Final Communique of the G8 Youth Summit 2009 | Experts Advise

Head of National Business Association Final Communiqu

We, the heads of the national business associations, see the world economy continuing to feel downward pressure through 2009 and well into 2010. Recovery in the stressed economic market depends on the strengthening of the US economy and banking industry, which is a key component in driving the world economy. Reducing trade barriers and increasing free trade agreements are also vital to further the progression of our global economy. BUSINESS PROPOSITION TO GOVERNMENTAL ACTION IN THE STRESSED WORLD ECONOMIC ENVIRONMENT There should be a global consensus to improving regional green standards. This must be achieved by changing the business model, encouraging firms to consider the impact of their actions on the environment. Governments can foster the right business attitudes by providing incentives to firms that increase their environmental awareness e.g. those firms that increase fuel efficiency within the automotive sector. This will generate the motivation for firms to increase research and development in green technologies and pave the way for greater environmental consciousness. Green initiatives such as the Better Place project in Israel demonstrate how greater co-operation can promote greener attitudes.

TRADE Furthering the aim of increasing free trade, we propose the re-organisation of the International Monetary Fund (IMF) and the World Trade Organisation (WTO). We encourage developed economies to increase funding to the IMF in order to make it possible for the IMF to assist developing economies. We also recognize that there have been controversial regulations in the past. These have to be reviewed and reformed to meet the current needs of struggling economies in order to prevent preferential trade agreements and improve the efficiency of the fund. With a stable, long-term financial provision mechanism in place, governments will have the ability to support structural changes in their home countries. We propose that the IMF should not be entitled to print money for aid provision due to the risk of potentially diluting currency. We recommend the restarting of the Doha Development Round, recognising the ability it has to enhance free trade. Talks should not be halted due to divergent opinions of certain countries. Especially in todays economic climate, governments must take the necessary steps to reach a beneficial conclusion. Certain essential changes to the structure of the WTO have to be made, such as the restructuring of the voting principles. To increase market competition, we recommend that China lowers tariffs on imports in order to join us in our commitment to the development and integration of member countries. In return, we all agree to ensure international competitors are not subjected to unfair conditions or limitations that prevent them from establishing industries in our domestic nations. States should implement gradual cuts in agricultural subsidies, revising spending focus to businesses and trade to stimulate the markets. Implementing this change will increase industry efficiency; because market forces will ensure only the most efficient firms succeed.

Opening Ceremony - 1 - G8 Youth Summit 2009 Italy

RATING AGENCIES We recommend full disclosure by rating agencies to ensure greater transparency of their rating procedures including how they rate assets and companies. This is particularly important with subjacent assets. We also endorse full disclosure of consultancy practices to prevent conflicts of interest. There should be more frequent ratings of agencies to improve the reflection of the market situation. More accurate investment ratings result in greater business confidence. This can be furthered by the implementation of an international code of conduct for all rating agencies globally, much like IOSCO. We want to encourage all businesses to obtain green ratings. This information will be available to the public, so that investors can choose to invest in progressively green companies. This will help us achieve our aim of changing the business model. REGULATION We recommend greater regulation and sufficient human resources in regulatory bodies (e.g. SEC) to ensure effective implementation of rules that are in place. The business associations would like to see the assembly of a unified governing body to oversee the mortgage markets. This body would establish a standard test to qualify individuals who sell loans, and oversee the firms they represent. There should be an implementation of a global standard regarding leverage and capital requirements. ACCOUNTING AND AUDITING STANDARDS

We wish to advance the homogenisation of accounting and auditing standards internationally. We recommend more countries implementing IFRS standards and this should become a global policy. We recommend that in full disclosure of accounting information, mark-to-market value and historical value are both represented. This can help prevent vicious cyclical downturns in economic crises. Mark-to-market value often under or overvalues assets, thus reducing business confidence. Having the historical value can help ensure the maintenance or improvement of investor confidence with economic entities. GOVERNMENT SPENDING Where appropriate, governments should inject capital directly into banks in return for principal reductions. This reduction of principle would apply to mortgage values that are currently higher than the market value of the underlying home. The homeowner will see a sizeable reduction in their monthly payments, which will reduce the amount of defaults. This will reduce debt pressure on banks making it easier for them to lend. This should increase credit flows, thus stimulating the economy. This can also be seen as direct stimulus to millions of consumers. A reduction in payment amounts will increase discretionary income for the life of the loan.



Western European banks have exposure to the US sub-prime defaults, but have also written trillions of dollars in loans to emerging market economies. As the global slowdown progresses, these economies have shown a tendency to decline at a much faster rate. This could potentially mean even further write downs taken by Western European banks. In some of these cases, the insolvent banks have become too big to save, meaning their home governments cannot afford to bail them out. The collapse of a sizable sovereign bank could mean disaster for the entire region. It is important that stronger economies in the European Union, take steps to sure up these economies. Action can be taken by these countries in a position to lend by either loaning money to the IMF or capitalizing the European Central Bank. We recommend that where appropriate, insolvent banks go into temporary receivership. The banks profitable assets will be split and then quickly reintroduced into the private markets. The toxic assets will be quarantined and gradually reintroduced into the market as it begins to stabilise. We emphasise that this receivership is merely a temporary measure but has proved successful in the past e.g. in Sweden. However, this should only be implemented under extenuating circumstances and should not be adopted as standard procedure.

Technical Experts in Climate Change Paper

SUMMARY OF COUNTRIES POSITIONS US: stop deforestation, forests as carbon sinks?, technology transfer Russia: more ambitious than Kyoto, developed and developing countries, deforestation Germany: 450 ppm, international CO2 trade, preservation of biodiversity Italy: global promotion of renewables, energy efficiency, international treaty ratified by all countries UK: legally binding post-Kyoto agreement with fixed quotas, cap CO2 emissions, extend global cap and trade system or global tax on CO2 emissions, protection of biodiversity, quota for renewable energies France: share the burden between developed and deveoling countries, CO2 quotas, binding protocol, research on renewables and energy efficiency, sustainability ensured, preservation of biodiversity Canada: CO2 reduction as fast as possible, reduction targets for corporations, focus on methane emissions, nitrous oxide emissions reduction, focus on renewables

THREE GOALS International agreement, burden sharing between developed and developing countries, defined CO2 emissions cap and global temperature rise, deforestation and biodiversity

INTRODUCTION

Since the beginning of Industrialization in the mid-19th century the global CO2 concentration in the atmosphere rose from 280 ppm to 380 ppm today. Carbon dioxide, along with methane gas, nitrous oxide, and sulphur hexafluoride, is the main driver behind the warming of the atmosphere, so-called global warming. This warming unleished several mechanisms, among those are the rise of global mean temperature and a shift in precipitation patterns

In the 1990s nations have united in the battle against climate change and instated the Kyoto Protocol to reduce global greenhouse gas emissions. The Kyoto Protocol will expire in 2012 and in December 2009 the world meets in Copenhagen to discuss a post-Kyoto protocol. We, the Technical Experts for Climate Change, have therefore identified three main aims and elaborated a proposal on how to mitigate climate change and, hopefully, its detrimental effects on the environment and the human race.


FIRST BEST SOLUTION CO2 emissions and trade:

We fully support the goal of limiting the rise in global mean temperature to 2 Kelvin above the pre-Industrial level. Scientists have identified 450 ppm to be maximum atmospheric CO2 concentration that still allows for reaching this target. A suitable mix of energy sources, energy efficiency, more efficient transport technology as well as future power generation technology will contribute to our reduction goals.

However, the most effective measure to reduce CO2 emissions, in our view, is a global cap-and-trade system. The cap needs to be defined by scientists and may at no point in time exceed 450 ppm. The allocation of CO2 emission rights per country needs to be based on population and/or surface area. The most effective instrument to distribute CO2 emissions all over the world and to realize CO2 emissions savings at as little cost as possible is a common carbon dioxide market. Emissions rights will then be traded by the ton of carbon dioxide.

On the road to a world-spanning system we encourage the installation of regional trading schemes framed after the European Emissions Trading Scheme (EETS) under national or regional supervision. In the long run, we propose a gradual merging of these schemes into a global trading system and the setup of a global supervisory authority. Tradable CO2 emissions include those from power plants, industry, the transport sector, and forestry, both negative and positive, with satellite monitoring. The emission rights, or CO2 certificates, will be auctioned ba an independent international organization. The certificates can then be freely traded between CO2-emitting companies. At the end of each trading period the companies will have to be in possession of as many certificates as they emitted CO2 in that period. Should a company fail to do so, heavy fines will be charged. Speculation on certificates is prevented by limiting the right to trade to those players on the market who emit CO2 themselves, living beings not counted.

The revenue earned through certificate auctioning will be distributed to all countries based on their population, land area or a combination thereof, ensuring a just distribution of the CO2 emissions savings burden among all nations, developed and developing. Burden sharing and reform of CDM, transfer of funds:

Seeing as Clean Development Mechanism (CDM) projects have shown at least some level of success, they should be continued but their value in reducing GHGs should be clear and well regulated. CDM projects will only be open to countries that become part of the CO2 trading system.

In the case of an auction, some of the funds could be reserved for a fund similar to the Adaptation Fund for countries most prone to climate change. Other funds could be allocated to nations based on population and/or land area. Distributing money to developing nations to reduce future carbon dioxide emissions may be necessary in cases where the developing nation cannot do so themselves. Policymakers will have to decide on the distribution method, which may involve an independent organization. Deforestation and biodiversity:



As forests are greatly important climate regulators, we are concerned about deforestation

and the related biodiversity loss. We recommend stricter regulation of forestry practices in national policies and promotion of sustainable forestry. We also recommend the preservation of pristine forests. Where logging is practised, we urge that land is to remain fertile by putting nutrients back into the soil. Promoting crop rotation can be an effective method in attaining this goal. Widespread education in long-term agricultural practices will be necessary as well.

We do not encourage the use of geo-engineering projects as it may threaten to the integrity of all life on earth but we do not discourage more thorough research on the topic.

ALTERNATIVE SOLUTIONS

In a quota system, an international organization would set a worldwide cap, then allocate emissions to each country. The world cap must be set at a level that meets the prior stated goal of keeping temperature rise below 2K. The allocations should be based on population, GDP and realistic reduction targets for each country. Once permits have been allocated, governments are free to create their own mechanism to reach required reductions and reallocate funds as they see fit. Non-compliance would result in heavy fines and/or trade sanctions. Under this program the adaption fund must be modified. It is suggested that a larger portion of CDM projects go to adaptation than the current 2%.

An alternative possibility for determining a long-term carbon price would be the introduction of a global carbon tax. A universally applicable and scientifically determined charge per emission of 1t CO2 has the advantage of incentivizing companies to reduce emissions while at the same time allowing economic actors to make reasonable cost estimates for their business plans. A tax is a transparent and just measure in the sense that it is in line with the polluter pays principle. Additionally, it would immediately make available funds that could be used for research, funding and possibly adaptation measures. Cooperation amongst governments and perhaps an independent organization would be necessary for the success of this scheme. Periodic adjustments may have to be made to find the effective rate of tax.

Technical Experts in Sustainable Finance

RatingAgenciesandBaselIIRecent financial market troubles highlight a number of problems with the ratings agencies. Ratings agencies exist to deal with principal-agent problems and asymmetric information. Company managers or sovereign finance ministers may seek to mislead investors. Requiring a minimum rating can limit the risk for asset owners and guarantors if an asset manager would otherwise invest principals funds in high-risk assets. One of the problems that the current crisis has highlighted is the difference in practice and transparency of the different rating agencies. This has resulted in inadequate ratings of financial products and a lack of trust in the effectiveness of these ratings. At present, there exists a code of conduct that was created in 2004 by the International Organisation of Securities Commissions We propose that a new international body be created, along the lines of the International Rating Group, to establish common international standards for Rating Agencies. These standards will reform the 2004 code of conduct to make it more mandatory. The common standards should include the following:

- Replace the existing system of a point estimate rating with a range for the risk of each financial product, with increased attention to structured financial products. - Greater transparency of the ratings reached by the agencies, through disclosure of methodology. - Increased information to accompany the given rating, outlining the market volatility for each product and the different risks associated with the products.

Given the oligopolistic nature of the market, there is little competition between rating agencies. We encourage increased competition in this market to remove the advantages gained by the limited number of rating agencies. We would welcome modifying the existing payment system for rating services. We feel that the current system whereby the company that is being rated pays a fee directly to the rating agency creates a conflict of interest. To elimintate this conflict of interest, we propose that investors who use the ratings pay a subscription to the rating agencies, as was the case before the 1970s. We advise that new national regulatory requirements are created for the purpose of separating rating services from advisory and consultancy functions within rating agencies to remove any conflicts of interest. Basel II Pillar one of the Basel II Accord, which specifies capital adequacy ratios is heavily reliant on credit ratings. The risk weighting, which determines the amount of capital held by financial institutions is determined by the credit risk assessments given by rating agencies. Therefore, there is an urgent need for these risk assessments to be more accurate and more reliable. There is a need to give banks, bank holding companies, savings associations and other financial institutions that are not subject to the Advanced Approaches of Basel II the option of using the Basel


II Standardized Approach to compute their risk-based capital requirement which are more risk-sensitive to withstand crises. We propose the following modifications to the existing Basel II Accord:

- Increase the number of the Risk Weights for the general and specific market risk to more levels to make the capital requirements more risk-sensitive - Revision of Basel II by its founders with particiption of representatives from emerging markets, so that the Basel II Accord is not detrimental to Emerging Markets. This revision should include the removal of sovereign ceilings - Introduce incremental capital reserve amounts during periods of financial growth to counter the procyclical nature of Basel II - Use of additional types of collateral (financial collateral) for risk mitigation

Financial Inclusion At this point in time, there is no international structure to facilitate the lending of institutions to individuals in developing countries. Without this structure available, the field of microfinance will remain fractured and limited. We propose to take the idea of microfinance to the global level by creating the International Microfinance Institute, what will become more commonly known as the IMI. The idea is to provide the framework for institutions across the world to be able to provide loans to those in the developing world. They would receive possible incentives from their respective government to partake in this lending, the IMI would establish the connections in developed countries, and the money would be lent to individual entrepreneurs in those countries. As a result, there is a continued profit incentive for corporations to invest a portion, regardless of how small, of their loan portfolio in the microfinance of developing nations. Also, financial inclusion is addressed because thousands more people across the developing world will now have access to credit. The organization will be set up essentially as an intermediary organization. If an institution wants to become involved in microfinance, perhaps due to the allure of national incentives in the form of reduced capital gains tax, the IMI would: 1) provide the lender with a list of possible projects (agriculture, construction, etc.) and find out if there is a preference of project and receiving nation, 2) collect the funds, 3) distribute to our microfinance banks in the aforementioned countries, and 4) have them allocate the funds accordingly to those who desire the loan. As loans are paid back, the funds are then collected by our regional MFIs and distributed back to the lending institution, along with all interest received. Interest rates on loans will be calculated by the IMI based on a number of macro-economic factors including political stability, current financial policy of the nation, the currency, etc. The interest rates actually charged will be determined by the institutions lending the money; the IMI will not interfere with the free market. However, the IMI will give a recommended interest rate based on chance of default, reasonable profit, and other risk factors. The IMI will have a reasonable amount more information because of its presence in the corresponding developing nation, and the IMI will be in a better position to provide a reasonable rate of interest based on research. For the personal factors concerning ability to acquire IMI loans, the Grameen Bank lending policy will be used as a basic model, but requirements will be adjusted given the current condition of each country and the specific project proposals. With every loan received, the IMI banks that we had established in the country would



provide specific business development training to the debtor. By providing financial and business education, we hope to help promote the creation of successful business that will last. If there is not an existing micro-finance institution, the IMI will establish them with the number of regional MFIs created based on need, land area, population size, etc. In countries that already have strong and well established micro-financing institutions, the IMI will not try and overlap their services provided. If their business model and loan requirements are successful and sustainable, we would aim to create a partnership with them. The influx of capital would yield to a larger loan portfolio for their organization, and as a result more people in that respective nation would have access to the credit markets. In addition to this collaboration, we would seek to help create additional projects of financial education. The creation of an international non-governmental organization will create a network to bridge the gap between lenders and entrepreneurs in developing nations across the world. The organization would operate independently of the United Nations, IMF and World Bank without any intervention. The structure of the organization would be a nonprofit organization with a Board of Directors consisting of one member from each of the G8 nations. Once every three years, they will vote on an Executive Director. This will lead to increased accountability of leadership in the organization, and operating independently of the UN, IMF, etc. will lead to more efficient operation without the constraints of government bureaucracy and intervention. A joint funding effort will limit the cost per nation to a completely feasible number. If the organization is funded by G8 or G20 nations, then 100% of the money from institutions would be loaned to those in developing nations as no funds would needed to recover costs. Not having to recover costs would eliminate the need to charge higher interest rates to those who are receiving microfinance loans. The French expert would like further proposals such as a reflection on currency risk to be considered.

Financial Education Preamble Now, more than ever, there has been a world-wide realization that financial education must be a priority. The current economic crisis, which has had dramatic effects on the entire world, has repercussions which cannot yet be fully measured. This issue can, at least partially, be attributed to misinformation about finance and financial products. This, we believe, extends to all levels of the economy: from financial professionals down to the consumers who utilize these products. The financial crisis has also marked a period of heightened fear. This fear is present with many consumers who simply do not understand how to avoid losing their hard-earning money in the current market conditions. This fear is only amplifying the issue, and needs to be addressed through a comprehensive education campaign. In a separate issue, we have seen stagnation in the growth within developing countries over the past decade. While the amount of resources has continually increased, this has not realized the desired results. Without the proper understanding how to use this aid effectively, the support has been seen to be highly ineffective. It is important, if the global community is serious about development issues, that there be a concerted effort to educate the developing world. Financial Education in the Developed World


While traditionally financial illiteracy is seen as a problem restricted to the developing world, the financial crisis has shed considerable light onto the lack of understanding within the developed world about the inner workings of the financial system. An important signal of this financial illiteracy is the amount of citizens who defaulted on their mortgages. In the year between 2007 and 2008, the number of US foreclosures nearly tripled (See Appendix 1). This reached its peak in the third-quarter of 2008, when 765,558 homes in the United States experienced foreclosure activity. This was undoubtedly a direct result of many families not understanding the financial implications of inheriting such a large mortgage. Many of them, approached by banks who were not concerned with the high probability for default, were given houses at rates which were much lower than the risk should have reflected. For the consumer, this provided an opportunity which they didnt properly understand the consequences of, and for many it was only a matter of time before they defaulted. Another issue, one which was discussed during the Financial Inclusion Panel, is the idea that immigrants to developed countries may arrive with no (or at best incomplete) understanding of how to gain access to the financial sector. This is a result of the fact that their native countries do not have these types or services and therefore they are unfamiliar with them. However, there has been little focus on providing education regarding these services. This stems from a misguided assumption is that a majority of citizens in a developed country have equal access to the financial system. Our proposed solution to both of these problems involves a comprehensive, dual faceted approach. First, each country should be responsible for establishing a committee which will be responsible for educating its citizens. This could be modeled after President Bushs 2008 introduction of a Presidents Council on Financial Literacy. However, even that initiative lacks the funding which is required to aptly address this major issue. As with most education, we firmly believe that this needs to start with the youth. Programs need to be created in schools, outlining proper saving techniques. In the United States, personal saving rates prior to the financial crisis had reached nearly 0% (See Appendix 2). This mismanagement of money poses substantial problems as an entire generation moves towards retirement without adequate funds to be able to cope. It will be important to devote substantial effort in educating the youth currently, to avoid a similar problem in the future. However, in addition to this, there will be adult literacy classes, focused at small business owners and new families, who truly require additional information. The second piece which needs to be addressed is the increasingly complexity of financial products, and the alarming trend of having underemphasized clauses which can have dramatic implications on the consumer. Regulators within countries should work to ensure that financial firms are providing explanations of financial products which are simple and easy to understand even to those without a financial background. This idea has precedence in other professional sectors. There has been a trend in law to reduce the amount of legalese which exists. A similar principle would apply to the finance sector. While exact measures would need to be further researched to ensure this simplified process is truly beneficial to consumers, it marks a distinct and important step forward to reducing the literacy required to interact with the financial sector. Financial Education in the Developing World Over the past decade, a concerted effort has been undertaken to increase the amount of funds available in the developing world. This has been led by an increase in micro-finance firms who are providing entrepreneurs funds to start their businesses. However, a critical piece which has been neglected in this process is a dedicated effort towards ensuring that education is attached to the funds. We envision this role being taken on by our newly created NGO who will be coordinating micro-finance in the developing world. A free education program will be offered, outlining different financial issues and dramatically increasing the knowledge of how the financial system works. This will have the


