P U E B L A

M É X I C O
World Trade Organization

C o n t e n t s
March 24 - March 28 , 2008

Opening Statement
Introduction Dear Delegates,
History of the Committee
My name is Akshay Ganju, and I am quite excited to be your
T o p i c A r e a A : T RIP S
director for the 2008 WorldMUN conference in Puebla, Mexico. Having
and Global health
directed SpecPol last year in Geneva, I know that WorldMUN 2008 will
Statement of the Problem
be an incredible experience, both substantively and socially.
History and Discussion of
the Problem
First, a little bit about myself – I am a senior at Harvard College,
Past UN Actions
and I concentrate in Social Studies. At home, “social studies” is the
Proposed Solutions
standard term for elementary school history; unfortunately, I don’t have
Questions a Resolution
it that easy. Social Studies is a cross-disciplinary field involving most of
Must Answer
the liberal art departments of the school (with a focus on political science,
Bloc Positions
philosophy, history, economics, and sociology) that specializes in the
Suggestions for Further
study of society and its functioning. I am also pursuing a secondary field
Research
in health policy; this year I am working on a thesis about the views of the
Topic Area B: the
American public towards healthcare reform. Along these lines, I am also
WTO and Labor
pre-med, and one day I hope to attend medical school. Though I grew up
R i g h ts
in Boston, next year I will end up in California upon graduation.
Statement of the Problem

History and Discussion of
I am really looking forward to this session of the WTO, and I hope
the Problem
you are as well. This study guide provides a good overview of the topic
Past UN Actions
areas, but remember that this is only an outline of information, and you
Proposed Solutions
should do further research on your country and your positions to be a
Questions a Resolution
productive and knowledgeable member of committee.
Must Answer
Bloc Positions
Of course, I hope that we can have a great MUN experience, with
Suggestions for Further
a creative, dynamic, and constructive committee. But my primary goal
Research
for this conference is that we can get to know each other and have a great
C l os i n g S t a t e m e n t
time in Switzerland. I look forward to meeting you all this spring!
Position Papers
Final Remarks
Appendix
Bibliography Till then,

WTO Director: Akshay Ganju

Akshay Ganju
aganju@fas.harvard.edu
 Opening Statement
Opening Statement
Introduction
In a globalizing world, issues surrounding
international trade have assumed increasing prominence
in the lives and livelihoods of our planet’s citizens. The
world’s economies are sophisticated and interlinked: the
farmers outside Puebla are no longer simply affected by
the actions of consumers in Puebla or even in Mexico
City – they are now manipulated by economic policies
crafted in France and India. With this new global reality,
the trade-regulating actions of the WTO are of utmost
importance, affecting the lives of billions worldwide.
The two topic areas under discussion reflect the
newfound importance of trade issues beyond the economic
well-being of global inhabitants, delving into people’s
social and human rights. The first topic area, TRIPS and
Global Health, asks how international patent rights can be
amended to help provide access for the developing world
to important, innovative, and expensive new treatments
often developed by Western countries. Though we wish to
protect the work of companies and inventors worldwide,
the WTO stands at the forefront of the push to save
millions of lives through the provision of inexpensive
drugs to the Third World.
The second topic area, the Trade and Labor
Standards, again hits at the line between economic trade
regulation and human rights. Though explicitly under
the jurisdiction of the International Labor Organization
(ILO), some argue that trade regulation, and thus the
WTO, should play an important role in ensuring workers’
rights worldwide.
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The WTO’s role in our lives is growing significantly,
and as members of this committee we can help ensure
that its impact is positive and lasting. Good luck!
History of the Committee
Before the WTO
During the economic devastation of World War II,
the major world powers gathered at Bretton Woods, New
Hampshire, USA, in 1944 to preemptively discuss the
financing of post-war restructuring projects. The Bretton
Woods conference produced the International Bank for
Reconstruction and Development (IBRD), the forerunner
of the World Bank, which was designed to provide long-
term capital to rebuilding states, and the International
Monetary Fund (IMF), for short-term financing to
stabilize exchange rates.1
With this newfound multilateral economic
cooperation, the countries sought to supplement the new
organizations with a third branch that would oversee
international trade; 50 nations negotiated an ambitious
draft charter to create a new branch of the United Nations,
the International Trade Organization (ITO) – it was to
be officially discussed and ratified in Havana, Cuba, in
1947.2
At the same time, 15 of the largest trading countries
had separately started talks in 1945 to reduce tariffs
amongst themselves; by 1947, 23 nations had signed
the provisional “General Agreement on Trade and
Tariffs” (GATT). When the Havana Conference started
in 1947, the international goal was to create an ITO
that complemented the GATT. Unfortunately, the ITO
charter ran into hurdles during the individual national
ratification processes; when the United States government
refused to seek Congressional ratification of the charter,
the ITO movement fell apart. Though refined multiple
times over the next forty-five years, the provisional and
limited GATT solely governed international trade until
the formation of the WTO in 1995.3
The Formation of the WTO
It took seven and a half years, almost twice the
original schedule. By the end, 123 countries were taking
part. It covered almost all trade, from toothbrushes to
pleasure boats, from banking to telecommunications,
from the genes of wild rice to AIDS treatments. It was
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 Opening Statement
quite simply the largest trade negotiation ever, and most
probably the largest negotiation of any kind in history.4
The Uruguay Round started in 1986, and after years
of negotiations between countries and trading blocks (such
as the European Union), most of the 123 governments
signed the agreement in Marakesh, Morocco in 1994. The
biggest outcome was the official founding of the World
Trade Organization on January 1, 1995.5
Since its inception, the WTO has consistently
revised its trade agreements through various multilateral
negotiations. Currently, the WTO is involved in one of its
largest negotiation rounds yet, the Doha Round, which is
still ongoing.
Topic Area A: TRIPS and Global
Health
Statement of the Problem
Last year, AIDS killed 8,000 people every day, and
14,000 more daily victims were infected with HIV.6 AIDS
is just one of dozens of treatable diseases that devastate
poor countries. Citizens of the developing world suffer
and die every day because of the prohibitive cost of drugs
developed and marketed by western corporations.
TRIPS, or the Agreement on Trade-Related Aspects
of Intellectual Property Rights, was negotiated during the
Uruguay rounds of 1986 – 1994,7 stipulates the minimal
patent and intellectual property legislation necessary for
a country to join the WTO, and regulates inter-country
trade of patented products. By the mid-1990s, one of the
effects of TRIPS was that patented drugs, often developed
in Western nations, could not be cheaply replicated and
sold in developing countries; instead, patients all over
the world were forced to purchase drugs at the price set
by the patent-holding company. These often-prohibitive
prices restricted access to the drugs for the world’s poor
populations.
Faced with overwhelming outcry at these needless
deaths, on 30 August 2003 the WTO temporarily waived
certain sections of TRIPS, which now allowed countries
to produce cheaper generic versions of patented drugs
which could be imported into developing countries
with significant health problems. This seemed to solve
the underlying problem, allowing poorer citizens of the
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For many, access to drugs affects their daily lives.
world cheaper access to patented life-saving therapies. In
December 2005, the WTO decided that these waivers
would become a formal amendment to the TRIPS
agreement when it is accepted by 2/3 of the WTO
membership, with a deadline of 1 December 2007.8
Nevertheless, as of 28 September 2007, only 11 of the
151 WTO countries had accepted this amendment to the
TRIPS agreement. Many developing countries, including
most of the African block, claim that the current system
has too much red tape, and the burdensome regulatory
mechanisms prevent adequate delivery of generic drugs;
the African block has submitted their own formal proposal
removing many of these procedural requirements. Despite
the progress that has been made, the WTO has reached
another roadblock – is this amendment the best way to
provide affordable drugs to the world’s poor? If so, why
have only eleven member countries signed on? If not, how
should it be reworked?
History and Discussion of the Problem
TRIPS and Intellectual Property Rights
Patents are a legislative means of protecting the rights
of inventors over their inventions, or their “intellectual
property,” giving inventors a period of time (often
twenty years), where they control the manufacturing and
distribution rights over their inventions. In today’s world
of quick information distribution, patent rights are seen as
necessary to maintain innovation – the ability to patent an
invention gives financial incentive to invest in creativity;
otherwise, all the work and money spent in the creation
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 Topic Area A
and perfection of an invention would be lost when it was
easily duplicated and sold by a different opportunist.
