to-expand-covid-19-vaccine-production-and-distribution-an-all-hands-on-deck-effort-being-led-by-the-u-s-and-eu-with-active-support-of-many-governments-and-others/; May 6, 2021:  COVID-19 vaccines — role of WTO and developments at May 5-6, 2021 General Council meeting on TRIPS Waiver, https://currentthoughtsontrade.com/2021/05/06/covid-19-vaccines-role-of-wto-and-developments-at-may-5-6-2021-general-council-on-trips-waiver/.

Prior to 2021, global capacity for all vaccines was estimated at 5 billion doses/year. In 2021, COVID-19 vaccine production alone will be around 10 billion doses. As of November 20, 2021, UNICEF’s COVID Vaccine Market Dashboard shows 8.624 billion doses delivered to countries and territories of which COVAX deliveries were 524 million (and 565 million delivered or cleared for shipment). https://www.unicef.org/supply/covid-19-vaccine-market-dashboard (visited on November 20, 2021).

Administration of vaccine doses to populations has been less than doses delivered. Data from Blomberg’s COVID Vaccine Tracker as of November 19, 2021 9:34 a.m., shows 7.63 billion doses administered. https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution/ (visited November 20, 2021). From the Vaccine Tracker data, there are a large number of countries or territories (95) that have administered 100 or more doses to every 100 people in the country. As major vaccines like Pfizer and Moderna need two shots, and as some countries have started supplying boosters, data are not necessarily comparable across countries in terms of percentage of people vaccinated. But the doses administered per 100 people is a reasonable measure of equitable distribution. A review of the data do show large differences in administration of doses. However, which countries or territories have administered large numbers of doses/100 people is not tied to a country or territory having vaccine production capacity, nor is it tied to level of income in the country or territory.

For example, the top ten countries or territories for administering doses of COVID-19 vaccine in the Bloomberg report were:

Gibraltar, 279.2 doses/100 people

Cuba, 244.2 doses/100 people

Chile, 207.5 doses/100 people

Maldives, 204.8 doses/100 people

UAE, 201.6 doses/100 people

Bahrain, 191.7 doses/100 people

Uruguay, 190.7 doses/100 people

Malta, 185.9 doses/100 people

Cayman Islands, 183.7 doses/100 people

Seychelles, 182.7 doses/100 people

China ranked 16th at 172.1 doses/100 people; the United States ranked 66th at 134.0/100 people; EU members were generally greater than 100 doses/100 people but had several member states below that (Bulgaria at 45.4 doses/100 people; Romania at 73.0 doses/100 people) and had an overall average of 138.7. Morocco had the most doses/100 people for a country from Africa — 136.5.

Twenty-eight countries or territories have administered between 75 and 99.4 doses/100 people (including India at 84.6 doses/100 people); twenty-three countries or territories have administered between 50 and 73 doses/100 people (including Rwanda at 65.2 doses/100 people and Botswana at 52.8 doses/100 people); twenty-two countries or territories have administered between 25 and 47.1 doses/100 people (including South Africa at 41.4 doses/100 people); thirty-three countries or territories have administered between 0.2 and 18.7 doses/100 people.

Obviously, there are a large number of countries (including some developed countries) where vaccines administered are far too limited. For many developing and LDC countries with low numbers of doses administered, the failure of supplies to be delivered to COVAX for shipment is certainly a significant cause. India’s need to keep vaccine doses at home was a major cause of the shortfall to COVAX in 2021, but not the only reason.

Belatedly larger volumes of vaccine doses are making it to those in greatest need. The increases flow from a combination of increased production volumes globally, India resuming exports, increases in donations from a number of countries and more. For example, the UNICEF data on deliveries shows that there have been some significant increases in doses available to the countries or territories with very low doses administered levels. For example, Nigeria shows only 4.6 doses/100 people administered in the Bloomberg vaccine tracker data. The UNICEF vaccine market dashboard shows roughly three times the number of doses delivered to Nigeria as are reported administered (29.689 million vs. 9.254 million). Benin has 1.968 million doses delivered and just 0.347 million administered (2.9/100 people). It is also true for countries receiving doses from COVAX with higher existing doses administered. For example, Zimbabwe which had 42.3 doses administered per 100 people in the Bloomberg data showed nearly twice as many doses delivered in the UNICEF data as had been administered (11.322 million doses delivered vs. 6.31 million doses administered).

What the two reports suggest is that while vaccine equity is a real issue, the causes of the very different experiences of different countries or territories in the same general area are complex and not easily or completely understood by the current discussion. For example, Zimbabwe’s per capital GNI in 2020 was $1,090 and yet they had administered 42.3 COVID vaccine doses/100 people. Cameroon, with a per capita GNI in 2020 of $1,100, had COVID vaccines administered of only 2.4/100 people. Similarly, Morocco had a 2020 per capita GNI of $2,980 and COVID vaccines administered of 136.5/100 people. In comparison, South Africa with a much higher per capita GNI in 2020 ($5,410) had COVID vaccines administered at less than 1/3rd the rate of Morocco – 41.4 vs.136.5/100 people. Nigeria, with a 2020 per capita GNI of $2,000 had administered only 4.6 COVID vaccines/100 people.

Thus, those working on improving vaccine equity need to identify and address the other causes besides vaccine production and availability through COVAX in the coming months.

I paste below the data from the Bloomberg COVID Vaccine Tracker ranked in descending order of COVID vaccine doses administered per 100 people as of November 19, 2021.

