1. Rally 1 pm, 23 July in Sydney to support Senate Hearing on GATS and USFTA
2. DFAT’s USFTA statements: focus on abolition is misleading

1. Rally 1 pm, 23 July in Sydney to support Senate Hearing on GATS and USFTA

AFTINET and other organisations will hold a short lunchtime rally on Wednesday 23 July, when the Senate Committee inquiring into GATS and the USFTA comes to Sydney. The rally is in support of the inquiry and to publicise the issues around these trade negotiations.

Where: Macquarie St. Sydney, outside Parliament House

When: Wednesday 23 July at 1pm

Speakers include: Colin Friels, actor; Doug Cameron, National Secretary AMWU; Senator Kerry Nettle, Greens; Senator Gavin Marshall, ALP and Senator Aden Ridgeway, Democrats.

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2. DFAT’s USFTA statements: focus on abolition is misleading

The Trade Minister and DFAT have sought to reassure critics of the USFTA negotiations about the impacts of the negotiations on social policies. They have stated that it is not the intention of the US to seek to abolish either the Pharmaceutical Benefits Scheme (PBS) or local content rules and subsidies for Australian film and television production. The US chief negotiator has confirmed that they are not seeking abolition of these mechanisms.

However, the real issue in these negotiations is not whether or not there is any proposal to abolish these mechanisms altogether. Rather, it is the types of changes the US is seeking to the way these mechanisms function that is of real concern. This AFTINET bulletin provides information about this issue.

The focus by DFAT on abolition is a distraction from the real issue of what changes are being sought. When questioned on particular changes, neither of the chief negotiators will provide a direct answer. DFAT has described the government’s position as a commitment to certain policy outcomes, rather than to particular mechanisms, which suggests that changes are indeed being considered, without any public debate on these changes.

DFAT produces a regular bulletin about the negotiations (available online at http://www.dfat.gov.au/trade/negotiations/us_fta/newsletter/index.html). The latest bulletin was produced following the negotiaions in late May, and contains extracts from the transcript of the joint media briefing given by the chief negotiators after the round. A full transcript of the conference for Australian media, on 23 May, can be found on the DFAT website at http://www.dfat.gov.au/trade/negotiations/us.html

Pharmaceutical Benefits Scheme

The Pharmaceutical Benefits Advisory Committee (‘Committee’) is an independent statutory body which considers evidence on a particular drug's effectiveness, including its cost effectiveness. It then advises the Minister if the drug should be listed on the PBS. If the Minister accepts the recommendation, the drug is referred to the Pharmaceutical Benefits Pricing Authority (‘Authority’). When recommending listings, the Committee provides advice to the Authority regarding comparison with alternatives or their cost effectiveness, which keeps the costs of drugs down.

The Authority negotiates with the drug manufacturer on the price at which the drug will be listed on the PBS and advises the Minister accordingly. (For further information on this see the PBS website: http://www.health.gov.au/pbs/committ.htm#pbpa)

The US pharmaceutical lobby has identified this ‘reference pricing’ as a target in the USFTA negotiations and have clearly said that they want higher prices to be paid for medicines. However the information provided by the Australian and US negotiators, and by the Minister, does not deal with the changes sought by the US to the pricing mechanism of the PBS. Instead, they merely assert that the PBS is not sought to be abolished.

An example is when US chief negotiator Ralph Ives was asked in the 23 May media briefing whether he has a view that the reference pricing facility of the PBS ‘keeps prices too low to allow pharmaceutical manufacturers from the US to recoup their investment’.

His answer was: ‘At this point we are just seeking information. As you may appreciate, for an outsider, the system is particularly complex. We have received a fair amount, much information at this point. What I have suggested…is maybe in the interim we continue to exchange information on it. So it’s relatively premature to say what our focus would be once we have received a better understanding of the system.'’

The DFAT bulletin, as with the Trade Minister’s speeches, endeavours to keep the focus on the simple question of whether the PBS will or will not be abolished. It does not reproduce the above extract from the transcript. Instead, it deals with the issue as follows:

‘Mr Ives also reinforced the position he stated publicly following the first round that the US was not seeking any outcome that would lead to dismantling of the PBS, nor had it even determined its own position on the issue. He said that

"the FTA will in no way affect the basic framework of the PBS or the way medicines are delivered to Australians.  What we're interested in is receiving information on how the system values innovative medicines and whether the system is transparent.  Those have been the focus of our inquiries."’

Film and television

The situation is similar on the question of changes to the percentages of local content rules or subsidies to the local film industry. While DFAT, the Trade Minister and negotiators from both sides seek to keep the focus on the question of abolition of local content rules and subsidies, the real issues is the particular changes that are sought.

The DFAT bulletin reads as follows:

‘In the following exchange, Ives indicated that the US would not be seeking the abolition of either local content rules for TV and radio or subsidies provided to the audio-visual industry:

QUESTION:  Just on local content rules, Jack Valenti, the head of the MPAA was quoted in Variety earlier in the week suggesting that American motion picture makers wanted a standstill in Australia's local content rules.  Ralph, can you confirm that is the US negotiating position, basically locking in current levels as a ceiling, and that what you are after won't be any worse than that?

RALPH IVES:  These steps of market access issues, as Steve indicated, will be addressed in the July session.  Just as in the first round, where we devoted a lot of time to seeking additional information, this is also the case with this issue.  I guess I could say that, in terms of the content requirements and the subsidies, we're certainly not seeking, as some in Australia have indicated, to abolish either the broadcast quota or the subsidies - let's make that clear.At this point it may be useful to say that, if the current system is working for the Australians and if it is working for the US industry that we consulted with, then I'm not sure there is any reason to change. ‘

Again, the focus is on abolition rather than answering the question. The abolition of local content and subsidies is so sensitive that it is unlikely to be abolished outright, but the government refuses to say what changes to these social policies it is prepared to sign away.

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