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PMA URGES REINSTATEMENT OF BRAZILIAN TRADE SANCTIONS

Executive Summary

PMA URGES REINSTATEMENT OF BRAZILIAN TRADE SANCTIONS and elevation of Brazil to Priority Foreign Country status under the "Special 301" provision of the U.S. trade law as a response to Brazil's failure to enact an "adequate" patent law following the lifting of sanctions in 1990. "Since then," argued Pharmaceutical Manufacturers Association Senior VP Harvey Bale, PhD, in testimony before the Senate Finance/International Trade Subcommittee April 19, "Brazil has done absolutely nothing, and it fully deserves and should expect the reinstatement of sanctions at such a level that will get that government's attention." The hearing was convened by subcommittee Chairman Baucus (D- Mont.) to provide an opportunity for the U.S. Trade Representative's office and representatives of private industry "to share their views on the effectiveness [of Special 301] in general and on their priorities for this year in particular," Baucus noted in opening remarks. In accordance with Section 301 of the Omnibus Trade Act of 1988, the USTR is scheduled to release its annual list of Priority Foreign Countries and the accompanying "Priority Watch" list and "Watch" list April 30. Those countries identified as Priority Foreign Countries will be the subject of negotiations on strengthening protection for intellectual property. If negotiations fail to achieve satisfactory results, the U.S. can impose trade sanctions. In addition to Brazil, other countries recommended by PMA for Priority Foreign Country status are Argentina, Turkey, Hungary, Colombia, India, Korea, Thailand and Venezuela. The association suggested that Egypt, Indonesia, Poland, Russia and Spain be placed on the Priority Watch list "because their acts and practices regarding patent protection for pharmaceuticals remain objectionable." In contrast to the continuing problems PMA has found with numerous countries, the association also told Baucus of some successes. Canada "should not be considered any longer in the context of Special 301," he recommended, in light of the patent protection legislation recently enacted by the Canadian Parliament. Bill C-91, enacted Feb. 4, repealed Canada's compulsory licensing system and provides market protection for patented products for 20 years from the date the original patent is filed ("The Pink Sheet" Feb. 22, T&G-4). In the past, PMA has suggested that Canada be included on the Special 301 Watch List. Bale also suggested that Mexico initially be placed on the Watch List this year, but that once the country publishes promised regulations to "further strengthen and clarify" the "world-class" patent law implemented June 28, 1991, it be dropped from all Special 301 lists. Bale warned that the General Agreement on Tariffs and Trade (GATT) "would effectively remove Special 301 as a U.S. trade policy tool" if the current draft of the "Dunkel text" is accepted. While endorsing several of the intellectual property provisions of the Dunkel text, such as a 20-year patent term and a prohibition of discrimination in patent practices, PMA believes that its delayed implementation period would permit countries such as Argentina, Brazil and India to "continue to pirate patented pharmaceuticals at will, and yet be in conformance with their GATT obligations." Bale also lamented the lack of protection for segments of biotechnology and the lack of "adequate" pipeline protection, and urged the Administration to reject the text and ensure that Special 301 "remains viable". PMA is also asking that the U.S. government perform a thorough review of the process by which the level of retaliation in Special 301 and other 301 cases is determined. Bale argued that the retaliation figure produced by the U.S. government is "narrowly defined" and that it does not take into account "such considerations as the opportunity cost to industry of inadequate intellectual property protection, or the cost to industry in other countries in the region because of poor patent protection in the investigated country." Subcommittee member Sen. Rockefeller (D-W.Va.) urged consideration of two bills he introduced Jan. 21 addressing intellectual property protection issues. S 148 proposes to amend the U.S. procedures for dealing with unfair practices in import trade so that the U.S. law conforms with the GATT requirement that enforcement procedures against imported goods be no less favorable than those against domestic products. Without such an amendment, Rockefeller suggested in a statement accompanying the bill, the use of the law by U.S. companies to exclude imports has declined since 1989. The second bill, S149, would establish standards for adequate and effective foreign patent protection for U.S. companies. Countries failing to meet those standards would be subject to Special 301 action. Cosponsors for S 148 and S 149 are Sens. Hatch (R-Utah) and Wofford (D-Penn.). Sen. Mikulski (D-Md.) is a cosponsor of S 149 only.
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