Questionable waivers threaten the World Trade Organization’s relevance

These are tough times for the World Trade Organization. Concerns for COVID and climate change have only heightened populist pressures to abandon free trade. Yet, more loopholes in the rules aren’t the answer. The WTO has to get off this slippery slope that it’s created for itself.  

It all started back in June 2022, when countries attending the WTO’s 12th Ministerial Conference agreed to a five-year “waiver” of patents on COVID-19 vaccines. Later this fall, they will consider whether to expand the waiver to include COVID diagnostics and therapeutics. 

Next came demands for a “green” waiver on intellectual property needed to cope with climate change. This proposal garnered widespread support at the United Nation’s COP27, where it was often coupled with an environmental “peace clause,” the idea being that subsidies on these technologies shouldn’t be challenged in WTO litigation. 

Joining in on this waiver frenzy, the African Group, comprised of 44 developing countries, wants to go even further. In a paper submitted to the WTO last March, they call for “rebalancing” global trade rules at the 13th Ministerial Conference in February. They argue that to prepare for the next pandemic, and cope with climate change, they need more “policy space.” To this end, they want more “flexibilities” in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), particularly with respect to compulsory licenses, which they frame as being the key to their industrialization. 

Putting aside the fact that least-developed countries have no TRIPs obligations until 2034, and likely longer, the African Group’s proposal for compulsory licenses is breathtaking. It’s not based on existing TRIP flexibilities, which frame compulsory licenses as being about emergencies, but is rather a rejection of them. 

The slippery slope doesn’t end there. The African Group wants tariffs to back up these compulsory licenses in support of “green industrialization.” In the March paper, they reason that “developing countries should be cautious about premature tariff liberalization” in this regard. And there you have it: Free trade is unraveling, in no small part because of this waiver frenzy. 

There’s been some pushback. The United Kingdom also submitted a paper to the WTO, calling for more attention to voluntary licenses. The argument is that voluntary licenses create less uncertainty for the patent holder, often result in lower prices and usually have technology transfer provisions, in contrast to compulsory licenses. The African Group claims that “existing mechanisms” (including voluntary licenses) have “restrictive contractual terms of licensing agreements,” although no evidence is offered. 

Back in 2022, Mexico and Switzerland argued in a communique to the WTO that IP wasn’t slowing the response to COVID in developing countries. The U.K. agrees: IP “was instrumental in the COVID-19 response,” voluntary licenses were the key to transferring technology to generics producers and were it not for developing countries’ steep tariffs and nontariff barriers, voluntary licenses would have been even more beneficial for developing countries. 

Most poignantly, the U.K. backs up its assessment with six case studies of how voluntary licenses resulted in the transfer of technology from patent holders to generics producers. In a debate that is typically driven more by passion than evidence, this is a welcome contribution. 

The 13th Ministerial Conference is bound to be eventful. The U.S. International Trade Commission will have delivered its study on the pros and cons of expanding the TRIPs waiver, setting up a debate at the WTO that could possibly trigger a vote. Other agenda items, like dispute settlement, will add to the sense of urgency to get things done. 

But by expanding the TRIPs waiver, and considering green and other ones, the WTO would send the message that free trade cannot solve the world’s most pressing problems. A waiver frenzy doesn’t show determination to prepare for the next pandemic or deal with climate change. Instead, it plays directly into the hands of green protectionists hiding in plain sight. 

If the WTO gets into the waiver business, it will slide down a slippery slope to irrelevance.  

Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University, and a global fellow at the Wilson Center’s Wahba Institute for Strategic Competition. Follow him on Twitter @marclbusch.