Countryvaccines

WTO Information Notes on COVID-19 Vaccine Production and Potential Bottlenecks

· October 12, 2021 · COVID-19 vaccinations, Uncategorized, WTO Information Notes · , , , , , , , , , , , , , , , , , , , , , , , , , , , · No Comments

On October 8, 2021, the WTO released the latest in a series of Information Notes pertaining to the COVID-19 pandemic. The first one is entitled “COVID-19 Vaccine Production and Tariffs on Vaccine Inputs”. The purpose of the information note was to examine public information to see if import tariffs in any of the 27 major vaccine manufacturing countries could pose challenges or create “choke” points in vaccine production. The second Information Note is entitled “Indicative List of Trade-Related Bottlenecks and Trade-Facilitating Measures on Critical Products to Combat COVID-19” and is an update on an earlier version released 20 July 2020. Both Information Notes are linked to a WTO press release from 8 October. See WTO news, WTO issues papers on vaccine inputs tariffs and bottlenecks on critical COVID-19 products, 8 October 2021, https://www.wto.org/english/news_e/news21_e/covid_08oct21_e.htm

The second Information Note is the more important of the two papers as it identifies a range of challenges to the expedited movement of vaccines and inputs. However, the first paper is interesting in terms of identifying tariffs on critical materials in major producing countries. However, as the paper acknowledges, the analysis has its limitations.

” 2. TECHNICAL DETAILS
“The MFN applied tariffs were based on the dataset used for World Tariff Profiles 2021, and 2020
imports were based on the TDM dataset3. Even if the national tariff line data (i.e. eight-digit tariff
line codes) were available, beyond the standard HS six-digit level there is no uniformity of codes
across national tariff nomenclatures. Thus, even if only a portion of the HS six-digit code pertains to
the COVID-19 vaccine input, the data used in the analysis both for tariffs and imports were the
six-digit MFN tariff average and the total six-digit imports from the world. Preferential tariffs were
not taken into consideration and thus intra-EU imports, imports from partners of free trade
agreements (FTAs) or any other preferential imports were treated as if MFN tariffs were levied.
Furthermore, there was definitely an over-estimation of the import value of the inputs, since
identification of the national breakdown pertaining to the actual product used in vaccine
manufacturing cannot be easily done. Sometimes even within the most detailed national tariff line
(or specific product) code available (eight digits or longer), the product coverage does not
necessarily refer only to the specific vaccine input and includes non-vaccine-related inputs. While
tariff estimates can be arguably good enough,4 the same cannot be said of the estimated imports
value.” (footnotes omitted)

Certainly for the EU, U.S. and some others, many of the potentially dutiable imports will have been duty free from FTAs or other preferential partners. But the Information is nonetheless useful in flagging general categories of products important to vaccine production that have bound tariffs at 5% or greater. While neither the U.S. nor Japan have any such categories, many other vaccine producing countries have one, several or many product categories where bound tariffs are 5% or higher. Table 4 of the Information Note provides a useful summary of the findings made.

Table 2 of the Information Note presents a summary of the weighted average MFN tariff rate by country.
Thus, from a bound tariff perspective, some countries, particularly developing countries are assessing ordinary customs duties on materials needed for the production of COVIDE-19 vaccines at relatively high rates that at a minimum increase costs, making it more expensive to provide vaccines to the domestic population or export populations.

A detailed review of each of the 27 countries is provided in the WTO’s Vaccine Production and Tariffs on Vaccine Inputs which is attached to the first Information Note.

The second note is the more interesting as it reflects issues and suggestions from various stakeholders on how to expand production and access to vaccines, therapeutics and medical devices needed to combat COVID-19. The introduction to the Information note provides useful background.

“1. INTRODUCTION
“This information note seeks to facilitate access to information on possible trade-related bottlenecks and trade-facilitating measures on critical products to combat COVID-19, including inputs used in vaccine manufacturing, vaccine distribution and approval, therapeutics and pharmaceuticals, diagnostics and medical devices. It is not meant to be an exhaustive list of all specific trade measures, nor does it make any judgement on the effect or significance of the reported bottlenecks, nor on the desirability of implementing any of the suggestions on trade-facilitating measures.3

“The indicative list is based on issues identified and suggestions made by stakeholders at various events and consultations convened by the WTO, as well as with vaccine manufacturers in the context of meetings organized by the Multilateral Leaders Task Force on COVID-19,4 which includes the heads of the International Monetary Fund (IMF), the World Bank Group, the World Health Organization (WHO) and the WTO.5 This revision includes information as of 4 October 2021. Entries under each subheading are presented in no particular order. One common theme that emerges is that essential goods and inputs need to flow efficiently and expeditiously to support the rapid scaling up of COVID-19 production capacity worldwide. As manufacturers scale up production and establish new sites in different countries, the production network is not only becoming larger but also increasingly complex and international. The delay of a single component may significantly slow down or even bring vaccine manufacturing to a halt, so it follows that inputs need to flow expeditiously, and each node within the supply chain network needs to operate seamlessly with the others.” (footnotes omitted)

There are a large number of potential trade-related bottlenecks including export restrictions (13 WTO Members are reported to have one or more), such restrictions as applied by manufacturers to “fill and finish” sites, effect of such restrictions on clinical trials, high applied tariffs, customs administration challenges (no green channels for expedited clearance, limited hours of customs operation, treatment of non-commercial samples sent for testing ad quality control, import barriers/delays on manufacturing equipment), challenges in completing consular transactions.

There are also many bottlenecks identified from vaccine regulatory approval including when looking at WHO Emergency Use Listing, requirements for application/registration and authorization, inspection, release, post-approval changes, donations, EUA and regular approval, scaling up production and other issues.

The paper also identifies bottlenecks in the distribution of finished vaccines and immunization supplies, bottlenecks in trade in pharmaceuticals, bottlenecks in trade in diagnostics and other medical devices.

All in all, a daunting list of challenges the vast majority of which involve the importing country and the complexity of systems for approval of medical goods and vaccines.

The last four pages of the Information Note then identify “possible trade-facilitating measures” that could be taken to improve movement of goods. Because the information note is providing a summary of proposals put forward by stakeholders and is not an agreed set of steps by WTO Members, the note states that “no judgement is made on the desirability of implementing any of these suggestions.” Page 7. That said, many of the suggestions relate to streamlining import operations, e.g., through implementation of the Trade Facilitation Agreement, seeing that customs operates 24 hours/7 days a week, exemptions from export restrictions, harmonization of regulatory approaches and many more.

