tag:theconversation.com,2011:/us/topics/ausfta-12857/articlesAUSFTA – The Conversation2015-12-07T23:02:09Ztag:theconversation.com,2011:article/496422015-12-07T23:02:09Z2015-12-07T23:02:09ZMr Hockey goes to Washington – so what challenges will he face?<figure><img src="https://images.theconversation.com/files/99763/original/image-20151027-18424-133tv57.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Joe Hockey has been announced as Australia's next ambassador to the United States.</span> <span class="attribution"><span class="source">AAP/Lukas Coch</span></span></figcaption></figure><p>Observers of the Australian-American relationship might be worried. Washington continues to suffer gridlock, with a president <a href="http://www.nytimes.com/2015/08/19/us/iran-nuclear-deal-obama-republicans.html?_r=0">hobbled</a> by a Congress deeply divided <a href="http://thehill.com/blogs/pundits-blog/presidential-campaign/255769-gop-divisions-overshadow-2016-primary">against itself</a>. US foreign policy in the Middle East remains bogged down without clear goals, and China’s growing assertiveness in the South China Sea remains unresolved.</p>
<p>Australia’s <a href="http://foreignminister.gov.au/releases/Pages/2015/jb_tr_151208.aspx">newly announced</a> ambassador to the US, Joe Hockey, now finds himself entering this situation. So will Hockey, a 19-year veteran of the Australian Parliament, be able to navigate an increasingly dysfunctional Washington?</p>
<h2>A unique landscape</h2>
<p>No one candidate for the ambassador job has ever been perfect, though some have been better prepared than others. Each Australian ambassador comes with strengths and weaknesses, and is supported by a professional diplomatic service. Since 1987, the Australian Embassy has been quietly building the capacity to represent Australian interests in the US Congress. </p>
<p>Following the <a href="http://legal.un.org/ilc/texts/instruments/english/conventions/9_1_1961.pdf">Vienna Convention on Diplomatic Relations</a>, diplomats in most capitals are mandated to work with the host country’s foreign ministry. In the US, however, Congress and the executive are equal branches of government. Diplomatic representation in Washington therefore requires a focus on both branches. </p>
<p>Embassies in Washington that give scant attention to Congress do so at their own peril. Australia has been a leader in tirelessly working the halls of Congress.</p>
<p>Congress is a place that runs on money, relationships and access to information. Current annual spending on lobbying is <a href="http://sunlightfoundation.com/blog/2013/11/25/how-much-lobbying-is-there-in-washington-its-double-what-you-think/">estimated</a> to be as much as US$6.7 billion. Lobbyists representing foreign interests must register under the <a href="http://www.fara.gov/">Foreign Agents Registration Act</a>.</p>
<p>Diplomats, representing their national interest to members of Congress, are not required to register. Foreign governments also cannot make contributions to political candidates. So, by taking money out of the equation, embassies must rely upon developing strong relationships and providing reliable information to members of Congress.</p>
<h2>Successes and challenges</h2>
<p>With a five-member team, the Congressional Liaison Office at the <a href="http://usa.embassy.gov.au/whwh/home.html">Australian Embassy</a> works to follow the sometimes-chaotic events on Capitol Hill while simultaneously promoting Australian interests. </p>
<p>These diplomat-lobbyists have earned a reputation for effectiveness on Capitol Hill. John Lawrence, now the retired chief-of-staff to former House Speaker Nancy Pelosi, said: </p>
<blockquote>
<p>The Australian Embassy has an unusually sophisticated and informed congressional relations operation. Not only are they knowledgeable about the topics before the Congress, but they understand the major (and often the minor) players in the Congress, and they assiduously develop and nurture relationships with key players in Washington which are vital when they need action from the Congress or the Administration.</p>
</blockquote>
<p>The Australian Embassy in general and the Congressional Liaison Office in particular has had demonstrable examples of success over the years. A few of these include the <a href="http://dfat.gov.au/trade/agreements/ausfta/pages/australia-united-states-fta.aspx">Australia-US Free Trade Agreement</a> (AUSFTA), the <a href="http://canberra.usembassy.gov/e3visa.html">E3 visa</a> and the <a href="http://www.defence.gov.au/ustradetreaty/">Defence Trade Co-operation Treaty</a>.</p>
<p>While Australia may not have won everything it was after through AUSFTA, it was an important objective of the Howard government. South Korea pursued its <a href="https://ustr.gov/trade-agreements/free-trade-agreements/korus-fta">free trade agreement</a> at the same time as Australia, yet had to wait until 2007 for the agreement to be signed. Congress finally ratified the South Korean agreement in October 2011, whereas AUSFTA passed Congress in July 2004.</p>
<p>Immigration was not included in AUSFTA. Australia initiated with members of Congress, in particular with the sponsorship of the then-Senate majority leader, Bill Frist, a new class of visa. The E3 gives to Australia 10,500 visa places for “skilled labour”, where skilled means anyone with an undergraduate education. The E3 visa offers a two-year and renewable right to work in the US. This unique class of visa does not have a labour market test. </p>
<p>Since its signing only Australians have use of this class of visa. More recently, Australia’s monopoly on this visa class has come under threat. Republican congressman James Sensenbrenner sponsored <a href="https://www.congress.gov/bill/114th-congress/house-bill/3730">H.R. 3730</a>, which if passed would shift unused E3 visas to Ireland and alter the definition of “skilled labour” to include those who have completed high school.</p>
<p>In 2010, the US Senate ratified two defence trade co-operation treaties – one with Australia and the other with the UK. Prior to its signing the US had placed an embargo on the transfer of US-sourced defence materiel without the US government’s prior approval. The treaty changed this – it permits the transfer of some US-sourced defence equipment without prior government approval. </p>
<p>Exempting Australia from requiring export licences for defence-related items thus signals a high level of trust and a significant upgrading of the alliance.</p>
<p>Numerous other challenges and opportunities remain in the US Congress. The Trans-Pacific Partnership is one test the embassy will have to confront in the coming months. Other undiscovered trials for the Australia-American relationship lurk in the halls of the Congress. </p>
<p>Hockey faces many challenges, but he does not face them alone. Pursuing Australia’s national interests on Capitol Hill is one place where he can best use his parliamentary skills.</p><img src="https://counter.theconversation.com/content/49642/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Tidwell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Will Joe Hockey, a 19-year veteran of the Australian Parliament, be able to navigate an increasingly dysfunctional Washington as ambassador to the United States?Alan Tidwell, Director, Center for Australian, New Zealand and Pacific Studies, Georgetown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/485952015-10-06T02:49:29Z2015-10-06T02:49:29ZWhy biologics were such a big deal in the Trans Pacific Partnership<p>After five years of negotiations, a <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/october/trans-pacific-partnership-ministers">deal has finally been reached</a> on the Trans Pacific Partnership Agreement (TPP). But details are sketchy and the final text may not see daylight for several weeks, as it undergoes what’s quaintly referred to as “legal scrub” – the painstaking dotting of the i’s and crossing of the t’s by each of the participating countries’ lawyers.</p>
<p>Before this final round of negotiations in Atlanta, only a handful of issues remained in the way of concluding the massive 12-country trade and investment agreement. One of them – a potential deal-breaker for Australia – was intellectual property protections for <a href="https://theconversation.com/explainer-what-are-biologics-and-biosimilars-45308">biologics</a>, which are expensive medicines derived from living organisms.</p>
<h2>Market exclusivity</h2>
<p>In the United States, <a href="https://theconversation.com/explainer-what-are-biologics-and-biosimilars-45308">biologics</a> are protected from competition by follow-on products (known as biosimilars, which are akin to generic medicines) for 12 years from the time they’re first granted marketing approval by the nation’s drug regulator, the Food and Drug Administration (FDA). This form of protection from competition is distinct from a patent. It prevents a follow-on product from entering the market even when any patents on the originator product have expired. </p>
<p>These 12 years are known as the market exclusivity period. In the TPP negotiations, the biopharmaceutical industry has been insisting the United States push its potential partners to <a href="http://keionline.org/tpp/11may2015-ip-text">adopt a similar period of exclusivity</a>, together with a whole series of other onerous intellectual property provisions, such as requirements to allow patenting of diagnostic, therapeutic and surgical methods of treatment, and of new forms, uses, or methods of using medicines.</p>
<p>Importantly, Australia doesn’t currently have a market exclusivity provision for medicines. Instead, the local drug regulator, the Therapeutic Goods Administration (TGA), provides a “data protection” period of five years for all prescription medicines. During this time, a follow-on product can’t rely on the data submitted to the TGA to support the originator drug’s registration to gain marketing approval.</p>
