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Protectionism by another name

The EU's continued seizure of drugs in transit is untenable

Business Standard  |  New Delhi 

The has met in New Delhi and failed to resolve the issue over Indian generic drugs being seized when they are in transit through European ports. This may be ascribed to technical reasons, but it has ramifications for international trade and, equally importantly, for public health. The stand-off comes barely weeks after the assurance by EU’s trade commissioner, Catherine Ashton, that the EU was committed to finding a solution that works for India. The EU’s plea that such seizures are made on suspicion of either violation of intellectual property rights (IPRs), notably patent laws, or of the consignments being of counterfeit drugs, holds no water because there is no evidence to back such a position. All the consignments detained so far have eventually been found to be of genuine, off-patent generic drugs on their way to countries where these are not patented.

The problem gets worse because the frequency of seizures has increased of late. This leaves only a couple of options for India. A change of route for ships carrying drugs, so that they avoid European ports, is one obvious course of action. But that would increase transportation costs, cause delays, and ultimately push up the costs and, therefore, prices of these drugs. In any case, if Indian firms prefer to export their goods through the Mediterranean, via the Suez Canal, it is because this is the shortest way to Latin American and West African destinations where people need access to cheaper drugs.

The second option for India is to take the issue to the disputes redressal body of the World Trade Organisation (WTO), as this is a clear case of the EU creating trade barriers against Indian drugs in order to boost the interests of its own firms. The issue has already been brought to the notice of the WTO’s IPR Council. Brazil, which, as an importer of generics, has been at the receiving end of such seizures, has also decried this practice, in a statement made at the last meeting of the general council. As pointed out by Brazil, such seizures on baseless grounds contravene the freedom of transit norms stipulated under Article V of the General Agreement on Tariffs and Trade. This section clearly states that traffic coming from or going to the territory of other contracting parties shall not be subject to any unnecessary delays or restrictions. If the issue is not resolved, the only course for India would be to formally place it before the WTO, preferably jointly with Brazil, which appears to be a willing signatory.

Meanwhile, several other developing countries have endorsed the Indo-Brazilian stand. The controversy has given a new urgency to the debate on how to ensure affordable medicines for the poor, as also to the question of whether IPR issues can or should supersede public health concerns. The EU should be aware that, in persisting with an untenable course of action, it is risking a larger battle on a more fundamental question.

First Published: Wed, November 18 2009. 00:15 IST