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EUIPO-OECDJoint Experts Meeting for a Better FTZ

Alicante, 29 September 2017

Free Trade Zones:TRIPS Standards and Beyond

Roger KampfCounsellor, 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.

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I. Overview:

The WTO’s TRIPS Agreement

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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.”

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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)

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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

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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

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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

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II.

Relevant Work at the WTO

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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

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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

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 goodsPromotion of cooperation between customs authorities

Why:Elimination of international trade in goods infringing IPRs

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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

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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

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III.

The International Legal Framework:

A Tentative Assessment

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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?

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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

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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.”

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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

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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

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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)

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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]

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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?

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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

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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