<p>Without being able to rely on these data, follow-on manufacturers would be forced to repeat the often long – and always expensive – clinical trials required for marketing approval. Repeating the clinical trials would arguably be unethical, since the question of whether the drug is safe and efficacious has already been answered.</p>
<h2>Big savings</h2>
<p>Under existing legislation, the TGA can’t begin to evaluate a biosimilar application during the data protection period. So a follow-on product is unlikely to get to market until at least six years after the originator first enters it. Why then has all this been so important that it stalled the signing of a major trade agreement? </p>
<p>Biologics are used to treat various cancers, multiple sclerosis, a range of immunological conditions, as well as diabetes (insulin is a biologic). They’re the fastest growing segment of the pharmaceutical market globally. </p>
<p>When a biosimilar product is listed on Pharmaceutical Benefits Scheme (PBS) and becomes subsidised by the government, it automatically triggers a 16% price reduction on all versions of the product. Biologics are expensive, so this can amount to tens of millions of taxpayers’ dollars saved every year on just a single product.</p>
<p>Trade Minister Andrew Robb had <a href="http://trademinister.gov.au/releases/2013/ar_mr_131211.html">repeatedly said</a> Australia wouldn’t agree to any TPP provision that would undermine the PBS or go beyond the provisions of the Australia-US Free Trade Agreement (AUSFTA). And this meant holding the line at five years of data protection. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/97360/original/image-20151006-29251-aqhld.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Biologics are medicines derived from living organisms and include insulin.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/sriram/2219886844/">sriram bala/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>But <a href="http://www.citizen.org/documents/new-tpp-maneuvering-on-biotetch-drugs-september-2015.pdf">recent reports</a> have suggested negotiating countries have reached some form of compromise involving a formal period of data protection of five years (the status quo in Australia) with an additional period of up to three years of “safety monitoring” before a biosimilar can be registered. It’s unclear what precisely this would entail, other than representing a period of time in which a follow-on product would be prevented from entering the market. If it’s true, this would effectively become an eight-year market exclusivity period.</p>
<h2>No need</h2>
<p>The devil will be in the details of the agreement. But it’s difficult to see how any extension of monopoly protection could be accomplished without an amendment to Australia’s Therapeutic Goods Act. And that is likely to be politically challenging in an election year, particularly given widespread public concern over the potential for the biologics provision to increase PBS costs. </p>
<p>John Castellani, the president of PhRMA – the <a href="http://www.phrma.org/about#sthash.kfNux1E4.dpuf">Pharmaceutical Research and Manufacturers of America</a>, which represents that country’s biopharmaceutical researchers and biotechnology companies – is <a href="http://www.politicopro.com/financial-services/story/2015/10/the-tpp-deals-winners-and-losers-056514">reported to have said</a> that TPP ministers had:</p>
<blockquote>
<p>… missed the opportunity to encourage innovation that will lead to more important, life-saving medicines… This [12-year] term was not a random number, but the result of a long debate in Congress. </p>
</blockquote>
<p>The industry originally sought 14 years of exclusivity in the United States. 12 years was the outcome of prolonged political horse-trading. </p>
<p>But the industry has never put forward a convincing argument in support of longer periods of data exclusivity, nor any evidence that longer protection leads to new and better drug development. And the <a href="https://www.ftc.gov/sites/default/files/documents/reports/emerging-health-care-issues-follow-biologic-drug-competition-federal-trade-commission-report/p083901biologicsreport.pdf">US Federal Trade Commission said</a> as far back as 2009 that a market exclusivity period for biologics might not be warranted at all. It found there was no evidence of a lack of patentability of new biologic products, nor that market forces weren’t adequate to stimulate their development – two of the arguments often used to support longer data exclusivity. </p>
<h2>Horse trading</h2>
<p>The significance and endurance of the data protection issue in TPP negotiations can’t be overestimated. It was equally contentious in the <a href="http://dfat.gov.au/trade/agreements/ausfta/pages/australia-united-states-fta.aspx">2004 AUSFTA</a>, and it also went down to the wire then. </p>
<p>The issue then wasn’t about exclusivity for biologics, as the US hadn’t yet established a regulatory pathway for approval of biosimilars. Instead, the US pharmaceutical industry was pushing for an additional period of three years of data protection for new uses of existing medicines. This would have meant up to eight years of data protection for all prescription medicines in Australia. Had it been agreed to, it would have resulted in significant additional costs to the PBS. </p>
<p>Those who’ve waded through the <a href="http://dfat.gov.au/about-us/publications/trade-investment/australia-united-states-free-trade-agreement/Pages/chapter-seventeen-intellectual-property-rights.aspx">Intellectual Property Chapter of the AUSFTA</a> might be forgiven for thinking that Australia had actually agreed to the “five plus three” model. But a small footnote provides a kind of get-out-of-jail-free card for Australia, while still retaining the model in the negotiating template. </p>
<p>It refers to the fact that data protection in Australia is granted to combination products where at least one of the components has not been registered before. In the US, exclusivity is limited to combination products where none of the component products have previously been registered. The scope of protection in Australia is thus broader. This is retained as a quid pro quo for the extra data protection.</p>
<p>The obvious question then is whether there’s a similar “out” in the TPP text and, if so, what will the obligations be for other TPP countries? Another key question relates to the <a href="http://keionline.org/tpp/11may2015-ip-text">remainder of the TPP’s intellectual property chapter</a>, and which other expansions of intellectual property protection sought by the US have been agreed to. </p>
<p>Before we can begin to breathe more easily on biologics, we need to know what Australia has horse-traded in other chapters of the agreement to get an “acceptable” outcome on this issue. But it will be some weeks yet before we can find out.</p><img src="https://counter.theconversation.com/content/48595/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ruth Lopert does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Before the last round of negotiations, only a handful of issues remained in the way of concluding the TPP. A potential deal-breaker for Australia was intellectual property protections for biologics.Ruth Lopert, Adjunct professor, Department of Health Policy & Management, George Washington UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/328852014-10-24T04:04:11Z2014-10-24T04:04:11ZCopyright in the Trans-Pacific Partnership echoes past mistakes<figure><img src="https://images.theconversation.com/files/62436/original/f4gk4xqq-1413938395.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">We've had a decade to learn from our mistakes.</span> <span class="attribution"><a class="source" href="http://www.flickr.com/photos/jazbeck/8025692978">jazbeck/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
<hr>
<p>Deja vu: last week a new version of the intellectual property (IP) chapter of the Trans-Pacific Partnership (TPP) was <a href="https://wikileaks.org/tpp-ip2/">leaked</a>. Even as experts try to make sense of 77 pages of complex text, IP negotiators are meeting in Australia this week and next to try to finalise the treaty.</p>
<p>Experts have already highlighted some big issues with this IP text. Extensive proposals on patents, clinical test data and the links between patent law and processes for approving pharmaceutical products, if agreed, look like creating <a href="http://www.citizen.org/tpp-ip-wikileaks">barriers to access to medicines</a> in the region. There are unprecedented proposals to criminalise certain kinds of unauthorised access to or use of trade secrets that, at their broadest, could threaten journalism and whistleblowers. </p>
<p>Extensive criminal and civil enforcement provisions are also there. Some extraordinarily long copyright terms – yes, longer even than we already have here in Australia – are still on the table. Less widely commented on are proposals – not surprisingly opposed by Australia – that would demand changes to our local IP rules, especially in the area of trademark law (with special and potentially very broad protection for famous brands) and in our protection of industrial designs. </p>
<p>What’s striking about this is how little has been learnt from the past. </p>
<p>You see, Australia has been here before. A decade ago, Australia signed a “free trade” agreement with the US (<a href="http://www.dfat.gov.au/fta/ausfta/">AUSFTA</a>). That agreement made copyright longer and expanded new rights to a wider set of creators, and strengthened enforcement (especially criminal enforcement) in a range of ways. We were told, at the time, that this would provide concrete benefits for creators: more profits, more incentives, easier enforcement. </p>
