Brazil, India to oppose EU at WTO

Indian generic drug companies have been charged with violating EU’s patent laws

Brazil would join India in invoking dispute settlement proceedings against the European Union at the World Trade Organization (WTO) over Brussels’ alleged violation of global trade rules by detaining on the high seas the generic drugs exported by Indian companies to other developing countries, a senior Indian trade official has said.

The two developing countries raised the issue early this year when the Dutch Customs authorities detained Indian generic drugs at the behest of leading western pharmaceutical giants. Though they charged the EU with violating WTO’s core global rules concerning freedom of transit, they refrained from raising an outright trade dispute until now.

Last week, senior trade officials from India and Brazil held talks to explore if they could raise a joint trade dispute. Given the importance of generic drugs for poor countries, the two have now decided to raise the dispute to ensure that big pharma companies are not able to raise fresh barriers.

Dutch and German Customs inspectors have stopped Indian generic drugs used to treat heart ailments, AIDS, Alzheimer’s disease, and medicines used for hypertension on the ground that they violated the EU’s patent laws. The repeated recourse to detaining Indian medicines was carried out at the request of companies like Sanofi-Aventis SA, Novartis AG and Eli Lilly & Co.

Despite attempts to amicably resolve the dispute, the two sides are yet to reach a blanket pact to ensure free transit for the Indian generic drugs. Consequently, Indian generic manufacturers are forced to divert shipments to avoid any legal or material challenge by the Customs authorities in the EU member countries. Besides, the Indian companies are forced to cough up high charges for directing their shipments through other routes, analysts said.

India and Brazil are expected to raise the trade dispute against the EU under Article V of GATT 1947 concerning Freedom of Transit, which says “there shall be freedom of transit through the territory of each contracting party, via the routes most convenient for international transit”.

Further, India will also cite violation of Article VIII of GATT 1947, which deals with fees and formalities connected with importation and exportation.

The two countries would also challenge the EU under the Doha TRIPS and Public Health Agreement and other provision of the trade-related intellectual property rights, the Indian official said.

Unconfirmed reports suggest that the Dutch Customs authorities have not released a consignment of generic drugs shipped by Cipla. Similarly, the Dutch Customs authorities have detained a 50-kg, $52,500-shipment of generic blood-thinner clopidogrel exported by a Chandigarh-based generic company, analysts said.