complementary effect of increasing the amount of funds loaned to developed countries since firms will see this investment as a lower risk. Financial Professional Education A major concern within the financial sector is that during the cyclical growth of the economy, firms were neglecting utilizing proper hiring practices. In an attempt to fill vacant positions, many employees were hired who did not have the necessary qualifications required to fulfill the role. As a result, firms were exposed to unnecessary risk. We propose that international regulation should be instituted which creates a requirement for every financial professional to apply for a traders licence. In order to receive this, they would be required to take courses which touch on subjects such as risk management and complexities within financial products. This would have three distinct characteristics. First, it would be truly international, whereas currently the CFA designation is limited to a select number of countries. Second, it would need to be renewed periodically throughout their career to ensure their education is dynamic and reflects the current market conditions. Also, a punitive board would be created, having the ability to revoke this traders licence if proper conduct is not followed. Finally, firms would be required to hire only individuals who hold this designation. This would ensure that the baseline education within the financial sector is consistent across the world. With regards to the management of this initiative, it will be managed through a two-tier system. The international body would be responsible for creating and maintaining a global education curriculum which outlines financial topics relevant to all countries of the world. The national organization would be involved with the creation of a supplemental country-specific curriculum, as well as the maintenance of the punitive board which will review the revoking of licences.

Intellectual Property Rights (IPR) Pharmaceutical Industry vs. Humanitarian Aid

INTRODUCTION TO THE TOPIC

First of all it is very important to mention that it is us young representatives of the states who

are interested in this problem. For three days we have been searching for better solutions to the

agenda and despite having different opinions and views in the beginning we eventually came to an

agreement. Not only does it mean that we worked productively but also that we have gained a very

positive perspective regarding our future politics. The decisions taken during the G8 Youth Summit

represent a unique way to create firm ground for future collaboration and stability.

While the question of Intellectual Property Rights (IPR) in the pharmaceutical sphere has recently

emerged on the G8 Agenda, the importance of this matter has already been recognized. This

concerns all the developing and developed countries and should be therefore discussed within the

framework of the G8.

This consultancy paper will focus on the relationship between IPR and humanitarian aid. It

addresses problems within this relationship by putting the regional focus on Africa. Africa is the

region with the largest disease burden in the world. This is due to different factors, among which is

the lack of private and public funding resulting in weak health systems. Patients therefore not only

face a lack of health facilities and health workers but also constraints in terms of medication such as

antiretroviral treatment (ART). Developing countries facing high HIV prevalence rely on developed

countries for pharmaceutical products to offer treatment to wide parts of the affected population.

Due to the current economic situation it is important to promote sustainable and adaptable

partnerships within the field of IPR.

We propose to adopt the following three-step program to improve the health situation in developing

countries, especially those in Africa, the region that has been focused on by the G8 in

Heiligendamm 2007. Firstly, the existing legal framework needs to be adapted to account for the

increasing complexity in public health. This is on the one hand done by setting quantifiable public

health results and on the other hand by excluding HIV and AIDS from the usual patenting process

and by shifting the issue towards more transparent and more rapid medication development.

Secondly, incentives for research have to be motivated. This can be done by creating partnerships in

research. Thirdly, we address the growing inaccessibility by the mechanism of a patent pool.

ACTION PLAN


STEP 1: Adaptation of the legal framework (TRIPS Agreement)

The Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement

administered by the World Trade Organization (WTO) that sets down minimum standards for

intellectual property regulation. TRIPS include the international regulations to be followed for

patents and therefore for pharmaceuticals. We recognize that the regulation system does not

adequately meet the needs of the growing HIV and AIDS crisis, we consider that an adaptation of

this regulation should be put into place. We also suggest that a global perspective should be adopted

concerning HIV and AIDS. Therefore, we recommend that the TRIPS system should be amended,

particularly as follows:

1) Priority should be given to HIV and AIDS questions in the interpretation of the TRIPS.

2) The patent protection term for HIV and AIDS treatment should be reduced.

3) Compulsory licensing should be adapted for HIV and AIDS matters.

4) International regulation of patent exploitation should be created.

5) Member states should adopt work towards a consensus concerning HIV and AIDS.

In order to achieve the abovementioned objectives we propose the following declaration of

amendment of the TRIPS agreement. Transitional provisions for the declaration are:

a) This declaration shall be considered an inseparable part of the TRIPS agreement.

b) This declaration shall be enforceable on the day of the signature by the 30th country.

c) All disputes concerning this declaration should be referred to the general dispute

settlement provisions of the TRIPS agreement.

d) The current provisions should be reviewed on a regular basis with respect to the evolution

of the HIV and AIDS crisis.

e) We advise that specific regulations be adopted for similar matters of global crisis.

