Tuesday, August 04, 2015

The Trans Pacific Partnership is still alive and still capable of doing us harm

Don't for one second think the Trans-Pacific Partnership is dead.

Talks to seal the mega-deal between Australia and 11 other nations representing 40 per cent of the world's economy broke up without agreement in Hawaii on Saturday, but agreement is close.

Those involved say all it needs is for a few of the parties to give ground on a few sticking points and all 25 chapters are ready to go.

The 12 trade ministers could meet again within weeks, before the end of August, and declare the deal done. The United States is desperate to get it signed before its extended election season gets into high gear. Canada has an election in October.

Australia is holding out for wants an exemption from so-called investor-state dispute settlement (ISDS) rules for decisions concerning health and the environment, and has so far held out against measures that would prop up the extraordinarily high prices of biologic drugs. But they are differences creative language could smooth over.

A draft of the investment chapter published by Wikileaks shows that Australia has asked to exempt four organisations, including the Pharmaceutical Benefits Scheme, from ISDS. But the request is in square brackets, indicating other nations don't agree. As a back-up, the chapter includes language almost exempting decisions designed to to protect objectives such as public health, safety and the environment. They would not be subject to ISDS "except in rare circumstances".

What this means in practice is that our Trade Minister Andrew Robb could agree to the clause and say Australia couldn't be sued in external tribunals over decisions concerning health and the environment (as it is now by tobacco giant Philip Morris under a different agreement) and later then down the track find himself in the middle of a "rare circumstance".

The clause wouldn't stop Philip Morris or its ilk suing Australia, it would just make it more likely Australia would win...

So far Australia has shelled out about $50 million defending its plain-packaging laws, even though it will probably win.

Australia's hard line on data protection for biologic drugs could also be softened. Biologic drugs are those made with living organisms. There are horrendously expensive. Soliris treats a rare immune disease. It costs our Pharmaceutical Benefits Scheme $500,000 per prescription. The PBS onsells it for $37.70, or $6.10 if the patient holds a concession card.

To get a drug approved, the manufacturer has to submit data from trials to demonstrate that it works and is safe. After five years that data is available to other firms that might want to make it after the patent expires. The US wants to lift the restriction to 12 years, locking away the data for an extra seven years and keeping prices high.

Data protection is separate to patent protection, which lasts for 20 years. If there's a big delay between the discovery of the drug and its approval, it can be additional to patent protection.

And it works the opposite way. Whereas patents grant exclusivity in return for handing over data, data protection grants exclusivity in return for not handing over data.

"You would have to sit in a committee room for a long time to work out a worse policy," says Nicholas Gruen, a patent expert who has prepared reports for the Australian government. "It grants a monopoly in return for nothing."

The US is reportedly considering a compromise to placate Australia. It's a base period of five years, followed by an extension of three years "under certain circumstances". However meaningful, it would allow both sides to claim they had won.

But even considering the idea makes plain how debauched the whole concept of trade agreements has become. In earlier decades the past trade agreements were unambiguously good for the citizens of the nations involved. They cut prices. This one puts them up. The US is using it it in an attemptto try to keep medicines expensive and the cost of taking on US corporations high. In Canada the pharmaceutical giant Eli Lilly is using an ISDS clause in the North American agreement to sue the government for failing to grant it two patents knocked back on the grounds that they weren't sufficiently innovative. Eli Lilly wants $500 million.

Somehowwhere along the road from the 1980s, trade agreements morphed from pacts designed to cut trade barriers to pacts designed to erect them. Negotiators who had previously worked to advance free trade started working to advance the interests of US corporations.

We saw it first in the early `90s in an odd request from the World Trade Organisation for Australia to extend its patent term from 16 years to 20 years. The then Labor government waved it through, handing existing patent holders an extra four years of high prices. A Productivity Commission study found the decision cost more than $376 million.

From then on the demands kept building, most of them made in secret. Much of what we know about the pact presently being negotiated in our name comes from Wikileaks. US corporations are allowed to see what's in it, ours are not.

Trade negotiating has become an exercise in fighting off bad proposals rather than enabling good ones. 

Gruen wants us to get back to basics. He says before we even start negotiations we should make three things clear: that tougher intellectual property laws hurt consumers; that they also have the potential to hurt producers who themselves rely on intellectual property; and that they can only ever be justified where the benefits exceed the costs.

It would put economics rather than tradeoffs at the heart of trade negotiations. It would give us an idea of what we are doing.

In The Age and Sydney Morning Herald