SOUTH BULLETIN Published by the South Centre ● ● 13 May 2013, Issue 72 China’S President Xi Pledges Support for South Centre

SOUTH BULLETIN Published by the South Centre ● www.southcentre.org ● 13 May 2013, Issue 72 China’s President Xi Pledges Support for South Centre

The Chairperson of the Board of the South Centre, former President of Tanza- nia H.E. Benjamin Mkapa, met with the new President of China H.E. Xi Jinping, when he visited Tanzania. President Xi pledged to continue to support the South Centre to promote South-South

cooperation. XinhuaNews ·Pages 2-3

South Centre Conference: The Board and Council of The South in the Global the South Centre Hold Economic Meetings in Geneva

Crisis  Pages 3-5, 15-18

 Pages 6-14 Investment Agreements: The First BRICS towards a A New Threat to the TRIPS South Bank? Flexibilities? • Pages 23-25  Pages 19-20 BRICS Bank: Doing LDCs Request to Extend WTO Development Differently? -TRIPS Transition Period

 Pages 20-21  Pages 27-28 South Centre Chairperson Holds Meeting with President of China Xinhua News Agency Report of the Meeting between Chinese Presi- dent and South Centre Chairperson

AR ES SALAAM, March 25 D (Xinhua) -- Chinese President Xi Jinping on Monday met separately with Ali Mohamed Shein, leader of Tanzania's Zanzibar, and former Tan- zanian President Benjamin William Mkapa.

In a meeting with Mkapa, Presi- dent Xi praised the former Tanzanian president as an old friend of China, as

Xinhua well as an advocate and a witness of the China-Africa and China-Tanzania South Centre Chairman Benjamin Mkapa greets China’s President Xi JinPing in Dar Es Salaam. friendship. he Chairperson of the Board ment that China has achieved, Thanks to the joint efforts by gen- T of the South Centre, former which has fortified his determina- President of Tanzania H.E. Ben- tion to explore a development path erations of leaders from both coun- jamin Mkapa, has met with the that fits the basic situation of his tries, the China-Tanzania all-weather new President of China H.E. Xi country. friendship has enjoyed constant devel- Jinping, when he visited Tanza- opment, said Xi. “He also hailed President Xi's nia. The meeting took place on The Chinese President believed 25 March in Dar Es Salaam. visit to Tanzania as a new milestone in bilateral ties, which will that with concerted efforts from both President Mkapa briefed Pres- vigorously enhance bilateral coop- sides, the bilateral comprehensive ident Xi on the work of the South eration. cooperative partnership based on mu- Centre and asked for China’s tual benefit and win-win results participation and support for ex- “Mkapa promised that he would would undoubtedly move forward. continue to contribute to the devel- panding South-South cooperation Mkapa, who served as president of with the South Centre. opment of Tanzania-China relations and that the South Center Tanzania from 1995 to 2005, is cur- According to a report from Chi- would like to strengthen its coop- rently chairman of the South Center, na’s Xinhua news agency: eration with China.” an intergovernmental organization of developing countries with its head- “Xi spoke highly of Mkapa's The South Centre believes that quarters in Geneva. efforts as the South Center chair- this meeting will greatly contribute man in promoting South-South to the further cooperation between Xi spoke highly of Mkapa's ef- cooperation and increasing repre- the South Centre and China. forts as the South Center chairman in sentation of the developing coun- promoting South-South cooperation tries, adding that China is willing The meeting of President Xi and increasing representation of the to continue to provide help within and Chairman Mkapa was also developing countries, adding that its capability to the South Center. highlighted on prime time TV in China is willing to continue to pro- China (in the TV station CCTV) in vide help within its capability to the “Mkapa said he has visited the 7pm news of that day. South Center. China many times, and could, on each visit, witness the develop-

Page 2 ● South Bulletin ● Issue 72, 13 May 2013 Mkapa said he has visited China many times, and could, on each visit, witness the development China has achieved, which has fortified his deter- mination to explore a development path that fits the basic situation of his country.

He also hailed President Xi's visit to Tanzania as a new milestone in bilateral ties, which will vigorously enhance bilateral cooperation.

Mkapa promised that he would continue to contribute to the development of Tanzania-China relations and CCTV that the South Center would like to strengthen its cooperation with China. The South Centre Chairperson (left) and the President of China holding talks during the President’s visit to Tanzania in March 2013. The Board and Council of the South Centre Hold Meetings in Geneva The end of January and the beginning of February 2013 saw the South Centre organising a series of events centred around the 30th meeting of its Board and the XIVth meeting of its Council of Representatives, and included a reception for the Member States and a holding of a South Con- ference on the global economic crisis and review of multilateral negotiations.

Board meeting and reception the Commonwealth of Nations and a ples' International Centre for Policy former Ambassador of Jamaica to the Research and Education). Under the chairmanship of South Cen- UN and WTO in Geneva, and Ms. Vic- tre Board Chairman Benjamin William A reception was hosted by the toria Tauli-Corpuz of the Philippines, Mkapa, former President of the United South Centre at its office on 29 January. Founder and Executive Director of the Republic of Tanzania, the Board of the It was attended by the Board members, Tebtebba Foundation (Indigenous Peo- South Centre held its 30th meeting on many ambassadors and senior officials 29 and 30 January 2013 in Geneva. The Board is the governance body of the South Centre that is tasked to review and approve the work programme and the annual budget of the South Centre, and report on these to the Council of Representatives of the member States of the South Centre which serves as the highest policymaking body of the organisation.

At its 30th meeting, the Board re- viewed the Centre’s activities that were undertaken in 2012 and approved the work plan for 2013. The Board also re- viewed the Centre’s financial status and approved its budget for 2013. The Board also agreed to nominate two new Board members. They are Mr.

Ransford Smith who was the Deputy South African Ambassador and South Centre Convenor H.E. Mr. Abdul Minty (centre, with micro- Secretary-General of phone) speaking at the reception.

Page 3 ● South Bulletin ● Issue 72, 13 May 2013 from the permanent missions of the member States of the South Centre and other developing countries, and of international organisations and NGOs based in Geneva. At the reception, Chairman Mkapa stressed the crucial importance to the South Centre of the continuing support being provided by its member States and other developing countries in enabling the South Centre to carry out its mandate to strengthen South-South solidarity and unity in today’s global context. Chair- man Mkapa expressed his appreciation for the work of the Board and of the Secretariat. Many ambassadors also made speeches appreciating the South Centre’s work and reaffirmed to con- South Centre Executive Director Mr. Martin Khor (left, standing, with microphone) with Board Chair- tinue providing support to the Centre. person H.E. Mr. Benjamin W. Mkapa (right. sitting) at the South Centre reception.

Iranian Ambassador H.E. Mr. Seyed Mohammad Reza Ecuadorian Ambassador to the WTO H.E. Mr. Miguel Carbo Sajjadi (with microphone) speaking at the reception. Benites (with microphone) speaking at the reception. Ecuador Indonesian Ambassador H.E. Mr. Triyono Wibowo Iran is the current Chair of the Non Aligned Movement . is the current Chair of the G77 and China, Geneva Chapter . (with microphone) speaking at the reception.

Chinese Ambassador to the WTO H.E. Mr. Yi Xiaozhun (with microphone) speaking at the re- Board Vice-Chairperson Prof. Deepak Nayyar (with microphone) speaking at the reception. ception.

Page 4 ● South Bulletin ● Issue 72, 13 May 2013 Meeting of the Council of Rep- resentatives

The 14th meeting of the Council of Rep- resentatives of the member States of the South Centre took place on the afternoon of 31 January 2013 at the Palais des Nations, and was attended by the ambassadors and senior officials of the member States. It was chaired by the Convenor of the Council, Ambassador Abdul Minty of South Africa.

The Council elected Mr. Dilip Sinha, Ambassador of India to the UN in Ge- neva, to serve as the Vice-Convenor of th the Council for a three-year term. The 14 meeting of the Council of Representatives of the member States of the South Centre was held on the afternoon of 31 January 2013 at the Palais des Nations. The Council then heard the report of Mr. Martin Khor, Executive Director sentatives for their quality, usefulness, Pakistan, Egypt, Iran, China, Cuba, of the South Centre Secretariat, on the and ability to provide developing Barbados and Ghana. country perspectives on global issues. Centre’s activities and financial situa- The Chairman of the Board then The member States also appreciated tion. The Convenor and the Chairman put forward for the consideration of that the Centre’s financial situation of the Board encouraged all member the Council of Representatives the had improved, with an increased oper- States to ensure their continued finan- Board’s nomination of Ms. Victoria ational surplus in 2012 following on cial support to the Centre as the best Tauli-Corpuz and Mr. Ransford Smith from the operational surpluses gener- means for strengthening the Centre’s to serve on the Board of the South Cen- ated in 2009-2011. Among the member ability to support the South in various tre. Their nomination was unanimous- States whose representatives spoke multilateral forums. ly approved by the Council. were the Philippines, Zimbabwe, Indo- Many representatives of the South nesia, Tanzania, South Africa, Algeria, Centre’s member States spoke in appreciation of the Centre’s work and its activities during 2012, particularly in terms of the assistance provided by the Centre to developing countries in negotiations at the WTO, WIPO, UNCTAD, UNFCCC, WMO, and on issues relating to the global economy, the global financial crisis and the right to development. The research output of the Centre was appreciated by the repre-

Indian Ambassador H.E. Mr. Dilip Sinha was elected Vice- Convenor. Mr. Lucas Saronga of Tanzania

Clockwise from left: H.E. Mr. Evan Garcia, Ambassador of Philippines; H.E. Mrs. Marion Williams, Ambassador of Barbados; H.E. Ms. Wafaa Bassim, Ambassador of Egypt; Latin American Member States of the South Centre.

Page 5 ● South Bulletin ● Issue 72, 13 May 2013 South Centre Conference discusses WTO’s Doha Round impasse and Bali Ministerial A distinguished panel of experts and diplomats presented their Dr. Ricupero stressed the need to views on the fate of the Doha Round and the upcoming WTO Bali assess the propositions put forward Ministerial during the South Centre’s Conference in Geneva. around the future of the world trading system based on two criteria; (1) the macroeconomics of the proposals put forward, and (2) the accuracy of the narrative in terms of diagnosing and explaining the stalemate in the trade negotiations. He stressed that the reactivation of the Doha Round should consider the macroeconomic framework defining the trade negotiations. He highlighted the role of countries with a trade surplus in providing the necessary increase in world demand, which could allow international trade to pick up. Dr. Ricupero highlighted that Ger- many's current account surplus stands at three times that of Japan and twice that of China. He added that most de- The panel for the session on “WTO and the Multilateral Trade System: The Fate of Doha, the Agenda of the Bali Ministerial and Beyond” during the South Centre’s South Conference. veloping countries have larger deficits and smaller surpluses compared to the By Kinda Mohamadieh Mr. Khor began the session by pre-crisis period. He expressed amaze- stressing the need to make the existing ment at the lack of calls upon Germany he fate of the WTO Doha Round global trading system "more fair and to do its part in contributing to world T and the agenda of the forthcoming more effective". He noted that develop- demand, particularly because most ministerial conference in Bali were dis- ing countries are trying to reform the developing countries have fulfilled cussed during a two-day conference existing rules, while developed coun- their duties by increasing their imports organised by the South Centre from 31 tries have been making excessive de- of goods and services. January to 1 February 2013 in Geneva. mands on developing countries in the Doha negotiations despite its being Dr. Ricupero said that free trade is The South Centre conference on supposed to be a "development round", not a benefit per se, but should be an "The South in the global economic cri- and are also preparing to propose new active instrument in promoting devel- sis and reviewing multilateral negotia- rules that would make the system more opment. According to him, trade nego- tions" convened a panel session on 1 imbalanced. tiations should be exclusively judged February entitled "WTO and the multi- based on the extent to which they con- lateral trading system: The fate of Do- Dr. Rubens Ricupero reminded the tribute to development prospects in ha, the agenda of the Bali ministerial conference that each time the trade ne- developing countries. and beyond". gotiations "hit the rock", a flurry of books and essays emerge with an- Speakers in the session included Dr. guished calls for initiatives to save the Rubens Ricupero, a member of the world's trading system. These calls are South Centre Board (and a former usually supported by deliberate recipes UNCTAD Secretary-General), Ambas- imagining the future of the world trad- sador Srinivasan Narayanan, former ing system. Indian Ambassador to the WTO, Am- bassador Faizel Ismail, permanent rep- He noted that today, we witness a resentative of South Africa to the WTO, repetition of such a trend, similar to and Mr. Lucas Saronga, acting perma- that during the 1990s when the Uru- nent representative of Tanzania to the guay Round was increasingly seen as a WTO. hopeless proposition. It is surprising how similar the books and ideas that The session was moderated by Mr. were advanced in that period are to Martin Khor, Executive Director of the those of the present day, he added. South Centre.

Dr. Rubens Ricupero

Page 6 ● South Bulletin ● Issue 72, 13 May 2013 He added that the development dimension was the basic argument used to sell the WTO Doha Round back in 2001. Currently, the reasons behind the deadlock in the negotiations stem from the decision of advanced economies to retract on their promises given in Doha. They are also aggressively pushing to extract additional concessions from other WTO members, irrespective of its negative impacts on development prospects, he said further. Dr. Ricupero stressed that if the promises made in the Doha Ministerial Conference (2001) are not followed up, then "we need to be worried about the current state of trade negotiations". Ambassador Narayanan of India commenced his presentation by re- minding the conference that develop- The WTO session was part of the two-day conference of the South Centre on “The South in the Global ing countries were initially skeptical Economic Crisis and Reviewing Multilateral Negotiations” . about starting a new round of negotia- (i.e. investment, competition, govern- countries have recognised the added tions in the Doha ministerial back in ment procurement, and trade facilita- value of unity behind their demands, 2001. tion) will be postponed. Narayanan said further. He explained that seven major as- Of the seven assurances, only the He explained further that in coun- surances were given and built into the assurance about the Singapore issues ter-argument, developed countries Doha Ministerial Declaration, based on was fulfilled, apart from trade facilita- claim that the reasons behind the which developing countries, including tion, along with partial fulfillment of stalemate were lack of enough offers India, joined the consensus for a new DFQF for LDCs, said Narayanan. on the table of negotiations. As part of Round. their narrative, developed countries Writings and analysis have prolifer- note that the world has changed and Narayanan said that the assurances ated during the last two years discuss- the mandate needs to be "re-balanced". given to developing countries including the reasons for the impasse in the They claim that "emerging countries" ed: (1) that the needs and interests of WTO negotiations. Narayanan noted have benefited from the liberalisation the developing countries will be placed that the reasons behind the impasse undertaken by developed countries at the heart of the Doha work pro- include the impacts of the global eco- since 1948 and should pay back, he gramme (i.e. paragraph 2 of the Doha nomic crisis, and the slowdown of de- added. Ministerial Declaration); (2) that negoti- veloped economies associated with ations on all outstanding high rates of unemployment, limiting Narayanan highlighted that unlike "implementation issues" would be an their ability to offer concessions. the claims that "emerging economies" integral part of the Doha work pro- are achieving convergence with OECD He also indicated the unreasonable gramme (i.e. paragraph 12 of the Doha countries in terms of economic demands made on the so-called Ministerial Declaration); (3) that a clear achievement, the World Bank figures "emerging countries" like China, India, mandate for the implementation of (2012) show that the gap between and Brazil to make concessions mainly Article 20 of the Agreement on Agricul- "emerging economies" and the OECD for the benefit of developed countries. ture for further liberalisation of trade in countries persist in terms of per-capita agriculture will be developed; (4) that He added that unlike the Uruguay GDP. While average per capita GDP of the "less than full reciprocity" principle Round, developing countries have in- OECD countries was $41,225 in 2011, will be incorporated in negotiations creasingly garnered awareness and sen- it was $12,594 in Brazil, $8,070 in around non-agricultural market access sitisation of the implications resulting South Africa, $5,445 in China, $9,977 (NAMA); (5) that the liberalisation of from accepting binding commitments. in Malaysia, and $1,489 in India. trade in services will be pursued ac- Developing country coalitions like the Moreover, "emerging economies" cording to Article XIX of GATS, up- G33, NAMA-11, small and vulnerable are home to large numbers of the poor holding respect for the level of devel- economies (SVEs), LDCs, etc. have of the world, living below US$1.25 per opment of individual members and helped in collectively resisting the un- day, he said further. flexibility for developing countries; (6) reasonable demands, he said. that a commitment to the objective of As regards the outcomes of the Moreover, they realised that it is duty-free quota-free (DFQF) market upcoming Bali Ministerial Conference, better to ensure that the commitments access for LDCs will be upheld; and (7) Narayanan stressed that the credibility they undertake are ones that could be that a decision on commencement of of the global trading system necessi- negotiations on the "Singapore issues" implemented. Like-minded developing

Page 7 ● South Bulletin ● Issue 72, 13 May 2013 tates a balanced outcome at Bali that is in the interest of developing countries. He underlined that the Bali Ministe- rial should not become "the farewell ministerial for the Doha mandate". He added that the "Doha Round must be completed with the development mandate intact and on the basis of the single undertaking". He noted that the developed countries are strongly pursuing the initiative on trade facilitation as "early harvest", while marginalising the rest of the Doha mandate. A trade facilitation agreement would be binding on even small and vulnerable economies and LDCs. Under the present form, he said, Narayanan called upon developing the post-Bali period, based on a long- the trade facilitation rules are basically countries to resist the pressures to add er-term approach to the global trading an import facilitation agreement. new issues like investment, competi- system. Narayanan explained that early tion, and energy security to the negotia- harvest is only a sub-clause of Para- tions agenda, at the cost of the Doha He highlighted that three major graph 47 of the Doha Declaration. The Round. trends have emerged during the Doha Round impasse since 2008. main point of that paragraph is that all Narayanan added that a plurilateral negotiations should be carried on a services agreement applicable only to First, a large number of commenta- single undertaking basis. He added its members would not be WTO- tors and academics declared the Doha that a consensus decision on early har- consistent. He explained that Article V Round effectively dead; second, a vest should not upset the overall of the General Agreement on Trade in large number of writers argued that "single undertaking" nature of the ne- Services (GATS), dealing with the com- one of the reasons behind the impasse gotiations. patibility of economic integration aris that "emerging economies" are not He called upon developing coun- rangements outside the WTO, necessi- offering enough and should be gradu- tries to resist attempts and proposals tates fulfilling the "substantial sectoral ated out of the current developing aimed at changing the basic structure coverage" criterion. country status; and third, a new narrative on trade is emerging, revolving and modality of decision-making in the Moreover, adding such an agree- around "global value chains" (GVCs), WTO. ment as a WTO plurilateral agreement and linked to promotion of "new path- (i.e. as an Annex IV WTO agreement) He further stressed that the out- ways" for the WTO, said Ismail. come from the Bali Ministerial should has to be approved by WTO members necessarily include the core LDC is- exclusively on a consensus basis (based He explained that the policy pre- sues, including DFQF and cotton, as on Article X.9 of the WTO Agreement), scriptions passed to developing coun- well as the G33 proposal on food secu- he added. tries within this context focus on reducing barriers to these supply chains, rity. Narayanan cautioned that powerful including barriers to movement of Adding that agriculture has been WTO members are hoping for divisions the most important sector in the cur- among emerging economies. They try rent round from developing countries' to promote suspicion between perspective, he underlined that "emerging economies" as a strategy to "abandoning the agriculture negotia- attract them to join the negotiations on tions (built in Article 20 of the Agree- a plurilateral agreement. He noted a ment on Agriculture) will upset the heavy responsibility on "emerging rights and obligations arrived at, at the economies" towards other less- end of the Uruguay Round, to the dis- developed countries in order to ensure advantage of developing countries". that the idea of a plurilateral agreement does not succeed. He also reminded the conference that agriculture has been kept out of He concluded by underlining that the negotiating agenda for 60 years to "the long term interest of developed the benefit of developed economies. He countries is in the development of the added that the December 2008 draft developing countries". negotiations' texts are the products of Ambassador Faizel Ismail of South seven years of negotiations, and should Africa commenced his presentation by not be jettisoned. calling upon developing countries to prepare for Bali and what lies ahead in H.E. Mr. Faizel Ismail, Ambassador of the Perma- nent Mission of South Africa to the WTO

Page 8 ● South Bulletin ● Issue 72, 13 May 2013 goods and services. They include as from concerns around unemployment, for LDCs because of their negligible well an argument in support of the inequalities, and poverty. It does not weight in the world economy". LDCs trade facilitation agreement. consider the asymmetries of global have put forward the proposal of power that define the global economy, DFQF market access for their exports He added that the approach to "new he said further. in the first WTO Ministerial Confer- pathways" is reflected in attempts to ence back in Singapore (1996), he said. promote changes in the WTO negotia- As a strategy towards the Bali Min- tions away from the principles of single isterial Conference, developing coun- He said that in the Millennium undertaking and consensus-based deci- tries should put LDC issues, including Declaration (2000), the international sions, towards majority voting, issue- agriculture, as a priority, noted Ismail. community pledged to adopt a policy by-issue negotiations, request-and-offer He concluded by calling upon develop- of DFQF market access. Currently, approach, and plurilateral agreements ing countries to "build their own narra- most developed countries are imple- (i.e. agreements that have a narrower tive about what they want from the menting DFQF schemes while devel- group of signatories than the full WTO current Doha Round, and how they oping countries are increasingly tak- membership, and that apply only to view the multilateral trading system ing steps in this regard. On cotton, those signatory member states). and the key elements and principles WTO members reaffirmed their com- underpinning it". mitment at the Hong Kong Ministerial Ismail critiqued a report entitled Conference towards having an explicit "Enabling Trade: Valuing Growth Op- He added that developing countries decision. These issues have still not portunities", which was released by the have articulated many of these princi- been resolved, he added. World Economic Forum in collabora- ples, including inclusiveness, participation with Bain & Company and the tion, special and differential treatment, On plurilateral agreements, Sa- World Bank (January 2013). The report and equity. Still, there is urgency for ronga said that such arrangements claims that "reducing supply chain bar- developing countries to articulate their would lead developing countries and riers to trade could increase global vision on how the WTO needs to be LDCs to lose their special and differ- GDP up to six times more than remov- reconstituted and redefined, said Is- ential treatment flexibilities under the ing tariffs". He challenged the statistical mail. WTO. background behind this analysis, in- Mr. Lucas Saronga of Tanzania He added that while LDCs may cluding how barriers to GVCs are stressed that "MC9 should not be an not be targeted to join such agree- quantified. He also questioned the im- end of the line but a stepping stone on a ments, creating more plurilateral pacts of reducing barriers to GVCs on longer term roadmap leading to the agreements, such as the International growth and welfare. conclusion of the Doha Development Services Agreement, would eventually Ismail argued that such analysis Round" and that the "Doha Develop- lead to a "club" within a "club". Such makes simplistic assumptions that im- ment mandate should be respected and developments, he underlined, would ports create exports. This kind of sim- not eroded". have "systemic implications for the plicity pushes aside the debate on the WTO and will erode the multilateral He added that "the outcomes of need for active policies on national and nature of the institution", while under- MC8 should be respected and should be international levels to address benefi- mining the single undertaking princi- a basis for MC9", while "full participa- ciation, diversification, building capaci- ple. tion of all members, inclusiveness, and ty, and assisting developing countries transparency should be maintained". With regards to the trade facilita- to make real gains from trade and to tion negotiations, Saronga noted that move up the value chain. Saronga noted that the LDC issues "LDCs do not agree with ‘cherry pick- should be top priority to resolve despite He added that the arguments for a ing' of the agreement in its current the current impasse in the negotiations. self-regulating market remain divorced form". He stressed that "any outcome He added that "no balance is required on trade facilitation must ensure both internal and external development balance". As he noted, this would include "acquisition of capacity to implement the trade facilitation rules and obligations, and safeguards such as periodic implementation review mechanism to assess the extent to which the implementation of the new rules and obligations are contributing to the overall sustainable economic development of developing and least-developed countries". As regards early harvest, Saronga said that "if early harvest takes place, then it should include LDCs' issues A session on “Development Impacts of Bilateral Trade Agreements and Bilateral Investment Treaties” was that integrate them into the multilat- also held during the South Conference. Page 9 ● South Bulletin ● Issue 72, 13 May 2013 Often, she noted, the difficulty aris- es from the impact of trade facilitation measures on the economies of net- importing developing countries. The proposed trade facilitation text does not deal with how to stimulate their exports or how to address the resulting increase in their imports. The trade facilitation agenda as it stands will benefit net exporters. Net importers, on the other hand, could face the risk of dispute settlement challenges if they fail to implement the many trade facilitation measures that they would have to agree to as part of the agreement. Many developing A view of the participants during the South Conference. countries have not implemented any eral trading system", including duty- Accordingly, Saronga underlined, yet. free quota-free market access and cot- the extension is supposed to be auto- Williams stressed that special and ton. matic. He recalled that MC8 invited the differential treatment under the trade TRIPS Council "to give full considera- He stressed that implementation facilitation agenda should not be lim- tion to a duly motivated request from and special and differential treatment ited to longer implementation periods. LDCs". He called on the support of de- issues should be resolved as well. He She called for a different approach to veloping countries and other member cautioned that most of the 28 special trade facilitation negotiations, which states when the proposal will be dis- and differential treatment provisions includes safeguards for developing cussed in March 2013. and the monitoring mechanism as cur- countries, especially net importers, as rently on the table "have little or no Following the presentations by the well as impact assessments, especially value... and need to be improved". panellists, during the question-and- for LDCs and small and vulnerable answer session, Dr. Yilmaz Akyuz, economies. Saronga noted the attempts of de- chief economist of the South Centre, veloped countries to introduce new Mr. Chakravarthi Raghavan, editor explained that today's global produc- issues (i.e. investment, competition, emeritus of the SUNS Bulletin, said if tion chains are organised and con- energy security, climate change, etc.) as there is an attempt to incorporate a trolled by multinational companies replacement for completing the Doha plurilateral services agreement in the from the industrial countries. He added Round. However, he stressed that 20th WTO (the proposed International Ser- that the global value chain agenda is century issues, including implementa- vices Agreement, with conditional focused on pushing free trade, but tion, special and differential treatment, benefits to signatories only), it would holds much more dangers. The integra- as well as the LDC package issues, be a fraud on the Marrakesh Treaty tion in these networks of global produc- should be resolved first. and international public law, and de- tion is not governed by a country's developing countries should continue to On the LDCs' extension under the velopment strategy, but rather by the say NO. Developing countries should Agreement on Trade-Related Aspects profit strategies of the multinational refuse to accept it, he said. of Intellectual Property Rights (TRIPS), companies. Saronga explained that the extension of He also said that the "black-box" in Dr. Akyuz cautioned that the global the transition period for LDCs under the global value chain (the nexus of value chain narrative represents a nex- Article 66.1 of TRIPS ends on 1st of July trade, investment and services issues, us of trade, investment, and services 2013. However, the economic situation a bundle of negotiation agendas in- issues. Through this narrative, he not- of LDCs has not significantly changed cluding on NAMA, services and the ed, developing countries are being pre- in terms of technological base and the Singapore issues) to which Mr. Akyuz sented with a bundle of negotiation overall constraints they face. LDCs are alluded to contained within them an- agendas including on NAMA, services asking for maintaining the flexibilities other black box, namely, the ability of and the Singapore issues, all in a single in accordance with Article 66.1 of TNCs involved in so-called "global package. TRIPS as long as those constraints re- chains" to allocate their incomes and main. Ambassador Marion Williams, per- profits to jurisdictions like the Cay- manent representative of Barbados to man Islands where there is no taxa- He said that Article 66.1 of TRIPS the WTO, cautioned that the trade facil- tion, so that they avoid all taxes in all provides that the Council for TRIPS itation agenda as it stands facilitates countries incurring expenditures on "shall, upon duly motivated request by imports and not exports. She refuted infrastructures and where production a least developed country Member, the assumption that technical assistance and sale take place. accord extensions of this period". The on trade facilitation will solve the prob- LDC group has tabled a draft proposal Kinda Mohamadieh is a Senior lems facing developing countries. of a "duly motivated' request to the Researcher associated with the Arab NGO Network for Development, and TRIPS Council. currently based at the South Centre.

Page 10 ● South Bulletin ● Issue 72, 13 May 2013 The UN’s Post-2015 Development Agenda & the Rio+20 Follow Up discussed at South Conference The South Centre Conference in Geneva held a session on Sus- with quantitative targets and objec- tainable Development issues. This article focuses on two tives that are easy to comprehend. presentations on the UN’s post-2015 Development Agenda and The good intentions of the MDGs are hard to disagree with. However, the on the post-Rio+20 Summit process. accountability of the international community and national governments By Bhumika Muchhala framework is concentrated on the mul- has been a limited endeavour. This is tilateral system, in which there is a pro- partly due to the reality that the con- he South Centre held a conference active engagement on the part of indus- stituencies for poor people simply T in Geneva on 31 January – 1 Febru- trial countries. He noted that nothing is didn’t have voice or the power of ary, which stressed the importance of more ironic than the fact that UK Prime sanction. addressing national development strat- Minister David Cameron leads the egies and social development policies High-Level Panel. Thus far, developing As it turned out, the MDGs did not in the United Nation’s Post-2015 devel- countries of the South are at best reac- serve the larger strategic purpose of opment framework and in the follow- tive and at worst marginal to this pro- changing the discourse on develop- up to the Rio+20 Summit held in June cess. A repeat scenario of the past, ment. The limitations of the MDGs as 2012. where the MDGs were drafted by a a construction requires some evalua- small group of diplomats in New York tion of the concept and design of the The conference addressed im- and then presented to member states in MDGs as a framework. portant issues in the global economy the General Assembly, must be avoid- Conceptually, the MDGs present and in multilateral negotiations and ed. cooperation, including the imperative an outcome but does not set out a pro- of South-South cooperation, the impact Nayyar noted that the MDGs, for cess to achieve them. In other words, of free trade agreements and invest- better or worse, need to be considered a destination is defined but the jour- ment agreements on development and as a starting point. However, the future ney is missing. The MDGs do not ful- policy space in developing countries cannot and should not be a prisoner of ly consider the diverse positions at and the current economic problems, the past, he stressed. The international which countries are starting from in policies and prospects across Africa, community needs to look at what can their developmental pathways. The Latin America and Asia. be learned from the MDG experience. MDGs are also laid out in terms of Several key questions arise. First, is the aggregates and averages that often Deepak Nayyar, Professor of Eco- 2015 juncture the same or significantly conceal distributional outcomes. Its nomics at Jawaharlal Nehru University different than 2000? Second, what design, characterized by a multiplicity in New Delhi, India and Vice Chairman should be done by developing countries of objectives that span a wide range, of the South Centre Board, addressed in the national context? And third, has serious limitations as well. the UN’s Post-2015 development what can be done to reshape the inter- The MDG’s goals are set out in framework. national context so that it is more con- proportions, such as “half the number ducive to development? The Post-2015 development frame- of people,” and addresses good inten- work will establish the framework for The various reasons why the MDGs, tions such as literacy and preservation development priorities in the UN and much like the Human Development of biodiversity. However, Nayyar beyond starting in 2015. Since the year Index, caught the popular imagination asserted that some indicators are inap- 2000, the global development frame- are obvious. The MDGs were simple, propriate or misleading. There is a work has been largely characterized by the Millennium Development Goals (MDGs). The ongoing development of the Post-2015 agenda is taking place in the UN system through several processes, including national consultations and a High-Level Panel chaired by the heads of state of the UK, Indonesia and Libe- ria. Several UN agencies have also been carrying out thematic consultations on a range of topics such as inequality, governance, employment and food and hunger. Nayyar said that much of the dis- The panel for the session on “Climate change, Biodiversity, Sustainable Development Goals, the Post cussion on the Post-2015 development Rio Plus 20 process, and the UN Post-2015 development agenda” during the South Centre’s South Conference. Page 11 ● South Bulletin ● Issue 72, 13 May 2013 It must also be explicitly stated that  Employment creation provides the Post-2015 development framework the only sustainable means of poverty represents objectives for the world as a reduction. whole, which are not a scale to measure progress in every country because na-  Policies should not be prescribed tional goals must be formulated domes- once-and-for-all because there are tically, with the use of global norms as a specificities in time and space. point of reference.  External finance is a complement Second, structural inequalities must to but cannot be a substitute for do- be analyzed in any assessment of out- mestic resources. comes. It is necessary to monitor pro- The role of the state remains criti- gress at a disaggregated level or com- cal in the process of development. pute statistical averages by introducing some weights that reflect the distribu- The Post-2015 development frame- tion among people. This is essential work must at its outset acknowledge because inequalities exist and distribu- that we live in a world that is signifi- tional outcomes matter. cantly different from the world in 2000. The consequences of the global There are two ways in which this financial and economic crisis has Prof. Deepak Nayyar can be done. The simplest method worsened development prospects in th would be to focus on the bottom 1/4 many developing and even some de- misplaced emphasis on stepping up the or poorest 40% of the aggregate nation- veloped countries. It is now clear that rate of economic growth. Indeed, the al population. Spatial inequality can be the developing world is not immune, formulation of the indicators reveal the seen through disaggregated evidence at but rather more resilient, from what ways in which the MDGs have been provincial or regional levels. happens in the world economy. The misunderstood, misused and misap- looming menace of climate change propriated. For example, global norms And third, it is imperative that the and all its consequent impacts on eco- have been presented as national targets new framework for 2015 and beyond nomic, social and food security, also and the dominant economic and social must incorporate the means rather than persist. ideology of our times, which is ortho- simply focus on ends. In other words, dox, have not been questioned or chal- something needs to be said not only on Furthermore, Nayyar highlighted lenged. outcomes but also on process. Howev- that deprivation is no longer about er, there must be resistance to the temp- developing countries alone. There is Nayyar stressed that more of the tation of setting out specifics of policies. relative, absolute deprivation in devel- same cannot be an option, the Post- Rather, the intention should be to pro- oped countries as well, as witnessed in 2015 framework has to be different. duce an outline through which coun- the profound increase in economic However, it is to be accepted that there tries have the freedom to follow their inequalities both between countries will be genuine differences of opinion own national development policies. and among people. Inequality is in- between countries and constituencies creasingly difficult to sustain in demo- on framing the Post-2015 development It is important that the Post-2015 cratic politics. The idea of austerity framework. In particular, achieving development framework avoids an at- now for prosperity later is something political consensus on the means of tempt to produce generalized prescrip- people are not easily willing to accept. implementation will be exceedingly tions or universal blueprints. Policies Democratic change must be on the difficult. Developing countries will and strategies must evolve at a national horizon, especially with the reality of need voice and influence to focus on level as times and circumstances industrial societies aging and ongoing equitable growth, aid, and improved change. However, the framework significant international migration governance. could enunciate some general propositions that are suggestive rather than despite draconian immigration laws. For the MDGs to be substantially definitive or exhaustive. The Post-2015 development frame- changed into its future incarnation, work must also acknowledge a shift in Nayyar presented three points of de- Some examples of suggestive and the balance of global economic power parture. First, it is imperative that general propositions are the following: in the world that is discernible now in there is structural flexibility at the na-  Economic growth is necessary but a way that it wasn’t in 2000. However, tional level. It is necessary to recognize not sufficient to bring about develop- while the share of developing coun- the possibilities of some interdepend- ment. tries GDP in world global GDP rose to ence among objectives and some trade- its highest in 2010, the influence and offs between objectives. For this pur-  It is necessary to create institution- voice of developing countries in the pose, the new framework should state al mechanisms that would transform policymaking fora of the international in its premises that development objec- economic growth into meaningful de- community remains negligible. tives are a norm rather than a floor or a velopment by improving the living con- ceiling. They should also state that ditions of people. Public action is an Abandon MDG 8 and start development outcomes are illustrative integral part of this process. over rather than exhaustive, and suggestive rather than definitive. On Goal 8 of the MDGs, which is the global partnership for development,

