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The following is a question by the Hon Lee Cheuk-yan and a written reply by the Financial Secretary, Mr Henry Tang, in the Legislative Council today (November 16):
Question:
Will the Government inform this Council of the position it will take on the following issues at the Sixth Ministerial Conference of the World Trade Organization ("WTO") to be held in Hong Kong next month:
(a) the requests of the G20 and other developing countries for substantial reduction in domestic support by various WTO Members and elimination of all forms of export subsidies by the developed countries on agricultural products;
(b) limiting the rights of owners of patents on pharmaceuticals in order to ensure access by the least developed countries to affordable medicines;
(c) establishing numerical targets and indicators on WTO Members' commitments for liberalization of services, as advocated by the developed countries; and
(d) the deliberation that basic public services, such as water, health care and education should be regarded as "services supplied in the exercise of governmental authority"?
Reply:
Madam President,
The questions cover three aspects of the ongoing negotiations in the World Trade Organization (WTO), namely agriculture, intellectual property rights and services. My reply is as follows:
(1) Agriculture
The prime objective of the WTO Doha Development Agenda (DDA) on agriculture is to remove trade-distorting barriers and subsidies, particularly those maintained by some developed countries, and to establish a fair and market-oriented trading system.
Developing WTO Members calling for further liberalisation in trade in agriculture are led by a group of countries called the G-20. They are demanding early elimination of export subsidies, substantial reduction of domestic support measures and meaningful market access through sharp and genuine reduction by developed WTO Members, such as the EU, Japan and the US.
Given Hong Kong's free trade policy, we fully support the eventual elimination of trade-distorting and restrictive measures in agricultural trade. Hong Kong, China monitors the agricultural negotiations closely since developments in these negotiations will impinge on negotiations in other areas under the DDA. As host of the Hong Kong Ministerial Conference, we have made use, and will continue to make use, of suitable opportunities to identify possible bridges that may reduce the differences between WTO Members so that a credible package may be agreed by the WTO membership.
(2) Intellectual Property Rights
Access by developing and least developed countries to affordable medicines is outside the DDA. In recognition of the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics, a Ministerial Declaration on TRIPS Agreement* and Public Health was adopted at the Fourth WTO Ministerial Conference in Doha in 2001. Among other things, the Declaration confirms that each Member has the right to grant compulsory licences (that is, governmental use of patents without the authorization of the patent owner) for the production of pharmaceutical products for such health problems.
The current discussion in the WTO on TRIPS and Public Health relates to a technical problem. Article 31 (f) of the TRIPS Agreement stipulates that the granting of compulsory licences "should be authorized predominantly for the supply of domestic market of the Member authorizing such use". This will constitute a problem for developing and least-developed country Members that are eligible to make effective use of compulsory licences but are unable to do so because of insufficient or a total absence of manufacturing capacity in the pharmaceutical sector. Under Article 31 (f) they will have difficulty in authorizing a third country with the necessary manufacturing capacity to produce and export the pharmaceutical products to them, since the latter is required to supply the products predominantly for their domestic markets.
To address this problem, the WTO General Council adopted a decision in August 2003 to waive the obligations of an exporting Member under Article 31 (f) of the TRIPS Agreement with respect to the grant by it of a compulsory licence for the production of a pharmaceutical product and its export to an eligible importing Member. The TRIPS Council is also required to initiate action to amend the TRIPS Agreement to replace this temporary waiver.
Hong Kong, China welcomes the adoption of the General Council decision. We recognize the importance of intellectual property protection for providing incentives for research and development into new drugs. Meanwhile, we also fully recognize that this objective must be balanced with ensuring developing countries' adequate access to affordable drugs.
The TRIPS Council has been discussing how to amend the Agreement to incorporate the General Council decision. Hong Kong will continue to participate actively in the discussions.
(3) Services
With a view to achieving a more substantive outcome for the services negotiations under the DDA, WTO Members have been deliberating on how to intensify the negotiation process. Some Members have suggested the establishment of "numerical targets" on services commitments as one of the means to help steer towards the common goal of achieving meaningful and progressive liberalization on international trade in services.
A number of interested Members (including both developed and developing country Members) have put forward specific proposals on possible "numerical targets" on the commitments to be undertaken in the services negotiations. However, this concept is rather controversial and there is not yet a consensus on any of the proposals. Members will continue to deliberate on whether "numerical targets" should be established and if so, the targets for individual Members.
Being an economy heavily dependent on trade in services, Hong Kong attaches great importance to the services negotiations. While we welcome the development of any means and targets which can help push forward the services negotiations and achieve a substantive and balanced outcome, we consider that the need to allow sufficient flexibility for developing country Members should be duly respected. The Government will continue to participate actively in the deliberations and will scrutinize carefully and prudently all proposals so as to safeguard the overall interests of Hong Kong.
The issue of whether basic public services such as the supply of water, medical and health, and education services should be regarded as "services supplied in the exercise of governmental authority" is not a subject for negotiations in the DDA. It will not be discussed at the coming Ministerial Conference.
As defined under Article I:3 of the WTO General Agreement on Trade in Services (GATS), "services supplied in the exercise of governmental authority" means any service which is neither supplied on a commercial basis nor in competition with one or more service suppliers. These services are excluded from the coverage of the GATS by virtue of the same article of the Agreement. In short, basic public services such as water, health care and education provided by the Government are outside the ambit of the GATS.
* TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights
Ends/Wednesday, November 16, 2005
Issued at HKT 14:00
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