Planet Not For Sale
World Trade Organization Rules Against Popular U.S. Country-of-Origin Meat Labels on Which Consumers Rely
Compliance Panel Says U.S. Policy Still Violates WTO Despite Changes Made to Comply With 2012 WTO Order; U.S. Should Not Change COOL Policy
Today’s ruling by a World Trade Organization (WTO) compliance panel against U.S. country-of-origin meat labeling (COOL) policies sets up a no-win dynamic, and the Obama administration should appeal the ruling, Public Citizen said.
If the administration were to weaken COOL, U.S. consumers would lose access to critical information about where their meat comes from at a time when consumer interest in such information is at an all-time high and opposition would only grow to the administration’s beleaguered trade agenda. If the administration again were to seek to comply with the WTO by strengthening COOL, then Mexico and Canada – the two countries that challenged the policy – likely would continue their case, even though cattle imports from Canada have increased since the 2013 strengthening of the policy.
The ruling further complicates the Obama administration’s stalled efforts to obtain Fast Track trade authority for two major agreements, the Trans-Pacific Partnership and the Trans-Atlantic Free Trade Agreement. Both of these pacts would expose the United States to more such challenges against U.S. consumer, environmental and other policies.
“Many Americans will be shocked that the WTO can order our government to deny U.S. consumers the basic information about where their food comes from and that if the information policy is not gutted, we could face millions in sanctions every year,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Today’s ruling spotlights how these so called ‘trade’ deals are packed with non-trade provisions that threaten our most basic rights, such as even knowing the source and safety of what’s on our dinner plate.”
The WTO compliance panel decided that changes made in May 2013 to the original U.S. COOL policy in an effort to make it comply with a 2012 WTO ruling against the law are not acceptable and that the modified U.S. COOL policy still constitutes a “technical barrier to trade.” The panel decided that the strengthened COOL policy afforded less favorable treatment to cattle and hog imports from Canada and Mexico, despite a 52 percent increase in U.S. imports of cattle from Canada under the modified policy. The panel stated that the alleged difference in treatment did not “stem exclusively from legitimate regulatory distinctions.”
The United States has one chance to appeal this decision before the WTO issues a final, binding ruling. Under WTO rules, if the U.S. appeal fails, Canada and Mexico would be authorized to impose indefinite trade sanctions against the United States unless or until the U.S. government changes or eliminates the popular labeling policy.
Today’s ruling follows a string of recent WTO rulings against popular U.S. consumer and environmental policies. In May 2012, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. In April 2012, the WTO ruled against a U.S. ban on clove-, candy- and chocolate-flavored cigarettes, enacted to curb youth smoking. In each of those cases, U.S. policy changes made to comply with the WTO’s decisions also have been challenged before WTO panels similar to the one that issued today’s ruling.
“The WTO again ruling against a popular U.S. consumer protection will just spur the growing public and congressional concerns about the big Pacific and European trade deals the administration is now pushing and the Fast Track authority to railroad through Congress more agreements that undermine basic consumer rights,” said Wallach.
The COOL policy was created when Congress enacted mandatory country-of-origin labeling for meat – supported by 92 percent of the U.S. public in a recent poll – in the 2008 farm bill. This occurred after 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program.
In their successful challenge of COOL at the WTO, Canada and Mexico claimed that the program violated WTO limits on what sorts of product-related “technical regulations” signatory countries are permitted to enact. The initial WTO ruling was issued in November 2011. Canada and Mexico demanded that the United States drop its mandatory labels in favor of a return to a voluntary program or standards set by an international food standards body in which numerous international food companies play a central role. Neither option would offer U.S. consumers the same level of information as the current labels. The United States appealed.
The WTO Appellate Body sided with Mexico and Canada in a June 2012 ruling against COOL. The U.S. government responded to the final WTO ruling by altering the policy in a way that fixed the problems identified by the WTO tribunal. However, instead of watering down the popular program as Mexico and Canada sought, the U.S. Department of Agriculture responded with a rule change in May 2013 that strengthened the labeling regime. The new policy provided more country-of-origin information to consumers, which satisfied the issues raised in the WTO’s ruling. However, Mexico and Canada then challenged the new U.S. policy. With today’s ruling, the WTO has announced its support for the Mexican and Canadian contention that the U.S. law is still not consistent with the WTO rules.
At the beginning of the year, we warned you about the upcoming trade tsunami. Well hold on to your hats everyone, because another “trade” storm is heading our way.
Trans-Pacific Partnership (TPP) negotiators are meeting in Australia this month and are aiming to finish the massive 12-country “trade” agreement.
Despite mounting evidence that the TPP should not be completed — including the leak of another part of the top-secret text earlier this week — President Barack Obama wants the TPP done by November 11. That is when he will be meeting with other TPP-country heads of state in China at the Asia-Pacific Economic Conference.
With the TPP’s threats to food safety, Internet freedom, affordable medicine prices, financial regulations, anti-fracking policies, and more, it’s hard to overstate the damage this deal would have on our everyday lives.
But the TPP isn’t the only threat we currently face. We are also up against the TPP’s equally ugly step-sisters: TAFTA and TISA. And Obama wants to revive the undemocratic, Nixon-era Fast Track trade authority that would railroad all three pacts through Congress.
The Trans-Atlantic Free Trade Agreement (TAFTA) is not yet as far along as the TPP, but TAFTA negotiations recently took place in Washington, D.C., and more are set for a few weeks from now in Brussels. The largest U.S. and EU corporations have been pushing for TAFTA since the 1990s. Their goal is to use the agreement to weaken the strongest food safety and GMO labeling rules, consumer privacy protections, hazardous chemicals restrictions and more on either side of the Atlantic. They call this “harmonizing” regulations across the Atlantic. But really it would mean imposing a lowest common denominator of consumer and environmental safeguards.
The Trade in Services Agreement (TISA) is a proposed deal among the United States and more than 20 other countries that would limit countries’ regulation of the service sector. At stake is a roll back of the improved financial regulations created after the global financial crisis; limits on energy, transportation other policies needed to combat the climate crisis; and privatization of public services — from water utilities and government healthcare programs to aspects of public education.
TPP, TAFTA and TISA represent the next generation of corporate-driven “trade” deals. Ramming these dangerous deals through Congress is also Obama’s impetus to push for Fast Track. Fast Track gives Congress’ constitutional authority over trade to the president, allowing him to sign a trade deal before Congress votes on it and then railroad the deal through Congress in 90 days with limited debate and no amendments. Obama opposed Fast Track as a candidate. But now he is seeking to revive this dangerous procedural gimmick.
