by Sandra Leis
March 01, 2009
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The suspension of concessions and obligations in the area of intellectual property (IP) has been a useful tool that underdeveloped and developing countries have sought in order to press developed countries to comply with WTO recommendations. Since underdeveloped and developing countries’ economies are largely dependable on imports of manufactured goods and exports of commodities, the suspension of concessions and obligations under GATT (goods) or GATS (services) can be more harmful than beneficial to such countries. Therefore, developing and underdeveloped countries prefer to threaten developed countries with the suspension of concessions and obligations under TRIPS (IP rights), which is a more sensitive issue for developed countries. This mechanism is commonly known as cross-retaliation because it involves a WTO agreement which is not the object of the dispute.
Recent examples of cross-retaliation involving IP are: Ecuador & U.S. vs. European Communities (EC) on the EC regime for importation and distribution of bananas; Antigua and Barbuda vs. US with respect to cross-border gambling services; Brazil vs. U.S. regarding subsidies to U.S. upland cotton producers. Although in these disputes the WTO panel authorized the complainant to suspend concessions and obligations under TRIPS in view of non-compliance with the decision by the respondent, no effective cross-retaliation measure involving IP has been applied so far.
In relation to the cotton dispute, in August 2008 Brazil requested the re-opening of the arbitration panel suspended in 2005. The panel was nominated, Brazil submitted its claims on the amount and form of retaliation and a decision by the panel is expected by April 2009.
Meanwhile, since WTO decisions are not self-applicable in member countries, Brazil needs a law to enforce WTO decisions and possibly suspend IP rights in case it becomes necessary. For this purpose, there is a bill pending at the House of Representatives (no. 1893/2007), which, if passed, would allow Brazil to suspend IP rights in case of non-compliance with WTO decisions, as long as the WTO Dispute Resolution Body so authorizes. This issue has caused much concern among IP holders, who are afraid of having their rights suspended temporarily.
However, three aspects must be considered. One is the fact that the passing of this bill requires approval at the House of Representatives and the Senate and sanction by the President, which may take several months, as it is still at the House of Representatives. The second aspect is that the bill contains general provisions on the temporary suspension of IP rights, but it does not establish how it should be done. So even if the bill becomes a law, implementation rules would still be required. The third aspect is that, as far as the Brazil vs. U.S. dispute is concerned, the suspension of IP rights may bring more harm than benefit to Brazil in terms of the flow of commerce between those two countries, so it is a measure the Brazilian government should carefully evaluate before putting