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Sweet FA from FTA

February 9th, 2004

So far, all we have on the US-Australia Free Trade Agreement is a rewritten press release, but I think that’s enough to conclude that this is an election-loser for Howard. The reports have noted that there’s nothing on sugar and nothing much on beef or dairy, but it’s more revealing in some ways to look at the list of wins. Of particular interest is that the US Federal government procurement market has been opened up to Australian suppliers. As of last weekend, our demands included state government procurement as well, particularly in California.

And of course we have yet to see the list of concessions on things like IP, parallel importing and so on. The PBS looks to have been kept off the table, but I wouldn’t count on it.

Overall, this is about as unbalanced an agreement as could be imagined.

Update I’m travelling and haven’t yet had time for a detailed study, but I thought I’d look at the US reponse. Naturally, it’s anything but front-page news. Buried deep in the business section of the NYT, I found this article, which notes, with respect to the abolition of tariffs on manufactures

supporters of the trade pact said its main significance, assuming Congressional approval, was the virtual elimination of import duties on American manufactured goods to Australia. Currently, the United States pays 10 times as much as Australia does in tariffs in the joint trade between the two countries.

This is a pretty fair summary of the distribution of gains and losses in the deal. The Washington Post has a story leading to a broken link and the LA Times nothing I could find.

Further updateI’ll take this chance to welcome Ken Parish who’s back as an active blogger. Ken is deferring judgement, but has a lot of useful links.

Welcome back also to Kim Weatherall who reports that the IP components of the agreement are as expected, that is, about as bad as they could possibly be.

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  1. Dave Ricardo
    February 9th, 2004 at 08:59 | #1

    I also suspect that Johhny’s insatiable desire to grovel to Dubya has trumped his sense of national interest, but

    “Overall, this is about as unbalanced an agreement as could be imagined’

    Well, until today, you were saying that we were going to be sold down the river on pharmaceuticals, so if the PBS is off the table, it is possible to imagine a more unbalanced agreement.

    “state government procurement”

    Can the US federal government bind the procurement policies of state governments? This, I would doubt.

    The big take out is that with sugar not part of the deal, the sugar farmers should be hopping mad and the sugar seats should be there for the taking. The sound you hear is Deanne Kelly and her mates loudly shitting themselves.

  2. Dave Ricardo
    February 9th, 2004 at 09:07 | #2

    Actually, maybe is as unbalanced as imaginable. According to the News Limited web site

    “Australia to adjust Pharmaceuticals Benefits Scheme”

    Whatever this means, it should be a gift to Latham.

  3. Kim Weatherall
    February 9th, 2004 at 10:02 | #3

    We do have a summary of the IP concessions. Looks like the US must have won on just about all points at least in relation to copyright: agreed civil/criminal standards, copyright term extension, and the Digital Agenda Review being run by Phillips Fox has been completely “circumvented”.

    See the IP summary here.

  4. Dave Ricardo
    February 9th, 2004 at 10:12 | #4

    “IP concessions”

    I thought FTAs were supposed to be about more competition, not less. This must be the first FTA in history that entrenches the power of monopolists.

    Nice work, Johnny.

  5. Geoff Honnor
    February 9th, 2004 at 12:25 | #5

    SMH coverage includes:

    “The Australian government says the free trade agreement (FTA) will make the PBS listing process more transparent and timely.

    The cost of PBS drugs, which are heavily subsidised by the federal government, will not rise.

    The US and Australia have also agreed to establish a medicines working group, which the Office of the US Trade Representative says will further promote the agreement’s public health principles through an ongoing dialogue between the two nations.

    Mr Goddard (ACA spokesman) said it was a concern that the working group could continue to tinker with the PBS off the political radar.

    “The changes will happen piecemeal, they will be technical and they will not necessarily be announced,” he said.

    Medicines Australia, the peak representative for Australian drug companies, said the deal was a win for patients, the medical community and the industry.

    Medicines Australia chief executive Kieran Schneemann said one of the most important improvements was the establishment of an appeals process for PBS listing decisions made by the Pharmaceutical Benefits Advisory Committee (PBAC).

    He said the appeals process would act as an important safeguard for Australians.”

    The Pharmacologists closed-shop on PBAC won’t be best pleased with the “listing transparency” and “review” aspects – Docs famously hate their decisions being questioned by laypersons – but I think I’m inclined to wait and see what it looks like. Industry has long taken issue with the supposed opacity of PBAC’s listing evaluation processes and given that pricing was never going to get up as an issue, I’m not surprised that this has emerged as the outcome.

  6. February 9th, 2004 at 13:37 | #6

    It’s interesting that we don’t have the text yet. If the appeals process proves to be the dreaded secret arbitration of investor complaints against public policy it could be a huge hole in the PBS, especially under a government that is not all that supportive of the scheme.

    Incidentally it’s worth checking the Foreign Affairs site, if only to get a good laugh out of negotiating triumphs like Australia’s sugar access remains unchanged at 87,000 tonnes per annum.

  7. wbb
    February 9th, 2004 at 14:44 | #7

    Before the suspected Australian backdown on PBS can become a gift for Latham, the Oz public will need to be informed of its prior existence.

    If the PBS becomes an historical footnote, the blame should fall largely on those who failed to educate people as to its value.

  8. Steve Edwards
    February 9th, 2004 at 17:09 | #8

    Latham is 10 metres out, directly in front on this one. He can’t miss.

  9. Homer Paxton
    February 10th, 2004 at 09:52 | #9

    why is the PBS a protected species?

    Surely with health being the largest expenditure on the horizon for an ageing population subsidies for drugs to make baby boomers live longer is unsustainable.

  10. Dave Ricardo
    February 10th, 2004 at 10:40 | #10

    Homer, get your facts straight. What the pharma companies want, and seem to have got in this deal, is the right to have more drugs put on the PBS list. This means more cost to the tax payers, not less, but it mean more out of pocket cost for the really important drugs, while the life style drugs get the subsidies.

  11. Homer Paxton
    February 10th, 2004 at 12:50 | #11

    sorry Dave I obviously didn’t word my comment correctly.

    Yes I know that I am just perplexed at why we can’t discuss reform of the PBS ie reduce subsidies and bring prices to the market level.

  12. Dave Ricardo
    February 10th, 2004 at 13:04 | #12

    Well, Homer, we can bring prices to the “market level” but I guess one reason we might not want to is that if one pharma company has the monopoly patent on a certain life saving drug that they spent a lot of time developing then the “market level” will be so high that a lot of people will not be able to afford that drug and so they will either not buy the drug and die, or else ruin themselves financially if they do buy the drug.

    Mind you, that is just a guess.

  13. Brian Bahnisch
    February 10th, 2004 at 23:15 | #13

    Homer, I had a triple bypass three years ago. My drugs cost me about $100 per month. I saw my cardiologist today and he says everything is fine. If I had to pay market price I’d probably be dead. Happy now?

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