755. Fundamentally the provision laid down in Article 66.1 acknowledges that the TRIPS Agreement may not be conducive to the social and economic circumstances of LDCs and that LDCs need to have policy space and flexibility to address their development challenges and create a viable technological base. The COVID-19 pandemic has further exacerbated the challenges that the LDCs continue to face. It is evident that the COVID-19 pandemic will have far-reaching implications for the global economy and especially for LDCs including those on the path to graduation.
756. Also, looking into the current grim scenario of socio-economic development in LDCs, it is not possible to assess when LDCs will be able to overcome their economic, financial and administrative constraints. This means that LDCs will need flexibilities as long as they are under these severe uncertainties and as long as they are unable to create a viable technological base. In other words, being in the LDC category, they will be unable to overcome the constraints and therefore, they will be in continuous need of the transition period for exemptions as provided under TRIPS Article 66.1 for a longer duration. The special needs of LDCs and their requirement for maximum flexibility are also clearly recognized in the Preamble of the TRIPS Agreement. This means that the maximum flexibility in TRIPS implementation is vital for LDCs. Members may also agree that LDCs have small delegations and it is difficult for them to come to the TRIPS Council after every fixed duration to request and negotiate this extension of transition with their limited capacities. Therefore, the transition period should remain in force for as long a country remains a least developed country.
757. LDCs continue to face many difficulties in reaching their development goals, even as the period for implementing the Istanbul Programme of Action (IPoA) for the LDCs for the Decade 2011-2020 comes to an end. One of the main targets of IPoA was for half of LDCs to meet the graduation criteria by 2020. Members are aware that there are three criteria for LDC graduation under the UN procedure: Income criterion, based on a three-year average estimate of gross national income (GNI) per capita, Human Assets Index (HAI), and Economic Vulnerability Index (EVI). To be eligible for graduation, a country must reach threshold levels for graduation in two consecutive triennial reviews for at least two of the three criteria, or its GNI per capita must exceed at least twice the threshold level. To date, three countries have graduated during this decade. 12 countries have already met graduation criteria and are on the path of graduation. 15 countries have already met at least one criterion for graduation. Thus, graduation from LDC status has taken a new momentum. At this point in time LDCs need special attention from Members on the future course after graduation. In this context, it may be pertinent to refer to the 2016 United Nations Conference on Trade and Development (UNCTAD) LDC report. It maintains:
The process of development beyond graduation merits much greater attention, even during the pre-graduation period — that graduation itself should not be the primary focus of LDCs and their development partners, but should rather be viewed as one milestone in LDCs' longer-term sustainable development. Graduation does not represent a solution to all the graduating country's development challenges; neither does a new set of challenges emerge out of nothing at this point. Rather, the challenges of the post-graduation period are a continuation of those that characterized the pregraduation period.
758. The international community has similar views on post-graduation challenges. Accordingly, the UN General Assembly in its resolutions 59/209 of 2004 and 67/221 of 2012 called upon WTO Members to allow graduated LDCs the existing special and differential (S&D) treatment and exemptions available to LDCs for some additional years to help support their transition for smooth and sustainable graduation. Positive responses to this call are particularly important for the TRIPS Agreement as LDC graduation criteria does not specifically address economic, financial and administrative constraints, which have been considered when providing exemptions to LDCs under TRIPS Article 66.1. As you are aware, implementation of the TRIPS Agreement requires, among other things, adequate financial resources, administrative capacity, judicial capacity, a legal regime, and border measures, which may not be available soon after graduation.
759. The LDC Group proposes that an LDC Member, after exclusion from the list of LDCs as per a decision of the UN General Assembly, should be provided a transition period of 12 years for implementing TRIPS Agreement. This decision, if approved, will genuinely respond to the call that Members recognized at the UN General Assembly.
760. The LDCs, therefore, request the Council to agree on the draft decision contained in document IP/C/W/668 to allow LDCs a transition period as proposed under Article 66.1 of the TRIPS Agreement.