Conclusion

The Information Notes developed by the WTO provide useful information either from public sources, such as the bound tariff rates of COVID-19 vaccine input materials or summaries of information gathered from stakeholders at events looking at how to ramp up production and distribution of vaccines. It is clear that the challenges for all WTO Members in addressing the global pandemic are many and not easily addressed. The Information Notes provide a data base that can be used by WTO Members to see that the current pandemic is fully addressed in fact in the coming months, and that Members consider ways to prepare for a better outcome to future pandemics.

COVID-19 Vaccines — Bolivia seeks a compulsory license to produce a vaccine in a third country

· May 14, 2021 · COVID-19 vaccinations · , , , , , , , , , , , , , , , , , , , , , , , · No Comments

Back in February of this year, Bolivia provided notice that it intended to use the special compulsory licensing system as an importing Member under the Amended TRIPS Agreement. See NOTIFICATION UNDER THE AMENDED TRIPS AGREEMENT, NOTIFICATION OF INTENTION TO USE THE SPECIAL COMPULSORY LICENSING SYSTEM
AS AN IMPORTING MEMBER, IP/N/8/BOL/1, 19 February 2021.

On the 10th of May 2021, Bolivia filed a notice with the WTO seeking access to a COVID-19 vaccine through a compulsory license for production in a third country. The notice was posted on the WTO website on November 11 (IP/N/9/BOL/1) and the subject of a WTO news release on the 12th of May. See WTO, Bolivia outlines vaccine import needs in use of WTO flexibilities to tackle pandemic, 12 May 2021, https://www.wto.org/english/news_e/news21_e/dgno_10may21_e.htm. Bolivia’s two notifications are embedded below.

8BOL1

9BOL1

A translation from Google Translate (with a few tweaks) of the May 10 notice is provided below.

NOTIFICATION UNDER THE AMENDED TRIPS AGREEMENT

NOTIFICATION OF THE NEED TO IMPORT PHARMACEUTICAL PRODUCTS UNDER THE SPECIAL COMPULSORY LICENSING SYSTEM

Member(s) who present the notification

Plurinational State of Bolivia

Necessary product(s)

An estimated 15 million doses of COVID-19 vaccines. In particular, it is intended to import the vaccine Ad26.COV2.S, a replication adenovirus type 26 (AD26) vectorized vaccine incompetent that encodes a stabilized variant of protein S of the SARS-Cov-2. The Plurinational State of Bolivia reserves the right to import other vaccines.

Demonstration that the capabilities of manufacturing in the pharmaceutical sector are insufficient or nonexistant

[X] At the moment the Member does not have manufacturing capacity in the pharmaceutical sector.

[ ] The Member has found that its capacity in the pharmaceutical sector to meet the needs regarding the pharmaceutical product needed.

Information about how it has proved the lack of manufacturing capacities (enough) in the pharmaceutical sector

The Plurinational State of Bolivia has verified that it does not have the capacity to manufacture in the pharmaceutical sector vaccines against COVID-19 including the vaccine Ad26.COV2.S.

Is (are) the product(s) necessary (s) protected (s) by patent in the territory?

[ ] No.

[ ] Yes.

[X] To be determined. Insofar as they have been requested or granted patents for the necessary products, the Plurinational State of Bolivia intends to grant compulsory licenses, in accordance with Articles 31 and 31bis of the TRIPS Agreement.

Date of presentation of the notification

10 May 2021

The WTO news release is copied below.

“The government of Bolivia has formally notified the WTO of the country’s need to import COVID-19 vaccines, taking another step towards using flexibilities in WTO intellectual property rules as part of its pandemic response.

“Bolivia notified the WTO it needed to import 15 million doses of a vaccine under the legal system introduced in a
2017 amendment (https://www.wto.org/english/news_e/news17_e/trip_23jan17_e.htm) to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). That amendment, which created Article 31bis of the TRIPS Agreement, provides an additional legal pathway for import-reliant countries to access affordable medicines, vaccines and other pharmaceutical products.

“Bolivia’s submission follows through on its February notification signalling that it intended to exercise the flexibilities under the amendment.

“Bolivia’s notification opens up the possibility of importing the needed vaccines from any one of around 50 WTO members (https://www.wto.org/english/tratop_e/trips_e/par6laws_e.htm) that have put in place domestic laws providing for the production and export of medicines made under compulsory licence through this system.

“’This is an example of a WTO member seeking to make use of available tools under the TRIPS Agreement to respond to the COVID-19 pandemic, even as members seek to expand the range of options through the TRIPS waiver proposal,’ said Antony Taubman, Director of the WTO’s Intellectual Property Division. ‘This step provides one practical component of what could be a wider process of countries signalling urgent and unmet needs and encouraging a combined, coordinated response by international partners.’

“The WTO Secretariat has been encouraged by members in the TRIPS Council to provide any necessary technical assistance to facilitate use of the system to import pharmaceutical products manufactured under compulsory licence.”

The intersection of intellectual property rights and public health has been a topic of great interest and intense feelings at the WTO since its inception and resulted in an amendment to the TRIPS Agreement to address the needs of developing and least developed countries without pharmaceutical manufacturing capacity for certain products during emergencies. As the WTO news release notes, through a long process starting in 2001 and ending with the adoption of Article 31bis to the TRIPS Agreement in 2017, special provisions were added that would permit importing developing or least developed countries to have pharmaceutical products produced under compulsory license in countries adopting procedures to comply with the modified agreement. Today the following countries are on the list of WTO Members willing to produce pharmaceutical products under compulsory license for importing countries where conditions are met:

Albania; Australia; Botswana; Canada; China; Croatia; Cuba; European Union; Hong Kong, China; India; Jordan; Kazakhstan; New Zealand; Norway; Oman; Philippines; Republic of Korea; Singapore; Switzerland; Chinese Taipei; Japan. See Intellectual Property: TRIPS and Health, Members’ laws implementing the ‘Paragraph 6’ system, https://www.wto.org/english/tratop_e/trips_e/par6laws_e.htm.