DECLARATION OF AMENDMENT

TO THE TRIPS AGREEMENT


1) Priority Art. 8-3: HIV & AIDS issues should have a priority in the application of the TRIPS agreement. 2) Term of protection Art. 12: (and art. 33) However concerning HIV and AIDS patent protection should not exceed a period as agreed upon by the members. 3) Separate framework Art. 27-2: Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by their law. Members agree that in the light of this paragraph HIV and AIDS should be considered a matter of ordre public and morality or they should be taken into consideration under a separate framework. 4) Special regulation for AIDS Art. 27- 4: Members should adopt special intellectual property regulations considering HIV and AIDS. They shall provide for the proper distribution of HIV and AIDS medication by an effective sui generis system. This provision should be reviewed on a regular basis. 5) Exceptions to exclusive rights Art. 30: Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties. Members should provide exceptions to the exclusive rights of a patent for HIV and AIDS medicines. On the other hand, the interests of pharmaceutical producers should be taken into account through the calculation of fair royalties. 6) Acceleration of compulsory licensing procedures Art. 31 (b): [...] In essential areas of public health such as HIV and AIDS treatment appropriate measures should be adopted in order to accelerate the respective procedures. 7) Termination Art. 31 (g) : [...] These provisions should have limited application in matters of HIV and AIDS. 8) Economic value Art. 31 (h): [...] The estimation of the economic value of the authorization should reflect the importance of the patent for HIV and AIDS research. 9) International regulation of patent exploitation


Art. 31 (i): Members agree on the constitution of an International Organization which deals with patent exploitation. 10) Dispute settlement Art. 64-4: Special attention should be paid to avoid the negative impact of dispute settlement on specific HIV and AIDS regulations. 11) LDCs Art. 66: Members should provide the application to this provisions in respect to LDC most touched by HIV and AIDS. 12) Reservations Art. 72: [...] Such reservations should not be possible for HIV and AIDS measures.

With regard to the Doha Declaration of November 2001, we suggest the following clarification: Art.

5 of Doha Declaration: [...] (c) Each Member has the right to determine what constitutes a national

emergency or other circumstances of extreme urgency, it being understood that public health crises,

including those relating to tuberculosis, malaria and other epidemics, can represent a national

emergency or other circumstances of extreme urgency. However, due to the extreme emergency

circumstances, HIV and AIDS should be a considered a global crisis rather than a national

crisis and common measures should be taken.

Adapting the TRIPS with regard to HIV specific aspects and with regard to quantifiable public

health threats, should result in an improved environment for research and thus in higher innovation

activity.

STEP 2: Partnerships in Research

In order to stimulate innovations even more, we propose the international promotion of

partnerships. This shall result in improved cooperation between developed and developing countries

as well as between the public and the private sectors of the countries, respectively.

Targets of the strategy. The international promotion of partnerships will involve the collaboration

of the targets outlined briefly in the Table A Summary of Strategic Targets, and further discussed

in this section.


Table A: Summary of Strategic Targets

TARGET ISSUE ADDRESSED POSITIVE OUTCOMES POSSIBLE CHALLENGE

Fostering partnerships

Lack of private funding in developing countries

x Increase innovation activities

x Accessibility to a broader range of treatments

x Accountability of investors for health crisis

x React on shortages in local health systems

Sustainable incentive mechanisms Control mechanisms needed

Increase Effective Dialogue

Lack of transparency in information circulation between countries

x Prevent redundancies and allow more efficient public health outcomes

x Up-to-date, practical knowledge of current global health issues

Ensure that other political interests are not coupled with the efforts on health partnerships

Long-term incentive

mechanisms

The phased withdrawal of health investments in the developing countries

x Initial motivation of investors to participate in sustainable partnerships with developed countries

Partnership Guidelines

Minimize existing biases and promote abilities to negotiate

x Assisting developing countries in doing the negotiation process

x Ensure benefits resulting from research in developed countries and of developing countries

x Ability to ensure success due to the prediction of proposal outcomes

Possible reduction in financial benefits for investors


Fostering Partnerships. Fostering partnerships between the public and private sector aims to

address the issue of the present lack of private funding for local research initiatives in developing

countries. By influencing local or foreign investors to support the developing research industries,

several benefits will naturally result. One positive outcome is the enhancement of innovation

activities through the sharing of information and introduction of new resources to the market. This

increase in innovation will create healthy competition and stimulate higher rates of innovations in

research, which can result in the reduction of market costs due to the broader range of accessible

treatments. Partnerships can also create accountability from investors to a global public health

crisis, which can result in quicker reaction times on shortages in local health systems.

Partnerships can be encouraged by incentives such as grants and tax cuts for those industries which

take the investment risks in developed countries. Periodic market exclusivity could also be

considered as a possible incentive for investors. The initiation and monitoring of projects can be

performed by an existing third party entity such as the World Intellectual Property Rights

Organization (WIPO). Having a separate body involved can ensure enforcement of fair guidelines

between countries. Funding should be initially provided by international means such as the Global

Funds to Fight Malaria, Tuberculosis, and HIV/AIDS. In the long run however the forum of

partnerships should be self-financing and free from subsidiary incentives. Potential challenges

include the requirement to establish a system to deter preference within cooperation concerning

their selected research topics.

Increasing Effective Dialogue. In order to increase the efficiency of the global pharmaceutical

industry, continual dialogue between developing and developed countries must exist. Presently,

forums are being held as a response to the common interest of increasing effective global

communication. One such example was the forum held recently by the International Finance

Corporation (IFC) which brought together representatives from the ten nations of Brazil, China,


India, Kenya, Nigeria, Saudi Arabia, South Africa, Thailand, Turkey, and the United Arab

Emirates. Promoting effective dialogue will minimize research redundancies and therefore allow for

an increase in efficient public health outcomes.

Although information exchanges are encouraged, it would be necessary to ensure that external

political interests do not influence efforts on health partnerships. Communications should focus on

the improvements to the health of global citizens.

Incentive Mechanisms. It would be necessary to provide initiation incentives to encourage the

creation of partnerships. As previously mentioned, such incentives could include the provision of

tax cuts, grants and periodic market exclusivity. The incentive mechanisms would be phased out

over time as the partnerships themselves would ultimately provide natural incentives. Therefore the

purpose of the initial incentives would be to generate motivation between countries. Applying initial

encouragement devices would require the consideration of balancing the interests of both partners.

Therefore, as each partnership will involve unique criterion regarding the benefits of each

stakeholder, the evaluation of the particular conditions must be thoroughly conducted without bias.

Partnership Project Guidelines. Guidelines for structuring productive partnerships should be

established with the intention of ensuring the promotion of innovation for current and urgent global

medical needs. Without such guidelines, the liberties for selecting partnerships could be subject to

bias and capital driven ventures. The guidelines should be established by a common body such as

WIPO, and shall not be aimed at enforcement in order to ensure the continued accordance to trade

agreements. The existence of such guidelines would also provide a structure for negotiations when

establishing partnerships. The guidelines could include such concepts as resource dependencies,

long-term goals, and research objectives. Partnership project guidelines may create controversies

due to the reduction of selection liberties which can be contrary to the goals of capital

maximization. Although controversy may exist, this is a necessary consequence for ensuring the

satisfaction of global needs.


DesiredOutcomes.


Possiblechallenges.

STEP3:PatentPoolingAt the moment, when a pharmaceutical company develops and registers a new invention, it is

granted patent protection for 20 years under the TRIPS Agreement. Our research regarding the HIV

and AIDS epidemic and anti-retroviral treatment indicates that these regulations stand in the way of

providing maximum access to life saving drugs. The most recent statistics regarding the HIV and

AIDS epidemic taken in December 2007 support this: at this time only 31% of the worlds

population in need of treatment was receiving the appropriate medication. The problem is most

severe in Sub-Saharan Africa: of the 32,900,000 people in the world affected by this disease,

22,000,000 are living in this area. Ninety percent of children with HIV and AIDS are living in Sub-

Saharan Africa, and they too are being denied access to treatment due to the lack of financial

incentive for pharmaceutical companies and researchers to invest in this problem. This is

particularly due to the fact that optimal treatment for children is different from optimal treatment in

adults. In order to treat HIV and AIDS, the patient must be administered combination of three

separate substances that can be patented by three separate companies. This makes treatment more

cumbersome and also prevents the possibility of combining these three drugs into one drug which

would be more feasible for the patient to take. Even if a researcher into such treatment gained

permission from two of these patent holders, the third could still refuse. As all three are

fundamental, denial by any party inhibits progress in the field of research into this epidemic.

The purpose of a Patent Pool. In an attempt to find a compromise between the need for

humanitarian aid and incentive for researchers and developers, we are proposing the idea of a patent

pool to circumvent this conflict of interests. A patent pool would in essence be based at an

independent organization, to which inventors would come to submit their patents. This organization

would then act as a one stop patent shop, in that other developers could use the patented products in

exchange for a fair royalty which would be paid to the patent holder. Researchers would also be

able to come to the patent pool in order to try to develop further innovations, for example

medication designed specifically for children.

Advantages of the Patent Pool: Pharmaceutical Companies. We propose that pharmaceutical

companies would obtain two years of direct market access from the time the patent is granted, after

which time they would submit their patent to the pool and receive royalties from other developers

who wish to use their invention for the remainder of the 20 year patent term. We propose that

companies which submit their patent to the pool will be granted a concession for instance

substantial tax breaks to be negotiated on a country by country basis. We propose that companies

who use the pool would benefit from legitimate competition, as opposed to losing massive profits to

trade on the black market. We propose that the patent pool would encourage companies to continue

developing products and promote a healthy atmosphere of competition amongst companies in order

to maximise the returns on royalties paid by users of their products. We propose that this solution

fits in with the importance of Corporate Social Responsibility and that companies who submit their

patents to the pool would benefit from enhancing their reputation amongst consumers.

Advantages of the Patent Pool: Researchers. We propose the creation of an international

comprehensive database, which would provide third parties with details, such as who is using the

patent pool, as well as highlighting the benefits of using such as system. We propose that the

creation of one, single body would increase the accessibility of information and this would lead to

increased and faster progress within the research community.

Advantages of the Patent Pool: Society. We propose that a much higher percentage of the public


would gain access to treatment as a result of lower prices engendered by increased competition

among producers. We propose that the public would benefit in the long term when there is

increased research and development and innovations. We propose that the public would be

protected from potentially harmful drugs which are unregulated on the black market.