The WTO was founded to regulate trade between
countries. Intellectual property rights provided a difficult
instance of international cooperation – some countries
had patent laws, whereas others did not. This proved quite
important in international trade: if Kenya has no patent
laws but Finland does, then Kenyan imitators can copy
Finnish inventions and sell them in Kenya, in essence
“stealing” profit from Finnish innovators. The WTO’s
response was TRIPS, the Agreement on Trade-Related
Aspects of Intellectual Property Rights, which arose from
the Uruguay rounds of 1986 – 1994.9 TRIPS mandates
certain minimal levels of copyright, patent, and trademark
protections within each member nation of the WTO.10
Intellectual Property Rights and Pharmaceuticals
Intellectual property rights are especially salient
for the pharmaceutical industry. It is quite difficult and
expensive to develop an effective drug, starting from the
basic biochemistry and ranging through huge clinical
trials – many drug companies spend billions of dollars per
year on drug discovery and development. But once a drug
is perfected, it can often be manufactured very cheaply.
Thus, it is quite easy for “generic” drug companies –
companies that do not manufacture the drug under patent
or trademark – to copy a drug’s formulation, figure out a
manufacturing process, and produce cheap copies. This
is done all the time today; for example, paracetamol and
acetaminophen are generic forms of a drug commonly
marketed under the trademark “Panadol” or “Tylenol.”
One can find generic brands of many off-patent
drugs, such as acetylsalicylic acid (“Aspirin”), or ibuprofen
(“Advil,” “Motrin,” “Brufen”). Importantly, however,
drugs for which generics are available are all “off-patent,”
meaning that their patent-life has expired. All newer
drugs, including those for HIV/AIDS, are still under
patent protection.
Patent protection is crucial for the pharmaceutical
industry. Since development is so extraordinarily difficult
and expensive, without the lucrative prospect of sole
manufacturing and marketing rights there would be little
incentive for companies to create the innovative new
therapies that improve modern medical care. Unfortunately,
these patent rights also mean that new drugs can be very
expensive – out of reach without insurance help for most
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Western citizens, and unfathomable for most residents of
the developing world.
This raises an important question – how can we
provide low-cost drugs to the developing world, while
maintaining enough intellectual property protection to
enable Western drug companies to continue therapeutic
innovation?
TRIPS and Public Health
TRIPS allows several exceptions where governments
can refuse to grant a patent, including for “
diagnostic, therapeutic and surgical methods for treating
humans or animals” in Article 27.3a.11 Along with this
exception, TRIPS also allows for “compulsory licensing,”
where “the law of a Member allows for other use of the
subject matter of a patent without the authorization of
the right holder, including use by the government or third
parties authorized by the government” in Article 31.12
Compulsory licensing is at the heart of the current
debate on TRIPS and public health. According to TRIPS,
a country in the throes of a public health crisis can suspend
patent rights on therapeutic products. This can be very
important – Kenya, for example, can suspend patent
protections on HIV/AIDS treatments so the “government”
or “third parties authorized by the government” can
produce generic versions of the drugs. But what if Kenya
does not have the resources to produce generic versions of
the drugs necessary for their population?
African nations in particular asked for additional
clarification, and the Doha Ministerial Declaration of 14
November 2001 declared that the “TRIPS Agreement
does not and should not prevent members from taking
measures to prevent public health.”13 But this declaration
still failed to address the central issue of countries that
could not afford to produce generic versions of patented
products. Article 31(f ) of the TRIPS agreement stipulates
that compulsory licensing must be primarily targeted to
the domestic market.14 But what if Kenya badly needs
medication, patented by an American company, generic
copies of which can be made cheaply in India? Under the
TRIPS phrasing, Kenya could not import generic drugs
from India; they were only able to compulsory license and
produce drugs for themselves. Many developing countries
claimed that in the absence of infrastructure for themselves
to produce generic medications, the TRIPS public health
exceptions were useless – they needed to be able to import
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 Topic Area A
generic versions of patented drugs from countries with
drug manufacturing capabilities, like Canada and India.
On 30 August 2003 the WTO created a new legal
system that would solve this problem, adopting paragraph
6 of the Doha Ministerial Declaration, which allows
exporting countries to waive the restrictions of Article
31(f ).15 In 2005 the WTO decided to formally amend
TRIPS with the 2003 waivers, pending acceptance by
2/3 of the member states with a deadline of 1 December
2007.
The Current Debate
On 3 December 2005 a group of NGOs, including
Oxfam International, Médecins Sans Frontiers, Access to
Essential Medicines Campaign, and various African AIDS
organizations released a joint statement criticizing the
proposal, claiming that “poor countries should not accept
a permanent amendment that has not been shown to work
in practice.”16 The NGOs continue to contest that the
procedures in place for the importation of compulsory-
licensed drugs “have been criticized by generic industry
experts and activists alike for being too burdensome and
unworkable in practice;” in fact, the waiver mechanism
has only been used once, quite recently: in October 2007,
Canada became the first country to file a compulsory
license to export a patented drug – an HIV/AIDS
medication for Rwanda.17
NGOs are not the only opponents of this amendment.
In the Gabarone Declaration of 14 October 2005, the
Ministers of Health of the African Union called upon their
“Ministers of Trade to seek a more appropriate permanent
solution at the WTO that revises the TRIPS agreement
and removes all constraints, including procedural
requirements, relating to the export and import of generic
medicines.”18
On 1 December 2004, Nigeria submitted a revised
version of the amendment on behalf of the African
Union, which removes much of the procedural language
deemed redundant. A copy of the current WTO waiver
agreement and the African Union’s proposal are included
in the Appendix.
On 30 August 2003, the Chairman of the General
Council also read out a statement “setting out members’
shared understandings on how the decision would be
interpreted and implemented.”19 In this statement, the
Chairman outlined different “good faith” procedures that
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Dr Herman Reuter examines a young girl, Sibonghile Khetiso
(aged 8) who was ill with AIDS-related infections and was due
to receive her first dose of anti-retroviral medication.
should be followed to prevent drug piracy and the creation
of black markets, following industry “best practices.”20
Many Western nations wish to include this statement as
part of the amendment, treating the entire amendment
as a “package” of all the 30 August 2003 statements. The
developing nations, however, especially in Africa, strongly
oppose the inclusion of this statement; they claim that it
has served its purpose in regards to the temporary waivers,
and should not become a permanent feature of TRIPS.
This statement is also included in the appendix.
Past UN Actions
As outlined above, TRIPS, and especially the
exceptions of Article 31, provide the current platform
for discussion. The included exceptions, including
compulsory licensing, are the only permanent intellectual
property right concessions for the public health of poor
populations.
The 30 August 2003 statement of the Chairman of
the General Council and the WTO-approved waivers are
the central past UN actions that are under debate. When
2/3 of the WTO membership ratifies the temporary
waivers, they will become a permanent part of the TRIPS
agreement. Nevertheless, the self-imposed WTO deadline
for this ratification is 1 December 2007, and only 11
countries have signed on so far. Provisions in paragraph 11
of the waiver, however, indicate that the waivers become
ineffective “on the date on which an amendment to the
TRIPS Agreement replacing its provisions takes effect for
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 Topic Area A
that Member,” essentially providing that the waivers can be
used in the current form past the December deadline.21
Proposed Solutions
Currently, there are two main proposals on the
discussion table. The first proposal, backed by many of
the Western countries, is a package amendment of the
current 30 August 2003 waivers (paragraph 6 of the Doha
Declaration) and the statement of the Chairperson of the
General Council. Both are included in the Appendix.
Developing nations, especially the African Union,
contend that the current waiver system combined with
the statement of the Chairperson contain too many
restrictive procedural rules. Instead, they first require
that the statement not be included with the amendment.
Secondly, Nigeria has put forward a counterproposal on
behalf of the African Union that maintains the essence of
the 30 August 2003 waivers while removing what they
deem unnecessarily prohibitive procedural restrictions.
The Nigerian proposal is also included in the Appendix.
Nevertheless, perhaps the best solution to the issue
is one that is not yet proposed. Many outsiders, including
activists, NGOs, and governments, contend that though
these proposals are good starting points, much work
should be done rethinking the substantive debate around
the provision of generic drugs to developing nations. This
is where the creative brains of the WTO can shine.
A lab at the Farmanguinhos pharmaceutical company produc-
es Ribavirina, an AIDS medication which inhibits the replica-
tion of DNA and RNA.
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Questions a Resolution Must Answer
Any proposed solution must comprehensively address
several questions. First, it must clearly resolve the debate
surrounding the current waiver system implemented by
the 30 August 2003 agreement. Should that template
become a permanent amendment to TRIPS? Should that
amendment also include the statement of the Chairperson
of the General Council? In addressing this question, issues
raised by developing nations, including the Nigerian plan,
must be resolved.
In the creation of any new generic import/export
system, many issues must be considered. Though
developing nations would love easy access to cheap,
generic drugs, many Western nations fear that their
pharmaceutical industries can be destroyed by careless
and imperfect implementation of such patent-overriding
systems. Not only will their companies lose much revenue
in sales in the developing world, but there is a strong fear
of the creation of black and grey markets, where cheap
generic drugs will be picked up in the developing world
and resold in Western countries for much lower than
the trademark price, reducing profits not only in the
developing world, but in Western countries as well. This
can stifle innovation and kill the industry, as companies
will no longer have incentive or the funding to research
and develop new therapies.
Bloc Positions
The battle lines in this debate are really drawn between
developing and developed nations. As of 28 September
2007, only 11 countries have signed on to the amendment
in its current form: (in temporal order) the United States,
Switzerland, El Salvador, Republic of Korea, Norway,
India, Philippines, Israel, Japan, Australia, and Singapore.
Many Western countries, especially pharmaceutical centers
like the United States, Switzerland, and Japan, strongly
support the amendment in its current form, including the
statement of the Chairperson of the General Council, as
an effective means of providing generic medicines to the
poor of the developing world while maintaining patent
protections in the Western countries.
Developing nations, however, and most specifically
the African Union, claim that the current amendment is
so restrictive that it is useless, and that only one drug has
been able to clear its hurdles in the past two years since
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 Topic Area A
its implementation. These countries strongly support the
Nigerian counterproposal.
Upon first discussions of the Nigerian proposals, the
United States, the European Union, Switzerland, Japan,
Canada, the Republic of China, and Australia were among
the countries that criticized the suggestions and called for
the continued closure of negotiations.22 Other developing
nations, however, were less disapproving. Malaysia
called for more consultations on the matter, and India
welcomed a move back from procedure to substance –
moves applauded by Argentina, Brazil, Mexico, Thailand,
and Israel. Some other developing nations, like Pakistan,
fully support the Nigerian proposals.
There is a tradeoff between the costs and potential benefits of life-
saving pharmaceuticals.
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Suggestions for Further Research
This study guide is only intended to be a brief
introduction to the topic of political imprisonment, and
it is essential that you conduct additional research on the
history and policy surrounding the issue, especially as it
relates to your country in committee.
The WTO website is a wonderful resource on the
topic, and contains helpful non-technical and technical
descriptions of the various documents and issues relating to
TRIPS and public health. There is also a good collection of
past and present news articles with up-to-date information
on the progress of the issue. One problem with the
WTO website, however, is its bias towards the current
amendment on the table permanently implementing
paragraph 6 of the Doha Declaration – information on
counterproposals must be found elsewhere.
Because of the very contemporary nature of this
debate, news articles are the best source of information.
I would recommend digging through online archives and
databases of news and journal articles as the best source
of information on the various valences of the current
discussion, as well as the position of specific countries.
Learning more about patent-protections and international
trade, as well as issues of public health and the provision
of generic medications, can help you devise novel and
creative solutions to the problem that will help push
debate forward.
Topic Area B: The WTO and Labor
Rights
Statement of the Problem
A ll WTO countries agree to certain basic regulations
regarding labor rights: freedom of association, no
forced labor, no child labor, and no work discrimination
(such as discrimination on the basis of race and gender).23
Unfortunately, the WTO has done little to address labor
rights beyond these core guidelines, and does nothing to
enforce members’ adherence to these principles.
The current official stance of the WTO dates from
the 1996 Ministerial Conference in Singapore, where
the WTO announced that “the International Labor
Organization (ILO) is the competent body to set and deal
World Trade Organization 7
 Topic Area B World Trade Organization

with these standards, and [the WTO affirms its] support

for [the ILO’s] work in promoting them.”24
But although the ILO is technically responsible
for upholding worldwide labor rights, the secretariats of
the two organizations often work together to maintain
“coherence” in international policy.25 Some countries feel
that it is time for the WTO to take stronger steps in this
issue. Many argue that the trade actions possible in the
WTO are strong and necessary tools to force countries to
uphold international labor standards. Furthermore, many
developed countries argue that countries with lower labor
standards enjoy unfair trading advantages, which is an
issue that should be addressed by the WTO. Employees making shoes at a factory in Zhongshan, China
The WTO has historically done little on the issue
of international labor standards. Now the organization arm of the United Nations.
faces two major questions: should the WTO address labor The link between organized free trade and labor
issues at all? And if so, how? rights began in 1947, with the ill-fated International Trade
Organization (ITO), a precursor to the current WTO.
History and Discussion of the Problem The charter of the ITO included a provision on Fair
Labor Standards, including that “the members recognize
History that unfair labor conditions, particularly in production
The history of the issue of labor rights dates back for export, create difficulties in International Trade and,
to the Industrial Revolution in England and the United accordingly, each member shall take whatever action may
States, where large factories and poor working conditions be appropriate and feasible to eliminate such condition
necessitated the first steps towards labor rights legislation within its territory.”28 But, foreshadowing official policy
with a Child Labor Act in England in 1833 and the to come, the ITO “shall consult and cooperate with the
Clayton Act in the United States in 1914 protecting International Labor Organization” in “all matters relating
organized labor. to labor standards that may be referred to the [ITO].”
International cooperation about labor rights started The GATT never contained any explicit provisions about
with the International Association for Labor Legislation, trade actions against labor rights violations. Nevertheless,
founded in Basel in 1901; these ideas eventually formed Article XX, which permits trade actions that protect
the basis for the Constitution of the International Labor public morals, and human health and safety, has often
Organization (ILO), which was founded as part of been used to establish some link between GATT-allowed
the Treaty of Versailles ending World War I in 1919.26 trade actions and workers’ rights.29
The Constitution included many provisions that are Over the last half of the twentieth century, and
still upheld as the standard for labor rights legislation, especially during the transition from the GATT to the
including regulations of working hours, living wages, WTO, developed countries, including the United States,
unemployment and sickness protection, child/women/ the European Union, and the Scandinavian nations, made
elderly labor, worker association, and discrimination. many forceful attempts to integrate labor standards or a
At the time, however, the formation of the ILO was social clause into the GATT and/or the WTO. Developing
largely driven by and applicable to developed nations, countries have blocked any such clause, and even the
and adapting these ambitious frameworks to developing formation of working groups every such time, arguing that
countries has always since posed a challenge.27 In 1944, “the demand for a social clause is disguised protectionism,
towards the conclusion of World War II, the ILO that it would erode their competitive advantage in labour
again added to its Constitution with the Declaration of costs, that the best method of improving labour standards
Philadelphia, and in 1946 the ILO became a specialized is export-led growth and development (the ‘trickle-down’

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 Topic Area B
theory),” and that there is not even a link between labor
standards and trade.30
The first steps of the WTO to include a clause on
labor standards occurred at the 1996 Ministerial Meeting
in Singapore. Even though the WTO Director-General
had already ruled out the possibility of possible sanctions
against any country, the developing country opposition to
the discussion itself was so vehement that an invitation to
the ILO Director-General to simply address the meeting
was withdrawn.31 The final result was the Singapore
Ministerial Declaration:
We renew our commitment to the observance of
internationally recognized core labour standards. The
International Labour Organization (ILO) is the competent
body to set and deal with these standards, and we affirm
our support for its work in promoting them. We believe
that economic growth and development fostered by
increased trade and further trade liberalization contribute
to the promotion of these standards. We reject the use of
labour standards for protectionist purposes, and agree that
the comparative advantage of countries, particularly low-
wage developing countries, must in no way be put into
question. In this regard, we note that the WTO and ILO
Secretariats will continue their existing collaboration.32
The Singapore Ministerial Declaration opened many
doors: this was the first time that the WTO acknowledged
a connection between trade and its social consequences;
it puts the comparative advantage of low wage countries
beyond question; and the declaration forces countries to
recognize core labor standards as members of the WTO,
rather than simply as members of the ILO.33 Nevertheless,
in more than ten years no further explicit action has been
taken by the WTO with regards to workers’ rights. The
issue was raised again in the Seattle ministerial conference
of 1999, though no further action was taken, and the
current Doha rounds of negotiation simply reaffirmed the
1996 declaration.34
Current Interpretations of WTO Laws
The Singapore ministerial declaration is an (arguable)
attempt by the WTO to establish some sort of “social
clause” into its bylaws. Nevertheless, there is a deeper
question of enforcement – should countries be allowed
to take trade action within the WTO to enforce labor
standards? Though it is commonly assumed that this is not
allowed, some of the current regulations can be somewhat
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murky.
