Dangers lurk in new free trade agreement

Posted on December 6, 2011


Australia faces real risks in exchange for dubious benefits from the US brokered Trans Pacific Partnership (TPP) trade agreement which was announced during President Obama’s recent sweep of Australia and the Bali APEC meeting.

Lecturer in Australian Politics, Dr Russell Marks, and Research Fellow in Public Health and Human Biosciences, Dr Deborah Gleeson, are concerned that there has been very little public consultation or media coverage of TPP negotiations. 

They argue there are serious risks for an elected government’s ability in future to make decisions in the best interest of Australians.

The TPP involves Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States and Vietnam. Dr Marks says a major aim of free trade agreements is to remove government from its traditional regulatory role and leave things to market forces.

Restricting the role of government

A ‘neat idea, in theory’, he says in an article published in the Sydney Morning Herald.  But many of the fundamental tenets of this approach were finally and very publically discredited in 2008, when decades of global deregulation of the financial sector resulted in the Great Financial Crisis.

‘It has become increasingly apparent that what free trade agreements do best is restrict governments from regulating the economy for public interest policy reasons, such as public health and the protection of the environment and local industry,’ he says.

Citing negotiations during 2003-04 over the Australia-United States Free Trade Agreement he adds: ‘The US focused in particular on Australia’s Pharmaceutical Benefits Scheme (which provides heavily subsidised access for patients to listed medicines under patent), its process of blood procurement (which for health and security reasons is not open to international competition) and its laws mandating minimum levels of local broadcast content on television.’

Further push to deregulate Pharmaceutical Benefits Scheme

Dr Marks says the US ‘sees these policies as “protectionist” and wants them abandoned, regardless of Australia’s arguments that they are in our national interest.’ He says it is likely that the US will now make a further push for the deregulation of Australia’s PBS, local content requirements and blood procurement system.

‘Australia claims that the TPP will result in greater access to Pacific markets for exporters. But it is highly unlikely that the US, in a presidential election year, will allow much further access to its own domestic markets, especially given that it is still facing nine per cent unemployment and is at risk of a double-dip recession.

‘Australians should be aware that any Pacific-wide free trade area would inevitably drive wages down as part of the need to compete with Asian and South American industries (so the ) “jobs at any cost” rationalisation of our own Labor Prime Minister has a very hollow ring,’ Dr Marks concludes.

Higher costs for medicines

Dr Gleeson: public kept in the dark

Dr Gleeson stresses there could be far-reaching consequences for every Australian – and for millions of poorer people in other countries – over the cost of medicines if US proposals for the TPP are accepted by the other countries.

‘Intellectual property regimes that prevent access to medicines on a global scale should be a matter for public discussion and debate,’ she says. 

Instead, they are being negotiated behind closed doors by trade representatives, with the Australian public kept in the dark – and with no input permitted from public health experts or consumers.

Dr Gleeson says a public White Paper issued by the US about the TPP agreement obscures the real problem of access to medicines. ‘It claims to promote access to medicines by making new drugs available quickly in the TPP countries – but that doesn’t mean they would be affordable. 

‘Leaked documents show that the US has tabled highly restrictive intellectual property provisions that would raise the cost of medicines and delay the availability of cheaper generic versions in countries where they are most needed.’

Dr Gleeson says the US is seeking to extend the rights of drug companies to charge high prices for medicines for longer periods, and to remove safeguards that prevent unwarranted patents being granted. US proposals would also undermine Pharmaceutical Benefits Scheme by requiring wholesale prices paid to drug companies to be based on market prices, rather than the existing process of comparison with similar, but lower cost, drugs.

Helping tobacco companies defeat health laws

She says that the US is also seeking to give foreign corporations the right to sue governments over policies and laws that affect the value of their investments.  This could provide new avenues for tobacco companies and other big corporations to contest ground-breaking public health policies like Australia’s plain packaging laws for cigarettes.

The Australian Government has said it will not accept provisions in the TPP that would threaten the Pharmaceutical Benefits Scheme or its tobacco plain packaging laws. But there is a risk that these commitments could be traded away in exchange for access to foreign markets.

While negotiations continue to be conducted in secret, Australians have good reason to be concerned, Dr Gleeson  says. (ER)

Read the full text of articles by Dr Marks and Dr Gleeson, in Crikey and The Conversation