18 February 2005

Contents:

1. Urgent action: Send a message to the Trade Minister about the current GATS negotiations in Geneva
2. Senate Inquiry announced into Australia – China relations
3. Time to gear up for the generic v brand-name drugs showdown
4. Community groups and unions launch legal challenge on NAFTA investment rules
5. Event: Fair Wear Fabric of Society Dinner, 31 March.

1. Urgent action: Send a message to the Trade Minister about the current GATS negotiations in Geneva

Right now, Australian trade negotiators are at a 3-week cluster of negotiating meetings in Geneva on the WTO’s trade in services agreement (GATS). This is a pivotal gathering, where trade negotiators from around the world are negotiating to increase the number of service sectors that countries open to trade liberalisation under GATS.

Second round offers of service commitments in the GATS negotiations are due in May and countries are under increasing pressure to expose more services, including essential services such as water, energy, postal, public transport, health and education.

Australia has been identified as one of the key ‘GATS pushers’ at the Geneva meetings. Australian negotiators have formed an alliance with 14 other countries, with the purpose of pressuring other WTO members, including developing countries, to increase their service commitments under GATS. The other countries in the alliance are the US, the European Union, Japan, Canada, Chile, Hong Kong, Iceland, India, Korea, Mexico, New Zealand, Norway, Singapore, Switzerland and Taiwan. This alliance is influenced by service industry cartels, like the US Coalition of Service Industries and transnational service corporations, such as Suez, Halliburton, FedEx and American Express.

Now is the time to send a message to the Trade Minister to let the Government know that the Australian community are aware of these negotiations. The Government should not sign away any essential services, nor pressure developing countries to make service commitments in essential services. To further pressure the Government, copy this message to the Australian negotiators in Geneva.

A sample message follows at the end of the bulletin. The round of service negotiations ends on February 25, so send the message as soon as possible.

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A Senate Inquiry has been called into Australia's relationship with China. The Inquiry was announced in the same week as the successful public forum on the China Free Trade Agreement organised by AFTINET, PIAC and the AMWU in December. The Senate Inquiry will examine Australia's economic and political relationship with China, with specific reference to a China Free Trade Agreement and its implications for Australia and the East-Asia region.

The Senate Foreign Affairs, Defence and Trade References Committee is calling for public submissions to this inquiry. The deadline for receiving submissions is 24 March 2005.

This is a great opportunity to raise concerns about the China FTA and to build the campaign. Please consider making a submission to this inquiry. AFTINET will circulate a draft submission for your comment or for you to use as a basis for your own submission.

The Senate media release and terms of reference for the Inquiry are below and further information is available at: http://www.aph.gov.au/Senate/committee/fadt_ctte/ china/index.htm. Submissions can be lodged electronically to fadt.sen@aph.gov.au, or by post to:

Committee Secretary
Senate Foreign Affairs, Defence and Trade Committee
Department of the Senate
Parliament House
Canberra ACT 2600

Senate media release: 9 / 12 / 04

The Chair, Senator Steve Hutchins and the Deputy Chair, Senator Sandy Macdonald, of the Senate Foreign Affairs, Defence and Trade References Committee are pleased to announce today that the Committee is to inquire into and report on Australia's relations with China.

China's entry into the WTO and the opening up of its domestic markets to international competition has transformed the country. Over recent years, China has experienced sustained rapid development and implemented wide-ranging economic reforms, including the lowering of trade and investment barriers. In opening up its markets, China has become a dynamic, strong and expanding economy offering opportunities for countries such as Australia to strengthen and deepen links.

As Australia's third largest merchandise trading partner, China is one of Australia's most important trading allies. Its size and growing influence in the Asia Pacific region politically, culturally and strategically, however, is also of great long-term importance to Australia. The changes taking place in China present challenges. There are both risks and opportunities ahead for Australia as China continues to develop and to exert significant influence over our near region.

The Committee believes that it is timely to review Australia's relationships with China. It intends to take a forward-looking approach and to explore the ways in which Australia can take advantage of the opportunities presented by the changes taking place in China.

The terms of reference recognise that economic, political and strategic factors are intertwined and hence the Committee will examine a broad range of issues but with the central focus on how best to develop and manage our relationship with China so that both countries benefit from changing circumstances.

The Committee is seeking the views of people interested in Australia's relations with China. In particular it is keen to hear from: sectors of the business community who have or would like to establish commercial links with China; Chinese companies who have business ties with Australia; mutual friendship associations both here and in China; organisations and associations interested in fostering links between the two countries; academics with expertise in East Asia and the South Pacific; and people who are concerned about Australia's future relations with China.

The Committee invites submissions and asks that they be lodged with the Committee Secretariat by 24 March 2005. Terms of reference and Secretariat contact details are attached.

On 7 December 2004, the following matter was referred to the Senate Foreign Affairs, Defence and Trade References Committee for inquiry and report to the Senate on or before15 September 2005:

(a) Australia's economic relationship with China with particular reference to:

i. Economic developments in China over the last decade and their implications for Australia and the East Asian region;

ii. Recent trends in trade between Australia and China;

iii. The Australia-China Trade and Economic Framework and possibility of a free trade agreement with China;

iv. Ongoing barriers and impediments to trade with China for Australian businesses;

v. Existing strengths of Australian business in China and the scope for improvement through assistance via Commonwealth agencies and Australian Government programs;

vi. Opportunities for strengthening and deepening commercial links with China in key export sectors;

(b) Australia’s political relationship with China with particular reference to:

i. China’s emerging influence across East Asia and the South Pacific;

ii. Opportunities for strengthening the deepening political, social and cultural links between Australia and China;

iii. Political, social and cultural considerations that could impede the development of strong and mutually beneficial relationships between Australia and China; and

(c) Australian responses to China’s emergence as a regional power with particular reference to:

i. China’s relationships in East Asia, including in particular the Korean Peninsula and Japan;

ii. the strategic consequences of a China-ASEAN free trade agreement;

iii. China’s expanded activities across the South West Pacific.

