on the proposal for a regulation of the European Parliament and of the Council providing for duty-free treatment for specified pharmaceutical active ingredients bearing an "international non-proprietary name" (INN) from the World Health Organisation and specified products used for the manufacture of finished pharmaceuticals and amending Annex I to Regulation (EEC) No 2658/87

(COM(2010)0397 – C7-0193/2010 – 2010/0214(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

–   having regard to the Commission proposal to Parliament and the Council (COM(2010)0397),

–   having regard to Article 294(2) and Article 207 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C7-0193/2010),

–   having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

–   having regard to Rules 55 and 46(1) of its Rules of Procedure,

–   having regard to the report of the Committee on International Trade (A7-0316/2010),

1.  Adopts its position at first reading, taking over the Commission proposal;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend its proposal substantially or replace it with another text;

3.  Instructs its President to forward its position to the Council, the Commission and the national parliaments.

This proposal invites Council and Parliament to authorise the addition of a further 718 pharmaceutical and chemical products to the already-existing list of 8619 products benefiting from bound duty-free treatment upon importation into the EU.

1. Background

At the WTO Uruguay Round, an arrangement was concluded between the most important pharmaceutical producing countries to reduce to zero and on an MFN basis their WTO bindings of duties on certain pharmaceutical products, including active ingredients and intermediates. The parties to the agreement are the EU, US, Japan, Canada, Switzerland, Norway and Macao (China).

The arrangement originally covered over six thousand products. However, given that new pharmaceutical products are constantly being developed, the arrangement envisages periodic reviews. The parties agreed to "meet under the auspices of the Council for Trade in Goods of the WTO, normally at least once every three years, to review the product coverage with a view to including, by consensus, additional pharmaceutical products for tariff elimination." Reviews took place in 1995-1996, 1998 and 2006 (Pharma I, II, and III reviews), and resulted in the addition of almost 2,400 products.

The fourth review (Pharma IV) was launched in 2009. In the course of these discussions, participants concluded that additional INNs (international non-proprietary names) and pharmaceutical intermediates used for production and manufacture of finished pharmaceuticals should be granted duty-free treatment and that the list of specified prefixes and suffixes for salts, esters or hydrates of INNs should be expanded, thereby adding 718 new substances to the list of products eligible for duty-free treatment.

The review process is largely industry-driven, with the International Committee to Eliminate Pharmaceutical Tariffs (INTERCEPT) recommending new products to be included and others to be removed. INTERCEPT is an organisation which includes the major pharma-chemical industries that conduct research and development in the world. The Japanese, US and European industries all participate. The arrangement is unanimously supported by industry because it eliminates tariffs on inputs and intermediaries that have to be paid even for intra-company trade. The European industry associations EFPIA (European Federation of Pharmaceutical Industry Associations) and CEFIC (European Chemical Industry Council) participate in INTERCEPT.

2. Observations

The intended date of implementation is 1 January 2011. This date is important, as the US has made the implementation of the update conditional upon implementation on 1 January. Other participants are expected to follow this example, except Japan, which has announced an expected delay of 6 months in implementation.

The reviews of this arrangement are necessary to cater for the rapidly changing product environment in the pharmaceutical industry, and are not controversial. Lists are produced by industry and decided by consensus by the participants. All Member States have supported previous reviews and support the product coverage of the fourth review.

These observations were considered during the exchange of views held by the Committee on International Trade on 26 October 2010. The Chairman proposed that the Commission proposal be approved without amendment, in accordance with Rule 46 (simplified procedure) of the European Parliament's Rules of Procedure. This proposal was accepted by the Committee.