Benefits of TRIPS agreement will disappear with LDC Graduation. What then?

Bangladesh has recently received the United Nations' final recommendation to move from the least developed country (LDC) status to a developing country. The transition is considered an important milestone in the development of a country.  The LDC graduation will definitely brighten the image of  Bangladesh, and at the same time, it will pave the way of achieving the Sustainable Development Goals by 2030, transition to a high middle-income country by 2031 and becoming a developed country by 2041.

If everything goes well, Bangladesh will be officially recognised as a developing country in 2026 – meaning it is getting five years of preparation. To make the transition sustainable, necessary steps should be taken within these five years. Otherwise, the underdeveloped trade and development of the country will face various challenges. 

The more post-transition challenges are discussed, the greater the financial loss of the export sector. However, if the flexibilities in implementing the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) are revoked, the challenges that Bangladesh may face are not discussed in detail.
 
Currently, under the TRIPS agreement, Bangladesh enjoys benefits from two types of transition periods - a general transition period and a special transition period for the pharmaceutical industry.

During the general transition period – valid till 1 July 2021 – developed countries who are members of  WTO- were required to provide technical and financial assistance to enterprises and institutions of LDCs to enable them to create a sound and viable technological base. 

Unless the period is extended, Bangladesh would no longer receive incentives from developed countries to foster technology transfer and thus, ensuring compliance with the TRIPS agreement would be expensive. Therefore, the government needs to emphasise effective bilateral and multilateral negotiation so that we can access preferential markets. 

And during the specific transition period – valid until 1 January 2033, or until such a date on which they cease their LDC membership, whichever is earlier – LDCs have been exempted from protecting patents and undisclosed information for pharmaceutical products. 

Utilising the patent waiver, Bangladesh gained self-sufficiency in the pharmaceutical sector and now supplies almost 97% of medicines for the local market and exports to hundreds of countries, including the United States. The pharmaceutical companies thus can produce so-called generics or non-branded medicines, the patents of which have already expired.

Leading pharmaceutical companies of the country are concentrating mainly on producing generic medicines and export generic versions of patented medicines to any country – non-WTO members, LDCs and other developing countries – where these medicines are off-patent. 

With losing LDC status in 2026,  the Bangladeshi pharmaceutical industry will stop enjoying patent waiver seven years before the expiry of the stipulated transition period – meaning in 2026 instead of 2033. As a result, the pharmaceutical companies may be unable to produce and export medicine at an existing lower price, which will eventually result in losing out the export business of these companies. It is predicted that, without policy adjustments, full implementation of TRIPS would trigger a significant jump in insulin prices. 

The specific transition period for pharmaceutical products was complemented by another waiver of the General Council exempting LDCs from the application of – mailbox requirements and exclusive marketing rights for the same period (i.e. 2033). The requirements under mailbox obligation, which includes to initiate and follow an administrative procedure for examination of pending pharmaceutical patent applications,  may require considerable and administrative efforts that would burden the country's health budget.

Apart from that, in 2017, LDCs were also exempted from notification requirements for issuing compulsory licenses for exports of pharmaceutical products to LDCs or other countries. Even with insufficient manufacturing capacities in the pharmaceutical sector, these countries would have this benefit.  

But  after graduation, Bangladeshi pharmaceutical companies would have to notify the intention to use the system.  And in their notifications, concerning needed pharmaceuticals might have to address the existence of insufficient or no manufacturing capacity.

Moreover, after graduation, Bangladesh will have to ensure compliance with the requirements under the TRIPS agreement and other international treaties related to IPR. In doing so, the government will also be required to update the existing IP laws or enact new laws as envisaged in the TRIPS Agreement – which will be subject to review by the TRIPS Council. 

In line with this requirement, the government would have to update its patent law – the Patent Act 1911, as it would contradict the TRIPS agreement in several ways.  The existing law only provides patent protection for 16 years which needs to be increased up to 20 years. Along with that, provisions for patents on pharmaceutical products and processes and patent protections on animal and plant varieties need to be introduced. 

Further, laws for the protection of undisclosed information – known as trade secrets – and for layout designs of integrated circuits – design of electronic circuits (chips) – have to be enacted to comply with the TRIPS Agreement. 

In addition to that, once the TRIPS Council comes into effect Bangladesh will also be required to submit the information of IP laws and regulations, including information on its IP enforcement law and practices. It is pertinent to mention here that Bangladesh has already made progress in notifying some of its IP legislation. 

In today's knowledge-based economy, the importance of intellectual property is increasing day by day, and knowledge-based resources are considered as a sustainable primary source. Therefore, to make the graduation sustainable, the government must put in place effective enforcement procedures of IP rights – that include increasing efficiency, transparency, improving service quality of intellectual property institutions, reorganization, and strengthening IP offices. 

Adequate training on IPR issues needs to be ensured for the concerned departments or agencies, including administration, police, judiciary and customs. The establishment of IPR courts across the country, formation of a task force on protection of IP, and establishment of National Intellectual Property Training Institute may also strengthen the IP offices' efficiency.

Mazharul Islam is a corporate legal practitioner and works to promote IP rights. He can be reached at Mazharkj528@gmail.com

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.