Mon, 23 Jan 2012 1:14p.m.
By James Murray
Free trade with America!
Sounds exciting, doesn’t it? It’s made up of two great words; “free” and “trade”, and when you put those words together they are even better. That’s literally a trade you’ve got there, all shiny in your sweaty little hands, and it was free!
But of course, there’s no such thing as a ‘free trade’ and the current negotiations surrounding the Trans-Pacific Partnership (TPP)* have many worried about the US's intentions regarding intellectual property laws.
Laws which, if agreed to by the New Zealand Government in their present form, could have a negative impact on the lives of New Zealanders and an even more drastic impact on people living in developing countries.
Negotiations surrounding the TPP are held in secret and have been ongoing since 2010. They are supposed to conclude this year, but then again they were also supposed to conclude in 2011.
Most of the information we know about the TPP is derived from leaked documents.
Last February a leak of the TPP’s Intellectual Property Chapter revealed the USA is taking what Auckland University Professor of Law Jane Kelsey describes as “an extremely aggressive position on intellectual property that contrasts starkly with the New Zealand proposal”.
Professor Kelsey was in Santiago for the fifth round of negotiations as a registered “stakeholder” at the negotiations, so she knows what she is talking about.
She believes the TPP represents a real threat to New Zealand and is something the average Kiwi should know and care about.
“This is probably the most fundamental assault on our sovereignty that we have experienced if it proceeds down the tracks that the US is proposing,” she told me last week.
“This is because it will tie the hands of New Zealand Government in the kind of policy choices they can make for the indefinite future on areas that range from schemes for medicines, ownership of privatised state assets, the internet and the rules that govern that, to plain packaging for tobacco and a whole range of things that have nothing to do with what people think of as trade.
“The added assault on sovereignty and democracy in that process is that the negotiations are secret, aside from the leaks of text that we have had. The nine countries involved in the negotiations have said that none of the documents aside from the final version of the text will be available for another four years, whether the negotiations are concluded or collapse, which means we cannot hold our Governments to account.”
Click on the video tab above to listen to an interview with Professor Kelsey – she talks about the impact TPP could have on pharmaceuticals and tobacco control and whether the agreement will bring any benefits to New Zealand
Green MP Gareth Hughes is concerned the signing of the TPP is being swept under the carpet by the National Government.
“The deal is being negotiated in secret… and it needs to be presented to Parliament for a vote,” he said.
Hughes believes the final make-up of the TPP is very important to our society, but I would wager the average New Zealander is not aware of how this will affect their daily lives. Fighting through the legalese to get to the potential impacts is more than tricky.
In fact, even Professor Kelsey agrees; emailing in reply to some of my questions:
“I have to say that trying to get your head around this and a story together in one day is extremely ambitious!”
But here are a few things that may affect you if the TPP is passed in its present form:
Book Copyrights to last for longer after an author’s death?
Hughes points out that proposed changes to copyright law could see the international copyright term (the author’s life plus 50 years) extended for another twenty years.
This would mean that no new works would enter the public domain in any of the countries signed to the TPP until 2033.
To steal a quote from the analysis linked to above – lengthening copyright terms would “impose severe costs on the American public without providing any public benefit. It would supply a windfall to the heirs and assignees of dead authors and deprive living authors of the ability to build on the cultural legacy of the past”.
What would this mean for publishing in New Zealand?
Books by James K. Baxter, Dame Ngaio Marsh and Ronald Morrieson, all soon to come into the public domain, would stay in copyright. A Way Of Love by James Courage, considered to be New Zealand’s first gay novel would also come under this umbrella.
Once copyright has ceded on these books they can be shared easily by New Zealanders through new tools like e-readers or printed and sold for much less than their usual retail price.
“Copyright is a balance,” says Hughes. “But I think we are seeing it used as a way to eke as much money out of works as possible.
“Extending the term of copyright would mean Kiwi readers miss out on freely accessing Kiwi classics until the 2030s, not benefiting the authors who would have died some seventy years prior but benefitting mostly big media businesses.”
It could also affect film – with New Zealand classics such as Goodbye Pork Pie not being able to be freely produced as a play for example for a much longer time.
International authors such as Robert Frost, Aldous Huxley, CS Lewis, TS Eliot, John Steinbeck, JRR Tolkein, and Ayn Rand would also be affected if this part of the TPP stood.