<p>Following AUSFTA, Australia’s trade negotiators seem to have become believers – that it’s a good idea to put strong, detailed IP rules into trade agreements. Both our recent trade agreements with <a href="https://www.dfat.gov.au/fta/kafta/">Korea</a> and <a href="http://www.dfat.gov.au/fta/jaepa/">Japan</a> include detailed, pro-IP chapters with little recognition of the need for balance in IP law.</p>
<p>But the great promises made about AUSFTA have not been fulfilled. For example, despite all the copyright reforms, there is no evidence that AUSFTA ushered in a new period of prosperity for Australia’s copyright industries. </p>
<p>According to the <a href="http://www.copyright.org.au/pdf/PwC-Report-2012.pdf">industry’s own figures</a>, the Australian copyright industries contracted by 1% per annum between 2006–2011. Employment in these industries also went backwards. Enforcement, it seems, continues to be a problem, at least according to recent <a href="http://www.ag.gov.au/Consultations/Pages/OnlineCopyrightInfringement-Submissions.aspx">submissions</a> to the Attorney-General’s Department. </p>
<p>There are, of course, many explanations, unrelated to copyright law, for the state of the industry. The point is, we should be treating with strong scepticism any claim that IP chapters in trade agreement will underpin growth for these industries. The evidence in favour of the AUSFTA approach – now being repeated in the TPP – is lacking. Continuing to push such an approach is the opposite of evidence-based policy-making.</p>
<p>In fact, if you look at the outcomes of the IP chapter in AUSFTA carefully, you would have to say that the larger IP owners who demand ever more extreme and detailed treaty rules in the TPP should be careful what they wish for. AUSFTA has backfired on rights holders, in two important ways. </p>
<p>First, AUSFTA caused a <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1010833">backlash</a> and a rebalancing. AUSFTA was a public relations disaster for IP law. Politicians became convinced that a rebalancing of IP rules was needed. And so copyright owners got longer copyright, and criminal liability to cover the kind of personal behaviour that, so far as I’m aware, has never yet been the subject of a prosecution. But to balance these extensions, the Australian government also, under political pressure, introduced broader exceptions too. It’s not at all clear that there was a win, overall, for copyright owners. </p>
<p>An unbalanced IP chapter in the TPP will cause a similar backlash. Public reactions to other attempts to expand rights since – in the <a href="http://www.ustr.gov/acta">Anti-Counterfeiting Trade Agreement</a>, and the US <a href="https://petitions.whitehouse.gov/petition/stop-sopa-2014/q0Vkk0Zr">Stop Online Piracy Act</a> – have given rise to even more public controversy, and the very public rejection of both initiatives.</p>
<p>Second, and more importantly, the inflexibility of the AUSFTA text – its painful specificity, especially on copyright – has stood, or stands, in the way of reforms that copyright owners want. AUSFTA text, for example, makes it much <a href="http://www.ag.gov.au/Consultations/Documents/OnlineCopyrightInfringement/OnlineCopyrightInfringement-IsabellaAlexanderEtAl.pdf">more difficult</a> for the Attorney-General to achieve his current goal of making internet service providers responsible for their customers’ infringements. Some options on retransmission of television signals that were considered recently by the Australian Law Reform Commission, and had a range of supporters, were precluded by AUSFTA.</p>
<p>There’s some evidence in this new leaked text that the TPP IP negotiators have responded to the concern about balance and backlash. Finally, we are seeing some attempts to bring in some public interest considerations (they don’t go far enough, but it’s a start). But the negotiators don’t seem to have learnt that putting in too much detail harms users and rights owners alike. </p>
<p>On some points, this new TPP draft is <em>more</em> detailed, <em>more</em> specific, <em>more</em> constraining than AUSFTA. We have not learnt from the past – and I hope the trade-off is worth it.</p>
<hr>
<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32885/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kimberlee Weatherall is a member of the board of the Australian Digital Alliance, which seeks to pursue balanced copyright law. The views in this article represent her own personal views based on her research and should not be attributed to the ADA or any other organisation.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Kimberlee Weatherall, Associate Professor of Law, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/325732014-10-23T19:16:26Z2014-10-23T19:16:26ZHow the US trade deal undermined Australia’s PBS<figure><img src="https://images.theconversation.com/files/62468/original/prz9jtf3-1413949474.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Central to the processes of the PBS is the idea that drugs with identical or similar clinical outcomes should have similar prices.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/gallery-524773p1.html?cr=00&pl=edit-00">Thinglass">Thinglass/Shutterstock</a></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
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<p>Australia’s <a href="http://www.pbs.gov.au/pbs/home">Pharmaceutical Benefits Scheme</a> (PBS) is one of the few pieces of national public health policy with unquestioned democratic legitimacy. It was <a href="https://www.mja.com.au/journal/2014/201/1/how-pharmaceutical-benefits-scheme-began">established</a> by the vote of a majority of citizens in a majority of states in a referendum in the late 1940s. Since then, it has lowered the cost of pharmaceuticals to citizens through expert assessment of their cost-effectiveness. </p>
<p>The PBS uses public funds to reimburse pharmaceutical companies for the “health innovation” value of listed medications, as determined after review of scientific evidence by the <a href="http://www.health.gov.au/internet/main/publishing.nsf/Content/Pharmaceutical+Benefits+Advisory+Committee-1">Pharmaceutical Benefits Advisory Committee</a>. The government negotiates the price with drug companies and wants a good deal for taxpayers, who ultimately foot the bill.</p>
<p>Central to the processes of the PBS is the idea that drugs with identical or similar clinical outcomes should have similar prices, known as <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/mja_ref_pricing_and_ausfta.pdf">reference pricing</a>. Unfortunately, the PBS process of reference pricing was considerably disrupted by the Australia-US Free Trade Agreement (AUSFTA) – though this is not something the Australian government wishes to admit. </p>
<h2>Australian medicines impacted by trade negotiations</h2>
<p>In the early 2000s, in preparing for the first bilateral trade deal between the United States and Australia, the US representatives <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/mja_ref_pricing_and_ausfta.pdf">were required</a> by legislation to negotiate an agreement that eliminated government price control measures such as reference pricing, which “deny full market access for United States products”.</p>
<p>The same legislation also required the US Department of Commerce to investigate the possible future <a href="http://www.ita.doc.gov/td/chemicals/drugpricing-%20study.pdf">dismantling of reference pricing</a> in other OECD countries. In December 2005, the US <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/mja_ref_pricing_and_ausfta.pdf">sought to implement</a> this agenda through the <a href="http://www.oecd.org/health/valueinpharmaceuticalpricing.htm">OECD Pharmaceutical Pricing Policy project</a>. </p>
<p>The Australian government initially denied the PBS would be in the AUSFTA at all. The AUSFTA ended up, however, specifically addressing Australia’s PBS in an annex. This meant this part of the AUSFTA would apply to Australia without having specific reciprocal obligations for the US. This also was handy for US pharmaceutical companies, as many policymakers in the US actually wanted to copy Australia’s PBS system because of excessively high US drug prices.</p>
<p>Annex 2C of the AUSFTA specified the parties agreed on the importance of pharmaceutical innovation and on pricing systems for pharmaceuticals being governed by both the “operation of competitive markets” (the US position) and “objectively demonstrated therapeutic significance” (the Australian position). </p>
<p>However, it also created a lobbying niche by requiring the PBS system to respond to undefined “innovation”.</p>
<p>In 2004, Australian AUSFTA negotiators reassured the Australian parliament about Annex 2C via a Senate Committee. They <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/jgm_ausfta-med_0.pdf">said</a>:</p>
<blockquote>
<p>… we went into these negotiations with an absolutely clear mandate to protect and preserve the fundamentals of the PBS. That is what this agreement does … there is nothing in the commitments that we have entered into in Annex 2C or the exchange of letters on the PBS that requires legislative change. </p>
</blockquote>
<p>However, when the AUSFTA Medicines Working Group (MWG), which was established under Annex 2C, met for the first time in Washington in January 2006, Australia’s then-trade minister Mark Vaile, <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/jgm_ausfta-med_0.pdf">said</a> that:</p>
<blockquote>
<p>… the core principle that we both agree on in this area … is recognising the value of innovation.</p>
</blockquote>
<p>Unfortunately Vaile did not clarify which approach to pharmaceutical “innovation” he was referring to. Documents obtained under a Freedom of Information application (organised by Pat Ranald of the Australian Fair Trade and Investment Network in 2007) were so redacted that they revealed almost nothing of what was said at the first AUSFTA MWG meeting, raising separate issues about the democratic legitimacy of the AUSFTA.</p>
