An initial look behind the scenes at the functioning of WTO TRIPS and the impact of FTZs on international regulatory frameworks
This presentation was delivered at the Transparency in Free Trade Zones meeting, on September 29, 2017. For more information, please see http://www.oecd.org/governance/risk/
1. 1
EUIPO-OECD
Joint Experts Meeting for a Better FTZ
Alicante, 29 September 2017
Free Trade Zones:
TRIPS Standards and Beyond
Roger Kampf
Counsellor, WTO Secretariat
Note: This presentation is the basis for a forthcoming publication by the WTO for
the OECD’s Task Force on Countering Illicit Trade on legal frameworks for IP
protected goods. It should therefore neither be cited nor attributed prior to the
publication of the working paper.
3. 3
Uruguay Round Negotiating Mandate:
Punta del Este Ministerial Declaration 1986
“In order to reduce the distortions and impediments to
international trade, and taking into account the need to
promote effective and adequate protection of intellectual
property rights, and to ensure that measures and procedures
to enforce intellectual property rights do not themselves
become barriers to legitimate trade, the negotiations shall
aim to clarify GATT provisions and elaborate as appropriate
new rules and disciplines.
Negotiations shall aim to develop a multilateral framework of
principles, rules and disciplines dealing with international
trade in counterfeit goods, taking into account work already
undertaken in the GATT.
These negotiations shall be without prejudice to other
complementary initiatives that may be taken in the World
Intellectual Property Organization and elsewhere to deal with
these matters.”
4. 4
Outcome of U.R. Negotiations:
TRIPS as Annex to WTO Agreement
• Includes comprehensive section on
enforcement:
– Makes available effective tools to guarantee
application of substantive rules
– Guided by balance between different interests
• Subject to basic principles:
– Minimum level of protection, but not harmonisation
– Freedom to determine appropriate method of
implementation within WTO Members‘ own legal
system and practice
– Subject to non-discrimination rules and WTO
dispute settlement
– LDC transition periods apply (2021/2033)
5. 5
All Types of IPR Infringements:
General Obligations, Civil & Admin.
Procedures, Provisional Measures
Right Holders Users
Effective enforcement,
including through provisional
measures
Procedures not to become
barriers to legitimate trade
Right of information Built-in safeguards against
abuse of procedures,
including indemnification of
defendant
Remedies: injunctions,
damages, other
All Stakeholders: Principles of Due Process
Fair and equitable procedures
Decisions on the merits of a case
Opportunity for review by a judicial authority
6. 6
Border Measures & Criminal Procedures:
Additional Mandatory Provisions
Border Measures (Art.51) Criminal procedures (Art.61)
Scope: import of counterfeit trademark /
pirated copyright goods
Scope: counterfeiting and piracy
Conditions/safeguards
•adequate evidence
•detailed description of the goods
•security or equivalent assurance
•indemnification
Conditions:
(i)wilful act
(ii)of trademark counterfeiting or
copyright piracy
(iii)on a commercial scale
Procedures
•notice of suspension
•10 working days to initiate proceedings
•right of inspection and information
Remedies:
•destruction
•disposal of infringing goods outside
channels of commerce
Remedies:
•imprisonment and/or
•monetary fines sufficient to provide a
deterrent
7. 7
Optional Application
Border Measures Criminal procedures
• IPRs other than counterfeit trademark and pirated
copyright goods
• Exports and goods in
transit
• Parallel imports
• de minimis imports
• ex officio action
9. 9
TRIPS: Transparency & Predictability
• TRIPS notification requirements serve to:
– promote transparency of Members’ laws and
policies on the protection of IPRs
– monitor operation of the agreement
– facilitate co-operation between Members aimed at
eliminating trade in infringing goods
• Relevant notifications in WTO document series
Document Series Coverage
IP/N/1/../E/ Enforcement (legislative measures)
IP/N/3/.. Contact Points under Art.69
IP/N/6/.. Responses to Checklist of Issues on
Enforcement
10. 10
TRIPS: Transparency & Predictability
• TRIPS notification requirements serve to:
– promote transparency of Members’ laws and
policies on the protection of IPRs
– monitor operation of the agreement
– facilitate co-operation between Members aimed at
eliminating trade in infringing goods
• Relevant notifications in WTO document series
Document Series Coverage
IP/N/1/../E/ Enforcement (legislative measures)
IP/N/3/.. Contact Points under Art.69
IP/N/6/.. Responses to Checklist of Issues on
Enforcement
e.g. EU notifications:
•Customs Regulation (EU) No 608/2013: Article 1(1)(c) clarifies
that the scope of customs measures extends to goods “placed under
a suspensive procedure or in a free zone or free warehouse”
•See also Trademark Regulation (EU) 2015/2424 and Directive
(EU) 2015/2436: Recitals (16)/(22) provide for prevention of “entry
of infringing goods and their placement in all customs situations,
including transit, transhipment, warehousing, free zones,
temporary storage (…) also when such goods are not intended to be
placed on the market of the Union.”
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TRIPS: Transparency & Predictability
• TRIPS notification requirements serve to:
– promote transparency of Members’ laws and
policies on the protection of IPRs
– monitor operation of the agreement
– facilitate co-operation between Members aimed at
eliminating trade in infringing goods
• Relevant notifications in WTO document series
Document Series Coverage
IP/N/1/../E/ Enforcement (legislative measures)
IP/N/3/.. Contact Points under Art.69
IP/N/6/.. Responses to Checklist of Issues on
Enforcement
Who:
141 WTO Members have notified
contact points
What:
Exchange of information on trade in
infringing goods
Promotion of cooperation between
customs authorities
Why:
Elimination of international trade in
goods infringing IPRs
12. 12
Enforcement Checklist (IP/C/5)
• Mandatory for all WTO Members:
– Responses submitted by 109 Members
– But: not regularly updated
• Information provided includes:
– Scope of border measures:
• Counterfeit trademark and pirated copyright goods
• Voluntary extension to goods infringing other IPRs
• Voluntary extension to exported/in-transit goods
13. 13
Enforcement Checklist (IP/C/5)
• Mandatory for all WTO Members:
– Responses submitted by 109 Members
– But: not regularly updated
• Information provided includes:
– Scope of border measures:
• Counterfeit trademark and pirated copyright goods
• Voluntary extension to goods infringing other IPRs
• Voluntary extension to exported/in-transit goods
E.g. Panama’s responses (IP/N/6/PAN/1):
•Colón Free Zone
• Administration cannot suspend release of goods in
Free Zone; under jurisdiction of customs
authorities
• Free Zone IP Department can prevent subsequent
traffic in goods in Free Zone that violate IPRs
• Inspection and/or detention by Administration by
order of competent authority, complaint by a
private party or ex officio
•But: information dates back to 1998
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Relevant Dispute Settlement Cases
• China - Measures Affecting the Protection and
Enforcement of Intellectual Property Rights
(WT/DS362) – selected finding:
– Art.59 not applicable to Customs measures
applying to goods destined for exportation
• EU/Member State – Seizure of Generic Drugs in
Transit (WT/DS408 and 409):
– Consultations requested by India/Brazil, pending
– Enforcement of IPRs regarding allegedly
infringing goods in transit country?
– Developments in EU law:
• CJEU jurisprudence (C-446/09, C-495/09 of
1/12/2011)
• EU Customs Regulation No 608/2013
• Trademarks: Directive (EU) 2015/2436 and
Regulation (EU) 2015/2424
16. 16
State of Play and Questions
• TRIPS does not include provisions
specifically dealing with FTZs
• As a result: diversity of laws in WTO
Members
• Selected issues for consideration:
– Obligation to apply TRIPS to FTZs?
– In particular: FTZs as part of a WTO Member’s
territory within the meaning of TRIPS?
– How to define certain key terms?
– Implications of mandatory and optional
provisions with respect to border measures?
– Any guidance from other WTO agreements or
other international treaties?
17. 17
TRIPS & WIPO Conventions
• Reference to “territory” in TRIPS:
• Uses term:
– See Art.22, 24, 27, Annex to 31bis, 65
• But: no definition is provided
• Art.72 TRIPS on reservations:
• Not applicable
• Art.24 Paris / Art.31 Berne Convention:
• Declaration of application to all or part of a
country’s territory
• Not incorporated in TRIPS:
– See Art.2.1, 9.1 TRIPS
• No equivalent provision in TRIPS
18. 18
Other WTO Agreements
• GATT Art. XXIV para.1:
– Application to Members’ “metropolitan customs
territories”
• GATT Art. XXVI para.5(a):
– Acceptance of the Agreement in respect of a Member’s
“metropolitan territory and of the other territories for
which it has international responsibility”
• Agreement on Trade Facilitation
– Article 9.1 – Temporary Admission of Goods
• Requires each Member to “allow, as provided for in its laws and
regulations, goods to be brought into its customs territory…”
– Article 11 – Freedom of Transit
• Note: para.8 explicitly provides for non-applicability of technical
regulations and conformity assessment procedures (TBT)
• Absence of a similar rule for TRIPS
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WTO Accessions: Selected WP Reports
• Russian Federation 2011 (WT/ACC/RUS/70, para.214):
– “…provisions of the WTO Agreement would be applied
uniformly throughout the territory of the Russian Federation,
including in regions engaging in frontier traffic, special
economic zones and other areas where special regimes for
tariffs, taxes and regulations could be established“
• Kazakhstan 2015 (WT/ACC/KAZ/93, para.933):
– “…SEZs and free warehouses in Kazakhstan would be
established, maintained and administered from the date of
accession in conformity with the provisions of the WTO
Agreement. (…) Kazakhstan would apply the provisions of the
WTO Agreement in all of its SEZs and in the operation of free
warehouses.”
• Liberia 2015 (WT/ACC/LBR/23, para.251):
– “… FTZs (…) would be established, maintained and
administered in full conformity with the provisions of the WTO
Agreement, (…), and that Liberia would ensure enforcement of
its WTO obligations in those zones.”
20. 20
Vienna Convention
• Article 29:
– “Unless a different intention appears from the treaty or
is otherwise established, a treaty is binding upon each
party in respect of its entire territory.”
