IHS Global Insight Perspective | |
Significance | The watchdog Corporate Europe Observatory (CEOb) has filed a lawsuit against the European Commission (EC) in the EU general court over secrecy during India-EU free trade agreement (FTA) talks. In other news, India's Ministry of Commerce and Trade has given the go-ahead for the use of bar coding using radio frequency identification technology (RFID) on 96 pharma products. |
Implications | The CEOb has raised questions about the EU's respect for transparency rules, and the case could affect various ongoing trade talks, although the lawsuit concentrates on negotiations surrounding the EU-India, free trade agreement due to be signed this year. The Drug Controller General of India's implementation of bar coding and ID tracking will allow India to control pharmaceuticals moving in and out of India as it looks to address the global perception that counterfeiting is a problem for Indian products. |
Outlook | Full disclosures of the EC's discussions and correspondence could negatively affect various trade agreements. Although it is unlikely the India-EU FTA due to be signed this year will be affected, the outcome may, however, play a role in upcoming and other ongoing trade talks. The implementation of bar and ID coding will have substantial financial implications for small-to medium-sized pharma companies in India, although in the long term pharma firms should be better able to manage their product sales and recalls, while the measure will also help prevent counterfeiting. |
Corporate Watchdog Hauls EU Executive to Court over Secrecy
On 15 February, campaign group the Corporate Europe Observatory (CEOb) launched legal action against the European Commission in the EU General Court for withholding documents and information pertaining to the ongoing free trade agreement (FTA) talks between the European Union and India (source: Statewatch.org). CEOb alleges that the EC's information and discussion disclosures favour corporate lobby groups, and are therefore violating EU transparency rules. The case pertains to 17 documents including meeting reports, emails, and letters, which the EC's Trade Directorate General (Trade DG) sent to industry associations including BusinessEurope and the Confederation of the European Food and Drink Industry (CIAA). CEOb also alleges that corporate lobby groups received full versions of the documents, yet the EC only released edited versions to CEOb and the public. CEOb also claims that the deleted sections related to information about priorities and strategies in the ongoing trade talks with India, including issues such as tariff cuts, services, investment, and government procurement liberalisation and health standards. The EC has, however, cited the protection of international relations as the reason for censorship pertaining to meetings and correspondence between EU officials and representatives of European pharmaceuticals companies, including Sanofi-Aventis (France) and GlaxoSmithKline (UK). The background to the lawsuit can be accessed here.
DCGI Approved for Bar Coding of Pharma Exports
As of 1 July 2011, the Drug Controller General of India (DCGI) will implement bar coding for exports pertaining to 96 pharmaceutical products using radio frequency identification technology (RFID) following the go ahead from India's Union Commerce Ministry, Pharmabiz.com reports. Pharmaceutical companies will be required to build a track-and-trace capability for their exported products using primary, secondary, and tertiary level packaging labels and GS1 global standards. The bar coding has been made essential owing to the concerns raised by recipient countries on the quality and authenticity of Indian drugs. The list of the 96 products is yet to be published.
Outlook and Implications
CEOb's legal action follows concerns raised by numerous governmental and non-governmental organisations—such as Medécins Sans Frontières (MSF)—which have warned that an EU-India FTA will hinder generic production and increase essential drug prices beyond the reach of much of the population in developing countries, who are heavily dependant on Indian generic products. The legal suit will now be reviewed by the General Court and a letter sent to the EC for response. The latter will have two months to respond, following which a hearing date will be set. CEOb is focusing on India given that the bilateral negotiations are now close to conclusion after four years of talks. Issues such as tariff cuts and health standards could have a significant impact on whether the FTA is signed, after delays due to intellectual property rights (IPR) protection issues (see India - Europe: 29 November 2010: EU-India FTA Negotiations Stalling over IPR). In addition, full disclosure of the EC's discussions and correspondence could increase the potential for problems in other ongoing trade talks, as India looks to ensure no or limited damage is done to its domestic pharmaceutical market, and to limit any market monopoly of Big Pharma. There are also concerns that stringent implementation on IP and other issues would have a ripple effect into developing markets by putting most drugs out of reach of middle- and low-income groups (see India - Europe: 9 July 2010: EU-India's Planned Trade Agreement May Hinder Generics Production). But with bilateral trade expected to exceed EUR160.6 billion by 2015, the FTA offers potentially high profit potential for Indian companies, which could lead India to make concessions in terms of its policies. As a result, the lawsuit is not expected to affect the current FTA, but may influence the outcome of later negotiations.
The DCGI's implementation of bar coding and ID tracking will allow India to control pharmaceuticals moving in and out of India. The implementation of the RFID technology is part of the Indian government's drive to improve the quality and global view of its pharma exports. This follows controversies pertaining to counterfeit products, which saw Indian generic drugs being impounded at EU ports as part of the EU's anti-counterfeit measures. The use of RFID systems will shorten the current timeframe required to trace and track drug imports and exports and will bring India in line with EU import-export bar-coding regulations. This should help address the IPR issues stalling the current India-EU FTA talks. Concerns have been raised, however, among small- to medium-sized pharma firms worried about a significant increase in costs, but it is unlikely the commerce ministry will back-track on its decision. The use of RFID will allow Indian firms to track their products, with more accurate measurements of product sales and better management of product recalls.