<p>One disclosed document, presumably discussed in the MWG, was an <a href="https://law.anu.edu.au/sites/all/files/users/u9705219/mja_ref_pricing_and_ausfta.pdf">opinion editorial</a> by a conservative Australian politician in The Australian, which argued that: </p>
<blockquote>
<p>Truly innovative cures should be referenced against innovation in other classes, rather than against generics.</p>
</blockquote>
<p>This approach seems to reflect the US “competitive markets” method of valuing innovation. </p>
<p>Shortly after the AUSFTA MWG met, the Australian parliament (with Liberal majorities in both houses) rapidly passed the <a href="http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r2801">National Health Amendment (Pharmaceutical Benefits Scheme) Act 2007</a>. This new act amended the National Health Act 1953 and from August 2007 divided the PBS into two separate formularies: F1, which mostly contains single-brand medicines, and F2, which mostly contains multiple brand, mainly generic, medicines.</p>
<p>Private sector consultants appear to have been heavily involved in drafting this legislation.</p>
<p>The separation of PBS-listed drugs into two groups (F1 and F2), weakened the role and fiscal benefits of referencing pricing in the PBS. Although there will be reference pricing within F1, an effect of the changes was to insulate high-priced single brand (patented) F1 drugs from price cuts and from the reference pricing that applied under previous PBS processes. </p>
<p>From 2007, once a new drug is listed on the PBS as F1, its price will not be linked to the price of any similar drug in F2. F1 drugs are not interchangeable at the individual patient level with drugs that have multiple brands, so the manufacturers may be able to retain their original PBS price until the listing of a bio-equivalent brand satisfies the new standards for a shift to F2. </p>
<p>Reductions in F2 drug prices will not affect F1 prices, even where the therapeutic effect of an F2 medicine is similar though not necessarily meeting the unscientific and subjective standard of “interchangeable at the individual patient level”.</p>
<h2>US continues to flex its trade muscle for pharma</h2>
<p>In its subsequent free trade negotiations with the US, the South Korean government demanded a process similar to Australia’s current system of evidence-based cost-effectiveness and reference pricing. </p>
<p>After recognising each nation’s differing approach to medicines policy, the Republic of Korea–United States Free Trade Agreement indicates that if South Korea establishes a reimbursement system for pharmaceuticals or medical devices where the amount paid is not based on “competitive market-derived prices”, then it has to “appropriately recognise the value of patented pharmaceutical products”.</p>
<p>The agreement respectively mentions PBS-type “sound economic incentives” as a method of facilitating access to patented medicines and Australian-style “transparent and accountable” procedures as a means of promoting health innovation. However, it creates a Medicines and Medical Devices Committee, similar to the AUSFTA MWG.</p>
<p>This is another example of the US technique to alter the domestic regulatory systems of other nations to achieve greater profits for US companies. And a recent US-India <a href="http://blogs.wsj.com/pharmalot/2014/10/08/will-a-u-s-india-working-group-do-the-bidding-of-the-pharma-industry/">working group on pharmaceutical patents</a> looks like it could be headed the same way. </p>
<h2>An evidence-based approach to pharmaceutical innovation</h2>
<p>The United Kingdom’s <a href="http://www.nice.org.uk/aboutnice/howwework/researchanddevelopment/%20KennedyStudyOfValuingInnovation.jsp">2009 Kennedy Report on Valuing Innovation</a> is directly relevant to debates about how to value pharmaceutical innovation. It strongly promotes the evidence-based approach Australia takes to assessing and valuing innovation through expert assessment of objectively demonstrated therapeutic significance. </p>
<p>The Kennedy Report recommends disinvestment or compensation to the government if an allegedly innovative product fails to offer value or meet expectations made when being evaluated for public funding. It also recommends a working definition of pharmaceutical innovation, emphasising scrutiny of whether the relevant product significantly and substantially improves the way that a current need (including supportive care) is met.</p>
<p>Allowing the US to alter the basic processes of Australia’s PBS represented an inexcusable surrender of Australia’s democratic sovereignty. It represents just how compromised the state has become as a representative of citizens’ interest in the face of corporate power. </p>
<p>It also provides salutary lessons as Australian citizens attempt to prevent their government surrendering democratic sovereignty on an even greater scale by agreeing to investor-state dispute settlement in the US-led Trans-Pacific Partnership Agreement.</p>
<hr>
<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32573/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Faunce receives funding from the Australian Research Council under a discovery grant focusing on developing a governance framework for globalising artificial photosynthesis as a distributed renewable food and fuel technology.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Thomas Faunce, ARC Future Fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/330162014-10-22T02:35:42Z2014-10-22T02:35:42ZA decade on, is the Australia-US FTA fit for the 21st century?<p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard series</a>, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
<hr>
<p>Almost ten years on from ratifying the Australia-United States Free Trade Agreement (<a href="http://en.wikipedia.org/wiki/Australia%E2%80%93United_States_Free_Trade_Agreement">AUSFTA</a>), the level of concern it generated among academics, NGOs and others has heightened in response to further FTA and plurilateral negotiations. Similar obligations, and more, are being pushed through the Trans-Pacific Partnership (<a href="https://theconversation.com/what-you-need-to-know-about-the-trans-pacific-partnership-21168">TPP</a>). </p>
<p>The AUSFTA was a watershed event. A broad range of federal and state bureaucracies had to engage in highly complex negotiations. As the Senate Select Committee 2004 <a href="http://www.aph.gov.au/binaries/senate/committee/freetrade_ctte/report/final/report.pdf">report</a> lamented, particularly in relation to intellectual property rights, the evidence received showed few policy experts were sufficiently prepared, resourced or intellectually attuned for these complex and lopsided negotiations. </p>
<p>No consensus emerged in the Senate report to help define Australia’s national interest. This high-level forum could have served to formally clarify ambiguities or register interpretations of the text. In contrast, the US recorded its <a href="http://www.ustr.gov/archive/Trade_Agreements/Bilateral/Australia_FTA/Reports/Section_Index.html">interpretation</a> of AUSFTA language before it passed through Congress. </p>
<p>Missing this important opportunity, the Senate committee’s deputy chair, George Brandis, concentrated on defending the treaty text. Opposition parties, although often lacking critical information, utilised the submissions and evidence to provide a critique which remains highly relevant. </p>
<p>The commitments are complex, policy-limiting and legally enforceable. Many obligations were spelt out in detail, some went unrecognised and others were not interpreted adequately for their budgetary and policy consequences, then or now. </p>
<p>At one level the negotiators can be seen to have delivered this politically driven task within an amazingly short timeframe. But at what cost and how well-briefed were their ministers on the consequences? </p>
<p>A key failing identified in the Senate report was the lack of policy coherence to understand consequences across the spectrum of Australia’s economic, social and development sectors. So has this situation improved? </p>
<h2>In Australia’s national interest?</h2>
<p>It could be claimed that ten years on negotiators are more capable of preserving Australia’s key interests. But the NGO, academic, consumer and public policy experts who follow this process generally do not agree. </p>
<p>The TPP briefings and the leaked text of the proposed agreement provide some insights into positions taken by Australia. For these TPP negotiators, the AUSFTA appears as the unquestioned starting point. Even the evidence provided by the original AUSFTA negotiators, claiming flexibility to pursue Australia’s national interest in several policy areas, has been forgotten or ignored. Or, more problematically, particularly for policy coherence, it has not been understood.</p>
<p>The lessons that should have been drawn from the Senate report have been largely ignored. So perhaps it is time to go back to first principles to see just what the negotiators claimed they agreed. </p>
<p>Evidence given shows these public servants defended many positions as being open for Australia to implement in its national interest. There is little evidence that this is how the AUSFTA is being implemented.</p>
<h2>Are AUSFTA obligations understood?</h2>
<p>Given the legal complexity of the esoteric text, lack of public engagement should not be read as tacit support. But it would be interesting to know how many of those who actively promote greater FTA engagement actually understand the AUSFTA. </p>
<p>Have they read it? Have they paid lawyers to give them an assessment of its meaning? Or is it only particular segments that have been scrutinised to take advantage of the expansive provisions? The intellectual property chapter, for instance, is an 11,500-word gift for the IP legal industry to interpret generously.</p>
<p>The AUSFTA embeds commitments that go well into the future, with the capacity to prevent elected governments acting on behalf of citizens in important areas of health and social policy. </p>
<p>Provisions such as national treatment, standstill arrangements and 20-year copyright extension have significant consequences. Would Australians approve dispute or consultative provisions that can facilitate US-based corporations accessing Australia’s bureaucracies and influencing what is acceptable? </p>
<p>That means negotiating with our public servants, scientific, quarantine and regulatory experts on issues such as setting standards, labelling, technical and conformity regulations and decisions on pharmaceuticals. That sort of access diminishes Australia’s sovereignty. </p>
<p>These treaty obligations have a very large public policy footprint in the economy and consequences for social and health policy options and budgets. So much more attention is required to ensure a fuller comprehension of what these obligations entail before we expand their application. </p>
<h2>‘Behind the Border’ – or how to give away sovereignty</h2>
<p>This interesting term defines the obligations mentioned above. The Senate took evidence highlighting the <a href="http://www.dfat.gov.au/fta/ausfta/outcomes/18_tech_regs_standards.html">reciprocal</a> obligations flowing from <a href="http://www.dfat.gov.au/fta/ausfta/final-text/chapter_8.html">Article 8.7.</a> Australia must allow the US to participate in the development of standards and technical regulations:</p>
<blockquote>
<p>… on terms no less favourable than those accorded to [Australia’s] own persons. </p>
</blockquote>
<p>TPP <a href="http://www.citizenstrade.org/ctc/wp-content/uploads/2011/10/TransPacificTBTwMedicalAnnexes.pdf">proposals</a> go even further. These set in place specific regulations for cosmetics, medical devices and other pharmaceutical products.</p>
<p>Both parties are subject to these treaty provisions, but few Australian companies would be capable of taking the US to task. Also, it opens opportunities - like the use of investor-state dispute settlement (ISDS) procedures in the tobacco plain packaging case - for global corporations to <a href="http://www.abc.net.au/radionational/programs/backgroundbriefing/isds-the-devil-in-the-trade-deal/5734490#transcript">cherry-pick</a> specific elements of countries’ trade obligations. Pertinent examples could involve blocking labelling or standards associated with policies to tackle obesity or diabetes, or information on use of antibiotics in cattle or fish.</p>
<p>Article 8 provisions can have real consequences. The Australian Department of Health decision <a href="http://www.abc.net.au/news/2012-02-16/nano-particles-to-remain-invisible-in-make-up/3833322">not to allow labelling of cosmetics containing nanoparticles</a> fits into Article 8 obligations. This decision seems dubious when even Australia’s peak cosmetics body, ACCESS, argued strongly for this information to be on its products. </p>
<p>The European Union has mandated nanoparticle information be available to consumers. Without this labelling, Australian cosmetics will not be able to enter the EU market. </p>
<p>Consumers support receiving such information. The science on nanoparticles is not settled and the cosmetics industry is one of the main areas for expanding this technology. </p>
<p>So why did health authorities not support nanolabelling? One can only guess at how this policy decision was taken, but consumers deserve to know. </p>
<p>There are several possible scenarios. Was there an exchange of views under Article 8.7? Or was the decision influenced in anticipation that the US would challenge such labelling? US cosmetic corporations may have lobbied well enough in Canberra to rule out any thought of providing consumer information on nanoparticles.</p>
<p>Or it may be none of the above. But transparency is essential to maintain confidence in sensitive public policy decisions.</p>
<h2>Trade negotiations 101!</h2>
<p>This <a href="https://theconversation.com/how-trade-agreements-are-locking-in-a-broken-patent-system-32564">article</a> provides a comprehensive assessment of anticipated TPP text that goes well beyond obligations provided for in AUSFTA. To go down this road only further limits Australia’s opportunities for innovation and development. </p>
<p>The article references the <a href="http://www.ipaustralia.gov.au/pdfs/2013-05-27_PPR_Final_Report.pdf">Pharmaceutical Patents Review</a>, highlighting losses to Australia of billions of dollars of export revenue, blocked by IP provisions. The AUSFTA further damaged this export opportunity through imposing “standstill” provisions. </p>
<p>A US generic drug company was blocked from establishing a strategically important export industry by an untested interpretation of IP. The US company left frustrated, establishing instead its generic production in India.</p>
<p>The patents review questions Australia’s lack of strategy and passive approach in IP negotiations and “insufficient attention paid to domestic IP interests”. Also criticised is the failure to use AUSFTA negotiations to resolve the generic export issue or trade it off against higher IP provisions given to the US.</p>
<hr>
<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/33016/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anna George does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Anna George, Adjunct Professor , Murdoch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/325742014-10-21T05:02:20Z2014-10-21T05:02:20ZIt’s time to fix the free trade bungle on the cost of medicines<figure><img src="https://images.theconversation.com/files/62319/original/zdz9px7s-1413859935.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Reduced access to generics drugs has contributed to the 80% rise in the cost of Australia's Pharmaceutical Benefits Scheme. </span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-178367195/stock-photo-young-asian-girl-holding-red-pills-and-medicine-sitting-on-sofa-at-home.html?src=K-zo1aFO3SdA3gHVhq6YcA-1-90">Diego Cervo/Shutterstock</a></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/uk/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
<hr>
<p>Negotiations for the Trans-Pacific Partnership present an opportunity to correct a mistake made a decade in the Australia-US Free Trade Agreement, which led to Australia paying higher prices for pharmaceuticals. </p>
<p>In July 2004, Tony Abbott, then health minister in the Howard government, issued this statement:</p>
<blockquote>
<p>The price of pharmaceuticals will not rise as a result of the AUSFTA…</p>
</blockquote>
<p>Contrast this to what the Abbott government’s first budget, in May this year, told Australians:</p>
<blockquote>
<p>Over the past decade the cost of the Pharmaceutical Benefits Schedule (PBS) has increased by 80%.</p>
</blockquote>
<p>To be sure, the “price of pharmaceuticals” is not the same thing as “the cost of the PBS”. But since the PBS is responsible for providing medicines to the vast majority of Australians, it is reasonable to infer that a contributing factor has been a rise in the price of pharmaceuticals. It is also reasonable to infer that the AUSFTA is partially to blame for that rise. </p>
<p>The legislative instrument through which the AUSFTA was implemented is the <a href="http://www.comlaw.gov.au/Details/C2004A01355">US Free Trade Agreement Act 2004</a>. The Therapeutics Goods Act 1984 was also amended to require companies seeking marketing approval for a pharmaceutical to provide a patent certificate as part of the <a href="http://www.tga.gov.au/">Therapeutic Goods Administration’s</a> (TGA) regulatory assessment process. </p>
<p>The patent certificate must say if the sponsored medicine will “infringe a valid claim of a patent that has been granted in relation to the therapeutic good (being the patented medicine)” in question. It must also notify the patent holder. </p>
<p>Otherwise known as “patent linkage”, the application for regulatory approval creates a link between a patented medicine and a possible generic substitute. </p>
<p>The patented medicines are categorised as F1 formulary medicines, which means there is no approved substitute. </p>
<p>When a generic medicine comes onto the market, these drugs are contained in the F2 formulary. Generic medicines contain the same active ingredient or have the method of production to the patented drug, or they may be similar in terms of its administration, dosage, method of treatment or indication. </p>
<h2>How does ‘patent linkage’ play out in Australia?</h2>
<p>“Patent linkage” provides advance warning to a patent owner, usually the manufacturer of a patented medicine, that a generic medicines’ manufacturer is about to enter the market with a competing and cheaper substitute medicine.</p>
<p>With the knowledge that a generic medicine will trigger an automatic 16% price drop for the patented medicine – and result in its transfer from the F1 formulary to the F2 formulary – the patent owner applies to the Federal Court of Australia for a preliminary injunction. </p>
<p>The injunction is normally granted and as a result, the marketing of the generic medicine is delayed by an average of three years. </p>
<p>This means that the patented medicine stays in the F1 formulary. This affects the pricing of that medicine not only because the price is higher, but also because medicines in the F2 formulary are subject to mandatory price disclosure. This tends to exert downward price pressure on all medicines within the F2 formulary.</p>
<p>For a generic manufacturer to defeat the injunction, it must mount a challenge to the validity of the allegedly infringed patent. The average cost of patent litigation is about A$5 million and requires a team of specialist patent lawyers, patent attorneys and highly skilled experts. </p>
