20 June 2014

Reasonable expectations on Non-Violate clause in TRIPS agreement

The USA has called for ending the moratorium on complaints based on the non-violate clause in the TRIPS agreement. The  Nullification of benefits clause or non violate clause (NV clause) as provided in Article XXIII enables a member to bring a complaint against another who has by any measure, which even while not in violation of WTO agreements, has nullified or impaired the benefits due to the member bringing action. The NV clause was not to come into effect for five years after the TRIPS agreement entered into force. However, after this period there have been diverging opinions on permitting complaints based on the NV clause under TRIPS and even in the Bali session, it was decided to maintain status quo till 2015.

It has been argued that TRIPS is not a market access agreement and measure likes taxation, compulsory licensing in pharma, which would be in compliance with other WTO agreements may still impair benefits which may accrue under the agreements. Another argument is that the text is vague incorporation of terms like ‘existence of any other situation’ which impairs benefits.

In its communication to the WTO dated 10-6-2014, the USA has advanced a view that the NV clause is part of the agreement, has been consented to by the members and should be brought into force without further delay. It argues that TRIPS also relates to market access and the NV clause provides an important remedy to address impairment of legitimate/reasonable expectations of negotiating members. It is further stated that the good faith or pacta sunt servanda principle is not enough to protect interests of members.


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