GATT Article I does not allow nations to provide
more favorable treatment to some countries instead of
others with regard to “like products,” which is known
as the “Most Favored Nations” (MFN) clause; Article I
thus prohibits dissimilar treatment of the same good from
different countries simply on the basis of national origin
– this rules out, for example, a nation levying additional
taxes on goods from a country because of the exporter’s
labor laws.35 And tariffs are generally the sole means of
regulating trade, as Article XI excludes the use of most
non-tariff border restrictions, like licenses and quotas.
GATT Article III allows importing governments to
impose regulations on products, as long as these imported
products face the same regulations as domestic products.
In this sense, countries tried to claim that the manner
in which a product was produced constituted part of the
product itself, and set up restrictions with these distinctions.
For example, countries would argue that Russia could set
up extra tariffs on beef produced with growth hormones,
as long as both imported and Russian hormone-fed beef
faced the same tariffs; in this sense, hormone-fed beef and
non-hormone-fed beef were considered different products,
even if they were technically the same good. This was
used to set up restrictions on products made with poor
labor conditions versus similar products made with better
labor standards. GATT panels put an end to this practice,
however, by ruling that regulatory measures on products
were different than regulatory measures on the manner in
which products were produced; if products were basically
identical but were produced with different standards, then
an importing country could not create tariff distinctions
between them.36
Perhaps the closest the WTO comes to permitting
trade enforcement mechanisms is in Article XX, which
permits otherwise unallowable measures that are
“necessary to protect public morals” and “necessary to
protect human life and health.”37 Arguably, this measure
could allow for countries to use trade sanctions to enforce
labor standards, which could fall within the realm of
protecting “public morals” and “human life and health.”
Nevertheless, such measures would have to be “necessary,”
and labor standards would have to fall within the bounds
of human health or public morality. This issue has never
been explicitly addressed in the WTO or its appellate
bodies, and many questions remain. For example, does
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 Topic Area B
“necessary” mean that such action can only be a last resort
after the exhaustion of other diplomatic means? Does
enforcement of labor standards count as protecting public
morals and health?
Another possible route is the use of the WTO’s trade
preferences for developing countries. Despite its MFN
policy, the WTO does allow developed countries, under
the “general system of preferences” (GSP), to unilaterally
give some preferential tariff rates to developing countries
in an effort to aid development.38 Since these are
voluntarily given by the developed country, they can also
be withdrawn for a reason such as poor workers’ rights;
such withdrawal would leave that developing country to
face standard tariff rates while other developing countries
enjoyed some GSP benefits. When contested, a WTO
panel found that such GSP preferences had to be extended
to all developing countries, but could discriminate
between developing nations if there were objective criteria
to show that some developing countries needed the GSP
treatment more than other developing nations. Since this
now allows differentiation of GSP based on objective
social criteria, such as observance of basic human rights,
preferential GSP treatment might be a possible means of
enforcing labor standards on developing countries within
the WTO framework. Nevertheless, this still remains
ambiguous, and the GSP program is only unilateral and
is not a WTO-wide policy.
An Afghan girl removes weeds from a poppy field near the road from the good indigenously, but with higher labor standards,
Kabul to Jalalabad.
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Is There a Need for the WTO to Address Labor
Standards?
The WTO understands that its role in the issue of labor
rights revolves around four main policy questions:39
• Do lower labor standards give a country’s exports
unfair trading advantages? Would this lead
all countries to a “race to the bottom,” where
countries are forced to lower their labor standards
to remain competitive both domestically and
internationally?
• To maintain parity, should countries only
trade with other countries with similar labor
standards?
• Should the WTO explicitly allow countries to
use trade actions to enforce labor standards in
trading-partner countries?
• Is the WTO even the correct institution to craft
labor policy and enforcement? Should this be
left to the ILO?
The first question sets the stage for the remaining
issues, and addresses the substantive economic policy at
issue in this debate – is there even a need for the WTO to
address global issues of labor rights? Neoclassic economic
theory about competitive advantage and game theory
would argue that countries with lower labor standards do
have a trading advantage, and that such advantages would
force all countries to consequently lower their standards.
A country with lower labor standards theoretically has
much lower production costs – fewer benefits mean lower
wages, and poorer working conditions mean that less
money needs to be invested in infrastructure and keeping
employees happy. Child, women, and elderly workers
also command smaller salaries, and preventing the
unionization of labor is a powerful means of controlling
wage increases. With fewer production costs, identical
goods can be produced cheaper in low-standard countries,
which give the products a competitive advantage in the
global marketplace. The “race to the bottom” argument
follows a classic game theory formula. Suppose country
“A” has low labor standards and can produce a good at
very low cost. Country “B” and country “C” also produce
and all three countries trade freely with each other. Since
country A can produce the good cheaply with its low
labor standards, it saturates the market and all buyers
in all three countries buy the product from Country A,
World Trade Organization 10
 Topic Area B
which kills domestic production and sales in countries
B and C. In order to compete, both countries B and C
must lower their standards to match those of country A,
and parity resumes with each country producing the good
at similar costs. But why stop there? To gain additional
advantage, one of the countries can simply reduce their
labor standards further, which gives them a temporary cost
benefit; the other two countries must then follow suit. In
this “race to the bottom,” free international competition
necessitates that all countries continually lower their labor
standards.
Some argue that this neoclassical economic story is
false. A 1996 study by the Organization for Economic
Cooperation and Development (OECD) found that,
the view that argues that low-standards countries
will enjoy gains in export market share to the detriment
of high-standards countries appears to lack solid empirical
support. These findings also imply that any fear on the part
of developing countries that better core standards would
negatively affect either their economic performance or the
competitive position in world markets has no economic
rationale.40
This conclusion is supported by many further
studies in the field; a working paper available online by
Drusilla Brown (2005) outlines many of these papers and
their arguments.41 This result is ambivalent with regards
to the WTO discussion, however: it provides a rationale
for developing countries to assert that the “race to the
bottom” is unfounded and WTO action is unnecessary,
while at the same time giving developed countries
ammunition by asserting that developing countries
should not fear competitive repercussions from the WTO
instituting strict labor standard legislation. This argument
concludes that the best way to improve labor standards in
developing countries is not through trade sanctions but
just the opposite – encouraging economic development
and rising wages through foreign investment that will
(inevitably) raise labor standards as countries become
more developed.
Developing countries argue that the push for the
WTO to address labor standards is just a veiled excuse
for developed countries to practice protectionism. Many
domestic industries in developed countries suffer from the
low-cost competition afforded by developing countries,
which attract investment out of developed countries and
then lower global prices through strong competition.
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Developing countries believe that developed countries
wish to use labor standard intervention to artificially
raise the costs of production in developing countries to
bolster their own domestic industry by reducing the cost
advantages enjoyed by developing nations.
The second, third, and fourth questions delve into
the specific actions of the WTO. Should the WTO
address the issues of labor rights? And if it should, how?
This reaches beyond the arguments above surrounding
the “race to the bottom.” For even without a race to the
bottom, with the 1996 Singapore ministerial declaration,
the WTO affirmed its social and moral duty to uphold
core labor standards. And the ILO has historically been
quite ineffective in mandating and implementing global
change. The WTO, however, has the unique opportunity
to harness the power of international trade tariffs and
sanctions to remove the benefits of low labor standards
and force countries to improve their attention to this
crucial aspect of human rights. But should the WTO do
so?