Medication may be out of reach
In a nutshell, patent law regarding pharmaceuticals runs like this.
Drug company spends money researching and producing new drug.
They are given a patent for a certain period of time allowing them the sole rights to sell this drug at whatever price they see fit.
The patent, and ensuing profits, provide the incentive for the drug company to keep on inventing new and better medication.
No patent, means anyone can use the drug company’s work and the incentive to spend money inventing new products is lost.
Once the patent has run out, others are able to produce the drug. This 'generic' medication, is sold for a much lower price as the pharmaceutical company's monopoly position no longer stands.
But there is an ethical problem here, the drug company has an artificially created monopoly and this means some countries are unable to afford the latest medication and those in developing countries can miss out on health care that people in richer countries take for granted.
Pharmaceutical companies often make concessions to third world countries and provide them with cheaper or free medication but this is not always equitable. (You can read more about the whys and wherefores of that here – but this blog is not the place for that argument).
Once a patent has run out, other companies are allowed to create generic versions of the drug and sell them at a much lower price. That is why you were probably given non-branded paracetamol the last time you went to the emergency department with a killer headache. It’s why Nurofen is so much more expensive than a non-branded product despite being essentially the same thing.
Critics of the TPP point out that the agreement spelled out in the leaked document would lead to a situation where pharmaceutical companies would be able to extend patents on medicines more easily and also delay generic drugs from hitting the market.
Firstly, there are provisions that allow a company to put a new patent on a drug if they can find a new use for it. As patent law stands the new use for the product must “involve an inventive step and [be] capable of industrial application.
In the leaked TPP documents the wording is quite different saying that new patents for known products can be granted “even if such invention does not result in the enhancement of the known efficacy of that product”.
In other words, if the inventor of loratadine, an effective antihistamine that used to be extremely expensive but is now eminently affordable, discovered his product also turned horses purple he would be able to apply for a further patent and have exclusivity in selling the product.
This practice is part of what is known as evergreening, where pharmaceutical companies take out new patents on drugs which are soon to come out of patent for different uses of the drug but also for things as seemingly trivial as packaging and delivery systems.
The wording of this part of the agreement goes against law in “TPP negotiating countries, including Australia, Malaysia, and Vietnam” but according to the authors of the infojustice.org analysis the real target is India, a country which is obviously not a signee to the deal.
India is a major producer of generics and has a huge population, which in turn needs a huge public health system. Their own patent legislation is carefully worded to reduce the potential for pharmaceuticals to engage in evergreening practices.
The 2005 Amended India Patents Act does not allow the “granting of patents for ‘the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such process results in a new product or employs at least one new reactant’”.
The TPP as it stands will make it harder for India to export generic medication to TPP member countries, something that hardly promotes free trade in a wider sense of the term. It’s the sort of protectionism that artificially raises prices and distorts markets, again contrary to the general aims of free trade worldwide.
Making it harder for developing countries like India to get hold of generic medication has obvious public health implications as well – India has a huge population, many of whom live in poverty. Anything but the cheapest medication is out of the reach of most, and despite a massive public healthcare system it is estimated that it would need billions of dollars of extra investment over the next five years to reach international standards.
The leaked TPP document also contains a proposal on patent/registration linkage – another technique that comes under the evergreening umbrella. This goes further than the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), which makes no specific mention of this.
Patent/registration linkage essentially forces regulatory bodies, who are charged with approving generic medicines as being safe for the market, with checking whether there are any patents on the product still in existence.
This offers pharmaceutical companies the option of stalling the launch of a generic medicine while the issue goes through the courts.
Australia is a good example of a country that has legislation to avoid this.
As part of the AUSFTA agreement the US required amendments to their patent legislation which required “applicants for marketing approval to certify their product would not infringe a valid patent claim, or that the patent holder has been notified of the application”.
The Australian Government stood up to this though and passed anti-evergreening measures, which prevent patent-holders from using court process to delay the marketing of generics.
Australia’s Chief Negotiator Stephen Deady said:
"We are not importing the Hatch-Waxman legislation into Australian law as a result of the free trade agreement...[Article 17.10.4] will not extend the time of the marketing approval process, and it does not add or provide any additional rights to the patent holders in that process...there is no injunction that can be applied under this article...it will be clear in the legislation tomorrow....we are establishing a measure in the marketing approval process that will fully meet the commitments under this article.”