The Amended TRIPS Agreement at Article 31bis and the Annex and Appendix which lay out requirements for utilization of the compulsory license provisions for importers are copied below. Like other compulsory licensing provisions, compensation to the patent holder is required by the exporter.

Article 31bis

1. The obligations of an exporting Member under Article 31(f) shall not apply with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) in accordance with the terms set out in paragraph 2 of the Annex to this Agreement.

2. Where a compulsory licence is granted by an exporting Member under the system set out in this Article and the Annex to this Agreement, adequate remuneration pursuant to Article 31(h) 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 not apply in respect of those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member.

3. 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 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) shall not apply 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.

4. Members shall not challenge any measures taken in conformity with the provisions of this Article and the Annex to this Agreement under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994.

5. This Article and the Annex to this Agreement are without prejudice to the rights, obligations and flexibilities that Members have under the provisions of this Agreement other than paragraphs (f) and (h) of Article 31, including those reaffirmed by the Declaration on the TRIPS Agreement and Public Health (WT/MIN(01)/DEC/2), and to their interpretation. They are also without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under the provisions of Article 31(f).

ANNEX TO THE TRIPS AGREEMENT 

1. For the purposes of Article 31bis and this Annex:

(a) “pharmaceutical product” means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address the public health problems as recognized in paragraph 1 of the Declaration on the TRIPS Agreement and Public Health (WT/MIN(01)/DEC/2). It is understood that active ingredients necessary for its manufacture and diagnostic kits needed for its use would be included(1);
  

(b) “eligible importing Member” means any least-developed country Member, and any other Member that has made a notification(2) to the Council for TRIPS of its intention to use the system set out in Article 31bis and this Annex (“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. It is noted that some Members will not use the system as importing Members(3) and that some other Members have stated that, if they use the system, it would be in no more than situations of national emergency or other circumstances of extreme urgency;
  

(c) “exporting Member” means a Member using the system to produce pharmaceutical products for, and export them to, an eligible importing Member.

2. The terms referred to in paragraph 1 of Article 31bis are that:

(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 Appendix to this Annex; 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 Articles 31 and 31bis of this Agreement and the provisions of this Annex(6);
  

(b) the compulsory licence issued by the exporting Member under the system 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 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; 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. In order to ensure that the products imported under the system 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 re-exportation of the products that have actually been imported into their territories under the 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.

4. 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 and diverted to their markets inconsistently with its provisions, using the means already required to be available under 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.

5. With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products, it is recognized that the development of systems providing for the grant of regional patents to be applicable in the Members described in paragraph 3 of Article 31bis should be promoted. To this end, developed country Members undertake to provide technical cooperation in accordance with Article 67 of this Agreement, including in conjunction with other relevant intergovernmental organizations.

6. Members recognize the desirability of promoting the transfer of technology and capacity building in the pharmaceutical sector in order to overcome the problem faced by Members with insufficient or no manufacturing capacities in the pharmaceutical sector. To this end, eligible importing Members and exporting Members are encouraged to use the system 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 on the TRIPS Agreement and Public Health and any other relevant work of the Council for TRIPS.

7. The Council for TRIPS shall review annually the functioning of the system with a view to ensuring its effective operation and shall annually report on its operation to the General Council.

APPENDIX TO THE ANNEX TO THE TRIPS AGREEMENT 

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.

Notes:

  1.  This subparagraph is without prejudice to subparagraph 1(b). 
  2.  It is understood that this notification does not need to be approved by a WTO body in order to use the system.  
  3.  Australia, Canada, the European Communities with, for the purposes of Article 31bis and this Annex, its member States, Iceland, Japan, New Zealand, Norway, Switzerland, and the United States.   
  4.  Joint notifications providing the information required under this subparagraph may be made by the regional organizations referred to in paragraph 3 of Article 31bis on behalf of eligible importing Members using the system that are parties to them, with the agreement of those parties.   
  5.  The notification will be made available publicly by the WTO Secretariat through a page on the WTO website dedicated to the system.   
  6.  This subparagraph is without prejudice to Article 66.1 of this Agreement.   
  7.  The licensee may use for this purpose its own website or, with the assistance of the WTO Secretariat, the page on the WTO website dedicated to the system.  
  8.  It is understood that this notification does not need to be approved by a WTO body in order to use the system.   
  9.  The notification will be made available publicly by the WTO Secretariat through a page on the WTO website dedicated to the system.   

Comments

The COVID-19 vaccine challenge is an interesting one. The WHO, Gavi, CEPI and UNICEF have come together to have a process for both supporting development, procuring and distributing vaccines around the world including to 92 low- and middle-income countries at little or no cost. The COVAX facility is an effort supported by many governments and private sector supporters to improve the equitable access to vaccines. Thus, it is an effort to reduce the need for individual low- and middle-income countries to have to secure supplies on their own. As reviewed in prior posts, while COVAX has been shipping millions of doses to countries (as of May 12, 2021 over 59 million doses to 122 countries), it is far behind its anticipated shipments because of the current challenges in India with the cessation of exports from India in the last several months March to address internal needs. (reduction of some 90 million doses likely)

Bolivia is a recipient of vaccines from COVAX. See Gavi, COVAX vaccine roll-out BOLIVIA, https://www.gavi.org/covax-vaccine-roll-out/bolivia (information from the webpage on 14 May 2021 reports that “First doses received: 22 March 2021Doses received: 228,000 SII-AstraZeneca (COVISHIELD) vaccine*; Doses allocated: 72,000 SII-AstraZeneca (COVISHIELD) vaccine; 92,430 Pfizer-BioNTech (BNT162b2) vaccine.”).