Past UN Actions
T he History section above provides a good overview
of the (lack of ) past WTO action on the issue of
labor rights. The ILO has been designated by the United
Nations as the central institution regarding labor rights,
but cooperation and enforcement is still a great issue
worldwide. The only explicit reference to labor standards
by the WTO is in the 1996 Singapore ministerial
declaration, which reads:
We renew our commitment to the observance of
internationally recognized core labour standards. The
International Labour Organization (ILO) is the competent
body to set and deal with these standards, and we affirm
our support for its work in promoting them. We believe
that economic growth and development fostered by
increased trade and further trade liberalization contribute
to the promotion of these standards. We reject the use of
labour standards for protectionist purposes, and agree that
the comparative advantage of countries, particularly low-
wage developing countries, must in no way be put into
question. In this regard, we note that the WTO and ILO
Secretariats will continue their existing collaboration.42
The appellate bodies of the WTO have also added
to this discussion, by ruling that actions to limit trade of
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 Topic Area B
particular goods because of their manufacturing process is
not allowed under the current wording of Article I and III.
Article XX, however, remains as an ambiguous tool that
could perhaps be used to influence trade policy around
labor standards.
Proposed Solutions
C urrently, the biggest proposed solution is for the
WTO to do nothing, and to accept that the issue
of global labor standards is beyond its relevant sphere of
action. This, however, does not help the untold millions
of abused workers worldwide forced to endure debilitating
working conditions without any international support.
One possible remedy would be to institute a
“normative floor” for the WTO – to create a set of core
standards by which all countries must abide. This floor
can be enforced through WTO membership itself – to
be a trading member of the WTO a country must have
certain minimum labor standards – or through trade
actions against certain transgressors. The latter route
is the most plausible, and does not necessarily involve
any active role of the WTO. That is to say, the WTO
does not need to use trade sanctions to enforce labor Questions a Resolution Must Answer
standards, but simply needs to remove itself as an obstacle
to such actions by member states. This can be achieved
through written exceptions to Articles I and III, or simply
through more explicit language in Article XX. Careful questions:
wording, however, is necessary to protect such a clause
from abuse by protectionist nations. Such trade actions
are not unprecedented and might not be as controversial
as is assumed. For example, the United States has a trade
Women labor at a silk factory in Hotan, China
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embargo on Myanmar because of its labor and human
rights abuses, and there has been no backlash or criticism
of this technically illegal policy from the WTO, any
member states, or Myanmar itself.43
There are also several less radical possibilities.44 At
the 1999 Seattle ministerial conference, the United States
supported the formation of a WTO Working Group on
Trade and Labor within the WTO itself. The European
Union advocated the creation of a joint ILO/WTO
Standing Working Forum that would work with the ILO,
WTO, and other international institutions. Nevertheless,
the mandates were vague and discussion was tabled.
The WTO can also work to strengthen its relationship
with the ILO. Though the ILO is an observer at the
World Bank and the International Monetary Fund, it has
not achieved observer status in the WTO (the WTO is
given observer status by the ILO).45 And while the WTO
negotiates agreements with the World Bank and the IMF,
it does very little with the ILO. Increasing institutional
cooperation with the ILO is a good place for the WTO
to start in an effort to improve its position with regards
to labor rights.
A
ny comprehensive resolution regarding the WTO’s
position with labor rights must address several crucial
• Should the WTO institute a “normative floor”
for labor standards to which all member states
must adhere?
• Should countries only be allowed to trade with
others with similar labor standards, to avoid a
“race to the bottom?”
• Should the WTO help enforce global labor
standards? How? Should WTO explicitly allow
member states to use trade policy to pressure
trading partner nations to comply with core labor
standards? How should this be accomplished
(i.e. exceptions in Article I/III or perhaps explicit
wording in Article XX)?
• Should the WTO increase its links with the ILO?
How? Should the ILO be granted observer status
within the WTO?
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 Topic Area B
Bloc Positions
T he bloc positions in the argument over the WTO and
labor policy are almost exclusively divided between
developing and developed countries. Developed countries
strongly wish to promote labor rights in the developing
world, either due to an embedded liberal wish to extend
basic human rights or in a push to protect their domestic
industries from the competition from cutthroat practices
in developing countries. Developing nations see no need
for WTO involvement in their indigenous labor practices
– they argue that there is no substantive basis for such
meddling (there is no “race to the bottom” for competitive
advantages), and that by interfering in developing
countries’ domestic labor policy, developed countries
are simply trying a different approach to protectionism.
Obviously, the higher a country’s labor standards, the less
they have to fear from WTO intervention, and the more
they have to gain from all countries competing on an even
playing field.
Suggestions for Further Research
A s always, this study guide is only intended as a brief
overview of the many issues surrounding this topic
area. The link between trade policy and labor rights
is currently a hot subject in international discourse. I
highly recommend the WTO website, which is very well
organized and offers much information. Its resources
on this topic can be limited, however, simply because
currently the WTO does very little with employee rights.
The footnoted sources in this guide are a good start to
research, and I recommend following source trails (i.e.
their citations) within these references to find other
good articles and books on the topic. Journal articles are
perhaps the best source; I would simply keyword “WTO”
or “trade” and “labor standards” or “labor rights” – a
simple Google search of “WTO labour standards” returns
1.6 million sites. One note is the spelling of “labor” vs.
“labour” – I would try both spellings in your searches to
get different results. And if you are American, I strongly
remind you to remember the alternate spelling, which
often returns more results. As always, be careful about
the validity and biases of your sources. The key to a good
debate is the research that you perform beforehand.
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Closing Statement
Position Papers
A
ll delegates are required to submit position papers
online by 16 March. These papers should reflect
the stance of your country on both the topic areas given
and should be about a double spaced page in length
(Times New Roman, 12 point font) per topic area. These
documents will be published on the WorldMUN website
to allow other delegates to review their co-delegates’ views
about the topics at hand, and will also be read by your
directors.
Writing the position papers will also allow you to
crystallize your own thoughts and focus on the salient
issues of the extremely complicated topics at hand. For
these reasons, you should spend some time thinking
about and writing the position papers, ensuring that you
cover each topic accurately and evenly, even though you
might have a strong preference for one over the other.
While you are empowered and encouraged to make
decisions in the committee, they have to be in accordance
with your country’s policy and should not be colored
by personal prejudices. Your positions on the topics
should be substantiated by secondary research which can
include press releases, official documents, and speeches
and representative editorial articles in newspapers and
journals. It is expected that your position will reflect the
position of your country’s official government, regardless
of the existence of any opposition or dissent against that
stance. If you encounter any confusion or ambiguity about
the stance of your country, please email me so that I can
refer you to the appropriate sources. The format of the
position papers should ideally conform to the following
guidelines:
ǹǹ State your country’s stand on the issue, using
any secondary research mentioned above. Also,
enumerate any major or concrete steps taken by
your country pertaining to the issue.
ǹǹ Feel free to mention any concerns/ findings
which you would like to present before the
committee as a starting point.
ǹǹ Mention the countries that you would be willing
to form alliances with, taking into account your
country’s relationship with them and the specifics
World Trade Organization 13
 Closing Statement
of the proposed collaborations/alignments.
Spell out certain counter-arguments that your
opposition is likely to make and your own defense against
that, so that you are well-prepared for the debate on those Noting that, in the light of the foregoing, exceptional
points. Ultimately, the purpose of the position paper is
to guide you and the rest of committee in their thinking
and must therefore be written with some thought and
research.
Decides as follows:
Final Remarks
As a reminder, this study guide should serve as a
starting point for your own research. It should provide
you with inspiration for other areas of the topic to explore
more thoroughly to increase your understanding of the
topics at hand. The amount of fun that you have in
committee will be directly proportional to the amount of
research you do ahead of time. Thank you very much for
reading! I look forward to meeting you in March!
