Health GAP Talking Paper
www.globaltreatmentaccess.org | www.healthgap.org

0ctober 25, 2002

I want to urgently bring to your attention two time- sensitive matters currently under review at the WTO in Geneva. Both issues -- TRIPS/Access to Medicines and the phase-out of global quotas on textile and apparel --are critically important to Africa, and merit your immediate attention.

TRIPS/ACCESS TO MEDICINE

The WTO Council on Trade Related Aspects of Intellectual Property Rights (TRIPS) has been charged with coming up with a practical solution before the end of the year to problems that African countries and others face in making effective use of compulsory licensing of pharmaceuticals. Compulsory licensing permits the production of drugs without the authorization of the patent holder in circumstances where countries need to address a serious public health problem, such as HIV/AIDS, malaria, tuberculosis and other epidemics.

With the year-end deadline fast approaching, much work remains to be done to reach consensus. African countries have a particular interest in helping to craft a practical solution given the devastating toll of HIV/AIDS and other epidemics in the region. The Chair of the TRIPS Council has circulated a paper that outlines a possible solution. We urge your government to respond favorably to the Chairís paper and to support a solution that addresses Africaís interests and particular circumstances.

The U.S. approach and the Chairís paper were drafted in response to calls from many African leaders for a solution that focuses on the serious health problems confronting Africa. Sadly, while HIV/AIIDS has taken its greatest toll in sub-Saharan Africa, most of the region's representatives to Geneva are not attending meetings related to this issue or engaging in the debate.

The attached papers summarize the main elements of this issue and the U.S. proposal. I urge you to instruct your officials in Geneva to work with the U.S. and other African countries to ensure that the solution the TRIPS Council develops benefits African countries and responds to the regionís needs.

ELILMINATION OF GLOBAL CLOTHING QUOTAS

The WTO Council on Trade in Goods has had before it a plan to eliminate textile and clothing quotas well before the planned phase-out of these restrictions in January 2005. Contrary to positions conveyed by the African Union and many African Trade Ministers, the African Group has also submitted a proposal supporting the early elimination of quotas.

These proposals would effectively erode the margin of preference African countries now enjoy under the African

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Growth and opportunity Act (AGOA) and other developed countries' preference programs. Under these arrangements, African countries already have quota-free access to U.S. and other major markets for apparel and textiles. Proposals under consideration in Geneva inadvertently help China, India and other countries with significant apparel capacity and markets, abroad to further expand their exports, putting significant competitive pressure on poorer, African countries that are just beginning to see success in the U.S. and other developed country markets.

I am also attaching a paper further outlining my concerns on the quota issue, and I hope that you will immediately instruct your representatives in Geneva to act to protect the region from these simultaneous assaults on Africaís interests.

Like you, I strongly believe that sub-Saharan African countries should approach negotiations in Geneva based on their own interests- and not be party to developing country

group positions that run counter to regional development goals. You know best where the interests of your country lie.

However, I hope you give your attention to these critically important issues. I am confident that you too will recognize the convergence of interests between the U.S. and sub-Saharan Africaís interests on issues related to TRIPS and textile-apparel quotas.

Please feel free to call me at 202-395-9514 if you have any questions about the U.S. approach to these issues.

Please accept my best wishes and highest regards.

Sincerely,

Rosa Whitaker Assistant United States Trade Representative for Africa

TRIPS Compulsory Licensing of Pharmaceuticals Summary of the U.S. Proposal

In the Doha Declaration on the TRIPS Agreement, and Public Health, ministers tasked the WTO TRIPS Council with finding a solution before the end of 2002 to the problem that some members face in making effective use of compulsory; licensing of essential medicines. The U.S. has submitted two papers to the TRIPS Council outlining a proposed solution to the problem.

The U.S. supports a solution that:

* focuses on the serious epidemics faced by Africans- HIV/AIDS, malaria, and tuberculosis. Broadening the solution to cover any public health problem, as some are advocating, would divert attention and resources away from these epidemics, at Africa's expense, and risks trivializing the gravity of these serious epidemics.

* focuses on the products in greatest need in Africa. The clear intent of the Doha Declaration was to facilitate the delivery of low-cost essential medicines to those countries in greatest need. Expanding the products covered to include the full range of diagnostic products and all other health- related items diverts attention from the key issue of access to essential drugs. The U.S. has agreed to go beyond medicine in certain, specific cases of demonstrable need, such as AIDS test kits.

* reserves the benefits of compulsory licensing for those in greatest need. The countries that are most in need of

this special exception are those least developed and low- income developing countries that do not have the capacity to produce essential drugs domestically (including all sub- Saharan African countries). Allowing developed countries or advanced developing countries to import under compulsory licensing might encourage the solution to be abused for commercial purposes ñ e.g. exporters would likely focus their attention on more lucrative developed country markets rather than on the developing world.

* Promotes development of the pharmaceutical sector in developing countries. The U.S. proposes to limit exporters under compulsory licensing to least developed and developing countries. Permitting developed countries to be exporters would hinder technology transfer and pharmaceutical company investment in the developing world.

The TRIPS Council has been charged with solving a specific problem in the TRIPS Agreement, not opening or renegotiating this

Early Elimination of Global Clothing Quotas in the WTO Will Harm Sub-Saharan African Garment Producers

Contrary to the interests of their own garment producers, some sub-Saharan African countries are going along with proposals in Geneva that would eliminate global quotas on textiles and apparel well before the planned phase-out of of these restrictions in January 2005 under the Agreement on Textiles and Clothing (ATC). The WTO Council on Trade in Goods has had before it a plan to speed up the process of textile and apparel quota elimination. And the WTO committee on Trade and Development is reviewing a recent submission by the African Group that would immediately remove quotas for all least developed countries - including some large Asian apparel suppliers.

The United States is committed to complying with its ATC obligations and will, as required, integrate all of its textile and apparel quotas on December 31, 2004. But removing quantitative restrictions now would erode the preferences sub-Saharan African countries enjoy under the African Growth and Opportunity Act (AGOA) just as they are beginning to compete effectively in the U.S, market. Garments produced in AGOA beneficiary countries currently enjoy duty-free and quota-free access to the United States on terms that are often more liberal and generous than under U.S. free trade agreements. African suppliers will still have a tariff advantage ovr other countries when global apparel quotas are lifted, but large and efficient Asian firms will no longer face annual limits on the volume of clothing they can export to the United States and other countries. That could mean a big increase in Asian apparel exports - and significant new competitive challenges for African firms.

As a result of AGOA, sub-Saharan Africa's total textile and garment exports to the United States increased by 60 percent between 1999 and 2001. Countries as diverse as Lesotho, Kenya, Senegal, Ghana, Namibia, South Africa, Madagascar and Mauritius have leveraged the Act's apparel provisions to attract hundreds of millions of dollars in new investment and create thousands of jobs. Early elimination of quotas will put these gains at risk to the benefit of large Asian suppliers - many of which individually export more clothing to the United States than all of sub-Saharan Africa combined. It will also hinder the region's efforts to further integrate into the global economy, promote economic growth and development, and battle the scourges of poverty and disease.

The African Union has already acted to protect the region's interests by asserting its strong opposition to the immediate removal of garment quotas.

See proposal 56(a) and (d) of the joint Communication from the African Group in the WTO on Special and differential treatment provisions (TN7CTD/W/3/Rev.2), July 2002.