John Howard finally let the cat out of the bag, with his suggestion that Labor’s amendments aimed at preventing evergreening of patents might ‘violate the spirit’ of the Free Trade Agreement with the US. As I pointed out last week
The letter of the FTA gives a fair bit of room to move, allowing for interpretations more or less favorable to the pharmaceutical lobby on the one hand and the PBS on the other.The government has tried to have it both ways, assuring the Australian public that the FTA clauses relating to PBS are meaningless words inserted to placate the Americans, while promising their (very close) friends in the pharmaceutical lobby that they can expect more favorable treatment, consistent with Wooldridge’s efforts to stack the PBAC and so forth. Passage of the FTA without amendment would have made it easy for the government to deliver to its friends when the elections were out of the way and the electors conveniently on the sidelines. Adding amendments directed at specific possible abuses implies, more generally, that Australia is committed to ensuring that the drug lobby gets nothing more than its minimum legal entitlement under the FTA – a nonbinding review, and observation of patent law.
Howard even raised the prospect that the Americans might walk away from the deal. If only!
John Quiggin 
Dear mr bush,
please walk away from the free trade agreement,it will be the biggest free kick in history.
Dear mr bush,
please walk away from the free trade agreement,it will be the biggest free kick in history.
The FTA is so much in the US’s favour, I can’t see that they would walk away from it.
And, anyway, the ALP’s amendments are probably window-dressing and would not stand up to an onslaught by US pharmaceutical companies’ lawyers in the long term.
The basic reason for the AUSFTA being flawed is that it doesn’t embrace the notion of reciprocity (“I’ll show you mine if you show me yours”). During the preliminary squabbling, the basic logic for the deal was said to be that we’d gain some benefits from agriculture market access, and the US would gain from IP etc (I don’t buy the AMWU line abut manufacturing – I think the allegedly deleterious effects of the deal on manufacturing employment are over-stated [though at the same time I agree with the Union’s decision to take a political stance]). As the deal turned out, the US squibbed on agriculture and, if rumours are correct, Vaile wanted to walk out because of this. Howard however couldn’t countenance the political implications of this so demanded Vaile continue and thus we ended up with a lop-sided deal that benefits the US more than Australia. (And incidently, generated a need for a payout for sugar farmers that contradicted the spirit of the WTO – exactly the same thing we tell off other countries for). Latham’s stance on the PBS was absolutely proper in trying belated to correct Howard’s political follies. Whether it stands the test of time, however, remains to be seen. Today’s media reports about a ‘please explain’ letter to Howard from Washington just show the stakes here and the extent to which the US pharmaceutical lobby seems to want to use the AUSFTA as a model for generating more generous IP terms in other jurisdictions. (By the way, is anyone else as completely gobsmacked as I am by Alan Ramsey’s revelation that Howard’s son is now working as a volunteer on the Bush campaign!)
Commenter Rex over at Surfdom has identified what may be the true significance of the PBS amendment – a line in the sand, beyond which we will not go. Hence he thinks Big Pharma will be most hesitant to challenge the amendment.
I think all this focus in the last few weeks has turned the PBS into a foundation domestic issue like interest rates, and any hint that the FTA is undermining it will send polititians scurrying for cover and big Pharma shaking their heads.
He could be right!
I don’t know how many of you have seen ‘The Castle’. But when the Michael Caton character hires a suburban solicitor (Tiriel Mora)to represent him at the High Court, he’s out of his depth and because he can’t explain the intricacies of constitutional law he resorts to talk about ‘the vibe’. When Howard talks about the ‘spirit’ he reminds me of the same thing.
The USTR will not complain about the legislative amendments for two reasons. They do not effect or impinge upon the textual content of the AUSFTA and secondly, the USTR will allow ‘Big Pharma’ to do the whinging on their behalf. Once a trade entity lodges a complaint, the review mechanisms kick in. From there on, the Labor amendments will be seen for what they really are. So many futile words on a page