– Practice of UN Secretary-General as Depositary of
Multilateral Treaties:
• Notes that “parts of the territory of a State may under its
domestic law be subject to a separate legal regime”
• In principle, absence of a territorial clause would normally
lay upon States on obligation to apply a treaty to entire
territory
• Article 32:
– Interpretative context includes preparatory work of a
treaty and circumstances of its conclusion
• TRIPS negotiating history
21. 21
Revised Kyoto Convention
• Free zones:
– Revised Kyoto Convention, Annex D: part of CP
territory; goods to be considered outside the Customs
territory with respect to import duties and taxes
– Recommended Practice: admission of goods from
abroad not to be refused solely on the grounds that the
goods are liable to prohibitions/restrictions other than
those imposed on grounds of (…) the protection of
patents, trademarks and copyrights
• Free warehouses:
– Revised Kyoto Convention, Annex D: storage in a
designated place under Customs control without
payment of import duties and taxes
22. 22
Selected RTAs (1)
• US FTAs
– Ex officio customs action regarding imported,
exported or in transit merchandise, or
merchandise in FTZs
• Art. 18, Section 22 KORUS FTA (2012)
• Art.15.10, Section 23 Oman FTA (2009)
– Ex officio customs action with respect to
merchandise for importation, exportation, or in
transit
• Art.14.10, Section 23 Bahrein FTA (2006)
• Art.15.11, Section 23 CAFTA-DR FTA (2006-7)
• Art.17.11, Section 20 Chile FTA (2004)
• Art.16.11, Section 23 Colombia PTA (2012)
• Art.15.11, Section 23 Morocco FTA (2004)
• Art.15.11, Section 23 Panama TPA (2012)
• Art.16.11, Section 23 Peru TPA (2009)
23. 23
Selected RTAs (2)
• Some more recent EU RTAs require the Parties:
− To enable the right holder to request customs action
with respect to the importation, exportation, re-
exportation, entry or exit of the customs territory,
placement under a suspensive procedure or placement
under a customs free zone or a customs free
warehouse of goods infringing an IPR
• Art.163 Cariforum EPA
• Art.330 Moldova Association Agreement
• Art.250 Ukraine Association Agreement
• Art.273 Central America Association Agreement
• Art.10.67 Korea FTA
– But: no such clarification in the majority of RTAs
• EFTA with various third countries
– Border measures to be made available for importation and
exportation
– FTZs and goods in transit not covered
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ACTA & SECURE
• [ACTA (IP/C/W/563):
– Article 5: defines territory for the purposes of border
measures as “the customs territory and all free zones of
a Party”
– Article 16(2): provides for optional application of
procedures “with respect to suspect in transit goods or
other situtations where the goods are under customs
control…”
– Note: ACTA did not enter into force]
• [WCO SECURE (2008):
– Standard 1: customs to enforce IPRs for goods under
customs supervision, including transit, warehouses,
transhipment, free zones and free ports
– Note: withdrawal of SECURE after strong criticism for
the promotion of “TRIPS plus” standards regarding IPR
enforcement]
25. 25
Conclusions (1):
Application of TRIPS to FTZs
At FTZ
Border
Import Export, Transit
• Yes
• Confirmed for
recently
acceded
WTO
Members
• Basic rule: optional
• Mandatory for parties to RTAs
with relevant provisions:
• Applies to all WTO
Members based on non-
discrimination principles
In FTZ
• Yes
• Based on TRIPS and other relevant treaties
• Clarified in certain cases:
• Recently acceded WTO Members
• Parties to RTAs with relevant provisions
• Competent authority?
• Applicable laws?
26. 26
Conclusions (2):
The Way Forward
• IPRs and FTZs not discussed in TRIPS
• But clearly a matter of concern, e.g.:
– US Special 301 Report 2017
• Lists UAE for transhipment and manufacturing of IP-
infringing goods in and through FTZs
– OECD/EUIPO Report 2017 on “Mapping the
Real Route of Trade in Fake Goods”
• Calls for further research “on the role of FTZs in
counterfeit and pirated trade”
• Is there a need to further clarify and to
ensure a more coherent approach?
– E.g.: INTA Model FTA (2011)
– Possible action under TRIPS
27. 27
Conclusions (2):
The Way Forward
• IPRs and FTZs not discussed in TRIPS
• But clearly a matter of concern, e.g.:
– US Special 301 Report 2017
• Lists UAE for transhipment and manufacturing of IP-
infringing goods in and through FTZs
– OECD/EUIPO Report 2017 on “Mapping the
Real Route of Trade in Fake Goods”
• Calls for further research “on the role of FTZs in
counterfeit and pirated trade”
• Is there a need to further clarify and to
ensure a more coherent approach?
– E.g.: INTA Model FTA (2011)
– Possible action under TRIPS
• Prohibit admission to/processing in/export
from FTZs of counterfeit goods
• Empower Customs to take action when goods
enter/exit FTZ and to inspect goods in FTZ
• Ensure cooperation between Customs and FTZ
authorities
• Apply/enforce anticounterfeiting criminal and
civil laws