Patents Amendment Bill and Southern African Customs Union Negotiations: Department briefings

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
3 June 2005
PATENTS AMENDMENT BILL AND SOUTHERN AFRICAN CUSTOMS UNION NEGOTIATIONS: DEPARTMENT BRIEFINGS

PowerPoint presentation on Patents Amendment Bill
Briefing on SACU Trade negotiations with the EFTA, MERCOSUR and the USA
Patents Amendment Bill [B17-2005]

SUMMARY
The Department of Trade and Industry (DTI) reported that a Free Trade Agreement (FTA) between a group of European Union (EU) countries and the Southern African Customs Union (SACU) was expected by the end of the month. South Africa had also concluded Free Trade Agreements with a number of countries worldwide. Implementation was only likely to take place from early next year, as each of the member countries of both negotiating blocs would have to ratify the agreement. The SACU-USA negotiations had stalled with substantive negotiating differences on all issues. The thrust of the US objectives would pose a series of difficulties that might constrain development policy in services, investment, procurement and intellectual property. It might also burden SACU institutions with burdensome and sometimes inappropriate implementation obligations.

The Committee was also briefed on the Patents Amendment Bill [B17 – 2005]. There was a feeling that the 20 years protection given to a patent might not offer adequate protection to indigenous knowledge systems. The developed countries wanted free access to resources and were opposed to legislation to protect resources by the developing countries. The Bill would ensure that local communities also shared in the benefits that accrued from the use of their knowledge. Any company that would produce a product using indigenous knowledge would be forced to indicate the community whose knowledge it had used.

MINUTES

Department briefing on trade negotiations
Mr X Carim (DTI Chief Director of Trade Negotiations) briefed the Committee on trade negotiations. (See document attached). He reminded Members that the negotiations were not South Africa’s negotiations with other countries. South Africa was negotiating as part of SACU. A Free Trade Agreement between SACU and the EU was expected by the end of the month.

The SACU-MERCOSUR Preferential Trade Agreement was signed on 16 December 2004. It was significant in that it was the first trade agreement concluded by SACU as a single entity. It was also important in that it was with another developing region and gave meaning to the objectives of South-South co-operation and integration. It created a basis for further integration and co-operation including the possible further exchanges of tariff preferences and co-operation in any other area.

The Africa Growth and Opportunity Act (AGOA) was enacted in 2000 and offered eligible Sub-Saharan African countries duty and quota free market access to 4 600 product lines. The decision to enter into Free Trade Agreements with the USA was informed by strategic considerations as the benefits of constructing a long-term and predictable trade relationship with the USA were recognised. The negotiations had stalled with substantive negotiating differences on all issues. The thrust of the US objectives would pose a series of difficulties that might constrain development policy in services, investment, procurement and intellectual property. It might also burden SACU institutions with burdensome and sometimes inappropriate implementation obligations.

Discussion
Mr M Moss (ANC) asked how South Africa from trade agreements benefited in terms of job creation and investment. He asked if it was necessary to enter into such agreements and if there were any agreements from which South Africa might want to withdraw.

Mr Carim replied that countries that were able to export more benefited in general. This required the capacity to produce quality products and access to markets. The Department negotiated better access to markets. Our businesses should be able to increase production should they take advantage of opportunities presented by trade agreements. This could increase investment and therefore lead to employment opportunities. There was evidence that opening up the markets and seeking markets was good for economic growth. Job creation also depended on the kinds of products that were being exported. One had to ask if the products were labour intensive or capital intensive. If the products were labour intensive the next question would be whether the businesses were competitive. A whole range of issues came into the equation.

On the issue of withdrawing from some agreements, he said that these were political decisions. His sense was that the agreements with EFTA and MERCOSUR would be beneficial to SACU. He was not sure on what would happen to the agreement with the USA agreement.

Mr T Godi (PAC) noted that South Africa and MERCOSUR were engage in trade negotiations. The engagement between SADC and MERCOSUR was on a political level and engagements with SACU were on economic level. He asked if there was a possibility of SACU spreading across the geographic borders of SADC such that economic negotiations could be held at SADC level. He also asked the presenter to explain the eligibility criteria in terms of the Africa Growth and Opportunity Act (AGOA).

Mr Carim replied that SACU was a customs union. The possibility of having agreements at SADC level was difficult because members of the SADC had different customs tariffs from those of SACU.

Ms T Khonou (ANC) asked how South Africa benefited out of the agreements. In most instances the European Union (EU) had entered into agreements with countries because there was something that it needed in return. She also asked how South Africa would ensure that entering into such agreements would not result in people trading illegally from a customs and duty perspective.

Department briefing on the Patents Amendment Bill
The Department‘s delegation consisted of Mr M Moeletsi (Chief Director: Policy and Legislation), Mr J Strydom (Legal Drafter) and Mr M Netshitenzhe.

Mr Moeletsi said that there were patents that emanated from genetic and biological resources. Some indigenous people of South Africa held certain knowledge that could lead to patent inventions. There was no protection for such people. The National Biodiversity Act which was administered by the Department of Environmental Affairs and Tourism (DEAT) dealt with the protection of genetic and biological resources. However, the Act did not cover these people. There was a need to protect indigenous knowledge through the use of the patents system. Cabinet had approved a policy on Indigenous Knowledge Systems (IKS). The Bill dealt with the policy.

Mr Netshitenzhe gave the presentation on the Bill. (See PowerPoint presentation). The intellectual property system as it stood had its own weaknesses. It could be used to some extent to protect traditional knowledge. A life span for a patent was 20 years. If traditional knowledge holders wanted to use this system, they would require information on it before agreeing to use it. The Department was mostly concerned with benefit sharing with the holders of the knowledge.

Mr Moeletsi said that the Bill covered ordinary people on the streets. One mostly found business people taking knowledge from people on the ground and using it for their own benefit to the exclusion of the knowledge holders. There would be a system to protect such people and ensure that they also benefited. This was one of the reasons why the Bill was concerned with co-ownership and not only sharing.

Discussion
Mr S Rasmeni (ANC) asked for an example of the indigenous knowledge that the Bill sought to protect. He also asked how one would go about striking or reaching agreements with IKS holders and how the Department would monitor that this was happening. There should be a monitoring mechanism to ensure that things were happening as planned.

Mr L Labuschagne (DA) said that he had no problems with the policy or the Bill or the need to protect biodiversity and genetic materials. Knowledge that had been disclosed to other people became public or common knowledge and could not be patented. One could find 20 traditional healers or sangomas who knew how to use a particular plant. Their knowledge of the usage of the plant could be considered public knowledge. He asked how the Department intended to protect such knowledge. The issue of consent by the community was important. He asked how this would be achieved, who should be consulted and if there were examples in other countries of cases where this had been dealt with correctly.

Mr Netshitenzhe used the hoedea plant as an example to respond to questions raised by Mr Rasmeni and Mr Labuschagne. The definition of a patent was that it should be new and not known by any other person. It must be good for trade purposes. It was correct to say that because the Khoisan people had been using this plant for a long time, there could be no patent to register in this respect. There was a school of thought that maintained that a patent could be registered following gene isolation. If one were to agree that the Khoisan people could register a patent in respect of the plant, this would mean that all Khoisan people in South Africa should benefit.

In terms of the Biodiversity Act, the National Biodiversity Institute (NBI) was the custodian of all natural resources. There would be a Unit that would assist local communities in drafting agreements. He could not say if there was capacity to assist in this regard. The Registrar of Patents would not register applications for patents if there was no proof that the agreement of the local community had been obtained. Strong communities could go to the negotiation table with their lawyers so as to ensure that everything ran smoothly. The NBI would be available to assist weak communities.

Mr Moeletsi said that implementation was not as easy as just putting the legal framework in place. People on the ground would be worse off if there was no legal framework to protect them. The proposal was to create a legal environment that people could use for their own protection. There were certain things that had to be disclosed in terms of the Bill. There were debates on legislation against bio-piracy and some countries were beginning to come up with their own legislation.

On the issue of whether the knowledge held by 20 sangomas was public knowledge, Mr Netshitenzhe replied that the sangomas could be protected by trade secrets. The Coca-Cola Company had never patented what people were drinking now. It used trade secrets to protect its products.

Ms D Ramodibe (ANC) asked how the Department would assist indigenous people to discover some of the patents of which they were not aware.

Mr Netshitenzhe said that the Department did not want to force people to come forward and reveal their knowledge if they felt that they were adequately protected by trade secrets. It was important to let them know that there was another system of protection available and that this lasted for 20 years. The Department had protested against the Traditional Health Practitioners Act because it forced people to disclose their knowledge without telling them about the implications of doing so. Some countries had registers of medicines that could not be used without the consent of communities and this strengthened the notion of perpetual ownership.
Mr M Moss (ANC) asked how the Bill would protect Rooibos. A patent had a life span of 20 years. Most indigenous people would assume, upon registering a patent, that they had lifetime protection. He asked why such patents could not be made permanent. The Department had engaged DEAT and South Africa was the third most bio-diverse country. How would the Bill affect Genetically Modified Organisms (GMOs)? The Department of Agriculture and Land Affairs would come into the equation but was not mentioned.

Mr Netshitenzhe agreed that the 20-year period might not be enough. The issue of perpetual ownership went beyond what the Bill was intended to achieve and could be addressed elsewhere. The Rooibos issue had two dimensions. Rooibos was a trademark. Some people might think that the name was generic and in the public domain. This was incorrect. He was aware that the Department did not support his view. The definition of a geographical indicator maintained that a particular tree, for instance, should grow in a particular geographic area due to climatic conditions and other things. Rooibos grew in the Cedarberg mountain area and could not be organically produced in America. Most people did not know that there were five patents relating to Rooibos which were registered in America. For now, the Department was fighting for Rooibos as a trademark. The issue of the patents would come into play at some stage. Members should ensure that the benefits of the patents were shared with the communities.

With regard to the issue of GMOs, the Department had formulated the IKS policy together with other Departments. Internationally, the World Intellectual Property Organisation (WIPO) was the custodian of all international treaties that dealt with plant varieties. In South Africa different Departments held different patents. The question was why all patents were not under the custody of one Department.

Mr T Godi (PAC) said that the introduction of the Bill was a positive move. He asked to what extent the negotiations in the World Trade Organisation (WTO) and WIPO would have a direct impact on legislation that South Africa would pass. The WTO had been a vehicle through which the developed countries had managed to beat developing countries. It was correct to say that developed countries would want free access to resources. He asked to what extent this would have a bearing on South Africa’s ability to pass legislation that would effectively protect its resources. He wondered if the Department had looked at situations where an individual or a Chief illegally entered into agreements with researchers or scientists in terms of ownership of patents to the detriment of the community. He asked if there was any mechanism to protect the community against crooked individuals. He also asked how widespread bio-piracy was and how it affected South Africa.

Mr Netshitenzhe replied that developed countries were opposed to the legislation and were using delaying tactics. Regional agreements that emphasised the need to respect IKS could help counter the effects of the delaying tactics employed by developed countries. He agreed that some Chiefs were crooked. Clans and tribal authorities could help prevent fraud and other irregularities.

Mr Labuschagne asked if any other country had already passed similar legislation. He also asked what would happen if companies were to use indigenous knowledge but did not patent the product for some other reason.

Mr Moeletsi replied that such a decision would not make business sense because the company would not be protected.

The meeting was adjourned.