<p>In addition to the legal cost, the generic manufacturer is, by effect of the injunction, denied sales revenue for the duration of the injunction – not to mention the opportunity cost it incurs as its workforce diverts attention to the patent litigation.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=336&fit=crop&dpr=1 600w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=336&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=336&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=422&fit=crop&dpr=1 754w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=422&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/62321/original/qpqny3mc-1413860194.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=422&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Patent linkage refers to the link that regulatory approval creates between a patented medicine and a possible generic substitute.</span>
<span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-128359274/stock-photo-close-up-of-chains-linked-with-blue-sky-background.html?src=vbOMd2hJ3Ql9LIYBJVa62w-1-55">Sarahbean/Shutterstock</a></span>
</figcaption>
</figure>
<p>In Australia, legal costs follow the event, meaning that should the generic manufacturer lose, it will also be required to pay a significant percentage of the legal costs incurred by the patent owner in defending its patent.</p>
<p>So, it is critical that a generic company carefully assess any patent that puts at risk a proposed generic medicine launch. This assessment costs money. And unfortunately, because of differences in patent law around the world, it is impossible for a generic manufacturer to extrapolate the results of a patent challenge in one country to that in another.</p>
<h2>How does it affect medicine prices?</h2>
<p>The longer a medicine remains in the F1 formulary, the higher the cost of that medicine to the PBS. This, combined with the consequences on price once that medicine moves into the F2 formulary, creates a significant incentive for patent owners to stop generic competition.</p>
<p>Patent owners encircle a valuable patented medicine with a series of “evergreening” patents. These usually apply after the patent (for the active ingredient) has or is about to expire. This can <a href="https://digitalcollections.anu.edu.au/bitstream/1885/11418/1/Moir%20%26%20Palombi%20Patents%20and%20trademarks%202013.pdf">extend patent protection</a> beyond the normal 20 to 25 year period to a period closer to 40 to 50 years.</p>
<p>Unfortunately, the profit margin for generic manufacturers has fallen significantly due to the <a href="http://www.pbs.gov.au/info/industry/pricing/eapd">price disclosure</a> mechanism, while the cost of patent litigation has risen significantly. Consequently, the capacity of generic manufacturers to assume the risks involved in risky and expensive patent litigation has fallen dramatically. </p>
<p>In the absence of any serious intervention by the Australian Competition and Consumer Commission, it is likely that fewer “evergreening” patents will be challenged in the future. This means that more medicines will remain in the F1 formulary and for a longer period and the costs of medicines will rise. </p>
<p>A consequence of price rises, particularly at a time of economic austerity, is that newer medicines are not being listing on the PBS. The Pharmaceutical Benefits Advisory Committee, which decides which drugs will be subsidised through the PBS, for instance, <a href="http://www.news.com.au/lifestyle/health/government-refuses-subsidy-for-hepatitis-c-medication-sovaldi/story-fneuzlbd-1227071011515">recently rejected</a> the costly drug Sovaldi, despite effectively treating hepatitis C virus infection. </p>
<p>If the Abbott government wishes to limit the <a href="http://www.health.gov.au/internet/budget/publishing.nsf/content/budget2014-hmedia01.htm">annual cost increase</a> of the PBS to 4%, it is critical that only medicines that are truly innovative and deserving of patent protection remain in the F1 formulary. If room in the PBS is to be made for medicines such as Solvadi, then it is essential for more of the older F1 medicines be moved into the F2 formulary more quickly. </p>
<p>The cost of the PBS has risen by 80% in the past ten years. It’s likely that without the AUSFTA, the cost of the PBS, and by inference the cost of medicines, would have risen by much less. </p>
<hr>
<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32574/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Luigi Palombi does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Luigi Palombi, Adjunct Professor , Murdoch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/328152014-10-20T19:13:31Z2014-10-20T19:13:31ZTrans-Pacific Partnership piles up challenges for democracy<figure><img src="https://images.theconversation.com/files/61773/original/dqjbmdcm-1413344686.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Trans-Pacific Partnership agenda is again being driven by the US on behalf of its major export industries.</span> <span class="attribution"><span class="source">EPA/How Hwee Young</span></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
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<p>As we approach the 10th anniversary of the Australia-US Free Trade Agreement (AUSFTA), its offspring, the Trans-Pacific Partnership (TPP), has entered its fifth year of negotiations. The TPP is a much bigger deal. It is being negotiated between 12 Pacific Rim Countries: the US, Australia, New Zealand, Canada, Mexico, Chile, Peru, Japan, Singapore, Malaysia, Brunei and Vietnam.</p>
<p>Talks to try to reach the broad outlines of a TPP deal will be held in Canberra on October 19-24. Trade ministers then <a href="http://www.trademinister.gov.au/releases/Pages/2014/ar_mr_141002.aspx">meet</a> in Sydney on October 25-27.</p>
<p>The AUSFTA prompted huge controversy because the US demanded – on behalf of its major export industries – changes to Australian domestic laws on medicines, copyright and local media content. The US also wanted rights for US investors to sue governments for damages if a change in law or policy could be claimed to harm their investment. This is known as Investor-State Dispute Settlement or ISDS. </p>
<p>These proposals were seen as a challenge to democratic parliamentary process and were fiercely contested. The US did not achieve all of the changes it wanted – notably ISDS. The AUSFTA also did not deliver the predicted economic benefits. Access gained to US agricultural and other markets was very limited.</p>
<h2>Driven by the US</h2>
<p>The US is again driving the TPP agenda on behalf of its major export industries, including pharmaceuticals, IT and media, building on its bilateral agreements with Australia and five other TPP countries. Although the TPP text remains secret, leaked documents and industry submissions have revealed key elements.</p>
<p>The TPP proposals are more extreme than AUSFTA. <a href="http://onlinelibrary.wiley.com/doi/10.1111/jlme.12014/abstract">US proposals</a> for medicine patents widen their scope and provide for patent periods of more than 20 years, delaying availability of cheaper generic medicines. Other US proposals for changes to the <a href="http://onlinelibrary.wiley.com/doi/10.1111/jlme.12014/abstract">Pharmaceutical Benefits Scheme</a> would raise the wholesale prices of medicines. This would cost the government more, creating pressure to raise the subsidised retail medicine prices Australians pay at the chemist.</p>
<p>Copyright law is supposed to balance the rights of creators and the rights of consumers to information. The <a href="http://works.bepress.com/cgi/viewcontent.cgi?article=1034&context=kimweatherall">US proposals</a> would increase the rights of copyright holders at the expense of consumers. Internet service providers would be forced to report breaches of copyright by their customers.</p>
<h2>Challenges for domestic policy and transparency</h2>
<p>The TPP has a series of new chapters which reach even further into domestic law and policy.</p>
<p>The <a href="https://www.mja.com.au/journal/2013/199/7/retaining-our-right-regulate-alcohol-warnings">Regulatory Coherence</a> chapter attempts to set regional limits on food and alcohol labelling. These could prevent governments from introducing new forms of regulation, such as alcohol health warnings for pregnant women or better nutritional labelling of food.</p>
<p>Some TPP governments want to introduce more regulation of tobacco products following World Health Organisation recommendations. <a href="http://media.wix.com/ugd/b629ee_5a919f41c20e47f5aa4e16e34f21024e.pdf">Tobacco companies</a> such as Philip Morris have used ISDS to sue governments for damages, notably over Australia’s plain packaging legislation. </p>
<p><a href="http://www.tobaccofreekids.org/what_we_do/federal_issues/trade/">Public health advocates</a> lobbied for a TPP exemption for tobacco products to enable more regulation, which the tobacco industry fiercely opposes. The Malaysian government has tabled an <a href="http://www.thestar.com.my/News/Nation/2014/02/23/TPP-Tobacco-control-alliance-calls-for-support-for-Malaysias-bid-to-exclude-tobacco/">exemption</a> proposal but the issue remains contested.</p>
<p>A chapter on Regulatory Transparency seeks a <a href="http://www.dfat.gov.au/fta/tpp/tpp-overview.pdf">regional standard for consultation</a> by governments with foreign investors about new legislation. This chapter interacts with ISDS because foreign investors could sue on the grounds that the government had not met the obligations for extensive consultation.</p>
<p>US proposals for ISDS add another layer of potential restraint on public policy. Recent <a href="https://www.kent.ac.uk/law/isds_treaty_consultation.html">EU and other government reviews</a> and even a paper by Australian High Court <a href="http://www.hcourt.gov.au/assets/publications/speeches/current-justices/frenchcj/frenchcj09jul14.pdf">Chief Justice Robert French</a> have shown that ISDS lacks the basic protections of democratic legal systems. There is no independent judiciary, since arbitrators can also be advocates. There is no system of precedents or appeals, so decisions can be inconsistent. </p>
