EU, India to solve dispute over drug seizures

In the clearest indication from the European Commission yet that a resolution to the ongoing dispute between New Delhi and Brussels regarding generic drug seizures had been reached, a senior EC official told reporters on Wednesday that the EU was "open to changing" the offending regulation.

The official said: "All the necessary elements for a settlement had been identified" and the EU regulation concerned would soon be "adapted to ensure that no recurrence of (drug seizure) incidents takes place".

While lawyers on both sides were still looking into the nitty gritty of the agreement, it is likely that an announcement on the matter will be made on Friday at the EU-India summit in Brussels.

The generics dispute dates to 2008-09, during which period twenty-odd consignments of Indian-made generic drugs were seized while in transit at European ports.

In May this year, India along with Brazil took the matter to the World Trade Organisation (WTO), where they were asked to establish consultations with the EU as a precursor to the setting up of a Dispute Settlement Panel.

The EU cites domestic customs laws that allow goods in transit to be stopped if suspected of being either illegal or substandard, as justification.

The generic drugs in question were off-patent in both India and the countries to which they were destined. However, in some cases, the seized drugs were patent-protected in the EU.

India maintains that European countries are creating trade barriers against Indian drug companies to protect the interests of their firms.

The EU regulation in the spotlight is Customs Directive 1383, which lays out the details of the conditions under which European customs can legitimately stop goods in transit.

Changes to this regulation will likely be announced as a "resolution" to the dispute at the summit meeting on Friday.

The EU official, who spoke on condition of anonymity, went on to say that a report on the ongoing EU-India FTA negotiations would be presented at the summit and outline the "significant progress achieved" thus far.

The "end game" was being entered into he said, and a conclusion to the talks was expected by spring next year.

On the contentious issue of the chapter on intellectual property rights (IPR), the official revealed an understanding had been reached between both sides.

The EU has been pushing India for TRIPS-plus provisions which New Delhi has rejected. But the official said the new joint position on the IPR chapter was that it would merely entail a reiteration of the existing IPR-related legislation in both countries which in some cases went beyond what was agreed to in TRIPS.

However, the chapter would in no way necessitate a change in the IPR legislation of either side.

The official added the negotiations on public procurement, an area that India has thus far been reluctant to discuss at all, were finally taking place, although the content of this chapter remained unclear at the moment.

As far as the chapter on sustainable development by which the EU is seeking to bind India to a range of human rights, labour and environmental commitments is concerned, the official said any final accommodation would be based on "cooperation not trade sanctions."

Although India has firmly rejected the possibility of including such a chapter in the final FTA, the official said he was "hopeful" a solution would be found that would "take into account India's concerns and the EU's interests."

The good news from an Indian perspective is that the EU is apparently ready to make a "strong offer" on what is called the Mode 4 category within the General Agreement on Trade in Services (GATS) treaty of the WTO which deals with cross-border investments in services. Mode 4 determines the cross-border movement of people to provide services.