The chilling reality of the TPP
What could the Trans-Pacific
Partnership (TPP) – currently being negotiated by the Abbott Government –
mean for Australia? Of concern, reports Mel Mac, is that it means our rights are being secretly traded away.
The TPP was conceived in 2003 as the Trans-Pacific Strategic Partnership Agreement (TPSEP)
as a path to trade liberalisation in the Asia-Pacific. The original
participating countries were Chile, New Zealand and Singapore with
Brunei joining in 2005. In 2008 the United States of America (USA),
Australia, Peru and Vietnam joined, followed on by Malaysia, Mexico,
Canada and Japan. China and Korea have expressed interest but the USA
did not bring it up when President Barrack Obama last visited the
Chinese President Xi-Jinping in November 2014. This was puzzling to most
as the USA has made so much of the TPP and it’s nervousness about China’s growing might economically and militarily.
Free Trade Agreements (FTA) deal mostly with goods being imported at a
certain price as long as certain environmental and labour standards are
met. What’s different about the TPP is that the treaty has 29 chapters,
dealing with the whole scope of tariff and agricultural quota removal
and market access on sensitive products, but in particular agricultural
goods. It also includes provisions over nontariff issues such as
intellectual property rights, the environment, state-owned enterprises,
and investment. Japan was the last to join in 2013, and agriculture as
well as the auto industry has long been a sticking point in Japanese
trade liberalisation and held up the TPP negotiations with the USA.
However recent agricultural reforms by Japan’s Prime Minister Shinzo Abe
has tipped the power of balance back into the governments favour and
away from Japan’s most powerful farm lobby, the Japan Agriculture
Cooperative (JA). In January this
year Japan offered to import more rice from the USA while keeping
existing tariffs in place, and the USA agreed to stop demanding that
Japan ease its car safety standards. In early February this year,
progress was made on issues such as state-owned enterprises,
environmental protection, and investment. This not only paves the way
for greater market liberalisation and deregulation in Japanese
agriculture but enables Mr Obama’s plan to “fast track” push for Congress approval to conclude the TPP within the year.
What is of the most concern is the provisions over not only the
aforementioned non-tariff issues of intellectual property rights, the
environment, state-owned enterprises, and investment but the Investor
State Dispute Settlements provisions (ISDS). ISDS allows multinational
corporations to sue governments if they’re deemed not to be acting in
their best “interests”. It can potentially place limits on governments
being able to develop their domestic laws and policies in areas such as
public health, patents on medicine, the environment, food labeling,
Internet use and privacy and even local media content. Australia for
example is currently entrenched in it’s first investor-state dispute since November 2011 with Philip Morris Asia, due to the introduction of the ‘Tobacco Plain Packaging Act 2011′ (TPPA).
The laws were introduced by the former Prime Minister Julia Gillard’s
government, as a health measure but Philip Morris Asia amongst the many
breaches, believes that it infringes their intellectual property.
Previous Australian Labor Party (ALP) and Liberal National Party (LNP)
governments have in the past only included ISDS in trade agreements with
developing countries that don’t have investments in Australia and they
weren’t included in the US-Australia FTA. American corporations are the
most frequent users of ISDS and the “safeguard” clauses countries employ
to protect themselves can and have been re-interpreted and over-turned
through the arbitration process. Philip Morris International Inc in the
Australian case for example is challenging the tobacco plain packaging
legislation under the 1993
Agreement between the Government of Australia and the Government of
Hong Kong for the Promotion and Protection of Investments (Hong Kong Agreement) by using it’s Asian arm to circumnavigate them.
The former Gillard government also decided to ban the inclusion of
ISDS in future trade agreements, they didn’t think that it harmed
investment as did the Productivity Commission. Even
where corporations do lose they have dragged governments through
lengthy and expensive legal processes with dispute settlement cases
being heard by tribunals of three private-sector lawyers
whose decisions are beyond appeal. The tribunals tend to be more
concerned with assessing potential damage to corporate investments over
the protection of government or public interest. There are more than 500
of these disputes being launched globally and more than $3bn being paid
by out governments, meaning taxpayers, to corporations under existing
US trade and investment agreements alone.
Not only is there strategic litigation employed by corporations but there is a concept known as “regulatory chilling”,
which is the alleged case with Philip Morris Asia suing Australia for
example, they’re able to put pressure on other countries considering
plain packaging regulations too. According to Dr Kyla Tienhaara: “The
Australian government has suggested that Philip Morris is currently
engaged in trying to achieve global regulatory chill through its case by
basically showing other countries that might want to introduce plain
packaging legislation ‘Look what we’re doing to Australia.’ This is
actually working because countries are saying, ‘We’re going to wait to
find out what happens with that case before we go ahead with our
regulations.”
Lone Pine Resources
filed a $250m lawsuit against the Canadian government when Quebec
placed a moratorium in June 2011, which was expanded into 2012, banning
drilling and fracking processes for oil and gas underneath the St.
Lawrence River, until a strategic environmental evaluation was
completed. “Based on the principle of precaution, the Quebec
government’s response to the concerns of its population is appropriate
and legitimate,” said Martine Châtelain, president of Eau secours! (Quebec based Coalition for a responsible management of water). “No
companies should be allowed to sue a State when it implements sovereign
measures to protect water and the common goods for the sake of our
ecosystems and the health of our peoples,” Ms Châtelain added.
Again back in Canada, they are popular with these disputes unfortunately, is the case of Eli Lilly and Company,
which is an American global pharmaceutical company (and it’s fifth
biggest). They filed a $500m law suit against Canada for violating its
obligations to foreign investors under the North American FTA for
allowing its domestic courts to invalidate patents for two of its drugs.
Canadian courts found that there was a lack of evidence supporting the
drug’s alleged benefits.
According to Forbes in 2013
the biggest profit margins produced be USA corporations were in the
Pharmaceuticals, Banks, Car makers, Oil and Gas makers and Media
industries. In 2013, US Pharmaceutical Pfizer, the world’s largest drug
company, made 42% profit margin. As one industry veteran put it: “I wouldn’t be able to justify [those kinds of margins].” In the UK that year, there was widespread anger when the industry regulator predicted energy companies’ profit margins would grow from 4% to 8% for the year.
Last year, five pharmaceutical companies made a profit margin of 20% or
more, these were – Pfizer, Hoffmann-La Roche, AbbVie, GlaxoSmithKline
(GSK) and Eli Lilly.
The problem isn’t just with the massive amounts of seeming
profiteering but the fact that the drug companies spend far more on
marketing drugs, in some cases twice as much, than on developing them.
Johnson & Johnson (US) total revenue for 2013 was $71.3bn with a
profit of 13.8%, it only spent 8.2% on research and development,
yet 17.5% was spent on sales and marketing. Drug patents are usually
awarded for 20 years, but 10-12 of those years are spent developing it
at a cost of up to $2.5bn, leaving eight to ten years to make money
before the formula can be taken up by generic drug companies. Once this
happens, sales fall by 90%-plus. Joshua Owide, director of healthcare
industry dynamics at research company GlobalData, explains, “Unlike other sectors, brand loyalty goes out the window when patents expire.”
This is why pharmaceutical companies go to such extraordinary lengths
to extend their patents, a process known as “evergreening”, employing “floors full of lawyers”
for this express purpose, one industry insider has said. And with a
drug raking in $3bn a quarter, even a one month extension can be worth a
lot of money. Some drug companies, including the UK’s GSK, have been
accused of more underhand tactics, such as paying generics to delay the
release of their cheaper alternatives. This is a win for both
industries, as it has been said that the loss of the big pharmaceuticals
far outweighs the generic industries revenue.
What can all of this mean potentially for my native country Australia
and more so in my current home state of New South Wales (NSW)? NSW
regulations that prevent coal seam gas (CSG) recovery near residential
areas could be subject to law suits if the TPP goes ahead with these
murky investor-state dispute settlement provisions. If it affects their
profit margin you can be assured that a law suit will eventuate as will
tricks from corporate lawyers trained in this specific area. Australian Trade Minister Andrew Robb has assurances of a deal being finally struck within weeks. “Mid-February to mid-March: that’ll be, I think, the timeframe,” he said. “We
might have to come back again to conclude some things, but that’s the
intent. The final issues, as always, are the most difficult. But
everyone seems to be in a mood to find some common ground so that we can
get this major, major agreement off the ground.”
The current Australian government has an appetite for signing FTAS as
seeming proof of their economic prowess. The TPP has been years in the
making and fraught with difficult negotiations especially in regards to
the ISDS provisions that could impact on us really hard, and we have
barely even touched on them. The secrecy in an Australian political
environment, let alone with a disillusioned public, couldn’t come at a
worse enough time. I would think now is the time for the Opposition,
Independents and the Senate to come together and put the public’s
interests first and put it first every time, no matter the high level of
Investment interest in our country. It is apparent that the current
government wants to dismantle our Medicare and even introduce a medical
tax. Can you imagine what could be in store for us if we allow
multinational corporations or investors with trade ministers, not
governments mind you, to ultimately decide our economies, laws and
policies? I will leave you with the global spend on medicines projected
to be worth up to $1.2 trillion for the year 2017.
This article was first published as ‘We can not allow the TPP with no transparency & clauses to sue us‘ on Mel’s bog, Political Omniscience.
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