<p>Claims against public health and environmental laws are mounting. Damages won against governments range up to <a href="http://www.foxnews.com/world/2012/10/05/world-bank-arbitration-body-says-ecuador-owes-occidental-petroleum-18-billion/">US$1.8 billion</a>. </p>
<p>The threat of ISDS can have a “freezing” effect on governments, preventing them from introducing regulation. The NZ and UK governments have <a href="http://guardianlv.com/2014/08/tobacco-giant-phillip-morris-prepares-to-sue-u-k-government-over-packet-law/">delayed</a> the introduction of plain packaging legislation pending the outcome of the Phillip Morris case <a href="http://www.ag.gov.au/tobaccoplainpackaging">against the Australian government</a>.</p>
<p>Public opposition to the TPP and ISDS is <a href="http://www.tai.org.au/content/survey-most-aussies-not-aware-tpp-implications">growing</a> in many TPP countries, and even in the <a href="http://delauro.house.gov/index.php?option=com_content&view=article&id=1455:delauro-miller-lead-151-house-dems-telling-president-they-will-not-support-outdated-fast-track-for-trans-pacific-partnership&catid=2:2012-press-releases&Itemid=21">US Congress</a>. This has contributed to delays in negotiations as governments have resisted US proposals. The <a href="http://www.choice.com.au/consumer-action/consumer-protection/consumer-rights/dont-trade-it-away.aspx">secrecy</a> of the text and <a href="https://theconversation.com/the-trans-pacific-partnership-and-australias-right-to-know-20334">lack of public and parliamentary scrutiny</a> until after the TPP is signed adds to the case that the TPP is negotiating changes to domestic law which should be publicly debated through the parliamentary process.</p>
<p>The <a href="http://www.theguardian.com/business/2013/dec/11/australia-would-let-multinationals-sue">Australian government</a> has signalled it is ready to agree to ISDS and other US proposals in return for more access to US sugar and other agricultural markets. But Australians must question whether medicine prices, public health, consumer rights and environmental regulation should be traded away behind closed doors for dubious claimed economic benefits.</p>
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<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32815/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pat Ranald is a Research Associate at the University of Sydney and the Co-ordinator of the Australian Fair Trade and Investment Network, which advocates for fair trade based on human rights. labour rights and environmental sustainability.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Patricia Ranald, Research Associate , University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/325692014-10-16T19:32:29Z2014-10-16T19:32:29ZAustralia’s procurement policy leaves our exporters behind<figure><img src="https://images.theconversation.com/files/61507/original/jymykzfj-1413162998.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Many Australian exporters find it difficult to crack the US government procurement market, while our policy leaves the door more open to US firms.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
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<p>While government procurement is one of the least studied aspects of the international trade regime, it’s also one of the most controversial. </p>
<p>It’s controversial because historically, many governments have sought to use their purchasing power to advance national goals, like local industry development. They have done so in a variety of ways. In the US for example, the government has long reserved public contracts under a certain value for small American firms. </p>
<p>In Australia, the government has preferred to make it compulsory for large foreign firms winning public contracts to source from local suppliers, or to transfer technology to local companies. With the value of government procurement accounting for between 15-20% of Gross Domestic Product in most OECD countries, strategic public purchasing is widely viewed as a powerful industry policy instrument. </p>
<p>Not surprisingly then, many governments remain reluctant to sign up to international agreements that require them to open their procurement markets to foreign firms, and to abandon local content and technology transfer requirements. </p>
<p>Since entering into force in 1996, the <a href="http://www.wto.org/english/tratop_e/gproc_e/gp_gpa_e.htm">WTO Government Procurement Agreement</a> has been a plurilateral (optional) deal. Many WTO members are still not signed up - including Australia. Australian policymakers chose not to sign in 1996 because they believed the agreement would undermine their ability to use public purchasing strategically without delivering meaningful market access to foreign government procurement markets. </p>
<h2>Government procurement in the Australia-US FTA</h2>
<p>The Howard government’s decision to include government procurement in the AUSFTA in 2004 marked a significant break with past policy, and met substantial local criticism. Critics’ main concern related to the lopsidedness of deal. The AUSFTA allowed the US to maintain the kinds of procurement-linked development policies that it has long preferred – including its <a href="http://www.fedgovcontracts.com/chap11.pdf">small business set-asides</a> program. On the other hand, it outlawed the kinds of industry policies upon which Australia long relied, like placing conditions on foreign firms winning Australian government contracts. </p>
<p>The AUSFTA also introduced an appeals mechanism for foreign firms failing to win government contracts. This gave those firms the right to ask the government to explain why their bid had failed, and to challenge the government’s decision in court if they were unhappy with the response. Critics feared this would render risk averse Australian bureaucrats even more reluctant to award contracts to local firms, out of fear of legal challenge. This would further entrench the Australian government’s existing bias towards procuring from large foreign firms – while leaving it no scope to impose conditions on those firms. </p>
<p>It was further feared the agreement would do little to improve access to the US government procurement market for Australian exporters. This is because the agreement would allow the US to keep its small-business set-asides program in place. Australian exporters – typically smaller firms – would therefore not be allowed to bid for the US government contracts most suited to their capacities. </p>
<p>Were these fears founded? In a 2009 survey of Australian exporters conducted by the Australian Industry Group, 87% of firms reported little or no improvement in their access to US government contracts under the AUSFTA. </p>
<p>As for whether foreign suppliers have displaced Australian firms in the local market since 2005, it is impossible to tell from the data. The Australian government only collects figures on government contracts awarded to “Australian Suppliers”. But to be counted as an Australian supplier, all you need is an ABN and a local street address. Under this definition, firms supplying 100% imported goods are considered Australian suppliers.</p>
<p>To understand whether Australian producers are finding it hard to sell to the Australian government, we must rely on anecdotal evidence. Such evidence was on strong display during a 2014 <a href="http://www.aph.gov.au/parliamentary_business/committees/senate/finance_and_public_administration/commonwealth_procurement_procedures">Senate investigation</a>. That investigation found Australian firms face major obstacles when trying to sell to the Australian government. Significantly, it also found one of the main obstacles was Australian bureaucrats’ belief that our existing trade agreements prohibit them from showing preference to Australian firms under any circumstances. </p>
<h2>Our trade agreements do not rule out strategic public purchasing</h2>
<p>This belief is unfounded. Australia’s trade agreements do outlaw some procurement-linked development policies, like placing local content requirements on foreign firms. Yet they leave plenty of legal scope for the government to actively support small local firms with their purchasing power. </p>
<p>For example, both the AUSFTA and the Korea-Australia FTA explicitly exempt small business promotion policies from the government procurement aspects of their deals. And significantly, since signing these agreements with Australia, the US and Korea have been stepping up their own strategic public purchasing efforts in order to support their local firms. </p>
<p>Korea has been particularly active. Since 2005 the Korean government has been evaluating and certifying particular products produced by small Korean firms, and mandating their purchase by government agencies. Agencies that don’t purchase these local products are asked to explain why at an annual review. To overcome the problem of risk aversion, the Korean government also insures the products it certifies, indemnifying losses incurred by procuring agencies if the local product that they purchase fails. </p>
<p>The result has been a significant increase in the public procurement of products made by small local firms. Thanks to such policies, around 65% of Korean SMEs now engage with their local government procurement market, three times more than in the US and around double that of France. </p>
