Special 301 is an annual report by the Office of the US Trade Representative (USTR) which places countries on a “watch list” if USTR would like to see greater changes in their intellectual property rules or enforcement practice.The USTR articulates in past Special 301 Reports that “the United States respects a trading partner’s right to protect public health and, in particular, to promote access to medicines for all,” and “the United States respects its trading partners’ rights to grant compulsory licenses in a manner consistent with the provisions of the TRIPS Agreement.” However, in these same reports, USTR has frequently criticized countries for exercising public health rights and other flexibilities enshrined in the TRIPS Agreement and Doha Declaration. Every year the USTR hears public comments on the Special 301 review.
Highlights from the Special 301 2018 Report
Style: This year’s Special 301 is longer and more detailed than previous reports. It includes a two-page fact sheet for the skimmers, which includes bullet points on actions taken by the USTR and lists concerns raised in bilateral meetings.
Tone: USTR’s tone is more aggressive and snippy. The USTR did not mind echoing PhRMA’s talking points such as: “In order to promote affordable healthcare for Americans and the innovation to preserve access to the cutting-edge cures and therapies, USTR has been engaging with trading partners to ensure that U.S. owners of IP have a full and fair opportunity to use and profit from their IP.”
- There are passages attacking policies used in many parts of the world to make medicines affordable which have never appeared in previous special 301 reports:
- “For example, actions by trading partners to unfairly issue, threaten to issue, or encourage others to issue, compulsory licenses raise serious concerns. Such actions can undermine a patent holder’s IP, reduce incentives to invest in research and development for new treatments and cures, unfairly shift the burden for funding such research and development to American patients and those in other markets that properly respect IP, and discourage the introduction of important new medicines into affected markets. To maintain the integrity and predictability of IP systems, governments should use compulsory licenses only in extremely limited circumstances and after making every effort to obtain authorization from the patent owner on reasonable commercial terms and conditions. Such licenses should not be used as a tool to implement industrial policy, including providing advantages to domestic companies, or as undue leverage in pricing negotiations between governments and right holders. It is also critical that foreign governments ensure transparency and due process in any actions related to compulsory licenses. The United States will continue to monitor developments and to engage, as appropriate, with trading partners, including Chile, Colombia, El Salvador, India, and Malaysia.”
- The report goes beyond countries’ IP laws and practice and now criticizes even the mere positions countries take in multinational forums. Particularly, India has been subject to criticism, such as:
- “ (…) as well as positions that India supports and voices in multilateral fora on IP issues, continue to generate skepticism about whether India is serious about pursuing pro-innovation and -creativity growth policies.”
Priority Watch Countries (PWC):
- USTR’s list of countries that present the most “significant concerns regarding insufficient intellectual property enforcement which, in turn, limits market access.”
- The Priority Watch List this year includes: Algeria, Argentina, Canada, Chile, China, Colombia, India, Indonesia, Kuwait, Russia, Ukraine, Venezuela
- Canada and Columbia are new additions to the Priority Watch List, joining USTR’s preferred usual suspects.
- These two countries are placed on the Priority Watch List for enacting good public health policies and legitimate pharmaceutical pricing policies.
- The Watch List countries include: Barbados, Bolivia, Brazil, Costa Rica, Dominican Republic, Ecuador, Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Pakistan, Peru, Romania, Switzerland, Tajikistan, Thailand, Turkey, Turkmenistan, Uzbekistan, Vietnam
- Saudi Arabia and UAE jut joined the group
Out-of-cycle review: An Out-of-Cycle Review is a tool that USTR uses to apply additional pressure. USTR will conduct out of cycle reviews of:
- Colombia: In order to assess Colombia’s commitment to the IP provisions of the Colombia Trade Promotion Agreement and continue to monitor the implementation of Colombia’s National Development Plan.
- Malaysia: In order to consider the extent to which Malaysia is providing adequate and effective IP protection and enforcement, including with respect to patents.