Appendix
30 August 2003 Waiver System46
The General Council,
Having regard to paragraphs 1, 3 and 4 of Article IX of
the Marrakesh Agreement Establishing the World
Trade Organization (“the WTO Agreement”);
Conducting the functions of the Ministerial Conference
in the interval between meetings pursuant to
paragraph 2 of Article IV of the WTO Agreement;
Noting the Declaration on the TRIPS Agreement
and Public Health (WT/MIN(01)/DEC/2) (the
“Declaration”) and, in particular, the instruction
of the Ministerial Conference to the Council for
TRIPS contained in paragraph 6 of the Declaration
to find an expeditious solution to the problem of the
difficulties that WTO Members with insufficient or
no manufacturing capacities in the pharmaceutical
sector could face in making effective use of
compulsory licensing under the TRIPS Agreement
and to report to the General Council before the end
of 2002;
Recognizing, where eligible importing Members seek
to obtain supplies under the system set out in this
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Decision, the importance of a rapid response to
those needs consistent with the provisions of this
Decision;
circumstances exist justifying waivers from the
obligations set out in paragraphs (f ) and (h) of
Article 31 of the TRIPS Agreement with respect to
pharmaceutical products;
1. For the purposes of this Decision:
(a) “pharmaceutical product” means any patented
product, or product manufactured through
a patented process, of the pharmaceutical
sector needed to address the public health
problems as recognized in paragraph 1 of
the Declaration. It is understood that active
ingredients necessary for its manufacture
and diagnostic kits needed for its use would
be included; (1)
(b) “eligible importing Member” means any least-
developed country Member, and any other
Member that has made a notification (2)
to the Council for TRIPS of its intention
to use the system as an importer, it being
understood that a Member may notify at any
time that it will use the system in whole or in
a limited way, for example only in the case of
a national emergency or other circumstances
of extreme urgency or in cases of public
non-commercial use. It is noted that some
Members will not use the system set out in
this Decision as importing Members (3) and
that some other Members have stated that, if
they use the system, it would be in no more
than situations of national emergency or
other circumstances of extreme urgency;
  (c) “exporting Member” means a Member using
the system set out in this Decision to produce
pharmaceutical products for, and export
them to, an eligible importing Member.
2. The obligations of an exporting Member under
Article  31(f ) of the TRIPS Agreement shall
be waived with respect to the grant by it of a
compulsory licence to the extent necessary for
the purposes of production of a pharmaceutical
product(s) and its export to an eligible importing
World Trade Organization 14
Appendix
Member(s) in accordance with the terms set out
below in this paragraph:
(a) the eligible importing Member(s) (4) has
made a notification (2) to the Council for
TRIPS, that:
 
(i)   specifies the names and expected
quantities of the product(s) needed
(5);
(ii)  confirms that the eligible importing
Member in question, other than a
least developed country Member,
has established that it has insufficient
or no manufacturing capacities in
the pharmaceutical sector for the
product(s) in question in one of the
ways set out in the Annex to this
Decision; and
(iii) confirms that, where a pharmaceutical
product is patented in its territory,
it has granted or intends to grant a
compulsory licence in accordance
with Article  31 of the TRIPS
Agreement and the provisions of this
Decision (6);
 (b) the compulsory licence issued by the exporting
Member under this Decision shall contain
the following conditions:
(i)   only the amount necessary to meet
the needs of the eligible importing
Member(s) may be manufactured
under the licence and the entirety of
this production shall be exported to
the Member(s) which has notified its
needs to the Council for TRIPS;
(ii)  products produced under the licence
shall be clearly identified as being
produced under the system set out
in this Decision through specific
labelling or marking. Suppliers
should distinguish such products
through special packaging and/or
special colouring/shaping of the
products themselves, provided that
such distinction is feasible and does
not have a significant impact on
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price; and
(iii) before shipment begins, the licensee
shall post on a website (7) the
following information:
• the quantities being supplied
to each destination as referred
to in indent (i) above; and
• the distinguishing features of
the product(s) referred to in
indent (ii) above;
(c) the exporting Member shall notify (8) the
Council for TRIPS of the grant of the
licence, including the conditions attached
to it (9). The information provided shall
include the name and address of the licensee,
the product(s) for which the licence has
been granted, the quantity(ies) for which it
has been granted, the country(ies) to which
the product(s) is (are) to be supplied and
the duration of the licence. The notification
shall also indicate the address of the website
referred to in subparagraph (b)(iii) above.
 
3. Where a compulsory licence is granted by an
exporting Member under the system set out in
this Decision, adequate remuneration pursuant
to Article 31(h) of the TRIPS Agreement shall
be paid in that Member taking into account the
economic value to the importing Member of the
use that has been authorized in the exporting
Member. Where a compulsory licence is granted
for the same products in the eligible importing
Member, the obligation of that Member under
Article 31(h) shall be waived in respect of those
products for which remuneration in accordance
with the first sentence of this paragraph is paid
in the exporting Member.
4. In order to ensure that the products imported
under the system set out in this Decision are used
for the public health purposes underlying their
importation, eligible importing Members shall
take reasonable measures within their means,
proportionate to their administrative capacities
and to the risk of trade diversion to prevent re-
exportation of the products that have actually
been imported into their territories under the
World Trade Organization 15
Appendix
system. In the event that an eligible importing
Member that is a developing country Member or
a least-developed country Member experiences
difficulty in implementing this provision,
developed country Members shall provide,
on request and on mutually agreed terms and
conditions, technical and financial cooperation
in order to facilitate its implementation.
5. Members shall ensure the availability of effective
legal means to prevent the importation into, and
sale in, their territories of products produced
under the system set out in this Decision and
diverted to their markets inconsistently with
its provisions, using the means already required
to be available under the TRIPS Agreement. If
any Member considers that such measures are
proving insufficient for this purpose, the matter
may be reviewed in the Council for TRIPS at the
request of that Member.
6. With a view to harnessing economies of scale
for the purposes of enhancing purchasing power
for, and facilitating the local production of,
pharmaceutical products:
(a) where a developing or least-developed country
WTO Member is a party to a regional trade
agreement within the meaning of Article
XXIV of the GATT 1994 and the Decision
of 28  November  1979 on Differential and
More Favourable Treatment Reciprocity and
Fuller Participation of Developing Countries
(L/4903), at least half of the current
membership of which is made up of countries
presently on the United Nations list of least
developed countries, the obligation of that
Member under Article  31(f ) of the TRIPS
Agreement shall be waived to the extent
necessary to enable a pharmaceutical product
produced or imported under a compulsory
licence in that Member to be exported to the
markets of those other developing or least
developed country parties to the regional
trade agreement that share the health
problem in question. It is understood that
this will not prejudice the territorial nature
of the patent rights in question;
(b) it is recognized that the development of
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systems providing for the grant of regional
patents to be applicable in the above
Members should be promoted. To this end,
developed country Members undertake to
provide technical cooperation in accordance
with Article 67 of the TRIPS Agreement,
including in conjunction with other relevant
intergovernmental organizations.
7. Members recognize the desirability of promoting
the transfer of technology and capacity building
in the pharmaceutical sector in order to overcome
the problem identified in paragraph  6 of the
Declaration. To this end, eligible importing
Members and exporting Members are encouraged
to use the system set out in this Decision in
a way which would promote this objective.
Members undertake to cooperate in paying
special attention to the transfer of technology
and capacity building in the pharmaceutical
sector in the work to be undertaken pursuant to
Article 66.2 of the TRIPS Agreement, paragraph
7 of the Declaration and any other relevant work
of the Council for TRIPS.
8. The Council for TRIPS shall review annually the
functioning of the system set out in this Decision
with a view to ensuring its effective operation
and shall annually report on its operation to the
General Council. This review shall be deemed to
fulfil the review requirements of Article IX:4 of
the WTO Agreement.
9. This Decision is without prejudice to the rights,
obligations and flexibilities that Members have
under the provisions of the TRIPS Agreement
other than paragraphs (f ) and (h) of Article 31,
including those reaffirmed by the Declaration,
and to their interpretation. It is also without
prejudice to the extent to which pharmaceutical
products produced under a compulsory licence
can be exported under the present provisions of
Article 31(f ) of the TRIPS Agreement.
10. Members shall not challenge any measures taken
in conformity with the provisions of the waivers
contained in this Decision under subparagraphs
1(b) and 1(c) of Article XXIII of GATT 1994.