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3. Time to gear up for the generic v brand-name drugs showdown

Sydney Morning Herald, February 7 2005, Tom Faunce

Last year, the Canadian health minister was applauded by a coalition of pensioners, workers and retirees for passing legislation restricting the "evergreening" of supposedly innovative drug patents. "Evergreening", the tactical extension of monopoly rights over "innovative" medicines that have large sales, costs millions of dollars each year.

The Australian Government has made similar efforts, through legislative amendment and policies such as the 12.5 per cent automatic discount once a brand-name patent expires. These efforts will soon be tested as US drug companies claim that generic or copy drugs nominated to be included in the Pharmaceutical Benefits Scheme infringe their "innovative" drug patents, thereby breaching the Australia-US Free Trade Agreement.

The arm-twisting between Australia and the US over pharmaceuticals, and their prices, will be carried out in private, through select committees on pharmaceutical policy set up under the trade agreement. The US is likely to be well advanced in its nominees for these committees. Hopefully, the Australian Government is taking its appointments equally seriously.

Under the agreement, a medicines working group is to be established with membership restricted to federal government officials of both countries. This committee is limited to discussing transparency issues under the Pharmaceutical Benefits Scheme, including the nature of the "independent review process" of PBS decisions. It is permitted to weigh the relative public health importance of pharmaceutical research and development against cheaper, quality generic medicines. But this committee cannot define "innovation" in pharmaceuticals, or consider how to make drugs available in a more "timely" or "expeditious" fashion. This task has been left to talks between Australia's Therapeutic Goods Administration and the US Food and Drug Administration.

Defining just what is "innovation" in medicines is fundamental, and on it may hang decisions to spend hundreds of millions of dollars on drugs whose comparative therapeutic significance has yet to be proven. In the US, drug companies can claim that medicines are innovative if they perform better than a placebo, that is, a tablet with no pharmacological effect, or have minor molecular variations without necessarily adding value to community health. Yet, under the trade agreement, drug innovation is linked with the concepts of "affordability" and "objectively demonstrated therapeutic significance" - concepts which may require comparison with existing therapies.

Concern over drug innovation has been spurred by the recent Vioxx and Celebrex debacles. These drugs, though possessing minor variations over competitors, were aggressively marketed as "innovative". The former federal health minister Michael Wooldridge mentioned Celebrex's "dramatically lower side effects" when including it in the PBS, a listing that cost taxpayers $140 million over the following nine months alone. More was spent on advertising these "me-too" drugs than on their research and development yet manufacturers continued to promote them long after they were known to cause fatal heart attacks. Their claim to be innovative appears to have been too readily accepted by government officials; public safety suffered as a result.

Perhaps most important for Australian drug policy is the joint committee which is to "supervise" the implementation of the trade deal. It will comprise government officials of both parties and be chaired by the US Trade Representative and the Australian Minister for Trade. This committee may delegate its functions to other committees, including the medicines working group. It may interpret any ambiguities in the agreement, including the definition of pharmaceutical innovation.

This committee may, but is not required to, seek advice from non-governmental persons or groups. If the Australian officials aren't careful, this could result in the input of Australian community groups with a stake in seeing a continuing important role for cheap, quality generic medicines under the PBS being sidelined. These include organisations of pensioners and retirees similar to those who fought brand-name drug patent "evergreening" in Canada and the US.

In the final exchange of letters for the free trade agreement, the US reserved its right to challenge Australian amendments protecting the role of generic drugs under the PBS. If a dispute arises, the US can threaten dispute resolution proceedings, including seeking damages and retaliation in trade areas such as agriculture or manufacturing, if its "legitimate expectations", such as those about drugs, are not achieved.

With what is at stake, it is crucial that Australian officials on these committees be experienced and dedicated to implementing PBS policy. If the Australian Government succeeds in achieving a balance between our emphasis on generic and the US focus on innovative medicines, if it succeeds in demanding research about "objective therapeutic significance" to back up claims of drug innovation, it will have defused a future political issue and gone a long way to assuring a healthier future for our ageing population.

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On January 24, the Council of Canadians and the Canadian Union of Postal Workers appeared in court to challenge the constitutionality of investment rules in the North American Free Trade Agreement (NAFTA). This marks the first time a court has ever considered the constitutionality of investment rules that allow foreign corporations to sue governments. The groups will argue that these rules usurp the authority of Canadian courts by putting the fate of policies, programs and laws at the mercy of international trade tribunals.

All documents related to the case including affidavits and public education fact sheets can be found at www.canadians.org. We will keep you informed of the progress of this landmark case.

It should be noted that the USFTA does not have an investor-state complaints process, however there is a clause in the USFTA that allows one to be established in the future. Similar challenges may be made under the general disputes process of the USFTA.

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5. Event: Fair Wear Fabric of Society Dinner, 31 March

Fair Wear and Kerry Flanagan, Head of the Federal Office for Women, invite you to the "Fabric of Society Dinner" to be held Thursday the 31st March 2005. The Fabric of Society event aims to recognise the contribution of everyone in the clothing supply chain, especially the hands behind the garment stitching.

The dinner will be held Sydney at 6:30 for 7:00pm on Thursday 31^st March at the Royal Gardens in, 6.30 pm for 7pm. Guest speakers are Anna MacPhee, Director of the Equal Opportunity for Women in the Workplace Agency and Ms Nguyen, Clothing Outworker.

Invitation and registration forms are available at www.fairwear.org.au or call 9793 9150 or 0403 128 013.

Sample Message: