negotiated, their relationship to substantive norms and the types of dispute that might arise in a GATT multilateral dispute settlement mechanism as a result of GATT commitments in the area of TRIPS. The last point attempts to build on the discussion that took place on the points raised in paragraph (ii) of my letter of 21 April 1988. The questions in Annex I are ones that the Group will need to answer irrespective of whether it takes a comprehensive approach to its work or treats the paragraph of its Negotiating Objective concerning trade in counterfeit goods separately. They, therefore, do not prejudice any participant's position. Whatever the norms regarding the level of protection of intellectual property rights, the issues raised in connection with enforcement will need to be discussed.

(ii) Annex II reproduces the text outlining what I understand to be the main points emerging from the Group's examination of relevant GATT provisions, that I annexed to my letter of 21 April 1988. I had the impression at the Group's last meeting that participants did not have difficulties with the text nor with the GATT secretariat document, MTN.GNG/NG11/W/6, as a description of the relevant GATT provisions. If there are no problems with the text, I would suggest that it be annexed to the note on the Group's next meeting as the Chairman's understanding of the main points emerging from the Group's examination of the relevant GATT provisions. As such, it would not constitute a legal interpretation of these provisions, but would indicate a common perception in the Group of their significance.

- What types of infringement of those intellectual property rights should be covered?

- What should be the substantive intellectual property law that is being infringed?

- At what points of intervention should the procedures and remedies apply?

(i) Coverage of intellectual property rights. The discussion at the Group's last meeting on trade in counterfeit goods showed that, in their initial thinking, some delegations favoured a larger and others a narrower conception of what should be covered. It also seemed to demonstrate two other points: generally speakers

appeared to be willing to consider at least some coverage beyond registered trademarks; and there is need for further exploration of this question before a decision can be taken. The Group has been told, for example, that the type of procedures that would be appropriate would vary according to the type of intellectual property right; it might be useful to explore further this and other practical implications of different coverages of intellectual property rights. This, I believe, would be in accordance with the expectations of the CONTRACTING PARTIES in adopting at Punta del Este the Group's Negotiating Objective; when they referred to "counterfeit goods", they knew that the GATT Group of Experts had reached an understanding that, if it were decided that joint action should be taken in the GATT framework, consideration would also need to be given to counterfeiting affecting other forms of intellectual property rights in addition to that affecting trademark rights (L/5878, paragraphs 10, 27 and 35). This, of course, does not bind the Group to cover counterfeiting affecting other forms of intellectual property rights, but does I believe require the Group to consider that possibility.

(ii) What types of infringement of those intellectual property rights should be covered. In the discussion so far, three main possibilities appear to have been raised. One is that all types of infringement should be covered. The second is that only infringements embodied in or associated with a good should be covered. This would presumably exclude such matters as the infringement of service marks and the infringement of the rights granted under copyright or neighbouring rights over communication to the public by performance, broadcasting or other non-tangible means. The question would arise as to whether an infringement not actually embodied in a good but taking place in connection with a good, for example with its sale, display or offering for sale, or in the preparation for its manufacture, sale, display or offering for sale, should also be covered. The third possibility referred to is that in the draft WIPO model legislation on measures against counterfeiting and piracy (WIPO document C&P/CE/2). The basic criteria in that draft is that goods (or, in the case of copyright or neighbouring rights, copies) should have been manufactured on a commercial scale without the authorisation of the owner of the right in question. In connection with trademarks and industrial designs, it does not cover all goods that may infringe those rights but only those that bear, or are accompanied by, a slavish or near-slavish reproduction of the protected mark or design. It might also be noted that the acts covered include acts of preparation for the manufacture or for the packaging of counterfeit goods or pirate copies as well as for the unauthorised affixation of protected trademarks.

- Disputes would only be disputes over whether a member government had met its GATT commitments: these commitments would only be on governments, not on private parties.

- Only governments, not private parties, would have access to multilateral dispute settlement procedures.

- It is not suggested that governments themselves be obliged to initiate action to prevent the violation of intellectual property rights. Thus, the fact that private parties in a country are violating intellectual property rights would not in itself be grounds for dispute settlement proceedings against that country.

- GATT obligations on governments would take the form of ensuring that their national legislation on the trade-related aspects of intellectual property rights was consistent with their GATT commitments and that the legislation in question was effectively applied.

- When assessing whether legislation is effectively applied, due allowance should be made for the different possibilities of countries - of the objective constraints facing each country. The obligations should be such that, in any dispute settlement proceedings, a common sense assessment would be made of what would reasonably be expected of a country according to its

situation.

i) The General Agreement does not put on governments specific obligations to enforce intellectual property rights or to accord any particular level of protection to intellectual property. The only GATT provision that specifically promotes the protection of intellectual property is Article IX:6, which concerns certain geographical indications. This requires contracting parties to cooperate and to be willing to consult with each other and indicates the standard of protection that such cooperation and consultations should aim to promote.

ii) The General Agreement recognizes the right of contracting parties to enforce intellectual property rights and contains a specific "exceptions" provision, Article XX(d), that authorizes contracting parties to take, subject to certain conditions, measures that would normally be inconsistent with the General Agreement for this purpose.

iii) The conditions attached to the use of Article XX(d) are essentially designed to ensure that such measures are not employed as unwarranted restrictions on trade or means of discrimination between contracting parties.

iv) With the same basic aims, the General Agreement also contains a number of general rules that apply to a wide range of governmental measures, both at the border and internally, including when taken in connection with intellectual property rights. Thus Article III on national treatment requires that, in so far as laws, regulations and requirements on intellectual property rights affect the internal sale, offering for sale, purchase, transportation, distribution or use of products, they should not be applied to imported or domestic products so as to afford protection to domestic production or to accord imported products less favourable treatment than like products of national origin. The basic GATT most-favoured-nation rule (Article I) and the GATT provisions on the publication and administration of trade regulations (Article X) also apply widely to intellectual property law as it affects trade.

v) While these GATT rules serve to prevent intellectual property legislation from having certain undesirable effects on trade, the General Agreement also contains two specific requirements that trade measures must not be used in a way that would prevent compliance with intellectual property procedures. The trade measures in question are import restrictions taken to safeguard the balance of payments (Articles XII:3(c)(iii) and XVIII:10).

vi) In addition to the above, some procedural provisions of the General Agreement have a potentially wide-ranging scope and could be invoked in certain situations in connection with intellectual property rights: