1. Support from US to leave drugs out of US Free Trade talks
2. Australia Thai Free Trade Agreement
3. British Cancun Report calls for WTO rethink
4. EU/developing countries Joint Parliamentary Assembly Opposes Liberalisation of Water

1. Support from US to leave drugs out of US Free Trade talks

Tony Walker, Australian Financial Review 23 Oct 2003

President George Bush has been urged by influential congressmen to quarantine pharmaceuticals from the negotiation of a US-Australia free-trade agreement because they want to introduce a similar scheme to Australia's subsidised pharmaceutical benefits scheme.

The congressmen asked Mr Bush specifically to ignore demands by the powerful pharmaceuticals industry to subject Australia's PBS to negotiations under the FTA because it was an allegedly unfair trade practice.

"By their nature, trade agreements compel reciprocal treatment of policies and regulations," the congressmen wrote in a letter dated October 17 as Mr Bush was leaving for Asia.

"Thus we are concerned that inclusion of any provision in the US-Australia FTA that targets the ability to evaluate drug cost-effectiveness under the PBS would have a chilling effect on efforts to establish similar mechanisms in the US."

The intervention, by the bipartisan group of seven congressmen, is an important development since it will bolster Australian opposition to any tampering with the PBS scheme under an FTA.

The seven members of Congress, including Republicans Doug Bereuter and Jo Ann Emerson along with Democrat Henry Waxman, are co-sponsors of a bill that seeks to adopt a similar "reference price" system for prescription medicines employed in Australia.

Under the PBS, the government ties the price it pays for imported drugs to the lowest price charged for similar medicine, thus ensuring a check is maintained on costs.

The congressmen's plea to Mr Bush coincides with the resumption of FTA negotiations in Canberra in what officials hope will be the preparation for a final push in a fifth round to be held in Washington in December.

Mr Bush's talks with Mr Howard are being viewed as an opportunity to energise the negotiations under a pressured timetable, which is supposed to end by the end of the year. The agreement would then go to Congress for a statutory period of 90 days before being voted on.

The congressmen said that "specifically, we want to ensure that the FTA does not weaken Australia's ability to evaluate the comparative effectiveness of pharmaceuticals, which in turn could hinder efforts to establish similar programs in the US".

Congress has before it a $US400 billion ($572 billion) bill that would add prescription drugs to Medicare as an entitlement, but the legislation does not include a reference pricing system such as that used in Australia.

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2. Thailand Australia Free Trade Agreement announced but not yet signed or made public

by Pat Ranald, AFTINET Convenor

Prime Minister Howard announced at the APEC meeting that the Thai Australia FTA has substantially agreed, with some reports implying the agreement had been signed. There was a selective blast of publicity about some of the specific benefits for Australian industry and agriculture, but no information about any negative impacts on employment or social policies. When we asked for a copy of the agreement we were told it would be 4-5 months before it is finalised, signed and becomes available to the public. The negotiators have agreed on some aspects of the substance of the content but have not signed off on the final text.

This follows the same pattern as the announcement of the Singapore Australia Free Trade Agreement last year, which was selectively and positively publicised but was not signed or made public for several months. The process underlines the continuing secrecy and lack of accountability in trade negotiations.

After a parliamentary committee will examine signing the Agreement dominated by the government. The Committee will make a recommendation to Cabinet. . Parliament does not vote on trade agreements. Some implementing legislation will go before the Parliament.

The Australian Manufacturing Workers' Union and the Textile Clothing and Footwear Union have expressed concern about the impact of accelerated tariff reductions on jobs in those two industries.

AFTINET is also concerned about the possible impact of the agreement on essential services, regulation of investment, government procurement rules and the role of an investor-state complaints mechanism.

Some information has been provided about these areas, but the detail cannot be checked until we see the final agreement. A key difference with the Singapore and US Agreements is that those agreements have a "negative list" structure for services and investment, which means everything is included unless it is specifically excluded. This was the structure of the infamous MAI, defeated by community campaigning in 1998.

The Thai agreement has a "positive list" for services and investment. This means that it only includes those sectors and areas of regulation which each government agrees to list in the agreement. The Thai government refused a "negative list " structure, because it wanted to keep the ability to continue to regulate services, investment and government procurement. The Australian government wanted a negative list, and will pursue it when the agreement is reviewed after three years.

Australian commitments on services are the same as those made in its initial offer in the GATS negotiations.

This would mean no new commitments in the key sectors of health, education, water or postal services. However there is an additional "standstill" commitment in the area of movement of temporary service workers. This means that the current level of regulation is "frozen" and any move to further restrict the entry of temporary service workers in future would not apply to Thailand.

A similar "standstill" commitment has been made about the current rules of the Foreign Investment Review Board, and there is an investor-state complaints process.

It appears that no specific commitments have been made on government procurement.

We will not know the full implications of the agreement until the full text is finally released to the public.

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3. British Cancun Report calls for WTO rethink

Larry Elliott, Economics Editor, The Guardian, 22 October 2003
http://politics.guardian.co.uk/economics/story/

Britain is privately bracing itself for the stalled Doha trade liberalisation talks to miss their 2005 deadline by at least two years and fears the talks may have been totally derailed by the collapse of negotiations in Cancun last month.

A confidential post-mortem examination prepared by the Department of Trade and Industry into the failed meeting warns that root and branch reform of the way the World Trade Organisation works could be necessary following the stand off between the rich west and a coalition of more than 20 developing countries. In a downbeat assessment, the DTI concludes the earliest that substantive talks will resume is the year after next, when the United States presidential election is over and a new European commission is installed in Brussels.

Britain, it says, is planning to use its presidency of both the European Union and the G8 group of industrial nations in 2005 to kick-start the trade talks again. The report, a copy of which has been seen by the Guardian, also reveals that the British government was kept in the dark by the commission -which was negotiating on behalf of Britain and the 14 other EU countries -during the Cancun meeting. It concludes: "At the heart of the collapse was a clash between the approach of the EU and US and others, expecting a traditional brinkmanship style negotiation and the approach of many developing countries who were not willing to play this game, and were prepared to hold out if they weren't satisfied. "Some developing countries [and non-governmental organisations] saw thecollapse of the talks as a slap in the face for the developed world, and celebrated this."

When the trade talks broke down, ministers sought to salvage something from the wreckage by setting a mid-December deadline for dealing with the issues left unresolved in Mexico."If this cannot be done - and possibly even if it is done - the Doha round is then likely to languish until early 2005, when a new [European]commission and a new US adminstration are in place and have had a fewmonths to settle in. There would then be a tight two years until the expiry of US fast track authority in March 2007, which many regard as the real deadline for the end of the round.

"With none of the WTO's big players showing any enthusiasm for resuscitating the trade talks, the six-page document says: "We need to recognise privately that we may not get agreement on a basic framework by mid-December, and that much of our work may in practice be providing the groundwork for later rejuvenation of the round. "We need to develop a longer term game plan for getting the Doha round back on track if it stalls in December and undertake in parallel some fundamental and strategic forward thinking about trade policy in a world where Doha has stalled."

It may simply not be possible to get the process back on track, and we maybe dealing with fundamental changes in the dynamics of the WTO. "This means that we should be careful to keep expectations modest so asto avoid setting ourselves up for a second failure at Geneva in December."

The paper says Pascal Lamy, the European Union's trade commissioner, made a"tactical misjudgement" by making concessions in Cancun too late and that the government needed to check "exactly what was said" by Mr Lamy in the last-ditch negotiations that preceded the collapse. "The relationship between the commission and member states came under strain in Cancun. Debate was stifled, and information flows were poor."But we need to be careful here - not least because it is in our interests to keep a good working relationship with the commission, and because the commission's agenda is broadly in line with our own. A relative shift of power to member states might give those with illiberal instincts greater scope to indulge them."

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4. African Caribbean and Pacific (ACP) EU Joint Parliamentary Assembly Opposes Liberalisation of Water Supply.

In a resolution on sustainable management and conservation of natural resources the ACP-EU Parliamentary Assembly, meeting in Rome on Wednesday 15 October approved unanimously a resolution that includes an amendment tabled by two deputies of the United Left Group, asking the European Commission to remove its demands on water supply liberalization from the GATS negotiations at the WTO, and not to present such demands in the negotiations of the Economic Partnership Agreements (EPA)with the ACP countries. The resolution stated that the assembly was "concerned that populations are finding it increasingly difficult to secure access to natural resources such as water, which constitutes a fundamental human right, and asks the European Commission to withdraw its calls for the distribution of water to be liberalised in the developing countries under the GATS agreements within the WTO and to abstain from calling for such measures in the context of the EPAs".

For the complete resolution, see web-site of the ACP-EU Assembly: http://www.europarl.ep.ec/intcoop/acp/60_06/pdf/resolution_03_en.pdf

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