Because of your great work, we’ve managed to fend off Fast Track so far. This time last year, the U.S. House of Representatives released a flurry of letters showing opposition to Fast Track from most Democrats, and a wide swath of Republicans. This is something the other side was not expecting, and they were shocked. We won that round, but Obama and the corporate lobby are getting ready for the final push.
Because Fast Track is so unpopular in the House, Speaker John Boehner has a devious plan to force the bill through Congress in the “lame duck” session after the November elections. We need to make sure our “ducks” are in a row before that.
Some members of Congress are working on a replacement for Fast Track. U.S. Sen. Ron Wyden (D-Ore.) says he will create what he calls “Smart Track.” It is not yet clear if this will be the real Fast Track replacement we so desperately need, or just another Fast Track in disguise.
Sen. Wyden will want to be ready to introduce his Smart Track bill right as the new Congress starts in January 2015. This means we have only a couple of months left to make sure his replacement guarantees Congress a steering wheel and an emergency brake for runaway “trade” deals.
With all these deadlines drawing near, it’s clear that a knock-down, drag-out fight is imminent. But we will be ready. The TPP missed deadlines for completion in 2011, 2012, and 2013 — if we keep up the pressure, we can add 2014 to that list as well. That’s why there will be a TPP/TAFTA/TISA international week of action Nov 8-14 — more details coming soon!
By Alberto Cerda, founding member of the Chilean organization Derechos Digitales (Digital Rights)
This article was published this morning (in Spanish) on the Derechos Digitales website here: https://www.derechosdigitales.org/7990/el-tpp-recluta-mas-espionaje-electronico/.
As if we don’t have enough spying on Internet users, the proposed Trans-Pacific Partnership (TPP) includes draft rules that would increase significantly the role of online service providers in keeping an eye on their users, under the pretext of combatting copyright piracy. Even if you are not an infringer, your Internet service provider (ISP) will be watching you, just in case.
The TPP is a so-called trade agreement being negotiated by the U.S. and eleven countries around the Pacific Rim. The TPP would establish binding rules for domestic policies in several fields, from agricultural goods and services to investment and public procurement. The agreement also includes new rules for enforcing intellectual property on the Internet, modeled to some extent on current U.S. law, but in an unbalanced way that fails to incorporate crucial safeguards or allow for policy evolution in the digital environment.
Draft rules under negotiation would impose on Internet service providers a legal obligation to fight against online copyright infringement. This obligation is embodied in several provisions, which would require, for example, ISPs to communicate to their users any supposed infringement committed through their accounts, take down from the Internet information that supposedly infringes on copyright, and collect information that allows identification of users that supposedly have infringed the law.
For most non-American users, these rules are new and raise a number of significant concerns about their potential abuse and misuse by the government, corporations and the big content industry.
For American users, these rules may look similar to the heavily criticized Digital Millennium Copyright Act (DMCA). But the difference is that these rules may go beyond current U.S. law – and as part of a trade agreement they would be much more difficult to overturn, because of being enforceable under international trade law – if U.S. citizens opposed the new rules, Congress wouldn’t be able to repeal them without exposing the country to possible trade sanctions.
Under current U.S. law, companies that provide Internet services are required to participate in enforcing copyright law or risk being held liable for their users’ infringement. This means that companies like AT&T, Comcast, Time Warner Cable and Verizon are required to help enforce the copyrights of the recording and motion picture industries, for example, against their own users who are purported to have infringed upon a copyright. The TPP would take this a step further by enrolling new groups to spy on us by collecting online data about their users.
First, the TPP includes provisions that would extend spying obligations not only to entities that provide Internet services, but to “any person,” thus, not only Internet-related companies would be required to enforce the law, but “any person,” whether human or otherwise. Rights holders would likely interpret this obligation as applying to the manager of a free-wifi zone at Starbucks or your favorite neighborhood cafe, to public libraries and schools, as well as to that neighbor of yours who shares her wifi by keeping it accessible and open.
Second, TPP provisions do not seem to limit this spying to the Internet. Instead they refer to online providers, which may extend the scope of the law to other digital networks, such as intranets and private networks. What does this mean? It means that not only ISPs would be spying on you by collecting user data to protect Hollywood’s copyrights, but also other providers of online services, like the private network you use at your workplace, at your university, or even at your kid’s school, even if those networks do not provide actual access to or from the Internet.
Although the TPP states that Internet service providers would not be required by law to “monitor” users, it encourages this practice. Therefore, the TPP would leave open the door for private agreements between copyright holders (such as the Recording Industry Association of America and the Motion Picture Association of America) and Internet companies for enforcing the law against Internet users (for example, see the Center for Copyright Information). This raises concerns about powerful content industry players working together to promote abusive practices to enforce their interests against supposed infringers, since, in order to prevent any liability, online service providers may collaborate with rights holders to enforce copyrights beyond what is required by the law.
In sum, the TPP would impose new obligations for spying on Internet users under the guise of enforcing copyright. This should raise concerns not only among countries that currently lack such regulations, but also among U.S. citizens, because the TPP would expand the online spy network at home.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, number 4.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, footnote 237.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, footnote 237.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, number 5.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, number 1.
Opposition to the once arcane “investor-state dispute settlement” (ISDS) system has ballooned. ISDS empowers foreign corporations to bypass domestic courts, challenge governments’ public interest policies before extrajudicial tribunals and demand compensation.
Widespread resistance to ISDS has pushed the Obama administration to become increasingly defensive about its plan to expand the regime through a proposed Trans-Atlantic Free Trade Agreement (TAFTA) with the European Union (EU). The administration recently published a justification for its push for ISDS. We will address the claims made in that document on this blog over the coming weeks (for a full rebuttal to these claims, click here for our new report).
The administration’s attempt to quell the controversy surrounding the proposed expansion of ISDS via TAFTA was recently complicated when German government officials made clear that even EU member states do not want the deal to include a parallel legal system for corporations to privately enforce sweeping investor rights. TAFTA must be approved by the 28 EU member states, including Germany.
One day before the Obama administration published its ISDS defense document, Germany’s Federal Minister for Economic Affairs and Energy Sigmar Gabriel warned the European Commission that Germany may oppose TAFTA if ISDS is included in the pact. On March 26, 2014 Gabriel wrote to EU Trade Commissioner Karel De Gucht, “From the perspective of the [German] federal government, the United States and Germany already have sufficient legal protection in the national courts,” and Germany “has already made clear its position that specific dispute settlement provisions are not necessary in the EU-U.S. trade deal.”
Gabriel’s remarks echo the official anti-ISDS position of the Socialists and Democrats Group, the second largest bloc in the European Parliament, which also must approve TAFTA. The bloc explicitly opposes the inclusion of ISDS in TAFTA out of concern that it would empower foreign firms to undermine health and environmental policies.
Facing mounting governmental and popular rejection of ISDS, the European Commission has sought to make clear that it is the Obama administration that is demanding its inclusion in TAFTA. One week after Gabriel first indicated Germany’s opposition to ISDS in TAFTA, De Gucht clarified that the EU had actually already formally proposed to U.S. negotiators that ISDS be excluded, but that the U.S. government continued to insist on its inclusion: “If the United States agreed to simply drop it [ISDS]…so be it…But they don’t. I’ve already submitted it [the idea] to them, and they don’t.”
The new President-elect of the European Commission, Jean-Claude Juncker, has already suggested that he opposes ISDS in TAFTA, stating in the TAFTA section of his official policy agenda, “Nor will I accept that the jurisdiction of courts in the EU Member States is limited by special regimes for investor disputes.” The Obama administration, however, has shown no change in its insistence that ISDS be included in the deal.
The Obama administration has also become increasingly isolated at home in pushing for ISDS, as libertarian and Tea Party groups have expressed ISDS opposition alongside the labor, environmental, consumer, health and other organizations that represent the President’s base. In March the libertarian CATO Institute, for example, published an article entitled “A Compromise to Advance the Trade Agenda: Purge Negotiations of Investor-State Dispute Settlement.”
U.S. state and local governing bodies have also made clear that they see investor-state provisions as a threat to their autonomy and basic tenets of federalism. The National Conference of State Legislatures (NCSL), a bipartisan association representing U.S. state legislatures, many of which are GOP-controlled, has repeatedly approved a formal position plainly stating that NCSL will oppose any pact that contains ISDS.
Another major complication for the administration’s defense of ISDS is the crescendo of increasingly audacious investor-state cases and rulings seen in recent years. As one policy area after another has come under attack in ISDS cases, opposition to the regime has steadily grown.
Take, for example, the investor-state cases that U.S. tobacco giant Philip Morris International has launched against Uruguay’s tobacco regulations and Australia’s cigarette plain packaging law to curb smoking. The measures have been praised by the World Health Organization as leading public health initiatives. They apply equally to domestic and foreign firms and products. Australia’s highest court ruled against Philip Morris in the firm’s domestic lawsuit against the policies. But using ISDS, Philip Morris is demanding compensation from the two governments, claiming that the public health measures expropriate the corporation’s investments in violation of investor rights established in Bilateral Investment Treaties (BITs).
In another highly contentious case, Vattenfall, a Swedish energy firm that operates nuclear plants in Germany, has levied an investor-state claim for at least $1 billion against Germany for its decision to phase out nuclear power following the 2011 Fukushima nuclear disaster. This comes after Vattenfall successfully used another investor-state case to push Germany to roll back environmental requirements for a coal-fired power plant owned by the corporation.
Such extrajudicial attacks on nondiscriminatory public interest policies have made clear to the public and legislators that the standard defense of ISDS – that it is a commonsense means for foreign investors to obtain fair treatment if they are discriminated against – does not comport with the reality of the regime, fueling broader ISDS opposition.
Stay tuned for more on the growing controversy surrounding the proposed expansion of the investor-state system via TAFTA, and the Obama administration's weak defenses of the regime.
As Growing European Government Opposition to Investor-State Regime Shadows This Week’s U.S.-EU Talks, Analysis of Investment Data Reveals That Inclusion of Regime in Transatlantic Pact Would Empower Attacks Against U.S., EU Policies by 70,000 Additional Firms
The Obama administration’s precarious justifications for the investor-state dispute settlement (ISDS) regime may determine the fate of the transatlantic free trade agreement, said Public Citizen as it released a new report examining those defenses and revealing data on the U.S. and European Union (EU) firms that would be newly empowered to attack domestic policies in extrajudicial tribunals if the pact includes ISDS. Recently, the incoming European Commission president, several large voting blocs in the European Parliament and the German government have voiced opposition to ISDS.
“The ugly political spectacle of the Obama administration insisting on special privileges and a parallel legal system for foreign corporations over European officials’ growing objections is only made worse by the utter lack of policy justifications for ISDS,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “As a slew of domestic laws are being attacked in these corporate tribunals, European officials are rethinking past support for ISDS while the Obama administration just doubles down.”
The Obama administration has also become increasingly isolated at home in pushing for ISDS, as libertarian and tea party groups have expressed ISDS opposition alongside the labor, environmental, consumer, health and other organizations that represent the president’s base. The ISDS system, included in some past U.S. and EU trade or investment pacts, empowers foreign corporations to bypass domestic courts, and challenge domestic policies and government actions before extrajudicial tribunals authorized to order taxpayer compensation for claimed violations of investor rights and privileges included in the pacts.
Trying to quell the mounting controversy, the administration has issued a series of ISDS defenses that Public Citizen refutes in its new report, “Myths and Omissions: Unpacking Obama Administration Defenses of Investor-State Corporate Privileges” (PDF). The report documents the increasingly audacious use of ISDS cases to attack policies ranging from Germany’s phase-out of nuclear power after the Fukushima disaster to Australia’s landmark plain packaging cigarette law to a Canadian province’s moratorium on fracking and that country’s national medicine patent policy. In recent months, South Africa and Indonesia have joined the list of countries announcing the termination of ISDS-enforced agreements.
Using official data on cross-border investments, the report reveals that, were the U.S.-EU pact to include ISDS, it would newly empower corporate claims against domestic policies on behalf of more than 70,000 foreign firms – an unprecedented increase in investor-state liability for both the United States and the EU.
“Given the vast threats that these corporate privileges pose to our health, our environment, our democracy and our tax dollars, it’s little surprise that European officials have joined the broad chorus concerned about this extreme system,” said Wallach. “Now all eyes are on the Obama administration: Will it continue peddling baseless defenses of these corporate protections even if that means the demise of its priority U.S.-EU pact?”
The Public Citizen report details instances in which governments have rolled back or chilled health and environmental protections in response to ISDS cases and threats under existing pacts. It describes how ISDS cases have undermined the rule of law by empowering extrajudicial panels of private-sector attorneys to contradict domestic court rulings in decisions not subject to any substantive appeal. And contrary to the administration’s claims, the report explains precisely how ISDS grants foreign corporations greater procedural and substantive rights than domestic firms, including a right to demand compensation for nondiscriminatory public interest policies that frustrate the corporations’ expectations.
“Rather than try to silence critical voices with far-fetched reassurances, the Obama administration should heed widespread warnings of the threats posed by this parallel legal system for corporations and scrap its stubborn fealty to ISDS,” said Ben Beachy, research director of Public Citizen’s Global Trade Watch. “As the world rejects this extraordinary regime, we cannot afford to further embrace it.”
Additional reasons for the current ISDS controversy described in the report, which goes point-by-point through the administration’s claims, include:
- ISDS cases are surging. While treaties with ISDS provisions have existed since the 1960s, just 50 known ISDS cases were launched in the regime’s first three decades combined (through 2000). In contrast, corporations have launched more than 50 ISDS claims in each of the past three years.
- Under U.S. free trade agreements (FTA) alone, foreign firms already have pocketed more than $430 million in taxpayer money via investor-state cases. Tribunals have ordered more than $3.6 billion in compensation to investors under all U.S. bilateral investment treaties and FTAs. More than $38 billion remains in pending ISDS claims under these pacts.
- Numerous studies have failed to find that ISDS-enforced pacts cause an increase in foreign direct investment – the ostensible reason for governments to subscribe to the pacts’ extraordinary terms. As promised benefits of ISDS have proven illusory while tangible costs to taxpayers and safeguards have grown, an increasing number of governments have begun to reject the investor-state regime. But as they have moved to terminate ISDS-enforced pacts, foreign investment has grown.
- The structure of the ISDS regime has created a biased incentive system in which tribunalists can boost their caseload by using broad interpretations of foreign investors’ rights to rule in favor of corporations and against governments, and boost their earnings by dragging cases out for years.
- Purported safeguards and explanatory annexes added to agreements in recent years have failed to prevent ISDS tribunals from exercising enormous discretion to impose on governments’ obligations that they never undertook when signing agreements.
- Transparency rules and amicus briefs are insufficient to hold accountable tribunals that remain unrestrained by precedent, countries’ opinions or substantive appeals.
- State and local governments have no standing to defend the state and local policies that often are challenged in ISDS cases.
- The Obama administration has repeatedly ignored ISDS opposition from Congress, the bipartisan National Conference of State Legislatures, diverse public interest groups and legal scholars.
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What does a trade agreement have to do with the thousands of unaccompanied children risking their lives to try to cross the U.S. southern border?
Earlier this month Congresswoman Marcy Kaptur (D-Ohio) hosted a congressional briefing entitled "Economic Underpinnings Of Migration In The Americas," focusing on the role that the U.S.-Central America Free Trade Agreement (CAFTA) has played in contributing to the forced migration crisis.
Watch Congresswoman Marcy Kaptur and GTW research director Ben Beachy explain how CAFTA has exacerbated the instability feeding this crisis in the video below. Ben's prepared remarks follow.
0:00 -- Congresswoman Kaptur introduces the event
4:57 -- Ben delivers remarks
16:40 -- Congresswoman Kaptur answers a question about Fast Track
24:34 -- Ben answers a question on how to achieve a more fair trade model
CAFTA and the Forced Migration Crisis
Ben Beachy, Research Director, Public Citizen's Global Trade Watch
I’d like to start with a quote from former Representative Tom Davis, from my home state of Virginia, when he was speaking on the House floor in favor of CAFTA on July 27, 2005. He said:
“…we need to understand that CAFTA is more than just a trade pact. It's a signal of U.S. commitment to democracy and prosperity for our neighbors. And it's the best immigration, anti-gang, and anti-drug policy at our disposal…Want to fight the ever-more-violent MS-13 gang activity originating in El Salvador but prospering in Northern Virginia? Pass CAFTA …Want to begin to ebb the growing flow of illegal immigrants from Central America? Pass CAFTA.”
One day later, the House passed CAFTA, at midnight, by a single vote.
Nine years later, gang and drug-related violence in Central America has reached record highs and the “growing flow” of immigrants from Central America that Representative Davis referenced has surged.
At a minimum, CAFTA failed to stem violence and migration from Central America as Rep. Davis and other CAFTA proponents promised. But it’s worse than that. The deal appears to have actually contributed to the economic instability feeding the region’s increase in violence and forced migration.
I’m not going to argue that CAFTA is singularly responsible for the surge of Central American children trying to cross the southern border into the United States. The horrific violence in Honduras, El Salvador and Guatemala is the proximate cause of this crisis. But that violence has been fed by economic instability in those countries. And it makes sense to examine whether CAFTA has done more to mitigate or to exacerbate that instability.
The evidence, unfortunately points to the latter. Under CAFTA, family farmers in El Salvador, Guatemala and Honduras have not fared well, the economies have become dependent on short-lived apparel assembly jobs – many of which have vanished, and economic growth has actually slowed.
First, let’s look at the situation for family farmers. A number of development groups unfortunately predicted during the CAFTA debate that the deal could lead to the displacement of the family farmers that comprise significant portions of the region’s workforce. Indeed, that should have been the expected result if NAFTA, the predecessor to CAFTA, offers any indication.
NAFTA removed Mexican tariffs on corn imports and eliminated Mexican supports for small farmers but did not discipline U.S. subsidies. The predictable result was an influx of cheap U.S. corn into Mexico, which caused the price paid to Mexican farmers for the corn that they grew to fall by 66 percent, forcing many to abandon farming. An estimated 1.1 million small-scale farmers and 1.4 million other Mexicans dependent on agriculture soon lost their livelihoods. Immigration to the United States soon soared. While the number of people immigrating to the United States from Mexico remained steady in the three years preceding NAFTA’s implementation, the number of annual immigrants to the U.S. from Mexico more than doubled in NAFTA’s first seven years.
Under CAFTA, family farmers in Honduras, El Salvador, and Guatemala have been similarly inundated with subsidized agricultural imports – mainly grains – from U.S. agribusinesses. Agricultural imports from the United States in those three CAFTA countries have risen 78 percent since the deal went into effect. While these exports represent a small fraction of the business of U.S. agricultural firms, they represent a big threat to the Central American family farmers who do not have the subsidies, technology, and land to compete with the influx of grain.
And despite promises to the contrary, most small-scale farmers in those countries have not seen a boost in exports of their products to the United States. The growth in agricultural exports from El Salvador to the U.S. under CAFTA has actually been lower than global growth in agricultural exports to the U.S. And Honduras’s agricultural exports to the U.S. have been swamped by the surge in agricultural imports. Honduras went from being a net agricultural exporter to the United States in the six straight years before CAFTA to being a net agricultural importer from the United States in the six straight years after the deal took effect.
Some CAFTA proponents understood that Central America’s small-scale farmers may not fare well under the deal, but promised that displaced workers could find new jobs in the garment assembly factories, or maquilas, producing clothing for export to the U.S. These factories are not only notorious for abusing workers’ rights and paying low wages, but for leaving a country as soon as cheaper wages can be found in another low-wage country. Indeed, this race to the bottom was evident in Mexico under NAFTA. Maquila employment surged in NAFTA’s first six years. But since 2001, hundreds of factories and hundreds of thousands of jobs in this sector have been displaced as China joined the WTO and Chinese sweatshop exports gained global market share.
Apparel production in Central America’s factories has faced a similar fate. Apparel exports to the United States from each of the three countries in question – Honduras, El Salvador, and Guatemala – were lower last year than in the year before CAFTA took effect. In Honduras, apparel exports to the U.S. have fallen more than 20 percent in CAFTA’s first 9 years. Guatemala has seen a nearly 40% downfall. Jobs in the apparel factories of Central America would be expected to disappear even quicker if the controversial Trans-Pacific Partnership would take effect. The TPP contains Vietnam, where the average minimum wage is 52 cents an hour – a fraction of minimum wages in Central America, and even in China.
A final promise of CAFTA that I’ll highlight is that the pact would boost Central American economic growth. This promise was also made for Mexico under NAFTA. But since NAFTA took effect, Mexico’s average annual per capita growth rate has been just 1 percent, significantly lower than the pre-NAFTA rate. Indeed, Mexico had the third-lowest per capita growth rate in all of Latin America during the first 20 years of NAFTA.
The outcome has not been much better under CAFTA. The average annual GDP growth rates in El Salvador, Honduras and Guatemala have all been lower than the overall growth rate in Latin American developing countries in CAFTA’s first 9 years. In fact, the average annual growth rates of El Salvador and Honduras have fallen since the deal took effect, while the growth rate of Guatemala went from being above the regional average before CAFTA to falling below it since CAFTA.
These aggregate numbers of course represent thousands of individual families who have found themselves facing increased economic instability and greater difficulty in making ends meet. Thousands of youth more susceptible to the influence of gangs and drugs. And thousands of children who have decided that a life threatening journey to the United States is better than an even more life-threatening existence at home.
In sum, representative Davis was clearly wrong, as were the other CAFTA proponents who promised the deal would bring “prosperity” to Central America, thereby diminishing gang and drug-related violence and stemming the need to migrate to the U.S.
While Rep. Davis is no longer in Congress, his arguments are still here. Some members of Congress and industry lobbyists are making very similar promises regarding the proposed Trans-Pacific Partnership – which would expand the NAFTA/CAFTA model across the Pacific. They have argued, essentially, that this time will be different. That this time, a more-of-the-same trade deal will actually spur prosperity among our trade partners.
Most members of Congress, thankfully, are not buying it. Most Democrats have opposed the effort to Fast Track the TPP through Congress, as has a sizeable bloc of Republicans. For those still on the fence, it would be prudent to consider the failed legacy of past agreements before committing us, and our trade partners, to a new one.
Cristina Fernández de Kirchner (Argentina). Discurso completo en la Asamblea General de la ONU, 2014.
In an op-ed appearing in Forbes on Tuesday, the CEO of Eli Lilly, a U.S. pharmaceutical corporation, paints a glowing picture of how the proposed Trans-Atlantic Free Trade Agreement (TAFTA) would benefit consumers on both sides of the Atlantic – but it’s pure fantasy.
It is not surprising that Eli Lilly is cheerleading this controversial deal. This is the same pharmaceutical firm that is using the North American Free Trade Agreement (NAFTA) – TAFTA’s predecessor – to challenge Canada’s legal standards for granting patents and demand $500 million in taxpayer compensation.
John Lechleiter, Lilly’s CEO, shrouds his arguments under the guise of “free trade,” while in reality Lilly’s TAFTA proposals are a plea for increased government protection for his company and expansion of the monopolistic business model upon which the multinational pharmaceutical industry relies.
This post will take on Mr. Lechleiter’s claims, one by one.
Claim: [Differing regulatory standards for approval of pharmaceutical products] represents a de-facto tax on innovation.
Reality: The pharmaceutical industry (like the chemical industry, the GMO industry, the oil and gas industry, the financial industry, etc.) sees higher regulatory standards as unfair barriers to trade. In its submission to the Office of the United States Trade Representative of its TAFTA wish list, PhRMA (a powerful pharmaceutical industry lobby group of which Lilly is a member) outlines precisely what sorts of “regulatory barriers” it would like to see dismantled by the deal. These include rolling back the EU’s rules requiring clinical trial data to be transparent. When given access to this data, researchers have discovered information that could have potentially saved thousands of lives and billions in government spending. If Lilly and other pharmaceutical multinationals get their wish, it could prevent the public from gaining critical information about the safety and efficacy of our medicines.
Claim: A unified approach to IP would take out some of the twists and turns in the drug development pipeline for innovators on both sides of the Atlantic.
Reality: Through analysis of previously negotiated free trade agreements (FTAs), leaked texts of agreements currently under negotiation and industry comments, we can see that FTAs have continually decreased access to medicines in the name of increasing pharmaceutical corporations’ “intellectual property.” By enshrining in FTAs rules that lengthen, strengthen and broaden the patent monopolies of pharmaceutical companies, drug costs become bloated, healthcare budgets are inflated, and access to medicines for patients in need is stifled. There is every reason to believe that an EU-U.S. FTA would be no different.
Claim: TTIP is a great chance to ensure that the process for reimbursing medicines throughout the EU is clear, predictable and transparent.
Reality: Big Pharma has quite a different notion of what the word “transparency” means than most people. What Mr. Lechleiter really means is that he would like his industry to have greater influence over government drug reimbursement decisions for pubic health programs like Medicaid and Medicare. Governments control public health costs by listing medicines approved for government purchase or reimbursement and negotiating with drug firms to obtain the lowest prices. Including rules in TAFTA that would require governments to allow greater pharmaceutical industry influence over such cost containment efforts is yet another mechanism for pharmaceutical companies to inflate prices and boost their bottom line at the expense of consumers and taxpayers.
Claim: [Discovery and development] of new medicines starts with the resources necessary for investment in R&D, and in health care itself–driven first and foremost by economic growth. At present, the simple fact is that economies on both sides of the Atlantic need to create jobs and growth … and freer trade is a great way to do that.
Reality: The TAFTA study most frequently touted by TAFTA proponents projected that, in the most optimistic scenario the authors could envision, the deal might generate a degree of growth smaller than that delivered by the most recent version of the iPhone. And to generate this tiny growth, the study assumed a widespread curtailing of health, environmental, financial and other protections (and assumed no costs from such loss of safeguards). Furthermore, there is zero evidence that extending patent terms and lowering patent standards, as the pharmaceutical industry seeks, leads to job growth.
These realities are only a small sample of what Mr. Lechleister and other Big Pharma elite hope to attain through a secretly-negotiated EU-U.S. FTA. He fails to even mention in his piece how controversial investment provisions proposed for the deal would empower foreign companies to “sue” governments through international tribunals over rules and regulations that they perceive as undermining their expected future profits. In fact, that’s precisely what Lilly did when it was upset that Canadian courts found that Lilly had not satisfied the legal criteria to earn patents on two medicines. As mentioned, Lilly is using the same provision under NAFTA to demand $500 million in compensation from Canadian taxpayers. Perhaps Mr. Lechleiter was having trouble thinking of a way to translate that reality into an innocuous sounding claim.
The Chamber of Commerce is a place of magic. For its latest trick, the corporate alliance tried to make a $106 billion trade deficit disappear.
The Chamber took to its blog last week to highlight for readers “One Weird Fact About the Trade Deficit No One Has Noticed.” Here’s the claimed “fact”: “in 2012 — for the 20 countries with which the United States has entered into a free-trade agreement (FTA) — the trade deficit vanished.”
A disappearing U.S. trade deficit with our FTA partners? That’s not just weird – it’s incredible. As in, not credible.
Want to know why “no one has noticed” this oddity? Because it didn’t happen.
In 2012 the U.S. trade deficit with FTA partners topped $106 billion. That includes trade in goods and services. (If you just count goods, the deficit was $178 billion.)
And that mammoth FTA trade deficit is not “vanishing.” The estimated U.S. trade deficit with FTA partners in 2013 is exactly the same: $106 billion.
Indeed, the aggregate U.S. goods trade deficit with FTA partners has actually increased by more than $147 billion since the FTAs were implemented. In contrast, the aggregate deficit with all non-FTA countries has decreased by more than $130 billion since 2006 (the median entry date of existing FTAs).
The Chamber goes on to claim, “The United States has recorded a trade surplus in manufactured goods with its FTA partner countries for each of the past five years.” The opposite is true. The U.S. has run a major trade deficit in manufactured goods with its FTA partners in each of the last five years. The average FTA manufacturing trade deficit during this period exceeded $48 billion. Last year, it topped $51 billion.
How does the Chamber claim to not see glaring FTA trade deficits? By using some “weird facts” of its own.
The Chamber distorts the data by counting “foreign exports” as “U.S. exports.” Foreign exports are foreign-made goods that pass through the United States without alteration before being re-exported abroad. Along the way, they support zero U.S. production jobs. And yet, the Chamber includes foreign-made exports alongside U.S.-made exports as if they had the same value for U.S. workers.
Doing so dramatically deflates the size of the actual U.S. trade deficit with FTA partners. By errantly including foreign exports, the 2012 goods trade deficit with FTA partners can be made to look less than 40 percent of its actual size ($71 billion vs. the true deficit of $178 billion). The distortion was even worse in 2013, when the actual FTA goods trade deficit was nearly three times as large as the distorted deficit with foreign exports included ($67 billion vs. the true deficit of $180 billion).
The graph below shows how this single data trick allows the Chamber to claim that a $106 billion FTA trade deficit has disappeared. As the administration contemplates expanding the old deficit-ridden FTA model via the controversial Trans-Pacific Partnership, it seems that we should be looking at the actual evidence from past FTAs, not illusions.
A footnote on data availability: services data are not available for some FTA countries, particularly the smaller economies. The missing data were not included in either the Chamber’s figures or those reported above. Also, while the Chamber did not report figures for 2013 due to a claimed lack of available services data for that year, 2013 services data is actually available for all but two of the FTA partners for which 2012 data were available. For those two countries, services data for 2013 has been extrapolated based on observed growth trends.
"These are largely industry- and lobby-driven activities. They are not yet in any way proved to be in the interest of American people, and this is a matter of significant concern. I don’t understand how something of such vast significance for billions of people could even presume to be treated in this manner."
That's the take on the controversial Trans-Pacific Partnership (TPP) and Trans-Atlantic Free Trade Agreement (TAFTA) from Jeffrey Sachs -- prominent economist, Columbia University professor, and Earth Institute director.
Prof. Sachs lambasted the proposed deals on Wednesday at a Forum on Free Trade Agreements, hosted by Congresswoman Rosa DeLauro. Other speakers who criticized the pacts and called for a new trade agreement model included Maine Attorney General Janet Mills, K.J. Hertz of AARP, Jared Bernstein of the Center on Budget and Policy Priorities, Thea Lee of the AFL-CIO, and Debbie Barker of the Center for Food Safety.
Check out this video of their incisive critiques of hte TPP and TAFTA. Excerpts from Prof. Sachs' remarks follow.
Excerpts from Prof. Jeffrey Sachs on the TPP and TAFTA (also known as TTIP):
TRANSPARENCY: The fact that the public is not engaged means that we should worry because we do know that when things are managed in secret, as these negotiations have been, it’s the organized and powerful interests that by far dominate the proceedings. These are largely industry- and lobby-driven activities. They are not yet in any way proved to be in the interest of American people, and this is a matter of significant concern. I don’t understand how something of such vast significance for billions of people could even presume to be treated in this manner. One could imagine that negotiations over very specific tariff rates or very specific numerical clauses in some of these chapters could be held privately. But the idea that the main text around issues as broad as investor protection, dispute settlement, taxation, financial flows, intellectual property, would be done secretly, is shocking actually to me. But we’re talking about the basic rules of the international economy for the three major regions of the world. There is no reason in the world I can see for this text not to be public, not to be publically vetted, and not to be updated over time.
WRONG TRADE AGREEMENT MODEL: [W]hen President Obama talks about TPP and TTIP being 21st century trade agreements, the starting point should be that the phenomena of globalization more generally, the extent of financial crises, the growing environmental catastrophe worldwide of climate change and loss of biodiversity, the crises of international disease (such as we now have with Ebola in West Africa) need to be not only considered as footnotes. And they’re not even that in any way. They need to be in the forefront of our international economic relations…And in that sense I can’t support either of these negotiations with what I see now. I think that they would distract us from the more important global issues. I don’t think they rise close to the standard of being 21st century trade and investment agreements, not even close. They are very much 20th century agreements which were already out of date by the time they were negotiated. This is a NAFTA treaty writ large, or this is the same negotiation that we’ve had in many other cases.
TPP AND TTIP AS INVESTEMT PROTECTION AGREEMENTS, NOT TRADE PACTS: [T]these proposed agreements are mostly investor protection agreements, rather than trade agreements. There are trade elements in them, but this is mostly about investor protection: investor protection of property rights of investors, of prerogatives of investors, of IP of investors, of the regulatory environment of investors, and so forth. Recognizing that, we have some reasons to support some of these issues, but a lot of reasons for worry, because it’s not true that everything that is in the investor’s interest is in the worker’s interest. Its’ not true that everything that’s in the investor’s interest is in the broad interest of the American people or the people in host countries where the American investment may be going, or in the same way, investment that could be coming into this country. So we’re talking about mainly investment rules. And trade, which is already quite liberalized in the straightforward trade manner, doesn’t change all that much from what we know of these treaties. These are basically not trade agreements. They are investment agreements.
INVESTOR-STATE: [T]he whole issue of investor-state dispute settlement: to my mind, it is quite alarming that the administration seems until this day to be pushing something which more and more observers, participants, legal scholars view as out of control…And the problem with this is that it creates an extra-legal venue for arbitration that has proven in many investment treaties in recent years to be highly deleterious for basic government regulatory processes and especially around issues of health, safety, environment, and other issues. The mechanism proposed here which is already part of many bilateral treaties and some multilateral investment treaties — is giving more and more power to investors to challenge general government regulatory actions. Not breach of specific investment contracts, but general regulatory and legislative actions on the claim that those general regulatory or legislative actions are against the interests of the investors and somehow therefore violate the implicit standards or guarantees that these investors have vis-à-vis the host countries. In other words, standards of general applicability against smoking or for environmental protection, or for taxation of natural resources and so forth are now coming under challenge in these investor-state dispute arbitration panels and forcing governments — the host governments — to back down or rescind or, in the face of a lost arbitration, to cancel laws of general applicability, and therefore to lose the sovereign right to pursue national interest at the face of investor interest. …As far as I know the United States government continues to press this clause today. I regard that alone as reason to oppose both of these treaties. If this remains in place, it is absolutely in the wrong direction. And, these clauses have proven to be increasingly dangerous and I’ve seen publicly no response to this at all.
No Time to Lose: 147 Studies Supporting Public Health Action to Reduce Antibiotic Overuse in Food Animals*
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This is the third post in a three-part series on how the Trans-Pacific Partnership (TPP) could increase medicine prices in the United States. Click here for the first post's introduction to the problem, and here for the second post's outline of new rights that the TPP would give to Big Pharma.
A leaked draft TPP annex with the Orwellian title “Transparency and Procedural Fairness for Healthcare Technologies” would set broad limits on governments’ prerogatives to negotiate or mandate lower drug prices, including for taxpayer-funded programs such as Medicare, Medicaid and veterans’ and military health programs. Pushed by U.S. negotiators, these proposed TPP rules would conflict with existing and proposed policies to reduce healthcare costs for seniors, military families and the poor.
Rolling back medicine cost savings for U.S. veterans:
The U.S. government uses automatic price reductions to secure lower drug costs for U.S. veterans who benefit from health programs administered by VA. U.S. law allows VA to access drug prices at 24 percent below average market prices, and requires drug companies to offer these reduced prices for VA-administered programs as a condition for their medicines being included in other government health programs.
However, this cost-saving mechanism could run afoul of the proposed TPP annex, which requires government drug reimbursements to be based on “competitive, market-derived prices,” or on a system that “appropriately recognizes the value” of the drugs. The government-mandated price-setting system for VA programs would be subject to challenge as not being “competitive” and “market-derived.” VA-secured prices that fall significantly below the prices of patented drugs also could be challenged under the TPP as not “appropriately recognizing” drugs’ value. These TPP provisions, if enacted, could expose the U.S. government to challenges before international tribunals for not rolling back policies that cut healthcare costs for veterans and taxpayers.
Threatening policies that make medicines more affordable for the poor:
U.S. federal and state governments currently use several methods to tamp down the prices of drugs provided to low-income families through Medicaid. For example, the U.S. federal government requires drug corporations, as a condition for having their drugs covered by Medicaid, to sign discount agreements that oblige the firms to provide the state and federal governments with rebates to lower the cost of the drugs. These rebates have resulted in a 45 percent reduction in Medicaid spending for brand-name drugs.
State governments can further cut costs by, for example, negotiating lower prices with drug companies in return for placing their medicines on a Preferred Drug List (PDL) – a list of medicines that the state’s Medicaid program will cover without requiring prior authorization from a doctor. States have calculated substantial cost savings from usage of PDLs: New York saved an estimated $381 million in one recent year, while Texas saved an estimated $115 million and Utah saved an estimated $434 million.
Such Medicaid cost containment measures could be challenged under the TPP. Leveraging the government’s buying power to set prices could be attacked as not being “market-derived” or as “appropriately recognizing” the value of patented drugs. Some argue that the TPP provisions would primarily target federal policies, while Medicaid is administered by state governments. But even if limited to federal policies, the pact’s proposed terms directly contradict Medicaid’s federal cost control efforts, such as requiring drug firms to sign discount agreements. And state-level tools like PDLs could still be challenged under the TPP as part of a program created and controlled by the federal government.
Challenging Obamacare cost reductions for seniors:
Before implementation of the landmark Patient Protection and Affordable Care Act of 2010, seniors faced a gap in Medicare drug coverage. After passing a given threshold of drug costs, Medicare beneficiaries went from having to pay 25 percent of a drug’s cost to having to pay 100 percent out of pocket, until reaching a second threshold at which Medicare again covered most costs. Closing this “doughnut hole” was a key objective of the Affordable Care Act, which required drug manufacturers to offer a 50 percent drug price discount to Medicare beneficiaries within the coverage gap if they wanted their drugs to continue being covered under Medicare. As a result of this discount and a gradual increase in Medicare coverage, Medicare beneficiaries within the coverage gap were only responsible for 47.5 percent of brand-name drug costs in 2013 and will be responsible for only 25 percent by 2020.
But under the TPP, the requirement for drug companies to halve the price of their drugs within the coverage gap could be challenged for neither reflecting “competitive market-derived” prices nor “appropriately recognizing the value” of patented drugs. The Obama administration’s TPP healthcare annex thus threatens the cost savings that the administration’s own signature health law has provided to seniors.
Chilling future reforms that could further reduce healthcare costs for retirees:
Governments in countries ranging from New Zealand to Japan have kept healthcare costs in check by leveraging the government’s large purchasing power for taxpayer-funded public health programs to negotiate lower drug prices with pharmaceutical corporations. In contrast, for Medicare, which covers more than 50 million Americans, the U.S. government is barred by law from directly negotiating drug prices with pharmaceutical corporations.
Many policymakers, healthcare professionals and even President Obama have called for changes to this law so that the government could ask drug companies to provide lower prices in exchange for getting subsidized access to millions of Medicare recipients. Other reform proposals, including legislation now pending, would have the federal government set maximum prices for drugs covered by Medicare (as it does for health programs provided to veterans) or require that drug companies provide drug rebates (similar to the rebates required under Medicaid). Indeed, the White House itself has proposed requiring drug companies to pay Medicaid-like rebates to providers for treating low-income Medicare beneficiaries. The administration estimates this would deliver $117 billion in savings over 10 years.
However, the TPP presents an obstacle to these proposals to control soaring Medicare costs. All of the above-mentioned policies involve direct government intervention in price setting, conflicting with the TPP requirement for market-derived prices, and inviting challenges for failing to “appropriately recognize” the value of patented drugs.
Undermining drug discounts for underserved communities:
Under a program known as 340B, the U.S. federal government enables nongovernmental health centers – including migrant health centers, homeless health centers, children’s hospitals and family planning centers – to offer their diverse constituencies more affordable drugs. The federal government requires pharmaceutical firms to offer discounted drug prices to 340B-covered health centers via rebates, as a condition for having their drugs covered by Medicaid.
As a federally-run program that mandates below-market prices, the program could be challenged as a violation of the proposed TPP rules requiring drug prices to be market-derived or to reflect the value of patented drugs. In addition, the leaked TPP annex would require the U.S. government to allow pharmaceutical corporations to appeal drug pricing decisions such as the rebate amounts set under the 340B program, though they have very limited appeal rights for such decisions under U.S. domestic law. The TPP would thus give pharmaceutical corporations a new means of challenging 340B policies that reduce drug prices for underserved populations.
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Leaked draft intellectual property texts for the TPP reveal broad monopoly protections for pharmaceutical corporations, which elevate the costs of medicines and medical procedures. Inserting these sweeping corporate privileges into the pact would undermine U.S. efforts to make healthcare more affordable.
Some of the leaked TPP monopoly protections for Big Pharma could require scrapping the Obama administration proposal to save more than $4 billion on biologic medicines. Biologics – the latest generation of drugs to combat cancer, rheumatoid arthritis and other diseases – are exceptionally expensive, costing approximately 22 times more than conventional medicines.
Under U.S. law, pharmaceutical corporations enjoy monopoly protections for biologic drugs, even in the absence of a patent, for a 12-year period of “exclusivity.” During these 12 years, the Food and Drug Administration is prohibited from approving more affordable versions of the drugs, inflating the cost of these life-saving medicines as pharmaceutical firms accrue monopoly profits.
To lower the exorbitant prices and the resulting burden on programs like Medicare and Medicaid, the Obama administration’s 2015 budget would reduce the exclusivity period for biologics from 12 to seven years. The administration estimates this would save taxpayers more than $4.2 billion over the next decade just for federal programs.
However, at the request of Big Pharma, U.S. trade negotiators are demanding the 12-year exclusivity requirement for biologics in the TPP. This would lock into place pharmaceutical firms’ lengthy monopolies here at home. That is, Obama administration negotiators would effectively scrap the administration’s own proposal to save billions in unnecessary healthcare costs and lock in rules that would forbid future presidents or Congresses from doing so.
Investor Privileges: Empowering Big Pharma to Directly Attack U.S. Health Policies
Another TPP text - the leaked draft investment chapter - reveals that the deal would grant foreign firms the power to skirt domestic courts, drag the U.S. government before extrajudicial tribunals, and directly challenge patent laws and medicine cost containment policies as violations of their new TPP foreign investor “rights.”
The tribunals, comprised of three private attorneys, would be authorized to order unlimited taxpayer compensation for domestic policies perceived as undermining pharmaceutical corporations’ “expected future profits.” Effectively, this system would elevate individual pharmaceutical firms to the same status as the countries that may sign the TPP, empowering such firms to privately enforce the public agreement.
Such extreme “investor-state” rules have been included in past U.S. “free trade” agreements, forcing taxpayers to pay firms more than $430 million for toxics bans, land-use rules, water and timber policies and more. Just under U.S. pacts, more than $38 billion is pending in corporate claims against patent policies, pollution cleanup requirements, climate and energy laws, and other public interest polices.
This includes a $500 million claim that U.S. pharmaceutical corporation Eli Lilly launched in 2013 against Canada’s legal standard for granting patents. The firm is demanding compensation because Canadian courts enforcing Canadian patent law ruled that two of Eli Lilly’s medicines failed to meet the Canadian standard to obtain a patent, which requires demonstrating a drug’s promised utility. This is the first attempt by a patent-holding pharmaceutical firm to use the extraordinary investor privileges provided by U.S. “trade” agreements as a tool to push for greater monopoly patent protections.
The TPP would vastly expand the investor-state threat to U.S. public health policies, given the thousands of corporations based in TPP countries that would be newly empowered to launch cases against U.S. laws on behalf of any of their more than 14,000 U.S. subsidiaries.
Stay tuned for post #3 on yet another way that the TPP could limit the U.S. government's ability to control rising drug costs.
Much has been said about how the Trans-Pacific Partnership (TPP) threatens to raise medicine prices in TPP developing countries, thanks to the deal's proposed expansion of monopoly protections for pharmaceutical corporations.
Less has been said about the proposed TPP rules that could increase medicine prices in the United States.
Americans pay far more for healthcare than people in any other developed country, even though U.S. life expectancy falls below the average for developed countries. A major contributor to our bloated healthcare costs is the high prices for medicines in the United States. According to the Government Accountability Office, U.S. drug prices increased more than 70 percent faster than prices for other healthcare goods and services over 2006-2010. As a result, millions of Americans cannot afford the medicines they need to live healthy lives.
Soaring drug prices also drive up the amount that taxpayers must pay to fund public health programs such as Medicare, Medicaid and programs covering the U.S. military and veterans. Indeed, rising healthcare costs are the number one contributor to the U.S. government’s projected long-term budget deficits.
To try to combat the twin problems of unaffordable healthcare and unsustainable deficits, U.S. federal and state governments already use several tools to tamp down the cost of drugs – for Medicare, Medicaid and for military healthcare under TRICARE and the Department of Veterans Affairs (VA). Many more such cost containment policies have been proposed.
Yet, the TPP threatens to chill such proposals and even roll back existing policies to rein in exorbitant medicine prices. Leaked draft TPP texts – an intellectual property chapter, investment chapter and healthcare annex – contain expansive rules that would constrain the ability of the U.S. government to reduce medicine prices. Getting these terms into the TPP was a key objective of large U.S. pharmaceutical corporations that stand to reap monopoly profits from expansive patent terms and restrictions on government cost containment efforts. This incentive may explain why pharmaceutical corporations have lobbied Congress for the TPP more than any other industry.
The TPP’s threats to the affordability of U.S. healthcare have spurred major groups that have not traditionally taken part in trade policy debates to warn against the TPP’s provisions. For example, AARP – representing more than 37 million Americans over the age of 50 – joined unions and consumer groups in a November 2013 letter to President Obama to express “deep concern” that texts proposed for the TPP would “limit the ability of states and the federal government to moderate escalating prescription drug, biologic drug and medical device costs in public programs.” The groups concluded that the TPP could “undermine access to affordable health care for millions in the United States and around the world.”
Stay tuned for post #2 on specific TPP threats to affordable U.S. healthcare: Expansive Rights for Big Pharma, Expensive Medicines for Consumers.
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