105. The representative of Hungary, speaking on behalf of the CEFTA countries and Latvia, fully agreed with the Chair's summary after the discussion at the previous meeting of the Council; the discussion held at that meeting on the subject had been extremely useful and there clearly was need for a more in-depth analysis of this important matter. The delegations on behalf of which he spoke had made a statement during that meeting expressing their concerns with respect to the applicability and desirability of the non-violation remedy under the TRIPS Agreement. Instead of repeating all the arguments made earlier, which were of course upheld, he wished to react to some of the comments made by other delegations and make some further suggestions. He tended to share the view of a majority of delegations that, as far as benefits and reasonable expectations were concerned, the TRIPS Agreement seemed to be different from the GATT and GATS. In his understanding, under the GATT and GATS, the non-violation remedy was introduced with the intention to protect reciprocal market access and national treatment-type concessions, be they tariff concessions or specific commitments, against being negated by non-tariff barriers or other measures adopted by a Member. However, the TRIPS Agreement was a minimum standards agreement which provided for minimum rights which could be acquired by nationals of all WTO Members in all other WTO Members to protect their intellectual property. Following this line of thought it was difficult to see the analogy on the basis of which some Members argued that the non-violation remedy should unconditionally, immediately and without limitations be made available under the TRIPS Agreement. He acknowledged that the views expressed with respect to the definition of benefits and reasonable expectations as well as the scope and essential elements of the non-violation remedy under the TRIPS Agreement differed considerably. Taking this into account, he offered some comments on the argument that the introduction of the possibility of non-violation disputes under the TRIPS Agreement would increase security and predictability. Given the divergence in views and the lack of clarity as to the concept of the non-violation disputes in the TRIPS context, the effect of introducing the concept in the TRIPS area could be exactly the opposite and could bring a high degree of uncertainty. He believed that such a result would not correspond with the aims of the TRIPS Agreement. He found the suggestion made by Japan, at the last meeting, that the TRIPS Council should consider carrying out case studies on the kinds or types of possible non-violation claims useful. Perhaps those delegations convinced of the need for and applicability of the non-violation remedy could bring practical examples or offer detailed explanations that the Council could analyse in its future meetings in order to deepen understanding of the issue. The argument had been made, at the previous meeting of the Council, that Article 26 of the DSU provided all the necessary assurances and safeguards for Members to handle any disputes that might arise alleging non-violation nullification and impairment under the TRIPS Agreement and to prevent any abuse of the dispute settlement mechanism. It had also been argued that the small number of actual non-violation cases under the GATT/WTO dispute settlement mechanism should alleviate some of the fears and concerns Members had regarding the potentially high number of non-violation disputes under the TRIPS Agreement. He understood that Article 26 of the DSU set out special procedures for non-violation complaints. The complaining party had to present a detailed justification in support of any complaint; there was no obligation to withdraw the measure if it had been found to nullify or impair benefits; the arbitrator, upon request by a party, could suggest ways and means of reaching a mutually satisfactory adjustment; and compensation could be a part of such an adjustment as final settlement of the dispute. He acknowledged that there had been a limited number of actual non-violation disputes. However, he wished to point out that neither the special safeguards in Article 26 of the DSU, nor the number of actual non-violation cases, could convince him of the need for, or the applicability of, the non-violation remedy in the TRIPS context. These factors could be, but not necessarily were, indicators of the scope of the problem. However, by no means could they be regarded as relevant to the question of whether non-violation complaints should be admissible in the TRIPS context and, if so, upon what conditions and within what limits. The first sentence of Article 64.3, as all knew, mandated the TRIPS Council to examine before 1 January 2000 the scope and modalities for complaints of the type provided for under Article XXIII:1(b) and (c) of GATT 1994 made pursuant to the TRIPS Agreement and to submit its recommendations to the Ministerial Conference for approval. He shared the view that, for the adoption of the recommendations, consensus was needed in the Council for TRIPS. Furthermore, in his understanding of Article 64.3, the approval by the Ministerial Conference of the recommendations on the scope and modalities for non-violation complaints made pursuant to the TRIPS Agreement was a pre-condition for the application of Article XXIII:1(b) and (c) of GATT 1994 in the TRIPS context. In other words, irrespective of the expiration of the five-year period provided for by Article 64.2, non-violation complaints would remain inadmissible under the TRIPS Agreement until a decision was taken by consensus at the Ministerial Conference on the approval of the TRIPS Council's recommendation on the scope and modalities of those complaints. In light of the lack of clarity regarding even the relevant basic notions with respect to non-violation complaints under the TRIPS Agreement, the genuine complexity of the issue and the divergence of views as to this remedy's applicability and desirability, further in-depth analysis was needed to forge a consensus on the recommendations. Such an examination was likely to be time consuming and the original deadline fixed in the Agreement was unlikely to be met. Taking all the above into account, he would see merit in setting a new, realistic deadline for the Council by which the needed analytical work and the necessary consensus-building could be done. Finally, he stressed that the Members, on whose behalf he spoke were, at the present stage, not at all convinced of the need for and applicability of the non-violation remedy under the TRIPS Agreement. Like many other delegations, they were of the view that the TRIPS Agreement contained a very fine and fragile balance of rights and obligations, and were concerned that the introduction of the non-violation remedy under the TRIPS Agreement, particularly without a proper understanding of the issue, might unsettle this delicate balance. Nevertheless, they respected the views expressed by those advocating the admissibility of non-violation complaints upon expiration of the moratorium and were ready to consider any substantive arguments made in support of these other views.