11. This Decision, including the waivers granted
in it, shall terminate for each Member on the
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 Appendix
date on which an amendment to the TRIPS
Agreement replacing its provisions takes effect for
that Member. The TRIPS Council shall initiate
by the end of 2003 work on the preparation of
such an amendment with a view to its adoption
within six months, on the understanding that the
amendment will be based, where appropriate, on
this Decision and on the further understanding
that it will not be part of the negotiations referred
to in paragraph 45 of the Doha Ministerial
Declaration (WT/MIN(01)/DEC/1).
[ANNEX] - Assessment of Manufacturing Capacities in the
Pharmaceutical Sector
Least-developed country Members are deemed to
have insufficient or no manufacturing capacities in the
pharmaceutical sector.
 For other eligible importing Members insufficient or
no manufacturing capacities for the product(s) in question
may be established in either of the following ways:
(i) the Member in question has established that
it has no manufacturing capacity in the
pharmaceutical sector;
 OR
(ii) where the Member has some manufacturing
capacity in this sector, it has examined this
capacity and found that, excluding any
capacity owned or controlled by the patent
owner, it is currently insufficient for the
purposes of meeting its needs. When it is
established that such capacity has become
sufficient to meet the Member’s needs, the
system shall no longer apply.
The 30 August 2003 Statement by the Chairperson of
the General Council47
The General Council has been presented with a
draft Decision contained in document IP/C/W/405 to
implement paragraph 6 of the Doha Declaration on the
TRIPS Agreement and Public Health. This Decision is
part of the wider national and international action to
address problems as recognized in paragraph 1 of the
Declaration. Before adopting this Decision, I would like
to place on the record this Statement which represents
several key shared understandings of Members regarding
the Decision to be taken and the way in which it will be
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interpreted and implemented. I would like to emphasize
that this Statement is limited in its implications to
paragraph 6 of the Doha Declaration on the TRIPS
Agreement and Public Health.
First, Members recognize that the system that will
be established by the Decision should be used in good
faith to protect public health and, without prejudice to
paragraph 6 of the Decision, not be an instrument to
pursue industrial or commercial policy objectives.
Second, Members recognize that the purpose of the
Decision would be defeated if products supplied under
this Decision are diverted from the markets for which they
are intended. Therefore, all reasonable measures should be
taken to prevent such diversion in accordance with the
relevant paragraphs of the Decision. In this regard, the
provisions of paragraph 2(b)(ii) apply not only to formulated
pharmaceuticals produced and supplied under the system
but also to active ingredients produced and supplied under
the system and to finished products produced using such
active ingredients. It is the understanding of Members
that in general special packaging and/or special colouring
or shaping should not have a significant impact on the
price of pharmaceuticals.
In the past, companies have developed procedures
to prevent diversion of products that are, for example,
provided through donor programmes. “Best practices”
guidelines that draw upon the experiences of companies
are attached to this statement for illustrative purposes.
Members and producers are encouraged to draw from
and use these practices, and to share information on their
experiences in preventing diversion.
Third, it is important that Members seek to resolve
any issues arising from the use and implementation of the
Decision expeditiously and amicably:
To promote transparency and avoid controversy,
notifications under paragraph 2(a)(ii) of the Decision
would include information on how the Member in
question had established, in accordance with the Annex,
that it has insufficient or no manufacturing capacities in
the pharmaceutical sector.
In accordance with the normal practice of the TRIPS
Council, notifications made under the system shall be
brought to the attention of its next meeting.
Any Member may bring any matter related to
the interpretation or implementation of the Decision,
including issues related to diversion, to the TRIPS Council
World Trade Organization 17
 Appendix
for expeditious review, with a view to taking appropriate
action.
If any Member has concerns that the terms of the
Decision have not been fully complied with, the Member
may also utilise the good offices of the Director General
or Chair of the TRIPS Council, with a view to finding a
mutually acceptable solution.
Fourth, all information gathered on the
implementation of the Decision shall be brought to the
attention of the TRIPS Council in its annual review as set
out in paragraph 8 of the Decision.
In addition, as stated in footnote 3 to paragraph 1(b)
of the Decision, the following Members have agreed to opt
out of using the system as importers: Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany,
Greece, Iceland, Ireland, Italy, Japan, Luxembourg,
Netherlands, New Zealand, Norway, Portugal, Spain,
Sweden, Switzerland, United Kingdom and United States
of America.
Until their accession to the European Union, Czech
Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania,
Malta, Poland, Slovak Republic and Slovenia agree that
they would only use the system as importers in situations
of national emergency or other circumstances of extreme
urgency. These countries further agree that upon their
accession to the European Union, they will opt out of
using the system as importers.
As we have heard today, and as the Secretariat has
been informed in certain communications, some other
Members have agreed that they would only use the
system as importers in situations of national emergency
or other circumstances of extreme urgency: Hong Kong
China, Israel, Korea, Kuwait, Macao China, Mexico,
Qatar, Singapore, Chinese Taipei, Turkey, United Arab
Emirates.
[Attachment] - “Best practices” guidelines
Companies have often used special labelling,
colouring, shaping, sizing, etc. to differentiate products
supplied through donor or discounted pricing programmes
from products supplied to other markets. Examples of
such measures include the following:
Bristol Myers Squibb used different markings/
imprints on capsules supplied to sub Saharan Africa.
Novartis has used different trademark names,
one (Riamet®) for an anti-malarial drug provided to
developed countries, the other (Coartem®) for the same
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products supplied to developing countries. Novartis
further differentiated the products through distinctive
packaging.
GlaxoSmithKline (GSK) used different outer
packaging for its HIV/AIDS medications Combivir,
Epivir and Trizivir supplied to developing countries. GSK
further differentiated the products by embossing the
tablets with a different number than tablets supplied to
developed countries, and plans to further differentiate the
products by using different colours.
Merck differentiated its HIV/AIDS antiretroviral
medicine CRIXIVAN through special packaging and
labelling, i.e., gold-ink printing on the capsule, dark
green bottle cap and a bottle label with a light-green
background.
Pfizer used different colouring and shaping for
Diflucan pills supplied to South Africa.
Producers have further minimized diversion by
entering into contractual arrangements with importers/
distributors to ensure delivery of products to the intended
markets.
To help ensure use of the most effective anti-
diversion measures, Members may share their experiences
and practices in preventing diversion either informally
or through the TRIPS Council. It would be beneficial
for Members and industry to work together to further
refine anti-diversion practices and enhance the sharing
of information related to identifying, remedying or
preventing specific occurrences of diversion.
The Nigerian Counterproposal (Numbering consistent
with Amendment to Article 31 of TRIPS)48
[Article 31]
2. The obligations under subparagraph 1(f ) of
this Article shall not apply to such use that is
necessary for the purposes of production of a
pharmaceutical product(s) and its export to an
eligible importing Member(s) who notifies(4)
the Council for TRIPS of its intention to use
the system established under this paragraph In
accordance with the terms set out below.
a.  For the purposes of this paragraph:
i.  “pharmaceutical product” means
any patented product, or product
manufactured through a patented
process, of the pharmaceutical sector
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Appendix
needed to address the public health
problems as recognized in paragraph
1 of the Doha Declaration. It is
understood that, among others,
active ingredients necessary for
its manufacture and diagnostic
kits needed for its use would be
included;
ii.  “eligible importing Member” means
any least-developed country Member,
and any other Member with no or
insufficient manufacturing capacity
in the pharmaceutical sector that has
made a notification to the Council
for TRIPS of its intention to use
the system as an importer, it being
understood that a Member may
notify at any time that it will use
the system in whole or in a limited
way, for example, only in the case
of a national emergency or other
circumstances of extreme urgency or
in cases of public non-commercial
use;
iii. “exporting Member” means a Member
using the system set out in this
paragraph to produce pharmaceutical
products for, and export them to, an
eligible importing Member.
b.  Where use is made by an eligible importing
Member of the subject matter of a patent
under this paragraph, adequate remuneration
for purposes of subparagraph 1(h) of
this Article shall be paid in that Member
taking into account the economic value to
the importing Member of the use that has
been authorized in the exporting Member.
Where a compulsory licence is granted
for the same products in the importing
Member, the obligation of that Member
under subparagraph 1(h) of this Article shall
be waived in respect of those products for
which remuneration in accordance with the
first sentence of this subparagraph has been
paid in the exporting Member.
c.  Products produced under the licence shall be
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clearly identified as being produced under
the system set out in this paragraph through
specific labelling or marking. Suppliers
should distinguish such products through
special packaging and/or special colouring/
shaping of the products themselves, provided
that such distinction is feasible and does not
have a significant impact on price.
d.  Members shall ensure the availability of
effective legal means to prevent the re-
exportation or unlawful importation into,
and sale in, their territories of products
produced under the system set out under this
paragraph, using the means available under
Part III of this Agreement. If any Member
considers that such measures are proving
insufficient for this purpose, the matter may
be reviewed in the Council for TRIPS at the
request of that Member.
e. With a view to harnessing economies of scale for
the purposes of enhancing purchasing power
for, and facilitating the local production of,
pharmaceutical products; where a developing
or least-developed country Member is party
to a regional trade agreement within the
meaning of Article XXIV of the GATT 1994
or the Decision of 28 November 1979 on
Differential and More Favourable Treatment
Reciprocity and Fuller Participation of
Developing Countries (L/4903), at least
half of the membership of which is made
up of countries on the United Nations list
of least-developed countries, the obligation
of that Member under subparagraph 1(f )
of this Article shall be waived to the extent
necessary to enable a pharmaceutical product
produced or imported under a compulsory
licence in that Member to be exported to the
markets of those other developing or least-
developed country parties to the regional
trade agreement.
f.  Members recognize the desirability of
promoting the transfer of technology and
capacity building in the pharmaceutical
sector in order to help importing Members
World Trade Organization 19
 Appendix
establish their own manufacturing capacities
in this sector. To this end, eligible importing
Members and exporting Members are
encouraged to use the system set out in this
paragraph in a way which would promote this
objective. Members undertake to cooperate
in paying special attention to the transfer
of technology and capacity building in the
pharmaceutical sector in the work to be
undertaken pursuant to Article 66.2 of this
Agreement, paragraph 7 of the Declaration
and any other relevant work of the Council
for TRIPS.
g.  Members shall not challenge any measures
taken in conformity with the provisions of
this paragraph under subparagraphs 1(b)
and 1(c) of Article XXIII of GATT 1994.
4. It is understood that this notification does not
need to be approved by a WTO body in order
to use the system set out under this paragraph.
The notification will be made available publicly
by the WTO Secretariat through a page on the
WTO website dedicated for this purpose.
Endnotes
1 “Bretton Woods Conference.” Encyclopædia
Britannica. 2007. Encyclopædia Britannica Online.
6  September  2007 http://www.search.eb.com/eb/article- 19
9016387
2 “The GATT Years: From Havana to Marrakesh.”
Understanding the WTO. The World Trade
Organization. 6 September 2007 http://www.wto.org/
english/thewto_e/whatis_e/tif_e/fact4_e.htm
3 Ibid.
4 “The Uruguay Round.” Understanding the WTO. The 22
World Trade Organization. 6 September 2007 http://
www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm
5 Ibid.
6 Kristof, Nicholas. “The Deep Roots of AIDS.” The 23 “Labor standards: consensus, coherence, and
New York Times. 19 September 2006.
7 “Intellectual Property: Protection and Enforcement.”
Understanding the WTO. The World Trade
Organization. 9 September 2007 http://www.wto.org/ 24 “Ministerial Conference, Singapore, 9 – 13 December
english/thewto_e/whatis_e/tif_e/agrm7_e.htm.
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World Trade Organization
8 Ibid.
9 Ibid.
10 “Intellectual-property law.” Encyclopædia Britannica.
2007. Encyclopædia Britannica Online.
5  October  2007   <http://www.search.eb.com/eb/
article-231531>.
11 “Obligations and exceptions.” Fact Sheet: TRIPS
and Pharmaceutical Patents. The World Trade
Organization. 9 September 2007 http://www.wto.org/
english/tratop_e/trips_e/factsheet_pharm02_e.htm.
12 Ibid.
13 Ibid.
14 Ibid.
15 Ibid.
16 “Joint Statement by NGOs on TRIPS and Public
Health.” 3 December 2005. Access to Medicines
Project. Essential Action. 9 September 2007 http://
www.essentialaction.org/access/index.php?/archives/28-
Joint-statement-by-NGOs-on-TRIPS-and-Public-Health.
html.
17 “Canada is first to notify compulsory license to export
generic drug.” 4 October 2007. WTO: 2007 News
Items. World Trade Organization. 1 November
2007 http://www.wto.org/english/news_e/news07_e/trips_
health_notif_oct07_e.htm.
18 Gabarone Declaration. 14 October 2005. The African
Union. 10 September 2007 http://www.africa-union.
org/root/au/conferences/past/2006/may/summit/doc/
GABORONE_DECLARATION.pdf.
“Obligations and Exceptions.”
20
“The General Council Chairperson’s Statement.”
WTO News: 2003 News Items. The World Trade
Organization. 9 September 2007 http://www.wto.org/
english/news_e/news03_e/trips_stat_28aug03_e.htm.
21
“Joint Statement by NGOs on TRIPS and Public
Health.”
Raja, Kanaga. “Africa Group Proposes Amendment
to TRIPS Agreement in Relation to Access to
Medicines.” South North Development Bulletin, 3
December 2004.
controversy.” Understanding the WTO. The World
Trade Organization. 11 December 2007 http://www.
wto.org/english/thewto_e/whatis_e/tif_e/bey5_e.htm.
1996.” WTO News: 1996 Press Releases. The World
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 Endnotes World Trade Organization

Trade Organization. 11 December 2007 http://www. 1996.”

wto.org/english/news_e/pres96_e/wtodec.htm. 43 Howse and Lagille
25 “Labor standards: consensus, coherence, and 44 Ibid.
controversy.” 45 Ibid.
26 “Origins and History.” About the ILO. The International 46 “Implimentation of Paragraph 6 of the Doha
Labor Organization. 13 December 2007 http://www. Declaration on the TRIPS Agreement and Public
ilo.org/global/About_the_ILO/Origins_and_history/lang-- Health.” General Council. The World Trade
en/index.htm. Organization. 9 September 2007 http://www.wto.org/
27 Howse, Robert, and Langille, Brian. “The World english/tratop_e/trips_e/implem_para6_e.htm.
Trade Organization and Labor Rights: Man Bites 47 “The General Council Chairperson’s Statement.”
Dog.” Social Issues, Globalization and International WTO News: 2003 News Items. The World Trade
Institutions: Labor Rights and the EU, ILO, OECD, Organization. 9 September 2007 http://www.wto.org/
and WTO. Leary, Virginia, and Warner, Daniel, eds. english/news_e/news03_e/trips_stat_28aug03_e.htm.
Boston: Martinus Nijhoff Publishers, 2006. 48 Raja, Kanaga. “Africa Group Proposes Amendment
28 Howse and Langille. to TRIPS Agreement in Relation to Access to
29 Kaufmann, Christine. Globalization and Labour Medicines.” South North Development Bulletin, 3
Rights: The Conflict between Core Labour Rights and December 2004.
International Economic Law. Portland, Oregon: Hart
Publishing, 2007.
30 Leary, Virginia. “Worker’s Rights and International
Trade: The Social Clause (GATT, ILO, NAFTA, US
Laws).” Fair Trade and Harmonization: Prerequisites
for Free Trade? Volume 2, Legal Analysis. Bhagwati and
Hudec, eds. Cambridge, MA: MIT Press, 1996.
31 Howse and Langille.
32 “Ministerial Conference, Singapore, 9 – 13 December
1996.”
33 Howse and Langille.
34 “Labor standards: consensus, coherence, and
controversy.”
35 Howse and Lagille
36 Ibid.
37 Kaufmann
38 Howse and Lagille
39 “Labor standards: consensus, coherence, and
controversy”
40 Organization for Economic Cooperation and
Development. Trade, Employment, and Labour
Standards: A Study of Core Workers’ Rights and
International Trade. France: OECD Publishing,
1996.
41 Brown, Drusilla. “International Trade and Core Labor
Standards: A Survey of the Recent Literature.” Tufts
University. 2005. http://ase.tufts.edu/econ/papers/200005.
pdf.
42 “Ministerial Conference, Singapore, 9 – 13 December

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