<p>The contrast with the Australian approach could not be stronger. Since coming to power in 2013, the Abbott government has been voluntarily abandoning its FTA-compliant, procurement-linked industry policies. In the 2014 budget, it proposed to dump the long-awaited federal pilot of the US-style Small Business Innovation Research program – a program strongly recommended for trial in the <a href="http://www.industry.gov.au/science/policy/Pages/ReviewoftheNationalInnovationSystem.aspx">2008 Cutler innovation system review</a>. </p>
<p>It also proposed to dump mandatory Australian Industry Participation Plans, which require firms winning large government contracts to show they have at least explored and considered the use of smaller local suppliers. </p>
<p>As a result of such changes, Australia is now swimming against the international tide, voluntarily abandoning its legal procurement-linked industry policies, while our major trading partners are expanding them. Our trade obligations leave policymakers plenty of room to move. It’s the political will to move that is lacking. </p>
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<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?” Sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32569/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Elizabeth Thurbon has no relevant disclosures to make in relation to this article. </span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Elizabeth Thurbon, Senior Lecturer in International Relations / International Political Economy, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/325752014-10-15T19:28:28Z2014-10-15T19:28:28ZCoalition’s policy bodes ill for health in free trade negotiations<figure><img src="https://images.theconversation.com/files/61122/original/3kpr5cxb-1412739450.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It's not yet clear how the Coalition will weigh health issues against economic priorities.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-160735946/stock-photo-an-elderly-woman-about-to-take-a-pill.html?src=cZwQUrXb_KoFaOeOlOqodA-4-112">jdwfoto/Shutterstock</a></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
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<p>Health is rarely a priority in trade negotiations. But recent developments in Australia suggest it is an even lower priority for the Coalition government than usual. </p>
<p>Over the past two decades, it has become increasingly clear that trade and investment agreements can have significant health impacts. The <a href="http://www.ag.gov.au/tobaccoplainpackaging">current case</a> by tobacco giant Philip Morris Asia against Australia’s tobacco plain packaging laws has cast these issues into sharp relief.</p>
<p>The <a href="http://lpaweb-static.s3.amazonaws.com/Coalition%202013%20Election%20Policy%20%E2%80%93%20Trade%20%E2%80%93%20final.pdf">Coalition’s Policy for Trade</a>, released just before the 2013 election, marks a significant shift in Australian trade policy, not only from previous Labor government but also from the legacy of the Howard years. </p>
<h2>The Howard years</h2>
<p>The negotiations for the Australia-US Free Trade Agreement (AUSFTA) placed these issues firmly on the Australian public’s consciousness for the first time, during 2003-04. From an early stage, it was clear that the US was targeting specific aspects of Australia’s health system.</p>
<p>The Howard government went into the AUSFTA negotiations without an explicit trade policy statement or clear position on health issues. Its position on health was arguably constructed in the negotiation of AUSFTA.</p>
<p>From a public health point of view, the results of AUSFTA were mixed. In many respects, the efforts of the United States to encroach on Australian health policy were successfully rebuffed. Provisions for pharmaceuticals, for instance, <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2257382">largely reflected</a> the status quo in Australia at the time. </p>
<p>And the Howard government refused to agree to the inclusion of an <a href="https://theconversation.com/when-trade-agreements-threaten-sovereignty-australia-beware-18419">investor-state dispute resolution</a> (ISDS) mechanism which would have enabled US corporations to sue Australian governments over their health and environmental policies.</p>
<p>But in accepting pharmaceutical provisions (however limited) in AUSFTA, the government essentially agreed to place health policy on the trade negotiating table. The provisions that were included “locked in” existing policy settings, such as patent term extensions, making them difficult to change. </p>
<p>Australia also made some new commitments, including restrictions on compulsory licensing and a patent linkage mechanism, that arguably placed new limits on our ability to make generic medicines available in a timely way.</p>
<h2>The Rudd/Gillard approach</h2>
<p>The incoming Labor government took a more cautious approach, instigating a <a href="http://www.pc.gov.au/projects/study/trade-agreements">Productivity Commission review</a> of Australia’s bilateral and regional trade agreements. </p>
<p>Following this review, the Gillard government issued a <a href="http://www.acci.asn.au/getattachment/b9d3cfae-fc0c-4c2a-a3df-3f58228daf6d/Gillard-Government-Trade-Policy-Statement.aspx">policy statement</a> that acknowledged “non-trade objectives” that might need to be taken into account and that made explicit commitments to ensure tobacco plain packaging and the Pharmaceutical Benefits Scheme (PBS) were not undermined.</p>
<p>The Gillard policy statement was timely, given Australia had entered into negotiations for the <a href="http://www.dfat.gov.au/fta/tpp/">Trans Pacific Partnership Agreement</a> (TPP) in 2010. Through a series of leaks of negotiating documents in 2011, it became clear that the US was seeking commitments in the TPP that would result in major inroads into health policy in areas such as medicine affordability and public health regulation.</p>
<p>There is some evidence that the Labor government’s position in the TPP negotiations was informed by these principles. This includes statements by then-trade minister Craig Emerson and <a href="https://www.righttoknow.org.au/request/18/response/348/attach/5/img%20415171934.pdf">briefing material</a> prepared by the Department of Foreign Affairs and Trade and released under Freedom of Information. </p>
<p>Leaked drafts of the TPP’s <a href="https://wikileaks.org/tpp/">intellectual property</a> and <a href="http://www.citizenstrade.org/ctc/wp-content/uploads/2012/06/tppinvestment.pdf">investment</a> chapters suggest that until the 2013 election, Australia was resisting many of the US proposals for medicines and seeking to exempt Australia from the ISDS clause.</p>
<h2>The Abbott government</h2>
<p>The <a href="http://lpaweb-static.s3.amazonaws.com/Coalition%202013%20Election%20Policy%20%E2%80%93%20Trade%20%E2%80%93%20final.pdf">Coalition’s Policy for Trade</a> signaled a very different approach. In contrast to the Gillard government statement, the Coalition’s policy makes no mention of health, medicines, the PBS or tobacco plain packaging – or of any other health, social or environmental issues that may be at stake in trade negotiations.</p>
<p>This policy is explicitly pro-industry, reflecting the government’s <a href="http://www.theaustralian.com.au/national-affairs/election-2013/abbott-claims-victory-and-says-australia-is-open-for-business/story-fn9qr68y-1226714414009">“open for business”</a> agenda. It states:</p>
<blockquote>
<p>The Coalition will take a pragmatic approach to trade negotiations and will consult widely with industry bodies and associations to ensure that stakeholder priorities are taken into account. This includes remaining open to utilising investor-state dispute settlement (ISDS) clauses as part of Australia’s negotiating position. </p>
</blockquote>
<p>Since then, Trade Minister Andrew Robb has made some <a href="http://www.andrewrobb.com.au/Goldstein/LocalIssues/tabid/123/articleType/ArticleView/articleId/1602/INTERVIEW-WITH-LINDA-MOTTRAM--702-ABC-SYDNEY.aspx">more promising statements</a> that suggest the government’s position is that it is not prepared to compromise the PBS or other areas of health policy in the TPP negotiations. </p>
<p>But Prime Minister Tony Abbott has also made it clear that completing trade negotiations involves some <a href="http://www.abc.net.au/lateline/content/2013/s3866749.htm">“horse trading”</a>.</p>
<p>The Coalition has also recently concluded an agreement with South Korea that includes an ISDS mechanism. The government argues that there are <a href="http://www.dfat.gov.au/fta/kafta/downloads/quick-guide-key-investment-and-isds-outcomes.pdf">safeguards</a> to protect health and environmental policy, but these supposed safeguards have been <a href="http://aftinet.org.au/cms/sites/default/files/AFTINET%20submission%20ISDS%200404.pdf">widely criticised</a>.</p>
<p>Due to the secrecy of the negotiations, it is not clear yet how the Coalition will weigh health issues against economic priorities.</p>
<p>Ultimately, regardless of the Government’s stated priorities, it is a concern that health policy goals are not set independently from trade policy concerns.</p>
<p>Significant areas of health policy – including access to affordable medicines and the regulation of health-damaging products such as tobacco, alcohol and processed foods – may be undermined when these issues are weighed on the same scales with market access.</p>
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<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32575/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah Gleeson receives funding from the Australian Research Council for research on the Trans Pacific Partnership Agreement, health and nutrition. She is a member of the Public Health Association of Australia (PHAA) and represents the PHAA on matters related to trade agreements. She is active in the global People's Health Movement.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…Deborah Gleeson, Lecturer in Public Health, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.