1. Senate Inquiry report: fax or email the Minister
2. Australia Institute: new report on USFTA and pharmaceuticals
3. US Drug Industry Seeks to Sway Prices Overseas
4. US and Australian organisations criticise USFTA

1. Senate Inquiry report: fax or email the Minister

As mentioned in the last bulletin, the Senate Foreign Affairs, Defence and Trade References Committee issued its report on its inquiry into the GATS and the USFTA on 27 November. The report is available at the committee’s website:
http://www.aph.gov.au/Senate/committee/FADT_CTTE/gats/report/index.htm

The report is a significant step in the public and parliamentary debate of Australia’s trade policy. The committee’s recommendations reflect many of the points made by AFTINET about the USFTA and GATS negotiations. The report highlights the many public submissions received (166) and the high level of public concern in this area.

A brief overview of the Committee’s recommendations is provided below. Key points are are the opposition negative list structure, that all trade treaties should be voted on by Parliament, and that key areas of social policy be excluded from the agreement. The recommendations for improving transparency and public consultation in trade negotiations are also very important.

USFTA

• Exclude the PBS, quarantine, the GE regulatory regime, cultural industries and the Australian Wheat Board.

• There should be no investor-state dispute mechanism

• The Government should maintain the right to regulate foreign investment, including the Foreign Investment Review Board.

• The narrow definition of e-commerce (as per the Singapore Australia Free Trade Agreement) should be used, and flexibility should be maintained with regard to cultural protection for existing and new media.

• Any rules of origin applied in the textile, clothing and footwear sector provide for goods made-up in Australia to access the US market without tariffs, irrespective of the source of the original yarn or fabric.

• The final text of the USFTA agreement should be referred to the Senate Committee for review and report.

GATS

• The Government should define and make public its interpretation of Article 1.3 of the GATS Agreement (which states that services supplied in the legitimate exercise of government authority will not be included within GATS unless they are supplied on a commercial basis or in competition with one or more services suppliers)

• No offers should be made that will adversely affect Australia’s Post’s standard letter service, and no further commitments should be made in the areas of public health, public education and the ownership of water.

• DFAT should consult widely with groups in the community prior to preparation of offers and requests under GATS, and give constructive feedback to all organisations about how their views have been taken into account in preparing Australia’s negotiating position. DFAT should consult again with stakeholders with expertise in relevant areas when the draft GATS offers have been prepared and before the offers are communicated to the WTO.

Parliamentary Process

The Government should introduce legislation for the following process regarding trade treaties:

(a) Prior to any trade negotiations the government shall table in both Houses of Parliament a document setting out its priorities and objectives, including comprehensive information about the economic, regional, social, cultural, regulatory and environmental impacts which are expected to arise.

(b) These documents shall be referred to the Joint Standing Committee on Foreign Affairs, Defence and Trade for examination by public hearing and report to the Parliament within 90 days.

(c) Both Houses of Parliament will then consider the report of the Joint Standing Committee on Foreign Affairs, Defence and Trade, and then vote on whether to endorse the government’s proposal or not.

(d) Once parliament has endorsed the proposal, negotiations may begin.

(e) Once the negotiation process is complete, the government shall then table in parliament a package including the proposed treaty together with any legislation required to implement the treaty domestically.

(f) The treaty and the implementing legislation are then voted on as a package, in an ‘up or down’ vote, i.e. on the basis that the package is either accepted or rejected in its entirety.

Fax or email the Minister

The USFTA negotiations are at a critical stage. Now that the Senate Committee has released its report, if you can, contact the Trade Minister Mark Vaile (fax (02) 6273 4128 or mark.vaile@aph.gov.au) and call on the Minister to:

• exclude all social and cultural policies and essential services from trade agreements

• reject proposals to allow corporations to challenge laws and sue governments

• refer trade agreements to full debate and vote by Parliament, not just Cabinet.

Top of page

2. Australia Institute: new report on USFTA and pharmaceuticals

The Australia Institute has released a report examining the implications of recent comments by FTA negotiators that the US was seeking changes to Australia’s Patent laws, as they relate to pharmaceuticals. The report argues that this is a backdoor, political strategy to weaken PBS reference pricing and raise pharmaceutical prices in Australia.

The report has received good press coverage in a number of newspapers today, including the following extract from The Australian Financial Review.

‘Big pharma’ dons sheep’s clothing,

Tony Walker, Australian Financial Review 4 December 2003:

‘The Australia Institute think tank says in a report out yesterday that recent comments by Australian negotiators indicate that the US is also "seeking changes to Australia’s intellectual property laws, particularly as they relate to pharmaceuticals". The Australian government has ruled out anything that costs customers more. But the AI says success by the US in changing Australian intellectual property laws would keep generic and low-priced drugs out of the market longer and lift Australian drug prices by at least $1 billion over four years.

"If the Australia US FTA includes changes to the PBS and IP regime designed to make the Australian system closer to that of the US, then the affordability of medicines in Australia can only deteriorate" the AI report says.’