While many countries have arranged for vaccine shipments outside of the COVAX facility process from one or more of the global producers, including some not yet approved by the WHO, and while production levels for many producers have been ramping up month to month and there are a number of additional companies likely to pursue authorization for vaccines in the coming months, access to vaccines is limited for many countries in the first and second quarters of 2021. See Bloomberg, More than 1.38 Billion Shots Given: Covid-19 Tracker, updated May 13, 2021 (6:18 p.m.), https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution/. There are four countries or areas with more than 100 million vaccination shots — China (354.3 million), United States (266.6 million), European Union (186.6 million) and India (179.2 million). There are seventeen countries with between 10 million and 56.4 million vaccination shots, 52 countries with more than 1 million and less than 10 million vaccination shots. There are 101 countries that have fewer than one million vaccination shots. Bolivia has administered 972,846 shots, enough for 4.2% of its population.

At the WTO, India and South Africa, now supported by a large number of other countries, have pursued a waiver from most TRIPS Agreement obligations for medical goods needed to address the COVID-19 pandemic largely on the basis that TRIPS Agreement flexibilities don’t work and the pandemic presents special urgency. Developed pharmaceutical producing countries have opposed a waiver as both unlikely to solve the need for more volume of vaccines and as unnecessary in light of TRIPS flexibilities. Last week the United States indicated it would support a waiver and agreed to engage in textual negotiations, though the position taken by the U.S. has not been supported by the European Union and possibly others.

So the Bolivian notification provides a real time opportunity to see if the flexibilities included in the Amended TRIPS Agreement can be used successfully to permit developing and least developed countries to access needed vaccines in a timely fashion. Coupled with expanded capacity and production and possibly additional licensing arrangements and additional approvals of new vaccines, a successful use of Art. 31bis of the Amended TRIPS Agreement may provide sufficient flexibility to address equity concerns at the WTO.

An update on COVID-19 data

Before closing, it is useful to review updated data from the European Centre for Disease Prevention and Control in yesterday’s COVID-19 situation update worldwide, as of week 18, updated 12 May 2021, https://www.ecdc.europa.eu/en/geographical-distribution-2019-ncov-cases and the data on weekly cases and deaths. The world in week 18 of 2021 saw the number of new recorded infections come down from the peak of the prior week as seen in the ECDC weekly update (chart copied below).

“Distribution of COVID-19 cases worldwide, as of week 18 2021

Distribution of COVID-19 cases worldwide, as of week 18 2021
“Distribution of cases of COVID-19 by continent (according to the applied case definition and testing strategies in the affected countries)

“Cases reported in accordance with the applied case definition and testing strategies in the affected countries.“

This is true in total and also for India. For the last two weeks, India recorded 5,544,535 new cases — the first time a country has surpassed five million cases in a two week period, although week 18 was slightly lower than week 17 in terms of new cases recorded in India. See ECDC, Data on 14-day notification rate of new COVID-19 cases and deaths, 13 May 2021, https://www.ecdc.europa.eu/en/publications-data/data-national-14-day-notification-rate-covid-19. India accounted for 49.38% of global cases over the last two weeks — the highest percent for a single country during the pandemic — and remains in a state of health care crisis as previously reported, although support from trading partners and lockdowns in a number of the Indian states appear to be reducing the number of cases and helping to some extent address health care needs.

Because of the size of India’s population and despite the recent surge of cases, India’s number of cases and deaths per 100,000 population are lower than many other countries. India has reported infections for 1.64% of its population or 1,642.21 people/100,000 population during the pandemic with 198.33 people/100,000 in the last week. Brazil has reported infections for 7.16% of its population or 7,155.64 people/100,000 population during the pandemic and 202.51 people/100,000 population in the last week. Bolivia has recorded infections in 2.73% of its population or 2,779.45 people/100,000 population and 103.51 people/100,000 population in the last week. The United States has recorded infections for 9.88% of its population or 9,881.43 people/100,000 population during the pandemic with 86.43 people/100,000 population in the last week. And there are many other countries with higher COVID-19 cases than India according to the ECDC data. Similar comparisons can be made on deaths where India has suffered recorded COVID deaths equal to 0.02% of its population during the pandemic compared to 0.20% for Brazil, 0.11% for Bolivia and 0.18% for the United States. Even in the last week, deaths in Brazil per 100,000 were more than three times what was recorded in India (6.87 people vs. 1.968 people). Bolivia was comparable to India during the last week (1.876) while the U.S. death count is declining (1.42 people during the last week per 100,000 population).

All of the above to say, the world’s attention on India is understandable because of the severe challenges the Indian government is facing and the size of its population. However, there are a number of countries experiencing comparable or even greater surges than India. Brazil is one example, but there are others in South America and some in Asia facing alarming increases or levels of infections. Equitable access needs to be tempered by flexibility to address current fires if the global effort is to be successful and reduce global infections and deaths.

U.S. blocks inclusion of Venezuelan request for panel on U.S. sanctions at WTO, Dispute Settlement Body meeting of March 26, 2021 postponed

· March 28, 2021 · Dispute Settlement Body, U.S. objection to Venezuela request to a panel on U.S. sanctions · , , , , , , , · No Comments

The monthly regular meeting of the WTO Dispute Settlement Body was scheduled for March 26, 2021. The proposed agenda was circulated earlier and contained as item 4, “United States – Measures Relating to Trade in Goods and Services, A. Request for the Establishment of a Panel by Venezuela (WT/DS54/2/Rev.1)”. See Dispute Settlement Body, 26 March 2021, Proposed Agenda, WT/DSB/W/679 (24 March 2021). For background, the Venezuelan request for a panel is embedded below.

WTDS574-2R1

The United States objected to the inclusion of agenda item 4. USTR released a short statement on March 26. “The United States will reject any effort by Maduro to misuse the WTO to attack U.S. sanctions aimed at restoring human rights and democracy to Venezuela. The United States exercised its rights as a WTO Member to object to this illegitimate panel request because representatives of the Maduro regime do not speak on behalf of the Venezuelan people.” See USTR, Statement from USTR Spokesperson Adam Hodge on U.S. Action to Prevent Maduro Regime’s Attempt to Undermine U.S. Sanctions, March 26, 2021, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2021/march/statement-ustr-spokesperson-adam-hodge-us-action-prevent-maduro-regimes-attempt-undermine-us.