Page 12 ● South Bulletin ● Issue 72, 13 May 2013 because it means that ordinary people have purchasing power. On the other hand, domestic markets are also in- strumental because they can drive the process of growth in ways that rely on domestic resources and productive capacity. In rethinking development, there is a vital need to restore the balance be- Nayyar argued that Goal 8 should be which is coming from many different tween states and markets, for the pen- abandoned and the Post-2015 should sources. dulum has swung too far in the direc- start over in defining and committing tion of markets. So much of what To revive the idea and plan of a na- to changes in the international financial needs to be done needs to be done by tional development strategy, macroeco- architecture. Simply put, the interna- states. Governments are accountable nomic policies must be reformulated. It tional community needs to do better on to people, markets are not. A crash in is essential to return to a developmental this unfinished business of the global stock markets is a system failure, but a approach in macroeconomic policies, he partnership for development. Its es- crash in government has grave conse- said, in the prioritization of short-term sence should be indeed that of partner- quences. countercyclical monetary and fiscal pol- ship, not patronage, which is the result icies with an eye toward long-term de- of an aid-dominated discourse which Martin Khor, executive director of velopment objectives. leaves much to be desired. the South Centre, addressed the future of sustainable development and the For this, economic growth with hu- Even if all the official development onset of an intergovernmental process man development must become an inte- aid had been committed with good in the UN to formulate sustainable gral part of the mandate of financial intentions, it would not have solved the development goals (SDGs). ministries and central banks. Long- problem. Evidence and experience term poverty reduction is only possible suggest that aid is a mixed blessing, Khor outlined three immediate through such an approach. Education often turning out to be an equivalent of follow-up actions to the Rio+20 sum- and social consumption in health and the ‘natural resources curse.’ It is clear mit of the UN on sustainable develop- public goods must be scaled up. Sub- that for developing countries, rather ment, which was held in June 2012 in stantial investments in infrastructure than an overwhelming focus on exter- Brazil. The first follow-up action is the must be made. And exclusion must be nal finance, access to medicines, tech- establishment of the SDG process. The addressed, particularly through the nology and markets is imperative and second is the creation of two groups in widening of social safety nets and gov- would serve to reduce some of the the UN that will address the means of ernment programs. asymmetries in development. implementation (financing of sustainable development) and technology. However, it is not sufficient to speak Goal 8 as it currently stands should And the third is the establishment of a about ‘inclusive growth’ as govern- be abandoned, and three key actions in High-Level Political Forum for sus- ments often do. Rather, it is necessary the international context should be fo- tainable development. to ensure that the process of growth is cused on. First, remove the asymmet- pro-poor. Employment must be placed rical relations within and between rich The first action, the SDGs, is cur- at the center-stage in the 2015 process. and poor countries. Instead of more rently preoccupying UN missions in The critical importance of public action performance criteria for developing New York. The establishment of the must be stressed, in that the develop- countries, there ought to be a more Open Working Group on the SDGs is mental role of the state is critical across equal partnership. The asymmetries in now complete. However, there is an the entire spectrum of what needs to be the development framework should important question of what develop- done. also be removed, in particular by ad- ing countries want out of the SDGs. During the Rio+20 process, European dressing the various protectionist poli- It is imperative that the moral au- countries had at first come up with the cies of developed countries. thority of the state is restored. The state idea of a Green Economy Road Map. has been eroded in the current era of Second, increase the policy space However, they did not succeed. In- market fundamentalism. Illogical con- for developing countries that has been stead, the concept of Sustainable De- clusions about the state have been made encroached on through the internation- velopment Goals was accepted. by using the select examples of inept al regimes. And third, move toward and corrupt governments. But govern- the logic and spirit of international co- Towards the end of the process, ments cannot be replaced with markets. operation and solidarity and away European countries proposed six or seven SDGs in order to create some- from the history of asymmetrical and Nayyar emphasized that the exter- thing concrete in the summit. Their unjust policies and systems. nal and internal must be viewed in goals were on the environmental side. terms of markets and resources. Exter- Prioritizing a development-oriented Developing countries argued it was nal markets must be a complement not too early to adopt a few SDGs. There national policy strategy substitute for domestic markets, which should be economic and social goals Nayyar asserted that there is a global are critical for development. We need as well, as the idea of sustainable de- momentum toward the role of the state to remember that domestic markets are velopment is to recognize that envi- and national development strategies, at one level constitutive of development ronmental crises exist alongside eco-

Page 13 ● South Bulletin ● Issue 72, 13 May 2013 nomic and social crises, and that in space for developing countries to pro- replaced with just a forum, then how order to address environmental issues, mote social development and a re- is the Rio+20 outcome document go- social and economic issues have to be orientation of the international intellec- ing to be implemented, Khor asked. simultaneously addressed. tual property regime to enable social With regard to the follow-up pro- development in developing countries. The SDGs thus have to be walking cess for the financing of sustainable on three legs, that of economic, social High-Level Political Forum development, Khor emphasized that and environment. These three legs are must ensure substance of sus- developing countries need to address the cornerstone of the SDGs, and devel- tainable development the issues of technology transfer and oping countries would not accept the development. There are significant articulation of goals based solely on Khor also addressed the establishment hurdles, as developed countries were environmental factors. The task now is of a High-Level Political Forum (HLPF) very reluctant to have any wording on to articulate goals in all three pillars. which is going to address sustainable technology transfer during the Rio+20 development. In adopting the Rio+20 negotiations. In the area of environment, the outcome document in the General As- goals could be selected from issues sembly it was agreed that the Commis- Khor also highlighted the need for such as: climate and atmosphere, biodi- sion for Social Development (CSD) a home for the SDGs, which logically versity and forests, oceans and seas, would be replaced by the HLPF. should be the HLPF. In essence, the toxic chemicals and wastes, sustainable MDGs never had a home. Although agriculture, water, and energy. Consequently, the issues of the CSD the UNDP and DESA, to some degree, would be addressed in the HLPF. Khor coordinated the functions and process- Khor stressed that the challenge said that the HLPF must have a strong es of the MDGs on the national level, now is to come up with the economic organisational base and adequate num- the MDGs never had a formal secretar- and social goals. Some examples of ber of days in a year for meetings to iat. economic goals for the SDGs are to reg- cover the sustainable development is- ulate financial markets to prevent fu- sues. It must be stronger than the CSD. A secretariat must be established ture financial crises, to re-orient the But some countries seem to want a for the HLPF in order to ensure that it financial system to meet the needs of weak organisation instead. Khor will remain strong and influential, and the real economy, to prevent and stressed that this would be an unfortu- to ensure that it will meet for more properly manage external debt crises, nate development, because it will most than two weeks per year. The Human to address the volatility of commodity likely reduce the substantive issues in Rights Council in Geneva meets 250 prices and markets, to achieve ade- the CSD to a few roundtables held dur- days per year, with many subsidiary quate and inclusive growth and to have ing the annual General Assembly ses- bodies and processes. a balanced set of macro-economic poli- sions held in September of each year. It The HLPF for sustainable develop- cies and goals. would be tragic for developing coun- ment should also ideally become an Social goals for the SDGs can in- tries to have the substance of CSD re- organization of 100 or so professionals clude, for example, the reduction of placed with panel sessions. working on sustainable development social inequalities and achievement of There may be weaknesses in the issues. Such an organization would greater equity between and within CSD, but there is a secretariat, pro- then work alongside implementing countries, full employment and ade- gramme of work and 2-3 weeks meet- bodies such as the United Nations quate rural livelihoods in the formal ings per year. If this entire establish- Environment Program and the Food and informal sectors, adequate policy ment of the CSD is closed down and and Agriculture Organization. The HLPF could then also ensure that important economic and social issues that are integrally connected to sustainable development would also have a home. However, Khor noted that a key challenge for the HLPF is that it would have to interface with the Economic and Social Council (ECOSOC). If the reform of ECOSOC takes a number of years, as it has done for many years in the past, then during that process of revitalization there might be a vacuum where in the absence of the CSD there may be no operational forum or council for sustainable development.

UN Photo Bhumika Muchhala is a Senior Researcher with the Third World Network. The UN General Assembly established a working group in January that will focus on the design of a set of sustainable development goals (SDGs) to promote global prosperity, reduce poverty and advance social equity and environmental protection.

Page 14 ● South Bulletin ● Issue 72, 13 May 2013 The State of Multilateral Affairs and South Centre Activities 2012 At the annual meeting of the South Centre’s Council of Representatives, the Executive Director Martin Khor presented the following report of the Centre’s activities in 2012. INTRODUCTION cluding research, convening of meetings, negotiating support, participation Developing countries faced many chal- in international meetings, and publica- lenges in the year 2012. There was a tions. The issues covered included further weakening of the global econo- global finance and economy, trade, IPR my, due to the continuing crisis in the and innovation policies, climate change European region and the uncertainties and sustainable development. in the US economy due to the possibil- ity of the “fiscal cliff”. Many develop- On issues relating to the Global ing countries experienced a decline in Economy and Development, the South their GDP growth rates. Centre was deeply involved in the UNCTAD XIII session in Doha in Multilateralism also seemed to be April, as well as the preparatory pro- weakening as the developed countries cess. UNCTAD XIII was a turning challenged the hitherto widely accept- point for UNCTAD and multilateral ed principles such as common but dif- relations. The G77 and China fought a ferentiated responsibilities, technology tough battle to have the UNCTAD transfer and new and additional finan- South Centre Executive Director Martin Khor pre- mandate reaffirmed, and to enable cial resources. After often acrimonious senting the Centre’s report of activities. UNCTAD to continue its work on sev- negotiations, there was an agreed out- eral areas such as the global economic porting G77 and China and several come in two important events, crisis, finance, debt and macroeconom- developing countries in preparing for UNCTAD XIII and the Rio plus 20 ic policy. The G77 and China eventual- the UN General Assembly high level Summit. But the lack of international ly succeeded in having the UNCTAD conference on the global economy and cooperation was also evident in the mandate reaffirmed. The Centre sup- finance, held in May. The Centre’s WTO (where the Doha Round contin- ported developing countries and the chief economist held two meetings, ues its impasse) and the climate change G77 and China in this effort; as well as and the ED held one other meeting, negotiations. Nevertheless, the devel- an initiative by former senior officials with the developing countries to brief oping countries generally maintained of UNCTAD in highlighting their the developing countries on the state of their unity in several negotiating fora, views in support of UNCTAD. The the global economy and the impact on and they successfully implemented the Centre was invited to be a keynote developing countries. The Chief Econ- Summit of the Non Aligned Movement speaker in the G77 and China Ministe- omist was a key speaker at the UNGA in Tehran. rial meeting at the start of the conference. The Centre also advised ACTIVITIES UNCTAD XIII session. the developing countries on re- activating the UNGA ad hoc working The Centre continued to conduct a On the global economic crisis, the group on the financial crisis. The Cen- broad range of activities in 2012, in- Centre played a significant role in sup- tre published a new book, “Financial

The Non-Aligned Movement Summit in Tehran, August 2012. The South Centre table at the NAM Summit.

Page 15 ● South Bulletin ● Issue 72, 13 May 2013 by developed countries. They also the world economy and Brazil with maintained policy space on the green MINDS and BNDES; (3) three South economy and sustainable development Centre personnel taking part in three goals, while its proposal for a new out of the seven official Sustainable high-level political forum on sustaina- development Dialogues; and (4) meet- ble development was accepted. How- ing political leaders. The Centre in- ever there was a weak outcome on fi- tends to be active in the follow up pro- nance and technology. The overall lev- cess. el of ambition for urgent action in the The UNFCCC climate negotiations face of global ecological and economic resumed after the Durban decision to crises was low in the final outcome. An initiate negotiations for a new Durban important achievement however was Platform (either a legally binding re- that there are important follow up pro- gime or an agreed outcome with legal cesses that could lead to longer-term force). The Centre organized a three- gains. Besides its support and advocacy day brainstorming and strategy meet- role, the Centre was also active in (1) ing in March in Geneva and then host- holding an official side event on ed a series of meetings in Bonn for Rio+20; (2) co-organising a seminar on UN

The South Centre’s Chief Economist Yilmaz Akyuz speaking at Roundtable 3: “Limiting commodity price fluctuations , increasing production, trade and investment” at the UNGA’s High Level The- matic Debate in New York in May 2012.

Crisis and Global Imbalances, a Devel- opment Perspective”, which put together various research papers written by the Chief Economist on the global financial crisis and the effects on developing countries. A new research paper, “The Staggering Rise of the South?” was published; it questioned the theory of de-coupling and the view that the developing countries were about to overtake the North in future performance. The Centre also co organized a three-day NGO strategy meeting on finance and development in May, with The South Centre held a side event to the Rio Plus 20 Summit held in Rio de Janeiro in June 2012. about 50 NGOs and resource persons attending. The Centre also took an active role in organizing two sessions at the conference of the Turkish Eco- nomic Association held in Izmir in Oc- tober, which was attended by several senior policy makers and academics. The Rio+20 summit (20-22 June) was held in Brazil, and there were four preparatory meetings (three in New York in end-March, end-April and end- May; and the fourth in Rio on 13-19 June). South Centre was active in monitoring the negotiations and supporting the G77 and China and many developing countries, by holding several meetings, and preparing papers and proposals on various topics. The G77 and China eventually succeeded in obtain- ing most of their negotiating objectives, especially in reaffirming the Rio principles and the common but differentiated responsibility, in the face of resistance The South Centre held a Forum on the Results of Rio Plus 20 and the Future of the Sustainable Development Agenda at the Palais des Nations in Geneva in July 2012.

Page 16 ● South Bulletin ● Issue 72, 13 May 2013 some like-minded developing counties to prepare the case for an equity based approach to the Durban Platform. The cooperation and coordination of such a group developed significantly in May at the Bonn session. The Centre’s ED also spoke at an important UNFCCC official climate equity workshop in Bonn. The Centre was also active in the UNFCCC session in Bangkok in August/September and then assisted in the meeting of a like-minded group held in Beijing in October. The Centre played an active role in the Conference of Parties (COP18) in Doha in Novem- ber/December by providing resource persons and organizing or taking part Delegates at the South Centre’s Council meeting responded positively to the report of the Centre’s in several meetings, including a meet- 2012 activities. ing of Ministers of developing countries organized by Saudi Arabia, and its eral, access to health technologies, ac- versary congress of the Indian Drug own side event. cess to knowledge, traditional Manufacturers’ Association in which knowledge, disclosure and benefit he urged the Indian generic companies Besides the UNFCCC, the Centre sharing in genetic resources, and na- to continue to supply quality generic has also been following the progress in tional IP and development strategy. medicines for the developing coun- the Inter-Governmental Panel on Cli- The Centre continued to hold meetings tries. mate Change (IPCC), with several ex- to support developing country delega- On trade and development, the perts from the Centre reviewing the tions to prepare for meetings at the South Centre focused much of its re- first-order draft of the mitigation work- WIPO, in several meetings relating to a sources in assisting the African Union ing group. The Centre also co- range of topics – the development as well as specific African countries organized a meeting of expert review- agenda at WIPO, copyright, patents and groupings, such as the east African ers and lead authors of the IPCC work- and genetic resources/traditional Community, in developing alternatives ing group to review the first-order knowledge. The Centre continued to to the EU’s model of EPA for the ACP draft. support the Development Agenda countries, as well as to counter argue Group of developing countries espe- The Innovation and Access to against the new EC policy in removing cially at the WIPO negotiations. The Knowledge and IP section was also trade preferences (including GSP and Centre co-organised a meeting of Am- active in supporting developing coun- GSP-plus) for several non-LDCs. The bassadors and high-level officials from tries in negotiations at WIPO, WHO, Chairman also made a keynote speech capitals of the Development Agenda WTO, FAO and UNFCCC. South Cen- at an important EAC meeting in Group during the WIPO General As- tre personnel took part in activities and Arusha while Board member Charles semblies. meetings not only in these institutions Soludo published extensively on the but in a wide range of academic, schol- The Centre was also active in health issue in African publications. The Cen- arly and NGO meetings. The issues and development issues. It also took a tre, together with the AU commission included IP and development in gen- leading role in the initiation and devel- and ACP secretariat have jointly development of the idea of a global R+D oped an alternative trade preference treaty for medicines and other health scheme for Africa. The Centre is at- products that are especially required tempting new ways of addressing the by developing countries. The Centre’s issue in the months ahead. IP and technology advisor played a The Centre has also been monitor- leading role in the WHO expert group ing developments at the WTO, includ- on R+D to develop this idea, and he ing the emergence of new issues such and the Centre’s health advisor also as “global value chains” and the con- played significant roles in the discus- tinuing attempts by developed coun- sions at the World Health Assembly, tries to reintroduce “new issues” while leading to a resolution that takes this avoiding old commitments especially concept a step forward. The Centre in agriculture. The Centre has been also began to participate in the meet- providing support to the Friends of ings of the protocol on tobacco control Development group in WTO. The linked to the WHO. The Centre was Centre co-organised a session on the also invited by WHO to take part in its future of the trading system at the advisory group on production of ge- The South Centre’s Special Advisor on Trade and WTO Public Forum. Towards the end neric medicines in developing coun- Intellectual Property Carlos Correa speaking dur- of the year, the Centre supported the tries. In January, the ED was invited to ing the Centre’s side event to the WIPO 50th efforts of the LDC Group to submit General Assemblies in October 2012. be a keynote speaker at the 50th anni-

Page 17 ● South Bulletin ● Issue 72, 13 May 2013 proposals for the extension of the ex- emption period for LDCs in relation to the TRIPS Agreement. The Centre also participated and spoke at the LDC Group retreat organized in November. The media and publications work of the Centre expanded in 2012. Regu- lar monthly issues of the South Bulletin were produced, with focus on various issues, including the state of the global economy and developing countries’ economies; two issues on UNCTAD XIII and the Rio Plus 20 negotiations; the NAM summit; on the EPAs and the impasse at the WTO negotiations; and the emerging crisis of investment agreements. The translation unit continued its work of translating South Bulletin and several research papers and other documents into French and Spanish. The Centre also published The South Centre held a Workshop on the State of the Global Economy and Reflection on Multilateral three books, on the global economic Negotiations in Geneva in February 2012. situation; a handbook on pharmaceutical patents; and a bibliography on arti- intends to expand its activities of re- and other processes. cles and books on access to medicines. search, analysis, convening of meetings To enable the expansion of the Cen- The Centre also published several Re- and cooperating with countries as well tre's activities in 2013 and beyond, it is search Papers, briefing papers and ana- as with organisations of the South. necessary for the Centre to obtain addi- lytical notes. The Centre also expand- The year ahead is also very chal- tional financial and human resources. ed its publication of SouthNews and lenging, with many important interna- We hope that the member states of the SouthViews and is in the process of tional processes taking place, including Centre will increase their contribu- revamping its website. the start of the UN’s post 2015 Devel- tions, through the annual contributions The administration section contin- opment Agenda, the WTO negotiations and through special contributions be- ued with its work to support staffing, towards the Ministerial Conference in yond the annual contributions that can financing and other activities. Bali at the end of the year, the FTAs be made to the overall operating funds and EPAs, the climate negotiations at or to more specific projects. Two Board meetings were held in UNFCCC, the follow up to the Rio Plus 2012. The first meeting was held in The Centre looks forward to work- 20 Summit including the establishment Geneva in February, with associated ing with the member states, the devel- of the sustainable development goals activities being a reception was held for oping countries in general, and with (SDGs) and the several meetings at diplomats, and a two-day conference civil society in the year ahead. WIPO and WHO. The South Centre on the State of the Global Economy and hopes to participate actively in these Reflections on International Negotia- tions. The second meeting was also held in Geneva, with a half-day seminar on developments in sustainable development, particularly the Rio plus 20 summit. The year 2012 marked the passing away of Board member Angela Cropper as well as the resignation due to health reasons of Leticia Ramos Sha- hani of the Philippines. The annual meeting of the Council of Representatives was held in January in Geneva. It elected H.E. Ambassador Abdul Minty of South Africa as the Convenor of the Council for a three year term. It also welcomed a new member state, Ecuador, and appointed a new Board member, Youba Sokona. CONCLUSION The South Centre together with the Third World Network and the Arab NGO Network for Development Looking forward to 2013, the Centre organised a study week for Arab NGOs at the South Centre in December 2012.

Page 18 ● South Bulletin ● Issue 72, 13 May 2013 The First BRICS towards a South Bank? A member of the South Commission (1987-1990) reflects on the moves by the recent Summit of the BRICS to establish a BRICS development bank – an idea that the Commission had promoted.

trade, production and investment, education, or science and technology need adequate financial resources to be viable.” “...We have selected several areas in which cooperation in financial matters or financing of cooperation in economic ca wants to put forward her continen- matters is greatly needed…In the long- tal identity. er run we envisage new institutions. Notably a south bank which would As we have known over the sever- initially finance trade and ultimately al decades from being colonized provide development finance.” states, to being so-called liberated countries, the Western media reports Lest we forget the leader of the us to each other in the most negative South Commission, Dr. Julius Nyerere terms. South Africa in Indian media is could anticipate, as far back as in 1987, seen as ‘dangerous to walk in the the dangers that lay in store for the streets, crime everywhere, and rape countries in the Southern continents if every three seconds crumbling with they did not form their own economic severe unemployment. ‘The Rainbow clubs and mobilize their own resources nation’ is only a dream’. Similarly one to design their own political economy can read South African newspapers destiny. He would often refer to the EU depicting India as corrupt, full of vio- as a model of self-strengthening, as well lent rapes, entrenched casteism, you as the OECD secretariat in Paris, to ar- name it. By Devaki Jain gue that we need similar consolidation of our economies apart from regular When I visited South Africa earlier or those of us who participated in key intelligence to enable us to keep this month, after a break of ten years F the South Commission and in the going as was provided by OECD secre- and spent more than ten days in three preparation of its report and recom- tariat to the EU governments. cities, and read the newspapers I real- mendations, the ` announcement of the ized how much of the news we receive Nations such as the members of the setting up of the BRICS bank, at the is misleading. BRICS group have woken up to the idea BRICS summit in Durban , is a mo- of bonding across our continents , after The Finance Minister is a confident ment not only to celebrate but to reflect the economies of the North went into leader and holds much strength, the (BRICS comprises Brazil, Russia, India, crises and really ran a tsunami over the parliament and its committees are China and South Africa). Further, its Southern countries too, who had be- functioning vigorously, inter African raison d’etre being to claim some au- come more engaged with them than meetings are galore. The one I attend- tonomy from the traditional Bretton each other. The meltdown of 2008 and ed was convened by the inter- Woods Institutions is heartening. This the later financial crisis in the parliamentary union of Africa in a hall was in fact the reasoning behind the “advanced” countries have woken up in Johannesburg , meant for their South Commission’s recommendation, the BRICS. meetings which I believe takes place in chapter four of the report, “The four times a year. Challenge to the South”, which was It does not surprise me to read that released in 1990. South Africa had mobilized all the na- The newspapers were so similar to tions of South Africa and all the many India’s newspapers, full of political In “The Challenge to the South” the economic commissions within the conti- and economic news, unlike many oth- idea of a South Bank was also derived nent to attend the BRICS conference. er countries’ papers which basically from the same analysis and towards For all its internal troubles and frac- are glossies. There are announce- the same purpose – a form of liberation tured states, the African continent as- ments of programmes and new laws as well as a form of sharing of wealth pires and seems to have succeeded in by the various Premiers of provinces, and opportunity within the South fami- that aspiration to unite itself as a conti- which is similar to our Chief Ministers ly. Therefore one could argue that it nent and not as a summation of indi- of states, of what they are doing. There was more inclusive, as seen in pg. 165 vidual nations. Whether we recall the is constant debate of the National De- of the Report: “Finance has proved to famous appeal by a former President of velopment Plan, columns with debat- be the critical missing link in the entire South Africa, Thabo Mbeki in his poetic ing controversies. Where they beat us range of south south activities. speech – I am an African – or the struc- Indians, the most news hungry people Schemes of cooperation whether in tural power of the African Union, Afri- in the world in my opinion, was that

Page 19 ● South Bulletin ● Issue 72, 13 May 2013 AFP | Getty Images Interestingly, the original BRIC as None other than Goldman Sachs’ Brazil, of the century At the turn After O’Neill’s coinage they held as both conceptSince then, BRICS show. But any initial magnanimity soon gave way to self-interest: US and of the World dominance European was to respectively IMF Bank and the be a Western “consensus” imposed on the world like a global neo-colonial regime. both a term and a grouping originated four countries the initial not in any of US in the but the developing world, or itself. Asset Management Chairman Jim O’Neill coined 2001 for the term in would out- those countries he believed total GDP by 2020. pace the US in Russia, India and China were merely regarded by some as emerging economies developing under their own steam. and invited in 2009 their first summit a South Africa later, to join them year and BRICS was born.

ive countries came together at the the together at ive countries came international to grab end of March Those institutions were never Those institutions were never The annual BRICS summit held The annual BRICS summit held And they would do so in the most BRICS leaders (From L): Indian Prime Minister Manmohan Singh, Chinese President Xi Jinping, South African President Jacob Zuma, President Dilma Rousseff of Brazil and Russian President Vladimir Putin. meant to be that way, of course, as a meant to be that way, of course, founding texts would of their reading during the last week of March in Dur- during the last week ban, South Africa, focused on what that muscle challengecan do the – International Bank and the World develop- the way Monetary Fund in as well as is conducted, ment finance the Western dominance that has pre- Woods institu- vailed in both Bretton tions. tried-and-tested way imaginable: fi- nancially, as a single economic entity. As a bloc BRICS may effect change on a global scale, but the grouping would traditional way of the still do so in flexing economic muscle. headlines over how they might, as a headlines over how they might, as Brazil, Rus- world: group, change the sia, India, China and South Africa (BRICS). By Bunn Nagara F A prospective being set up by the new financial architecture to reform and improve countries promises BRICS development the world. finance for BRICS Bank: Doing Doing Bank: BRICS Differently? Development

Commission. member of the of the member

Issue 72, 13 May 2013 2013 May 13 72, Issue ● South Bulletin ● Devaki Jain was a South Commission (1987-1990). The In preparation Sum- for the BRICS so ago when hus- A decade or my the conti- We read every day how But Julius Nyerere otherwise called follow up on the reportfollow up of the South South Centre initially formed to was mit, therewere and campaigns mobile exhibitions and arrangements to hold discussions not only all over South the on the continent all over but Africa to bring and how meaning of BRICS South Africa as a strong leader sup- continent. ported by the the presented his LC Jain band the late President Nel- then credentials to the expected be acceptanceson Mandela entitled his he can As speech as “Africa CONTINENT - the HOPE”. OF of the faith President loved the idea the speech, and wanted a expressed in copy of the argument on which LC Jain had built his speech! in nent of Africa is the most endowed wants, of the world all that the rest of namely energy, natural resources, oil. lack understanding with our This matches from or description of what colonization suffers of So this continent was all about. she as hope is also at vulnerable extremely time, this financial strength as well as stable gov- to world wants ernments, while the harvest her resources. Mwalimu, Teacher, was acutely aware of this, of the vulnerability of the Afri- can continent and was appealing to all the South countries especially China and India to be the leaders of real eman- economic namely emancipation ancipation extension of what Gandhi– ji called economic freedom for the more vulnerable countries.Thus while BRICSfirst is the brick in memory of vision its Nyerere, Julius Mwalimu needs to match the purpose he had in equitableto build an and non- mind - exploitative economic south. every lamp post had a poster, a double a poster, had a lamp post every sizefoolscap stuckrectangle on flat with very pole, to the , tied matting capitalbold large giving the letters political previous hour, latest, almost Johan- drive, whether in news as you nesburg or Pretoria. Page 20 and entity has had vigorous growth half-empty? tries now work within a global capital- and a vibrant youth. It compares fa- ist system. Some of the most difficult decisions, vourably with the IMF and the World such as financing modes, remain unre- President Vladimir Putin, often Bank, both pushing 70 years and solved. Its primary purposes like the cited in Western circles as a modern weighed down by limiting conditional- operation of funds in project financing incarnation of the Soviet bear, even ities and outmoded economic ideology. and a contingency fund as crisis buffer insisted that a new global bank “must Both institutions typically adopt a will take more time to work out. work on market principles only.” And cold, mechanistic approach to develop- “communist” China is not only a major Pessimists may cite how the ab- ment that prioritises market interests and enthusiastic player in global mar- sence of agreement on even the quan- over human needs. Their Western bias kets, but – to former British foreign tum of fund contribution from each is also a throwback in a 21st-century minister David Miliband – has even country bodes ill for BRICS. Basing the world of shared global interests and acted as a saviour of Western capital- contribution on economic capacity aspirations, and a world in which ism. makes sense, but concerns were ex- Western economies themselves are in pressed over how that would inevita- What worries fans of the IMF and trouble. bly make a hulking China dominant. World Bank is not how a new global In contrast, BRICS as a bloc of bank as competitor will “steal their A standard sum of US$10bil emerging economies serves as a bridge business,” but how it may force both to (RM31bil) from each country as seed between the developing Third World be more democratic and more sympa- capital was then considered, following and the developed First World. It seeks thetic to the developing world. Who a Russian proposal, but the final deci- to narrow that yawning chasm by fo- else but those currently dominating sion was left until later. cusing on reviving global growth and them in Washington and Brussels ensuring macroeconomic stability. would object? Those virtues that had once been Japan as an emerging economy it- the preserve of the West have become self decades ago had its chance to forge its elusive goals. The “developed” and a new alternative in international fi- the “emerging” (mostly, once nance with the Asian Development “developing”) economies have traded Bank, but blew it. places. The former coloniser in Asia seek- The new global bank that BRICS ing to make good in its post-war peri- wants to establish is expected to em- od, with US partnership, soon settled phasise infrastructure development into establishment mode alongside its and trade. The first represents solid Bretton Woods equivalents. A new investment in development for the fu- Optimists would say that far from global bank established by BRICS will ture, and the second works as an eco- weak indecision, this showed an open- be a welcome addition to the existing nomic multiplier for further growth. ness about not wanting any country to financial institutions. dominate, with agreement on equality On paper, BRICS countries account Its continental and political diversi- with a fair and manageable quantum for almost half the world’s population ty would also make a slide into betray- for all. and just over a quarter of world trade. ing its noble purpose more difficult. But more important than these bare However, realists may say that in Late last year, Brazil suggested that figures is how BRICS economies have such financial matters China would the proposed bank should be modelled been driving global growth for years, still eventually dominate. To that, it can on ASEAN’s Chiang Mai initiative. as acknowledged by the World Bank be said that dominance by a single itself. country was never a problem before, This is a time for a sharing of expe- given the prominent US role and influ- riences when each can learn from the The idea for a new global bank ence in the World Bank and the IMF. rest, not of jealous exclusion and un- arose only last year. So how the meas- founded fears of rivalry. ured progress at the Durban summit is At this point some may say it was perceived depends at least as much on precisely because of single-power dom- In time, perhaps even the World the observer: is the glass half-full or inance that had compromised the work Bank and the IMF can find it in them- of the Bretton Woods institutions. It selves to accommodate and welcome might then be observed that a new new financial institutions operating on global bank dominated by China their “turf”. would only balance the World Bank At least that would help them re- (and the IMF), which it would comple- turn to their initial noble calling. ment rather than replace. Some observers may see crippling Bunn Nagara is a senior Malaysian incompatibility in the different political journalist and a columnist in the Ma- systems within BRICS. laysian newspaper The Star, in which this article was published. But such diversity need not be an obstacle, particularly when all coun-

Page 21 ● South Bulletin ● Issue 72, 13 May 2013 Why Chavez’s Legacy Will Live On The death of Hugo Chavez in March sparked an outpouring of lation to 8.5% and infant mortality fell grief in Venezuela and South America, but his legacy will live on from a rate of 20 per 1,000 live births in his policies and South-South initiatives. to a rate o13 per 1,000 live births in 2011. On the other hand, Venezuela still faces serious problems: an over- dependency on oil, high inflation and a high crime rate—in 2011 the homi- cide rate of 45 per 100,000 population compared with 25 twelve years earlier. The pro-poor orientation and policies of the state were responsible for the strong support of the poor for Chavez. Their devotion to the Presi- dent was evident in the outpouring of REUTERS grief and the massive turnout of millions at his lying in state and his funer- al. By Martin Khor with a large majority was to re- To his critics, Chavez had simply organise the national oil industry and used oil money to “bribe the poor” to ugo Chavez, who died on 5 March to play a leading role in reviving vote for him. H 2013, mourned by millions of OPEC, the organisation of oil exporting But for Chavez and his colleagues Venezuelan citizens and people around countries. in what they termed the “Bolivarian the South American region, was a figure revolution”, re-orienting institutions that was larger than life. The price of oil shot up from around US$10 a barrel in 1998 to and policies to benefit the poor was During his 14 years as President of US$20, and then to around the US$100 the main reason to be in government. Venezuela, he managed to institute pro- level where it now is. The country’s Chavez’s influence went far be- found changes with effects on his coun- net oil export revenues climbed from yond Venezuela. His policies, and try and the developing world long after around US$14 billion in 1999 to US$60 fiery rhetoric, set alight the imagina- his death. billion in 2011. tion of social movements and the pub- Some leaders and media outlets in The hugely increased oil revenues lic in South America, and started an the West have been giving misleading was the basis for financing many inno- important trend. Following his ascent or trivialised commentaries, just as they vative social programmes. to power, several other leaders as- tried to demonise him during his life- sumed political leadership in neigh- time. Known as “missions”, they includ- bouring countries who also bucked ed raising literacy and education lev- the ideology and policies of the Wash- This is to be expected, since Chavez els, providing health care to the poor ington Consensus. was felt by the establishment as a thorn through thousands of doctors and in the flesh. health assistants in the communities These included the more radical and providing cheap food for the ur- leaders of Bolivia and Ecuador and the He had not minced words in criticis- ban population through special super- more moderate and unorthodox leading and acting against the so-called markets. ers of Brazil, Argentina and Uruguay. Washington Consensus, a nexus of poli- The assumption to power of so many cies and institutions (including the In- In the rural areas, there were sepa- such leaders have broken the political ternational Monetary Fund, the World rate “missions” to look after the peas- sway of Washington and the economic Bank and the US Treasury) that promot- ants, resolve problems of mining com- spell of the Washington consensus in ed a version of free-market fundamen- munities, and meet the interests of in- the region. talism that adversely affected the eco- digenous peoples. nomic and social life of the Latin Ameri- Chavez’s legacy may just be as can region. These well-documented social pro- important as a master builder of re- grammes and accompanying economic gional unity and integration. In his Chavez’s greatest feat was to identi- policies did much to improve the lot of tribute to Chavez, the former Brazilian fy and break out from the straightjacket the poor. President, Luiz Inacio Lula da Silva, of the Washington Consensus and to credited Chavez for his leadership role formulate policies that were very differ- According to data compiled by the London-based Guardian, from 1999 in the setting up of so many regional ent, which he believed would benefit institutions in recent years. the people, especially the poor. (when Chavez assumed the Presiden- cy) to 2011, GDP per capita rose from They include the 2008 treaty that One of the first things he did as US$4,105 to US$10,801, extreme pov- (Continued on page 23) President after being elected in 1998 erty decreased from 23.4% of the popu- Page 22 ● South Bulletin ● Issue 72, 13 May 2013 Investment Agreements: A New Threat to the TRIPS Flexibilities? The bilateral investment treaties (BITs) may be a threat to access to medicines as shown by a recent legal suit by a drug multinational against Canada for invalidating a patent. By Carlos M. Correa al Canadian court decision to invalidate, five years before its expiry, a pa- ecent complaints based on bilateral tent it had obtained in Canada. In ac- investment treaties (BITs) demand- R cordance with generally accepted prin- immovable property, equity in compa- ing a compensation for the alleged ciples of international law, the courts nies, claims to money, contractual damage caused by anti-tobacco policies of the country of grant of a patent en- rights, intellectual property rights adopted in Uruguay and Australia, joy exclusive jurisdiction to address (IPRs), mining concessions, licenses have illustrated the pervasive implica- issues of invalidation. Eli Lilly, how- and similar rights are generally in- tions that such treaties may have on ever, wants an arbitral tribunal that cluded. public policies. If successful, those com- will operate outside the Canadian ju- plaints will undermine the States’ right risdiction and whose decision would Some IAs generally refer to IPRs, to adopt measures to protect public not be appellable before Canadian while others explicitly indicate the health. courts, to award it an economic com- types of IPR covered, such as copy- rights and related rights, patents, The North American Free Trade pensation for the alleged losses caused rights in plant varieties, industrial de- Agreement (NAFTA), like other free by the patent invalidation. Eli Lilly signs, rights in semiconductor layout trade agreements (FTAs) signed in the claims it has suffered damages of at designs, trade secrets, trade and ser- last twenty years, includes a detailed least 100 million Canadian Dollars. vice marks, and trade names. In some chapter on investment protection with a Patents as an investment IAs reference is also made to scope and obligations similar to those "technical process" or "know how" and found in BITs. The notification of a The broad definition of ‘investment’ "goodwill". complaint against Canada under such typically contained in IAs is the start- chapter in connection with the invalida- ing point of Eli Lilly’s complaint. NAFTA does not mention explicit- tion of a patent raises new concerns NAFTA, as well as BITs and the ly IPRs. However, in accordance with about the power given to investors un- investment chapters in FTAs, incorpo- article 1139(g), ‘investment’ includes der investment agreements (IAs). rate an all-encompassing concept of ‘real estate or other property, tangible or intangible, acquired in the expecta- Eli Lilly, a major US pharmaceutical "investment" that includes any kind of tion or used for the purpose of eco- company, has notified an investment tangible or intangible asset. All assets nomic benefit or other business pur- complaint as the result of a 2010 Feder- of an enterprise, such as movable and (Continued on page 24)