For the paper see: www.tai.org.au/WhatsNew_Files/WhatsNew/Patents.pdf

Top of page

3. Drug Industry Seeks to Sway Prices Overseas

Extracted from The New York Times, November 27, 2003 By ELIZABETH BECKER

WASHINGTON, Nov. 26: Having beaten back price controls on prescription drugs in the United States, the American pharmaceutical industry is trying to roll them back overseas, with help from the administration and Congress.

In talks over a free trade agreement with Australia, American officials are pressing to water down the system under which the Australian government negotiates the prices it pays for prescription drugs, Mark Vaile, the Australian minister for trade, said here Wednesday. Mr. Vaile said that the American negotiators had raised this "in amongst a range of issues, not as a core issue."

If successful, the United States could use this agreement as a benchmark for trade deals with other rich nations. Loosening price controls is a priority for the drug industry, which gets most of its profits in the United States and argues that prices here could be lower if other nations paid their share of the cost of developing drugs.

Mr. Vaile, in a briefing for reporters, said that his government would stand firm against any terms that would affect "the ability of the Australian government to provide inexpensive medicine to its citizens."

Analysts say that the drug issue could be part of the horse trading over Australia's desire to export more agricultural products to the United States and Washington's push to ease access to Australian markets for the American entertainment and service industries.

The legislation passed by Congress this week to establish a prescription drug benefit in the Medicare program specifically forbids the government to use its influence to negotiate lower drug prices. That provision was a top goal of the drug industry in its lobbying on the measure.

The Medicare bill also requires the Bush administration to apprise Congress on progress toward opening Australia's drug pricing system. Drug industry executives said that provision was a sign of how badly their backers on Capitol Hill want to see trade agreements used to challenge foreign government's price-control systems, especially when Americans are flocking to Canada to buy inexpensive medicine.

In the free trade talks, drug industry executives said, the United States is asking that Australia agree that its Pharmaceutical Benefits System pay higher prices for new medicines and make other changes in how it sets the prices of prescription drugs. "This is all going on in this larger context of growing unrest in the United States that other countries are not paying their share of the cost of pharmaceutical research," said Ian Spatz, vice president for public policy at Merck & Company.

Officials in Mr. Zoellick's office said that no formal proposal had been put in writing. "What we are looking at are ways to reward innovative medicine and to promote transparency," said a senior American trade official.

Dr. Mark B. McClellan, the commissioner of the Food and Drug Administration, said in a speech in September that since the benefits of American drug innovations are global, the costs of the research and development of the drugs should be global as well. "The United States is now covering most of these costs of developing a new drug to the point where it can be used by the population of the world," Dr. McClellan said. "But it is clear to me that we cannot carry the lion's share of this burden for much longer."

Mark Weisbrot, co-director of the Center for Economic and Policy Research, a research center in Washington, criticized the American strategy. "This is a terrible extension of the inefficiency and inequity of our own system," Mr. Weisbrot said. "The administration is right that something has to change," he said. "But it should be here, not in countries with an effective method to finance pharmaceuticals for their citizens."

The pharmaceutical industry disagrees. The World Trade Organization now enforces intellectual property rights, including drug patents, in large part because of industry pressure. And though the United States bowed to pressure and agreed to help poor nations buy generic medicines through exemptions from trade rules, the drug companies contend that wealthy nations use the negotiating power of their national health systems to demand unfair, arbitrary prices.

Tony Abbott, the minister of health, said on Australia's Channel 7 television this month that "the American drug companies don't like the P.B.S. because the government uses its position as a massive purchaser of drugs to keep prices down - and that's the way it should be."

Mr. Vaile disputed contentions by the American pharmaceutical industry that Australians do not pay their fair share of research costs or that Australia can provide low-cost medicines to its citizens only by taking advantage of American consumers. "The Australian taxpayer also pays for research and development," he said, noting that the government has a $500 million medical research budget. "But it is different in Australia. We are a differently structured society."

Top of page

On Monday 1 December AFTINET issued a media release which gave details of statements and letters released by both Australian and US union, health and environment groups criticising the USFTA. The organisations include the Australian Council of Trade Unions (ACTU) and the AFL-CIO, the Australian Conservation Foundation (ACF) and a range of US environmental organisations (details below), and the Public Health Association of Australia. The US and Australian Greens also issued a joint statement.

The Australian groups were among sixty-one organisations which expressed their concerns about the agreement in a launch of AFTINET’s statement on the USFTA released on November 24.

US environmental groups wrote to the Australian Parliament expressing their concerns about the USFTA, in particular:

• the dangers from allowing corporations to sue governments under the USFTA,

• the potential for the USFTA to increase land clearing in Australia, because of demands from the beef industry, and

• the lack of any environmental review about the impact of the USFTA

The letter was signed by:

Stas Burgiel, PHD
International Policy Analyst
Defenders of Wildlife

David Waskow
Trade Policy Coordinator
Friends of the Earth (U.S)

Bill Frymoyer
Director of Public Policy
National Environmental Trust

Jake Caldwell
Program Manager
Trade and Environment, National Wildlife Federation

Susan Casey-Lefkowitz
Senior Attorney
Natural Resources Defence Council

Dan Seligman
Director
Responsible Trade Program

Top of page