The Legal Framework for Waiving World Trade Organization (WTO) Obligations

The Legal Framework for Waiving World Trade Organization (WTO) Obligations

Legal Sidebari

The Legal Framework for Waiving World
Trade Organization (WTO) Obligations
May 17, 2021
On May 6, 2021, the Biden Administration announced that it supported negotiating a waiver of certain
obligations in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS
Agreement) at the World Trade Organization (WTO). The announcement represents a shift in the U.S.
position at the WTO on South Africa and India’s October 2020 proposal to waive some TRIPS
obligations to address the “prevention, containment or treatment” of Coronavirus Disease 2019 (COVID-
19). To date, WTO members remain divided as to the need for or appropriateness of the proposed waiver.
As of this writing, South Africa and India are revising the proposal with the aim of submitting a revised
text later this month. (For more information on the proposed TRIPS waiver to address the COVID-19
pandemic, see this CRS Insight.)
After the Biden Administration’s announcement, some Members of Congress have asked, including
during a Senate Finance Committee hearing, about the Administration’s authority to agree to such a
waiver. This Sidebar discusses how waivers are negotiated at the WTO, and the President’s authority,
delegated to the Office of the U.S. Trade Representative (USTR), to agree to waivers of WTO obligations.
Negotiating Waivers at the WTO
Legal Framework for Granting Waivers
WTO members must generally adhere to WTO Agreements absent a waiver or other exception. Article IX
of the Agreement Establishing the WTO permits the Ministerial Conference—the WTO’s highest
decisionmaking body—to grant waivers in “extraordinary circumstances” and exempt affected WTO
members temporarily from implementing certain WTO obligations. To initiate a waiver, WTO members
submit waiver requests to the relevant WTO body. Requests for waivers of the Agreement Establishing
the WTO go to the Ministerial Conference, while requests regarding most of the other WTO Agreements
go to the Council for Trade in Goods, Council for Trade in Services, or Council for TRIPS. If a request
goes to one of the councils, that body prepares a report for the Ministerial Conference or General Council,
which then considers whether to grant a requested waiver. In general, the relevant council must conclude
its deliberations on a waiver request in 90 days, but this time limitation is not always observed strictly.
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The Ministerial Conference must make a decision on whether to grant a waiver by consensus or with the
support of three-fourths of the WTO members. When the General Council, acting on behalf of the
Ministerial Conference, considers waiver requests, it “will seek a decision” by consensus, but may adopt
waivers instead with the support of three-fourths of the WTO members if no consensus is reached. In both
decisionmaking bodies, approval by consensus is the norm.
Decisions to grant waivers must state (1) the “exceptional circumstances” justifying the waiver; (2) the
conditions applicable to the waiver; and (3) when the waiver will expire. The WTO must also review
waivers on an annual basis to assess “whether the exceptional circumstances justifying the waiver still
exist and whether the terms and conditions attached to the waiver have been met.” At the end of each
review, the waivers may be continued, extended, modified, or terminated. Given Article IX’s strict
conditions for granting a waiver, the WTO Appellate Body has stressed that any waiver must be
“interpreted with great care.” Therefore, WTO members are advised to state explicitly which obligations
are being waived.
WTO Practice on Waivers
Since the WTO’s inception in 1995, the Ministerial Conference or General Council has granted several
waivers each year. A list of waivers granted between 1995 and 2015 is here. The Ministerial Conference
or General Council granted additional waivers in 2016, 2017, 2018, 2019, and 2020. These waivers are
generally granted to one or a group of WTO members, and cover a variety of obligations, including some
TRIPS obligations. For example, the General Council has waived certain TRIPS obligations for least-
developed countries until 2033, and the United States currently has four waivers of several
nondiscrimination obligations under the General Agreement on Tariffs and Trade so that it can operate
certain preferential trade programs.
Arguably, the only IP-related waiver of comparable scale to South Africa and India’s proposed TRIPS
waiver for COVID-19 is the General Council’s 2003 waiver of Article 31(f) of the TRIPS Agreement.
Article 31(f) generally permits a country that issued a compulsory license for a product to limit its use to
that country. A compulsory license is a regulatory tool used by governments to allow companies to
produce patented products or processes without the patent holder’s consent. However, the 2003 waiver
allowed WTO members to deviate from Article 31(f) and issue compulsory licenses permitting export of
the product to least-developed and other eligible countries. This waiver remains in effect for WTO
members who have not yet adopted the 2005 amendment to the TRIPS Agreement, which codified the
substance of the waiver (see Article 31bis).
USTR’s Authority to Agree to WTO Waivers
The international agreements that led to the creation of the WTO, and which include the TRIPS
Agreement, were negotiated as part of the Uruguay Round. The United States agreed to be bound by these
agreements, as a matter of international law, by adopting the Uruguay Round Agreements Act (URAA),
codified at 19 U.S.C. ch. 22. In that Act, Congress approved these agreements and provided conditions for
continued U.S. participation in the WTO.
Role of Congress
With regard to waivers of WTO obligations, the URAA does not expressly require congressional action or
approval before USTR may agree to such waivers. Instead, if a proposed waiver “would substantially
affect the rights or obligations of the United States under the WTO Agreement . . . or potentially entails a
change in Federal or State law,” then USTR must consult with the “appropriate congressional
committees” before any vote on the proposed waiver in the Ministerial Conference or General Council.