The presence of patent/linkage in the leaked TPP document is a clear sign the US are still determined to push this issue.
So the Australians have already had a taste of what the TPP could mean for pharmaceuticals in their own country, but what about the effect of the agreement on New Zealand.
Professor Kelsey had this to say:
“One of the most interesting responses to the launching of these negotiations was the quite aggressive positioning by what we call ‘Big Pharma”, which is the large pharmaceutical lobby base in the US.
“For the US generally, the whole area of intellectual property is hugely lucrative, whether you are thinking about Hollywood, whether you are thinking about Microsoft, or companies that patent seeds like Monsanto or you talk about the pharmaceutical companies.
“They have pushed really hard for the Obama administration to demand provisions that go well beyond the intellectual property agreement in the World Trade Organisation, which has created enough problems for access to pharmaceuticals and beyond existing US Free Trade agreements, but they want to go even further.
“[The provisions in the leaked TPP document] are in a way designed to lock up their control and monopoly for longer and restrict the production of generics.
“But what they also want is to change the processes by which decisions are made by drug purchasing companies, [such as Pharmac].
“They really hate the Pharmac process. Pharmac has a cap on how much money the Government will spend on meds each year and that gives a lot of leverage to Pharmac in negotiating down prices of the drugs that will be subsidised. When I have been at events with big Pharma – they say ‘oh we are just talking about due process and decision making, we just want a fairer process and more transparency’, and what they really want is to be able to force Pharmac to disclose all the ways that they are making their decisions so they can challenge them more effectively and they want a guaranteed right of more of a seat at the table of the decision making process.”
An end to parallel imports?
Ever picked up a camera or mobile phone from a Parallel Import shop for less than an approved supplier?
According to the analysis provided by infojustice.org this could become a thing of the past as a consequence of Article 4.2 of the leaked document would be an international legal requirement “to provide copyright owners an exclusive right to block parallel trade”.
This is particularly worrying for a country with New Zealand’s demographics. We do not have a large enough population to provide the sort of bulk-buying dynamics that allow companies to charge low market entry costs.
Put simply, things should be more expensive here than they are in the US due to our small population.
Media and electronics companies, who lose the most from parallel imports want to be able to set the price for their product in individual countries. Parallel importers stuff this up by buying a product in a market where it is sold more cheaply, in our case usually South-East Asia, and selling it for a price in New Zealand that does not exceed the price charged by the original producer of the good.
In other words, manufacturers of goods want the right to rip us off.
A restriction on parallel imports would be welcomed by some parts of our society though.
Kiwi producers of grocery items often complain of being undercut by inferior parallel imported products, generally sold at discount supermarkets and local dairies.
Last year, there was general brouhaha when some milo was found to taste different to other milo and TV One’s Fair Go revealed the funny tasting stuff was in fact a cheaper parallel import.
Not long after this the New Zealand Food and Grocery Council put out this press release asking that importers of parallel imported goods comply with New Zealand laws regarding labelling and ingredients.
“Many parallel imported grocery products fail to comply with New Zealand’s food and grocery laws and damage the reputations of many local brands”, says the council’s chief executive Katherine Rich.
Tellingly, they can’t resist getting a bit prickly and saying: “While it’s clear we’d prefer retailers to support local Kiwi suppliers, we don’t debate their legal right offer parallel imported goods.”
So parallel imports can also have a damaging effect on New Zealanders by undercutting the price of the products we are producing for our domestic market.
Ms Rich goes on to talk further about the Milo example, although it is not clear whether anyone noticed the irony that the producers of Milo were effectively undercutting themselves.
Negatives aside then – if you are a stickler for correct-tasting Milo, the TPP is for you.
If on the other hand you are concerned by copyright law that works for corporations rather than artists and producers and patent law that restricts access to affordable medication here and in developing countries you should read further and raise your voice.
I approached the office of Tim Groser, who is New Zealand's Minister of Trade and our lead negotiator for the TPP, to ask his point view, but he has not had time to respond to my questions as of today. The request remains with his office.
* It should be noted that the multi-lateral TPP is not a traditional free trade agreement, which is usually bilateral, but when originally signed by Helen Clark it was considered to be pretty much the same thing. "I think the value to New Zealand of the United States coming into a transpacific agreement as a partner would be of the same value as we would hope to get from a bilateral FTA. . . It's very, very big news,” she said.