Chavez’s Legacy (Continued from page 22) practitioner of broader South-South Without hesitation or ceremony, solidarity and cooperation. He used Chavez invited me to visit Caracas and established the Union of South Ameri- his country’s oil revenues to finance to organise a large conference to pro- can Nations, the setting up in 2011 of economic and social programmes in mote South-South solidarity. Alas, we the political forum of the Community poorer neighbouring countries, from were not able to make that proposed of Latin American and Caribbean selling oil at below market prices to conference a reality before Chavez States (that does not include the United treatment for the blind. passed away. States and Canada as the OAS does) His memory and grasp of issues Chavez lit up that Copenhagen and the Bank of the South (a bank set and people were also phenomenal. conference by telling the thousand- up by South American countries, and When I approached him in the main strong audience, that included many which is independent of the World aisle of the conference hall of the Co- heads of states and governments, of his Bank and the Inter-American Develop- penhagen Climate Conference in De- disappointment with the rich countries ment Bank). cember 2009, and introduced myself as for not doing enough to contain the “Of the many leaders I have met, director of the South Centre, he imme- climate crisis. few have believed so much in the unity diately recalled his knowledge of the “They spend trillions of dollars of our continent and its diverse peoples Centre and his meeting with and admi- bailing out the banks. If only the cli- -- indigenous Indians, descendants of ration for Julius Nyerere, the former mate was a bank it would have been Europeans and Africans, recent immi- Tanzanian President, founding Chair- saved by now,” he said. grants – as he did,” said Lula of man of the Centre and another tower- Chavez. ing pioneer of South-South coopera- The straight talking and colourful tion. Chavez will be missed; his legacy will Chavez was also a believer and live on. Page 23 ● South Bulletin ● Issue 72, 13 May 2013 (Continued from page 23) because inventors enjoy a ‘natural’ unless the [US Patent and Trademark right over the invention. Thomas Jeffer- Office] PTO can prove otherwise...The poses’. A patent and other IPRs would son, fervent advocate of the patent sys- PTO’s procedures to evaluate patent fall under the category of ‘intangible’ tem, observed, in a famous letter to an applications seem inadequate to han- property. inventor in 1813, that inventions dle this burden”. The report concluded ‘cannot, in nature, be a subject of prop- that “[T]hese circumstances suggest In addition to the broad definition erty. Society may give an exclusive that an overly strong presumption of a of ‘investment’, a particular feature of right to the profits arising from them, patent’s validity is inappropriate…It IAs is that, unlike in the case of WTO as an encouragement to men to pursue does not seem sensible to treat an is- disputes, IAs grant ‘investors’ the right ideas which may produce utility, but sued patent as though it had met some to directly sue the State where the in- this may or may not be done, according higher standard of patentability”. vestment was made. Eli Lilly’s decision to the will and convenience of the soci- to sue the Canadian government, thus, As a result, revocation (by the same ety, without claim or complaint from follows its own assessment of the pros patent office) or invalidation of a pa- anybody’. and cons of engaging in litigation. It tent by a court is not something excep- would be interesting to know whether A patent is generally granted after tional or that would be unexpected to the US government would have shared an examination by the patent office to patent owners. Claiming that invalida- the company’s opinion. establish whether the claimed invention implies a loss of an ‘investment’ tion meets the patentability standards suggests a gross misconception on the The US government was sued un- (novelty, inventive step and industrial fundamentals and operation of the der chapter 11 of NAFTA by APOTEX, applicability or utility). The decisions patent system. An invalid patent only a Canadian company, which claims to grant a patent are often based on has an appearance of validity; a find- that wrong decisions by US courts in incomplete information, or on incorrect ing of invalidity means that a legiti- applying federal law violate NAFTA judgments. For instance, a publication mate right over the invention never Article 1102 (national treatment) and that anticipated the invention and, existed. Article 1105 (minimum standard of hence, destroys its novelty, may be treatment under international law), and Significantly, article 32 found after the patent was granted, that the decisions amounted to an ex- (Revocation/Forfeiture) of the TRIPS particularly when competitors affected propriation of the company’s invest- Agreement left a wide room for Mem- by the patent undertake detailed patent ments under NAFTA Article 1110. The ber countries to determine the grounds searches with tools more sophisticated US Department of State has indicated and conditions for the revocation or than those available to the patent office. its intention to defend against this forfeiture of a patent, including situa- claim ‘vigorously’. Given the limitations inherent to tions of invalidity. During the negotia- examination, a patent only provides a tions that led to the Agreement, India Data on patent invalidation in the precarious title to the invention. Alt- proposed to establish that a patent USA show a growing court’s tendency hough patents are generally presumed could be revoked when ‘used in a to invalidate patent claims. US District to be valid, some patent laws clarify manner prejudicial to the public inter- courts invalidated patent claims in 86% that patents are issued without any est’. The USA, on its side, wanted to of the cases they decided in 2007-2011; guarantee by the State. Even the US permit revocation only where the in- between 2002 and 2012 the Federal Cir- Federal Trade Commission has alerted vention were found to be non patenta- cuit confirmed 70% of the invalidation against a strong presumption of validi- ble. The adopted text simply stipulates: decisions by lower courts. ty. It noted that “[O]nce an application ‘An opportunity for judicial review of This means that, if Eli Lilly were is filed, the claimed invention is effec- any decision to revoke or forfeit a pa- successful, the USA (as well as other tively presumed to warrant a patent tent shall be available’. countries parties to IAs) may face an increasing risk of being sued and eventually obligated to pay compensations when their courts invalidate wrongly granted patents. This may be particularly troublesome in the light of the large number of sub-standard patents granted as a result of lax patentability requirements, or the poor quality of the examination conducted by patent offic- es. Patent invalidation Patents are granted by States to achieve certain objectives including, in the case Eli Lilly, file photo of WTO members, to comply with the obligation imposed by the TRIPS Agreement. They are granted as result of a deliberate policy decision, and not

Page 24 ● South Bulletin ● Issue 72, 13 May 2013 In the Eli Lilly’s case, the Canadian such issuance, revocation, limitation or been realized. The Sixth Annual Forum court held that the patented invention creation is consistent with Chapter Sev- of Developing Country Investment had failed to deliver the benefits prom- enteen (Intellectual Property)’. This Negotiators concluded, for instance, ised when the application was made. means that, in principle, an investor’s that ‘there was no clear correlation Eli Lilly questions the so-called compensation cannot be claimed in between the number of BITs and FDI, ‘promise doctrine’ developed by the cases of invalidation of a patent. This and that there was a need to shift to- Canadian courts, and argues that this is, as noted above, a logical conse- wards a more balanced investment new, more stringent approach to patent quence of the nature of the rights con- treaty regime that would take into ac- invalidation applied after 2005, is conferred. Such a claim could only be count developing countries’ sustaina- trary to the company's expectations "at made in case of inconsistency with the ble development objectives’. FDI has the time of its investment". The compa- rules contained in NAFTA Chapter 17. primarily flown to countries with large ny also argues that the ‘promise- markets and attractive growth pro- NAFTA’s article 1709.8 stipulates, doctrine’ has become a national stand- spects. Brazil has opted not to sign any in this respect, that a Party ‘may revoke ard as a result, for instance, of its recog- BIT; it has been, however, one of the a patent only when :(a) grounds exist nition in the guidelines issued by the main recipients of FDI amongst devel- that would have justified a refusal to Canadian Intellectual Property Office oping countries. grant the patent; or (b) the grant of a and, therefore, questions Canada’s compulsory license has not remedied While IAs have not been critical in right to determine how “utility” is de- the lack of exploitation of the patent’. attracting FDI, they have become plat- fined for the purpose of granting or not forms for multi-billion compensation a patent. Eli Lilly contends that the The Canadian Federal Court deci- complaints. The investors’ right to di- questioned judicial practice is not only sion regarding the patent for Strattera rectly sue the host States, in particular, inconsistent with various obligations is based on one of the grounds that has allowed unprecedented challenges provided for in Chapter 11 of NAFTA, would have justified the rejection of the to governmental action. In the view of but also with the TRIPS Agreement. patent application (lack of utility); the implications of BITs and other IAs, hence, it seems consistent with para- However, as noted, the only obliga- Ecuador has decided to denounce all graph (a) of article 1709.8. It would be tion the TRIPS Agreement imposes in BITs it had entered into. South Africa difficult for an arbitral tribunal to ig- relation to revocation relates to the decided not to sign any new BIT and nore this provision, even in the light of availability of a judicial review. No will attempt to exit from or re- Eli Lilly’s argument that the ‘promise substantive conditions are provided negotiate existing ones. Australia an- doctrine’ was not applied prior to 2005 for. Further, Members can determine nounced that it would not agree on when its alleged ‘investment’ took how they define and apply the patenta- investor-state dispute settlement provi- place. bility standards set out in article 27.1 of sions in new IAs, and India is review- the Agreement. This is, in fact, one of Interestingly, the USA Model BIT ing its BITS, especially their dispute the most important flexibilities in the contains a provision that carves out an resolution component. TRIPS Agreement: it determines which exception for compulsory licenses - One of the worrying dimensions of standards need to be applied to estab- reflecting the US government interest the Eli Lilly’s complaint is that it in- lish patentability, but does not define in protecting its extensive use of these volves matters that the TRIPS Agree- them. Hence, WTO Members can adopt measures - as well as for revocation. ment has left to the discretion of the the criteria they consider adequate to Article 6.5. on ‘Expropriation and Com- WTO Members. Deciding on which implement such standards, including pensation’ stipulates that this provision grounds a patent can be invalidated rigorous requirements to prevent the ‘does not apply to the issuance of com- and how the patentability require- proliferation of patents on minor devel- pulsory licenses granted in relation to ments are applied are among the im- opments that, as it is the case in phar- intellectual property rights in accord- portant flexibilities allowed by that maceuticals, may unduly block legiti- ance with the TRIPS Agreement, or to Agreement. If Eli Lilly prevailed in this mate competition and increase prices the revocation, limitation, or creation of case, investor–state litigation could for consumers. Section 3(d) of the Indi- intellectual property rights, to the ex- become a new, possibly more friendly, an Patent Act is one example of how tent that such issuance, revocation, lim- venue than the WTO dispute settle- this flexibility can be used. Another one itation, or creation is consistent with ment mechanism for right-holders to is the set of guidelines for the examina- the TRIPS Agreement’. The TRIPS question the interpretation and imple- tion of pharmaceutical patents adopted Agreement, as noted, does not provide mentation of the TRIPS Agreement. by the Argentine government in 2012. for any substantial standard for revoca- Although the commented complaint tion; inconsistency could only be found The admissibility of Eli Lilly’s may ultimately fail, its systemic impli- if an opportunity for judicial review claims under NAFTA is also doubtful. cations may be very significant and were not offered. In accordance with NAFTA article would just add one more reason to 1110.7, the provision mandating com- Unrealized promises seriously review the benefits and costs pensation in cases of direct or indirect of being a party to or signing new IAs. nationalization or expropriation ‘does A large number of developing coun- not apply to the issuance of compulso- tries entered into IAs with the promise that the protections conferred to inves- ry licenses granted in relation to intel- Professor Carlos Correa is Special lectual property rights, or to the revo- tors will increase FDI and boost their Advisor on Trade and Intellectual cation, limitation or creation of intellec- economies. There is no evidence, how- Property of the South Centre. tual property rights, to the extent that ever, suggesting that such promise has Page 25 ● South Bulletin ● Issue 72, 13 May 2013 South Centre Welcomes the Indian Supreme Court Decision on Novartis Case

The Indian Supreme Court on 1 April ruled against a petition by No- obligations, it did not compromise vartis company to overturn a Patent Office decision not to grant a public health through ‘evergreening’ patent for Novartis’ medicine to treat leukaemia. Below is a state- of pharmaceutical patents. ment issued by the South Centre in support of the Supreme Court’s The Court, hence, took into ac- decision, which has positive implications for access to medicines. count the concerns about the impact of TRIPS on public health and on the development of an indigenous pharmaceutical industry. Moreover, it considered the implications of the Novar- tis case for the availability of essential medicines at affordable prices global- ly. The Supreme Court decision fully reproduced two letters from Dr. Jim Yong Kim, the former Director of the Department of HIV/AIDS at WHO (current President of the World Bank) and from UNAIDS to the Indian Min- ister of Health and Family Welfare expressing the concerns relating to the continuous availability of affordable drugs supplied by Indian firms in oth- The building of the Supreme Court of India er developing countries. he ruling by the Supreme Court of some international organizations in Thus, the decision by the Supreme India dismissing the petition from view of the possible negative implica- T Court of India has significant positive Novartis AG is a historic decision with tions for access to affordable medicines global implications. It has effectively positive global implications. Novartis for patients in those countries if the protected the leading role of India in had challenged the interpretation given petition of Novartis were to be allowed supplying affordable medicines to by the Indian Patent Office to Section 3 by the Supreme Court. Most develop- other developing countries. The reaf- (d) of the Patents Act that seeks to pre- ing countries strongly rely on Indian firmation of the primacy of health and vent the grant of patents on non- generic pharmaceutical companies for access to medicines as a right of citi- inventive new forms of known medi- the supply of affordable medicines. zens is particularly important for the cines. Any weakening of section 3 (d) would international community when these have enabled multinational pharma- The Novartis AG application had rights are under significant threat un- ceutical companies to extend their pa- claimed a patent for a new salt form der bilateral trade and investment tent monopolies based on frivolous (imatinib mesylate), a medicine for the agreements. This decision is a triumph incremental improvements which – as treatment of chronic myeloid leukemia. for all developing countries which will in the case of imatinib - could delay the Novartis sells this medicine in several be able to continue importing afforda- generic supply of essential medicines countries under the brand name Glivec ble essential generic medicines from for the treatment of HIV/AIDS and (Gleevec). The Indian patent office had India. Developing countries can bene- other diseases. rejected the patent application on the fit further by emulating the Indian ground that the claimed new form was In this context, the decision by the approach towards balancing patents anticipated in a US patent of 1996 for Indian Supreme Court is very signifi- and public health by discouraging the compound imatinib and that the cant. In interpreting section 3 (d), the evergreening. Finally, this decision new form did not enhance the thera- judgment took into account the legisla- also shows the importance of public peutic efficacy of the drug. The deci- tive history of Section 3(d). The Su- health sensitivity in the judiciary in sion was upheld by the Indian Patents preme Court observed that this section determining disputes on pharmaceuti- Appellate Board (IPAB). was introduced in the Patents Act by cal patents. the 2005 Amendment to ensure that The legal challenge from Novartis Martin Khor while India allowed product patents on had alarmed patients groups, govern- Executive Director, South Centre medicines in accordance with its TRIPS ments of developing countries and

Page 26 ● South Bulletin ● Issue 72, 13 May 2013 LDCs Request for an Extension of their Transition Period under TRIPS The least developed countries (LDCs) have been exempted for a period from implementing the obligations in the WTO’s TRIPS Agreement. This period is expiring in July. Below is the statement of the LDC Group as presented by the Group’s Coordinator, Ambassador Shanker Das Bairagi of Nepal, at the TRIPS Council meeting on 5-6 March. The statement lays out the rational for the LDC Group’s request for an extension of the transition period.

by multiple structural constraints that include low per capita income, low level of human development and extreme vulnerabilities to external shocks. LDCs are home to more than 50 per cent of over a billion people who live in . These countries are the most off-track in the achievement of the internationally agreed development goals, including the Millennium Development Goals. They bear consid- erable health burdens - of both communicable and non-communicable diseases. In 2011, according to UN- AIDS, some 9.7 million of the 34 million people living with HIV worldwide lived in the LDCs. Of these people, only 2.5 million had access to antiretro- he LDCs’ request for an extension LDCs now submit a duly motivated viral treatment. T of the transitional period under request that the transition period be Article 66.1 of the TRIPS Agreement, extended further. LDCs' economic indicators have not contained in the document changed since 2005. Trade in goods LDCs need the continuation of flexi- IP/C/W/583, was introduced on be- and services has not improved much– bility as their situation has not changed half of LDCs Group to the last TRIPS in fact trade deficit in both goods and significantly over the years. Their mar- Council. Today, I intend to present the services have increased; per capita ginalization continues. They have not request with details. GDP growth has fallen. been able to develop their productive The LDCs’ communication con- capacities which limit their meaningful All LDCs are net payers of royal- taining the duly motivated request of integration into the world economy. ties. These countries have not been able November 5, 2012 is self-explanatory. to spend even a small fraction of their LDCs continue to be characterized It contains an annexed draft decision national budget to research and devel- and provides the rationale behind our request. We seek the decision that the LDCs shall not be required to apply the provisions of the Agreement, other than Articles 3, 4 and 5, until they cease to be an LDC. An important flexibility available to LDCs under the TRIPS Agreement is the transition period that is extenda- ble. This flexibility was granted to LDCs in recognition of their special needs and requirements, their economic, financial and administrative constraints and their need for flexibility to create sound and viable technological base. While the initial 10 year transition period was to expire at the end of 2005, TRIPS Council approved in 2005 an extension of the period, which will expire on July 1, 2013. LDCs continue to be characterized by multiple structural constraints that include low per capita income, low level of human development and extreme vulnerabilities to external shocks.

Page 27 ● South Bulletin ● Issue 72, 13 May 2013 protected goods and services are simply beyond the purchasing power of least developed countries and their people. To quote UNAIDS Executive Director Michel Sidibe, ‘An extension would allow the world's poorest nations to ensure sustained access to medicines, build up viable technology ba- ses, and manufacture or import the medicines they need’. TRIPS Article 66.1 specifies an obligation to grant extensions once the TRIPS Council receives a duly motivated request from LDCs. Ministers have invited us 'to give full consideration' to a duly motivated extension request from LDCs. Paragraph 2(iii) of the Uru- guay Round Decision on Measures in Favour of LDCs specifies that ‘sympathetic consideration shall be policies to stimulate technological opment as they have to concentrate given to specific and motivated con- catch-up with the rest of the world, more on basics like health and educa- cerns raised by the least-developed they will continue to fall behind other tion. The developmental schemes for countries in the appropriate Councils countries and face deepening marginal- transfer of technology provided in and Committees’. ization. TRIPS Article 66.2 have not effectively While I present the LDCs proposal, and adequately materialized. In terms of future outlook, the 2012 I recall the statement UN Secretary UNCTAD LDCs report, has noted that The level of technological develop- General Ban Ki-moon made back in “LDCs have to prepare for a relatively ment in the LDCs has remained low. In 2007 at the opening of ECOSOC session prolonged period of uncertainty, with UNDP’s Technological Achievement (quote-unquote) “The rules of intellec- possible escalation of financial tensions Index LDCs are at the bottom. So are tual property rights need to be re- and real economic downturn”. they in UNIDO’s Competitive Industri- formed, so as to strengthen technologi- al Performance Index and UNCTAD’s The flexibility agreed in TRIPS Arti- cal progress and to ensure that the poor Innovation Capability Index. Numbers cle 66.1 is in consideration of LDCs’ have better access to new technologies from WIPO reports indicate that LDCs special situation and it is not possible and products”. What LDCs are seeking have not been able to enter the race of to predict when LDCs will be able to today does not go to the extent of re- technology and innovation. overcome this. It has been recognized form of IPR. We are simply asking for in the preambular paragraph that least the continuation of flexibility already In the Istanbul Programme of Ac- developed countries have “special agreed in 1995 – with reasons. tion we all recognised that LDCs are needs” and thus need “maximum flexi- lagging behind in the critical areas of Before I conclude, I take this oppor- bility in the domestic implementation science, technology and innovation. tunity to extend the LDCs Group’s of laws and regulations in order to ena- Unless LDCs have flexibilities to adopt thanks to you for your constructive ble them to create a sound and viable efforts to bring us all together on the technological base”. LDCs view that issue. I thank Members for their inter- the most logical and predictable ap- SOUTH BULLETIN ests in LDCs Proposal. We have al- proach is not to set an artificial ready had a couple of rounds of infor- EDITORIAL COMMITTEE timeframe. Our proposed approach mal consultations with Members, in- gives more certainty and predictability Chief Editor: Martin Khor cluding the one the Chair facilitated. – once you graduate, you need to com- We are encouraged to note the positive Managing Editor: Vice Yu ply. We find precedence of such ex- engagements. Assistants: Xuan Zhang, Anna Bernardo emption in Article 15(2) of the Agree- ment on Agriculture. We would also like to highlight that The South Bulletin is published by the the LDC request and draft decision text LDCs’ request has been motivated South Centre, an intergovernmental have received strong support from the by the need of policy space to (to quote think-tank of developing countries. UN development agencies, civil society UNDP’s latest issue brief) ‘conserve the as well as from industry. autonomy to determine appropriate South Centre website: development, innovation, and techno- Today, we request Members to ex- (in English, French and Spanish) logical promotion polices, according to tend support to the LDCs’ request, www.SouthCentre.org local circumstances and priorities’. which is duly motivated and to adopt They need such space to ensure access the draft decision contained in the an- South Centre to various technologies, educational nex of the document no IP/C/W/583. Tel: +41 22 791 8050 resources, medicines and tools neces- Email: [email protected] sary for development. Most IP-

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