Venezuela did not agree to withdraw its request for a panel from the agenda with the result that Dispute Settlement Body meetings cannot proceed until there is a resolution. See Blomberg, U.S. Disrupts WTO Dispute Meeting Over Venezuela Sanctions Fight, March 26, 2021, https://www.bloomberg.com/news/articles/2021-03-26/u-s-disrupts-wto-dispute-meeting-over-venezuela-sanctions-fight (“The meeting ended prematurely after Venezuela refused Washington’s demand that the WTO remove Venezuela’s dispute request from the meeting agenda, according to the official attending the meeting. The impasse means that the WTO can’t hold any regular dispute settlement meetings unless and until the U.S. or Venezuela back down.”); Inside U.S. Trade’s World Trade Online, WTO: DSB meeting postponed over U.S. objection to Venezuela panel request, March 26, 2021, https://insidetrade.com/daily-news/wto-dsb-meeting-postponed-over-us-objection-venezuela-panel-request; Reuters, U.S. blocks Venezuela bid to seek WTO review of sanctions, March 26, 2021, https://www.reuters.com/article/us-trade-wto-usa-venezuela/u-s-blocks-venezuela-bid-to-seek-wto-review-of-sanctions-idUSKBN2BI1ZT (“Were the United States and other members to allow representatives of the illegitimate Maduro regime to exercise rights at the WTO on behalf of Venezuela, it would be tantamount to recognizing the Maduro regime itself,” the official said. “This would be contrary to the Biden-Harris administration’s firm policy supporting the people of Venezuela.”).

Background

The Maduro government in Venezuela is viewed as illegitimate by the United States and dozens of other governments based on the 2013 election. The U.S. has recognized Juan Guaido as the interim President and has imposed a series of sanctions on Venezuela and the Maduro government. While the sanctions were imposed during the Trump Administration, no changes have yet occurred in the Biden Administration. A 2020 write-up from the State Department describes the problems and justifications for the sanctions. See U.S. Department of State, U.S. Relations With Venezuela, Bilateral Relations Fact Sheet, Bureau of Western Hemisphere Affairs, July 6, 2020, https://www.state.gov/u-s-relations-with-venezuela/. Much of the fact sheet is copied below.

“U.S.-VENEZUELA RELATIONS

“The United States recognizes Interim President Juan Guaido and considers the Venezuelan National Assembly, which he currently leads, to be the only legitimate federal institution, according to the Venezuelan Constitution. Nearly sixty other countries have joined in this recognition.

“The United States works with Interim President Juan Guaido and his team on a number of areas of mutual concern, including humanitarian and migration issues, health issues, security, anti-narcotrafficking initiatives, and reestablishment of the rule of law. The United States proposed a Democratic Transition Framework in 2020 as a guide to help Venezuelan society achieve a peaceful, democratic transition. Venezuela’s previous presidents, the late Hugo Chavez (1999-2013) and Nicolas Maduro (2013-2019), defined themselves in large part through their opposition to the United States, regularly criticizing and sowing disinformation about the U.S. government, its policies, and its relations with Latin America. Maduro, who was not reelected via free and fair elections, clings to power through the use of force. His policies are marked by authoritarianism, intolerance for dissent, and violent and systematic repression of human rights and fundamental freedoms – including the use of torture, arbitrary detentions, extrajudicial killings, and the holding of more than 400 prisoners of conscience. Maduro has been sanctioned by the Office of Foreign Assets Control, and in 2020 the Department of Justice charged him with offenses related to narco-terrorism and drug trafficking The U.S. Department of State’s Bureau of International Narcotics and Law Enforcement (INL) posted a $15-million reward for information to bring him to justice. The Maduro regime’s irresponsible intervention in the economy has facilitated widespread corruption and stoked hyperinflation leading to negative economic growth and a humanitarian crisis, including food, energy, and water shortages, in a country with the world’s largest proven oil reserves.

“U.S. Assistance to Venezuela

“Through its assistance to the legitimate Guaido Interim Government and democratic organizations within and outside Venezuela, the United States supports the protection of human rights, the promotion of civil society, the strengthening of democratic institutions, and transparency and accountability in the country. From Fiscal Year (FY) 2014 to 2019, the United States has committed approximately $58.6million in bilateral democracy assistance to Venezuela. Assistance to Venezuela is subject to a number of restrictions, including those under Section 706(1) of the Foreign Relations Authorization Act, Fiscal Year 2003 (P.L. 107-228) (the so-called Drug Majors restriction), the Trafficking Victims Protection Act, and restrictions contained in the annual appropriations laws

“Since 2005, the President has determined annually that Venezuela, and more recently the illegitimate Maduro regime, has “failed demonstrably” to adhere to its drug control obligations under international counternarcotics agreements. The President has issued a national interest waiver to enable certain assistance programs vital to the national interests of the United States, such as human rights and civil society programs, to continue.

“Pursuant to Section 40A of the AECA, since 2006 the Department of State has determined annually that Venezuela was “not cooperating fully” with U.S. counterterrorism efforts. Under this provision, defense articles and services may not be sold or licensed for export to Venezuela during the relevant fiscal year.

“U.S. Assistance in Response to the Venezuela Regional Crisis

“The United States is answering Interim President Guaido’s call to help the people of Venezuela cope with severe food, water, energy, and medicine shortages. Since FY 2017, the United States has provided more than $856 million in assistance to support the response to the crisis inside Venezuela and the region, which includes $611 million in humanitarian assistance and $245 million in economic and development assistance. The United States is the single largest donor to the combat the crisis, and supports sixteen countries hosting Venezuelan refugees. USG-provided humanitarian assistance addresses critical life-saving needs, including food and nutrition, water, sanitation, hygiene and health, and temporary shelter. Our development assistance is helping countries throughout Latin America and the Caribbean meet longer term needs, such as education deficits, caused by the man-made regional crisis.

“Bilateral Economic Relations

“Before the United States suspended diplomatic operations in Venezuela, the United States was Venezuela’s largest trading partner. Bilateral trade in goods between both countries reached $3.2 billion in 2019. U.S. goods exports to Venezuela totaled $1.2 billion in 2019. U.S. imports from Venezuela totaled $1.9 billion. U.S. exports to Venezuela have historically included petroleum and refined petroleum products, machinery, organic chemicals, and agricultural products. Crude oil dominated U.S. imports from Venezuela, which was one of the top five suppliers of foreign oil to the United States. In early 2019, imports of Venezuelan crude oil averaged roughly 500,000 barrels per day, but sanctions imposed by the United States have now cut this to zero. Previously, U.S. foreign direct investment in Venezuela was concentrated largely in the petroleum sector, but sanctions, coupled with the poor business environment, have significantly reduced these investment.

“Hyperinflation, state intervention in the economy including expropriations, macroeconomic distortions, physical insecurity, corruption, violations of labor rights, and a volatile regulatory framework make Venezuela an extremely challenging climate for U.S. and multinational companies. A complex foreign exchange system, capital controls, and the lack of dollars, coupled with increasing sanctions from the United States and other countries, have prevented firms from repatriating their earnings out of Venezuela and importing industrial inputs and finished goods into Venezuela. Lack of access to dollars, price controls, and rigid labor regulations have compelled many U.S. and multinational firms to reduce or shut down their Venezuelan operations.

“Since 2017, the United States has made over 300 Venezuelan-related designations, pursuant to various Executive Orders (E.O.), including under the International Emergency Economic Powers Act, and the Foreign Narcotics Kingpin Designation Act. Designations include former President

“Maduro and those involved in public corruption and undermining democracy under E.O. 13692 (Blocking Property and Suspending Entry of Certain Persons Contributing to the Situation in Venezuela) issued by the President in March 2015 and E.O. 13850 (Blocking Property of Additional Persons Contributing to the Situation in Venezuela) issued by the President in November 2018, each as amended. Since 2017, the Department of Treasury has designated two individuals for involvement in narcotrafficking under the Kingpin Act, including former Vice President (and nominal Minister of Oil) Tareck El Aissami.

“Additionally, E.O. 13850, in conjunction with determinations made by the Secretary of the Treasury, authorizes sanctions against persons determined to be operating in the gold, oil, financial, and defense and security sectors of the Venezuelan economy and was the basis for the January 2019 designation of Venezuelan national oil company Petreoleos de Venezuela, S.A. (PdVSA). The Central Bank of Venezuela is also designated under E.O. 13850.

“On August 5, 2019, the President signed E.O. 13884 which blocks all property and interests in property of the Government of Venezuela that are in the United States or that are within the possession or control of any United States person. In conjunction with E.O. 13884, Treasury also issued or , including those that authorize, among other things, transactions with Guaido and the National Assembly, activities for the official business of certain international organizations, and activities NGOs undertake to support humanitarian projects to meet basic human needs in Venezuela.

“For additional information about the Venezuela sanctions program, please visit the Treasury Department’s Office of Foreign Assets Control (OFAC) website.

“On March 26, 2020, the Department of Justice charged former President Maduro and 14 other current and former Venezuelan officials, including his vice president for the economy, his Minister of Defense, and the Chief Supreme Court Justice with offenses related to narco-terrorism, corruption, and drug trafficking, and other criminal charges.

“Venezuela’s Membership in International Organizations

“Venezuela and the United States belong to a number of the same international organizations, including the United Nations, Organization of American States, International Atomic Energy Agency, International Civil Aviation Organization, International Monetary Fund, Interpol, World Bank, World Trade Organization and Inter-American Development Bank (IDB).

“Venezuela is a founding member of the Organization of the Petroleum Exporting Countries (OPEC), the Bolivarian Alliance for the Peoples of Our America (ALBA), the Community of Latin American and Caribbean States (CELAC), and PetroCaribe. Venezuela is also a member of the Non-Aligned Movement, , the G-15, the G-24, and the G-77. On August 5, 2017 Venezuela was indefinitely suspended from Southern Common Market (Mercosur).

“With the recognition of Juan Guaido as interim President by 57 countries, Venezuela’s participation or representation in some of these organizations has come under debate.

“On April 26, 2017, Maduro announced Venezuela would withdraw from the Organization of American States (OAS), a process that requires two years. This decision was reversed by Interim President Guaido and the National Assembly. On January 10, 2019, the OAS Permanent Council voted not to recognize the second term of former President Nicolas Maduro and on April 9, 2019 the OAS Permanent Council approved a resolution to accept interim President Guaido’s nominee Gustavo Tarre as Venezuela’s representative to the Permanent Council on April 9.

“The interim Guaido government is also an active member of the Lima Group, an important group of likeminded nations founded in 2017 to facilitate regional coordination in the pursuit of a democratic resolution to the Venezuela crisis.

“On March 15, 2019, the IDB approved a resolution recognizing Guaido’s representative, Ricardo Hausmann. The current representative is Alejandro Plaz.

“Bilateral Representation

“On March 12, 2019, the United States suspended embassy operations in Caracas. The United States maintains formal diplomatic relations with Venezuela and the Guaido interim government through its accredited Ambassador to the United States.

“On August 28, 2019, the Department of State announced the opening of the Venezuela Affairs Unit (VAU). The VAU is the interim diplomatic office of the U.S. Government to Venezuela, located at the U.S. Embassy in Bogota, Colombia. It continues the U.S. mission to the legitimate Government of Venezuela and to the Venezuelan people.”

While the Biden Administration is reviewing its approach to Venezuela and some in the Democratic party have questioned the sanction program in terms of effectiveness, the sanctions remain in place as of March 28, 2021. See, e.g., White House Briefing Room, Background Press Call by Senior Administration Officials on Venezuela, March 08, 2021,https://www.whitehouse.gov/briefing-room/press-briefings/2021/03/08/background-press-call-by-senior-administration-officials-on-venezuela/; PBS News Hour, Democrats pressure Biden to review U.S. sanctions on Venezuela, March 23, 2021, https://www.pbs.org/newshour/politics/democrats-pressure-biden-to-review-u-s-sanctions-on-venezuela.

WTO history of the dispute

Venezuela requested consultations with the United States in late December 2018. See UNITED STATES – MEASURES RELATING TO TRADE IN GOODS AND SERVICES, REQUEST FOR CONSULTATIONS BY VENEZUELA (28 December 2018), WT/DS574/1, G/L/1289, S/L/420, 8 January 2019.

The United States refused the request for consultations. Venezuela requested a panel on 14 March 2019. See UNITED STATES – MEASURES RELATING TO TRADE IN GOODS AND SERVICES REQUEST FOR THE ESTABLISHMENT OF A PANEL BY VENEZUELA, WT/DS574/2, 15 March 2019.

The request was included in the draft agenda for the DSB meeting of March 26, 2019. See Dispute Settlement Body, 26 March 2019, Proposed Agenda, WT/DSB/W/641, 22 March 2019 (agenda item 6, “UNITED STATES – MEASURES RELATING TO TRADE IN GOODS AND SERVICES, A. REQUEST FOR THE ESTABLISHMENT OF A PANEL BY VENEZUELA (WT/DS574/2)”).

The U.S. objected to the inclusion of the Venezuelan request on the agenda. No DSB meeting was held on March 26, 2019. Venezuela agreed to withdraw its request, and the DSB meeting was rescheduled for April 26, 2019. See Dispute Settlement Body, 26 April 2019, Proposed Agenda, WT/DSB/W/643, 24 April 2019.

The minutes of the April 26, 2019 DSB meeting included the following statement ahead of the adoption of the agenda.

“Prior to the adoption of the Agenda, the representative of the Bolivarian Republic of Venezuela said that his delegation wished to make a short statement for the record to the effect that Venezuela was not asking to modify the proposed Agenda of the present meeting to request an inclusion of an item. However, Venezuela wished to reserve its right to do so at any future DSB meeting. Subsequently, Japan said that it wished to include on the proposed Agenda an item under “Other Business” regarding its communication contained in Job/DSB/3. The Agenda was adopted as amended. Following the adoption of the Agenda, the representative of Peru, speaking on behalf of Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Honduras, Panama and Paraguay said that the members of the Lima Group supported the functioning of the DSB at the present meeting.
However, their Governments wished to indicate that they did not recognize the legitimacy of Nicolás Maduro’s regime nor that of its representatives. The representative of Venezuela said that the DSB was not the appropriate forum to discuss this matter. The representative of the Russian Federation said that her country supported the legitimate government of Nicolás Maduro and underlined that the WTO was not the appropriate international forum vested with the authority to discuss issues raised by the members of the Lima Group.” Dispute Settlement Body, 26 April 2019, MINUTES OF MEETING HELD, WT/DSB/M/428
25 June 2019, page 1.

March 26, 2021 DSB Meeting

Thus, based on the history of U.S. concerns with the Maduro government in Venezuela, it was hardly surprising that the United States would block inclusion of the request for a panel from the agenda this past Friday. Press accounts report that Peru, Brazil and Colombia supported the U.S. position and that the Russian Federation and Cuba supported Venezuela. See, e.g., Reuters, U.S. blocks Venezuela bid to seek WTO review of sanctions, March 26, 2021, https://www.reuters.com/article/us-trade-wto-usa-venezuela/u-s-blocks-venezuela-bid-to-seek-wto-review-of-sanctions-idUSKBN2BI1ZT.

The EU made a statement at the truncated meeting which is copied below. See Permanent Mission of the European Union to the World Trade Organization (WTO), EU Statement at the Regular meeting of the Dispute Settlement Body (DSB), 26 March 2021, https://eeas.europa.eu/delegations/world-trade-organization-wto/95717/eu-statement-regular-meeting-dispute-settlement-body-dsb-26-march-2021_en.

“ADOPTION OF THE AGENDA:

“If the EU understands correctly, the US is not ready to accept this panel request by Venezuela as being valid, as it was submitted by a government which the US no longer recognises as the legitimate government representing Venezuela.

“In fact, in this case, the EU would have expected the US to rely on the security exceptions in Article XXI of the GATT and Article XIVbis of the GATS for justifying any departures from basic GATT and GATS provisions that may lie in the measures taken against Venezuela. 

“Indeed, we note that the United States measures at issue appear justified by the security exceptions, so the challenge at issue cannot in any event succeed.

“All this being said, the EU has to react for systemic reasons and express its concern at the prospect of the DSB being prevented from holding its meeting on all items of today’s agenda simply because that agenda is not adopted. 

“There is a longstanding and widely recognised principle that DSB agendas cannot be blocked to the extent that they include items governed by negative consensus. This includes first panel requests (governed by consensus), since they are a necessary pre-condition to a second panel request. This principle is of utmost importance because the binding nature of WTO dispute settlement rests on it. 

“That said, the EU expects this meeting to be suspended now, as a result of the US objection to the agenda adoption. This should allow the Chairperson and the WTO Members most involved to consult in search of a solution. The EU hopes that these efforts will rapidly yield a solution, so that this meeting can continue and the DSB discharge the important duties with which it is entrusted.”

Conclusion

Friday’s events at the Dispute Settlement Body meeting were not surprising once the request for a panel had been filed by Venezuela. What is surprising is the Maduro government’s effort to re-raise a matter that had no possibility of being considered in light of the well understood U.S. position (a position agreed to by many WTO Members).

WTO Members have historically shown an inability to evaluate disputes they pursue from the vantage point of whether the result desired is at all politically possible for the Member whose action is being challenged. Yet pursuing disputes that cannot be resolved through the dispute settlement system is a disservice to the WTO and to the proper functioning of the Dispute Settlement Body. The Maduro government dispute with the United States first and foremost is a question of the legitimacy of the Maduro government and its refusal to transfer power to the interim President. No WTO dispute will help resolve the underlying dispute. Besides the question raised by the United States (blocking requests from entities which are not the true representatives of the people), getting rid of the request properly reflects the political realities of the underlying dispute.