Infrastructure. We propose that the World Intellectual Property Organisation be the primary

regulatory body in regard to patent pools. In addition, there is the possibility that the World Health

Organisation plays a role in tandem with the WIPO to take pressing health issues into consideration.

We propose that the monetary needs necessary to implement and run the patent pool be provided by

the Global Fund to Fight Malaria, Tuberculosis, and HIV/AIDs.

ALTERNATIVE SOLUTIONS

Re-assess the President Emergency Plan

Introduction. In 2003, U.S. President George W. Bush initiated the President's Emergency Plan

For AIDS Relief, which dedicated $15 billion over 5 years toward fighting the HIV and AIDS

epidemic in Africa. The funds are directed toward resource-limited countries which have high HIV

and AIDS prevalence rates. The program began distributing generic medication in 2005 as a way to

maximize resources and reach the greatest number of people possible. PEPFAR was revised and

renewed in 2008, increasing the funds dedicated to the program to $48 billion through 2013

(PEPFAR, 2008).

This program entails a dual approach toward addressing the growing HIV and AIDS problem. The

first approach involves providing treatment and care to those already infected and has shown to be

extremely successful. The program has provided treatment to 2.1 million men, women and children

through September 2008 and increased the share of children receiving PEPFAR treatment from 3%

to 8% in the first four years of the program. In terms of caring for those persons who already have

HIV and AIDS, PEPFAR provided HIV and AIDS counselling and testing for approximately 57

million people and provided care for more than 10.1 million people affected by HIV and AIDS,

including over 4 million orphans and vulnerable children. The second aspect of PEPFAR entails the

prevention of HIV and AIDS infection through education initiatives. As of September 2008,

PEPFAR reached approximately 58.3 million people through community outreach programs that


educated about the prevention of sexual transmission of HIV and AIDS. Additionally, PEPFAR

supplied 2.2 billion condoms worldwide and supported nearly 16 million pregnancies to prevent

mother-to-child transmission of the disease. In 2008, PEPFAR has partnered with a total of 2,667

organizations, of which 86% were local to the affected area.

Proposal. We, the technical experts on intellectual property rights at the Model G8 Youth Summit,

propose that the G8 recognizes the recent achievements by PEPFAR and actively supports this

approach in the future. To do so, we aim to split the initiative into two halves, the treatment and

care sphere and the prevention and education sphere. The money currently dedicated to the program

by the United States will be earmarked toward the first sphere of the program, of which the United

States will be the primary provider. The additional G8 member countries will undertake the

prevention and education aspects of the initiative. This will allow the United States to dedicate all

of the allocated $48 billion toward providing treatment for HIV and AIDS infected individuals,

while relegating their role in the prevention and education to the other G8 countries.

The Treatment and Care for Infected Individuals. The United States will focus all of the

dedicated $48 billion toward purchasing and distributing generic medications to the focus countries

in Africa. More specifically:

1. Continuing to provide life-saving treatment to those most in need.

2. Increasing the share of children who receive medication.

3. Caring for those affected by HIV/AIDS, including orphans and other vulnerable

children.

4. Providing tuberculosis treatment for HIV/AIDS infected patients.

5. Expanding counseling initiatives.

6. Testing patients for HIV/AIDS so as to begin a treatment regimen more quickly and thus

more effectively.

The Education and Prevention Program. Priority will be given to an on the ground,

comprehensive education program, which accounts for HIV/AIDS prevalence among specific

populations, and according to the risks that exist within specific populations. The education of

youth will be the primary focus, and to this end we will implement youth specific education

programs. We support the idea of local, youth-led community programs to help youth, their parents


- 12 - G8 Youth Summit 2009 Italy Opening Ceremony

and the broader community to personalise the risk associated with early sexual activity, sex outside

marriage, multiple partners and cross generational sex. We support the idea of training and

educating youth mentors to provide education about the risks involved in the aforementioned sexual

practices for young people who lack sufficient adult supervision. We support the idea of a media

campaign to publicise abstinence, fidelity and HIV counseling and testing. We believe that the

education program would be most effective if it was implemented as far as possible at the local

level and by involving the local leaders of small communities in the education process.

NormalizedCost/RoyaltiesINDEX


SUMMARYWe, the technical experts on intellectual property rights at the Model G8 Youth Summit, feel that

this proposal is both well-rounded and specific. It takes into account the overwhelming necessity of

providing access to lifesaving medications to the greatest number of people regardless of their

financial situation while also providing patent protection and compensation to the pharmaceutical

companies for their important innovations. This model generates many advantages for

pharmaceutical companies, researchers and the public and is an issue ripe enough to generate

support both in developing and developed countries. Our hope is that other countries will join with

the G8 to implement this proposal to the fullest extent possible. International cooperation on this

issue will be essential in order to maximize the possibilities for success and allow us to adequately

address the global HIV/AIDS epidemic with a united front.


LINKS

BUSINESS PROPOSITION TO GOVERNMENTAL ACTION IN THE STRESSED WORLD ECONOMIC ENVIRONMENTTRADE

Documents

Final Communique of the G8 Youth Summit 2009 | Experts Advise