Most of my blogging time this week has been devoted to criticism of the Free Trade Agreement between Australia and the United States. Wait! Don’t stop reading yet!
I know that “Trade agreement said harmful to small faraway country” is the stereotype of a boring newspaper story, but this one is really important to Americans as well as Australians, and to anyone interested in health policy. If you ever hope to see affordable health care in the US, you’d better hope that (against all the odds) this agreement falls at the final hurdle.
Although it’s called a Free Trade Agreement, it’s nothing of the kind. Australia has hardly any trade barriers to speak of, and the US has given very little ground on its barriers and subsidies. The important bits of the agreement are those relating to intellectual property and (closely related) pharmaceuticals. In both areas, the Americans have pushed Australia to adopt the strong IP approach prevalent in the US, which of course is primarily concerned with preventing people from producing and marketing products covered by patents and copyrights. In other words, it’s a free trade agreement that’s primarily concerned with making trade less free.
On IP, the main, though not the only, concession made by Australia has been lengthening the term of copyright from the life of the author + 50 years (already overly restrictive) to life + 70 years. For some examples of the kind of nonsense copyrights on the works of long-dead authors can produce you need only look at the recent squabbles over <This Land is Your Land (written more than 60 years ago) and Ulysses ( written set 100 years ago and completed more than 80 years ago)
The real action though, is in pharmaceuticals. Under the Pharmaceutical Benefits Scheme, the Australian government bargains with drug companies over bulk purchases of pharmaceuticals which are then sold at subsidised prices to the public. Before drugs can be included in the scheme, they undergo a cost-benefit assessment by an advisory committee. Big Pharma hates this, not so much because of the loss of profits in Australia as because of the fear that the US government might one day follow the Australian example. They managed to get Congress to pass legislation demanding that the Administration report on progress in “opening up” the Australian market. Then in the FTA, they inserted a clause allowing US drug companies to seek a review of unfavorable decisions, and some additional clauses about patent protections. The Australian government said that this concession was meaningless, and kept on saying it until they were black in the face.
The US Congress approved the agreement overwhelmingly (Bush signed it today) and it looked as if the Australian Parliament would do likewise. Because of our bicameral system and the opposition of minor parties, this required that the main Opposition, the Labor Party, support the relevant legislation. After bitter internal debate, they caved in, requiring only a couple of facesaving concessions, one on IP and the other designed to ensure continued access to generic drugs. Amazingly, the government rejected the generic drugs amendment.
It’s still unclear whether this was a piece of political brinkmanship, designed to force Labor into another humiliating backdown, or whether the government is acting at the behest of the US Administration (which would imply that the clause is vitally important to Big Pharma). But, as of today, both sides are dug in, and the legislation may be rejected.