Introduction
Issues
Pharmaceuticals


Introduction

On April 22 2013 Indian Commerce and Industry Minister Anand Sharma submitted a letter to the Indian Parliament to update it on the progress in negotiations with the European Union on a broad-based trade and investment agreement (BTIA). Sharma noted "intensified" negotiations in diverse sectors from goods and services to government procurement, competition and IP rights.

Since the BTIA negotiations launched in June 2007, the two sides have met for 15 rounds of talks, but have also missed a number of deadlines. The most recent meeting was held in Brussels on April 15 2013, but Sharma and his negotiating counterpart, EU Trade Commissioner Karl De Gucht, were unable to conclude the negotiations. The next ministerial-level meeting is scheduled for June 2013, but EU negotiators will reportedly travel to India for a preparatory meeting in May to help bridge the gaps and support a swift conclusion to the deal.

Issues

The points of contention in the BTIA negotiations arise from differences on key domestic issues in each market. The European Union is seeking tariff reductions on goods such as automobiles, wine and spirits, and dairy products. Additionally, it is seeking to increase the limits placed on foreign direct investment in the insurance sector and to promote a strong IP rights protection regime.

India has focused on more liberal norms for professional work visas, data security status and enhanced market access in the service and pharmaceutical sectors. The Indian dairy industry has also pressured the government not to give concessions without an adequate levelling of the playing field for Indian producers on sanitary and phytosanitary standards and geographical indications.

Pharmaceuticals

The key negotiating issues of each partner reveal deep differences relating to the pharmaceutical sector. The European Union's push for increased IP rights protection, which would have a major impact on pharmaceutical patents, was raised by the German minister of economy and technology as a key issue for German industry. Minister Roesler has been reported as stating that India does not sufficiently guarantee patent protection.(1) India, a major producer of generic pharmaceuticals, has sought increased market access in this sector.

These negotiations are played out against the backdrop of the Indian Supreme Court's recent rejection of a patent application for the drug Glivec by Swiss-based Novartis.(2) The decision has raised concerns not only with Novartis, but also with the pharmaceutical sector more broadly. India is perceived as not offering the IP rights protection that is required by international law, such as its obligations under the World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs).

In particular, the court's apparent view that not all pharmaceutical inventions merit patent protection could be questioned under Article 27 of TRIPs, which provides that patents shall be available to all inventions without discrimination as to the field of technology. Although India claims that its Patent Act as interpreted by the Supreme Court addresses the problem of 'evergreening', it could be argued that other countries have been able to deal with this problem in a manner that raises fewer issues under TRIPs. The background of this decision includes India's historical lack of patent protection for pharmaceuticals (until relatively recently) and its recent approval to start the process of compulsory licensing for a number of other cancer drugs. These factors mean that the Supreme Court's ruling could be seen as raising systemic concerns over India's TRIPs commitments in regard to pharmaceuticals.

In the context of the EU-India BTIA, the European Union denies that it is seeking any changes to India's IP laws and claims that it is demanding of India nothing more than to implement its commitments under TRIPs. It remains to be seen whether these recent developments will play a role in the final stages of these negotiations or whether they will need to be resolved by the WTO.

For further information on this topic please contact Jasper M Wauters or Jordan Shepherd at King & Spalding LLP by telephone (+41 22 591 0804), fax (+41 22 591 0880) or email (jwauters@kslaw.com or jdshepherd@kslaw.com).

Endnotes

(1) See www.business-standard.com/article/current-affairs/india-eu-talks-on-fta-expected-to-make-headway-113041500167_1.html.

(2) www.reuters.com/article/2013/04/01/us-india-novartis-patent-idUSBRE93002I20130401.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.