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The URAA defines “appropriate congressional committees” as the House Ways and Means and Senate
Finance Committees. If the Ministerial Conference or General Council adopts a proposed waiver, the
USTR must submit a report discussing the waiver to those congressional committees and consult with
them about the waiver. An example is the USTR’s 2006 report discussing the 2005 amendment to the
TRIPS Agreement that made the 2003 waiver permanent.
Even though USTR may negotiate and consent to waivers at the WTO without congressional approval,
there are several relevant qualifiers. First, waivers generally allow, but do not require, WTO members to
derogate from their WTO obligations. In other words, even if a waiver allowed all WTO members to
derogate from a specified obligation, the United States could agree to grant the waiver request but not opt
to derogate from the obligation. The case of the 2003 TRIPS waiver is instructive. The waiver, which is
now incorporated permanently in TRIPS, allowed potentially any WTO member capable of
manufacturing pharmaceutical products to issue compulsory licenses and export those products to eligible
countries, as of 2019; one member—Canada—appears to have used this authority. Similarly, in the
context of COVID-19 and the TRIPS Agreement, if a proposed waiver would allow WTO members to
derogate from certain TRIPS obligations, the United States could potentially agree to the waiver request
(i.e., agree to allow other WTO members to derogate from the specific TRIPS obligations), but not
implement the waiver domestically.
Second, in the unlikely scenario that a WTO member might interpret a waiver as requiring its exercise,
and such exercise would need Congress to amend domestic legislation, such a waiver would not be self-
executing in U.S. law. Specifically, the URAA expressly provides that neither the WTO Agreements nor
an application “that is inconsistent with any law of the United States shall have effect.” Thus, if a WTO
waiver imposed international obligations on the United States to, for instance, limit patent rights for
COVID-19 vaccines in a way that conflicted with existing U.S. patent statutes, the international
obligation would not override U.S. law.
Finally, USTR’s authority to agree to proposed waivers at the WTO is distinct from another part of the
URAA, which addresses more generally the United States’ continued participation in the WTO. Section
3535 provides for periodic review of U.S. membership, requiring the USTR to report on the benefits,
costs, and effects of current and continued participation at the WTO every five years. Either chamber of
Congress may introduce a joint resolution within 90 days of receiving the USTR’s report to disapprove
continued U.S. participation in the WTO. The USTR sent its most recent report under Section 3535 to
Congress in March 2020. Although some Members of Congress introduced joint resolutions to disapprove
continued participation in the House and Senate, due to a separate House resolution and Senate
parliamentary ruling, neither was given floor consideration. The next year in which the Section 3535
process may occur again is 2025.

Author Information

Nina M. Hart

Legislative Attorney

Disclaimer

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This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
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