- Read Public Citizen’s hearing statement on Malaysia and Colombia here
Read Public Citizen’s comments to the Special 301 Committee here: https://www.citizen.org/access-meds-301, including comments on each of the below countries. These highlights in the 2018 Special 301 Report illustrate USTR’s new snippy approach:
Priority Watch List
Argentina – Usual Suspect
- USTR uses similar language to the previous report, calling the 2012 Joint Resolution on patent examination “highly problematic” and raising issue with its ability to reject patent applications for classes of pharmaceuticals
Chile – Usual Suspect
- USTR says “Chile did not deliver any tangible progress on outstanding IP commitments in recent years,” saying that Chile failed to prioritize USTR’s perceived shortcomings. Chile does not agree that it has failed to meet “outstanding comments,” but does not seem particularly interested in USTR’s opinion, either
India – Usual Suspect
- USTR critiqued India’s leadership on global access to medicines, saying “India’s vocal encouragement and propagation of initiatives that promote the erosion of IP around the world, especially in the pharmaceutical sector, sends a concerning signal about India’s commitment to strengthening its IP regime.” This is further than USTR has gone in past reports.
Indonesia – Usual Suspect
- USTR criticizes Indonesia’s patentability criteria (inspired by Section 3d) saying that revisions to the country’s patent laws raise “serious concerns.” Officially, “USTR identifies Indonesia on the Priority Watch List due to the lack of adequate and effective IP protection and enforcement.”
Canada – New to Priority Watch List
- USTR calls out Canada, the “only G7 country on the list” for what it perceives as a “failure to resolve deficiencies in protection and enforcement of IP.”
- USTR is also concerned about Canada’s pricing policies which makes Canada “an outlier among similarly situated countries”. Canada has thus far rejected U.S. efforts to force revision of its pharmaceutical pricing rules in the NAFTA negotiations.
Colombia – New to Priority Watch List
- In 2017, USTR conducted an Out-of-Cycle Review focusing on certain provisions of the United States-Colombia Trade Promotion Agreement (CTPA) and monitoring the implementation of Colombia’s National Development Plan.
- USTR critiques Colombia’s use of provisions to protect the health of individuals, as is its right, saying new provisions in the country could “undermine innovation and IP systems, particularly those that would condition pharmaceutical regulatory approvals on factors other than safety or efficacy.”
- Colombia’s 2018 Out-of-Cycle Review will cover the same issues.
- Updates mainly focus on continuing to watch the development of ANVISA and INPI’s new agreement on patentability approvals (restricts ANVISA’s role and adds a response period for industry), but ends with the statement: “Strong IP protection, available to both domestic and foreign right holders alike, provides a critical incentive for businesses to invest in future innovation in Brazil, and the United States looks forward to engaging constructively with Brazil to build a strong IP environment and to address remaining concerns.”
- USTR takes issue with Turkey’s national pricing and reimbursement policies, claiming the policies “suffer from a lack of transparency and procedural fairness.” It further suggests that Turkey adopt policies to expedite patent disputes for follow-on pharmaceuticals.
- From 2017 to 2018, USTR escalated its language with Vietnam, moving from a commitment to “address” issues of intellectual policy through bilateral frameworks, to a commitment to “press on” these issues and because “it is imperative that Vietnam fully engage and work toward resolving these issues over the next year.”
- USTR claims there are issues with IP enforcement in Peru and pushes the country to “fully implement” efforts under the United States-Peru Trade Promotion Agreement (PTPA).
Our Past Submissions on the Special 301 Report:
- February 9, 2018 – Comments of Public Citizen for 2108 Special 301 Review
- February 9, 2017 – Public Citizen Comments for USTR’s 2017 Special 301 Review
- February 5, 2016 – Public Citizen Comments for USTR’s 2016 Special 301 Review
- February 24, 2014 – Public Citizen Comments for USTR’s 2014 Special 301 Review
Select News Coverage on Special 301 Report:
- May 1, 2014 – SpicyIP: Special 301 Report: India not downgraded to Priority Foreign Country, will receive OCR though
- April 30, 2014 – Infojustice: USTR Avoids India’s WTO Threats to Special 301
Blog Posts on special 301: