The Free Trade Agreement Of Your Nightmares

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Twelve nations, including the United States, are currently negotiating what may be the largest trade agreement ever conceived, and they’re doing under a cloak of complete secrecy. The Trans-Pacific Partnership is a free trade agreement between the nations of the United States, Canada, Mexico, Japan, Malaysia, Vietnam, Peru, Australia, Singapore, New Zealand, Chile, and Brunei (Note: as of late 2013, both South Korea and Taiwan have also expressed interest in joining). Twenty separate rounds of negotiations have been held since March 2010, and still continue today. Transcripts from these meetings do not exist and watchdog groups are growing more and more fearful of what may emerge.

Recently however, Wikileaks published two separate draft chapters from these negotiations: one on intellectual property, the other on the environment. These releases confirmed some fears – that the creation of a free trade zone is primarily for the benefit of large multinational corporations, and not for the general public.

Although the majority of the TPP is still unknown, several aspects – uncovered by the Wikileaks publications – raise suspicions. We examine only some in detail then return to the issue of the methodology employed by the Obama Administration and Congress in seeking to pass this trade agreement.

Generic Drugs and Patents

The draft chapter on intellectual property suggests terms that would allow major pharmaceutical companies to more easily obtain patents while simultaneously strengthening their current patents. However, several congressional representatives as well as Medicins Sans Frontiers and other NGOs have expressed concerns that cheaper generic drugs would be precluded by the terms of the TPP. The effects would not necessarily be felt as dramatically in the developed country signatories. Instead, a greater burden would be shouldered by nations like Vietnam whose population is dependent on cheaper but equally effective generic brands.

Notably, the United States is pushing for the following term: “Patents shall be available for any new forms, uses, or methods of using a known product; and [these] may satisfy the criteria for patentability, even if such invention does not result in the enhancement of the known efficacy of the product” (emphasis added). This language would allow for what is known as “evergreening,” a process that allows for minor alterations to “name brand” drugs and which extends the length of the patent, preserving the pharmaceutical company’s monopoly.

Consider the following example: Company A – a big pharmaceutical company based in the U.S. – patents a drug in 2014 that prevents a carrier of HIV from spreading it to others, making it noncommunicable. They receive a patent providing them with a 20-year monopoly, and reach online casino profitability. However, in 2033, Company A makes a slight adjustment to the formula which does not, in any way, change the efficacy of the drug: It does not improve the drug in any way. Under the terms of the TPP’s intellectual property chapter, the company can now extend their patent for additional years. This prevents the creation of generic drugs, which are more readily accessible to poorer individuals, while simultaneously removing the ability of nations like Vietnam to change their patent structures.

Investor State Dispute Resolutions

Perhaps the most boring phrase in the history of boring phrases, “investor state dispute resolutions,” is actually terrifying both in its effects and future implications. ISDR allows corporations to sue sovereign nations, an extra-legal right that provides corporations the ability to undo democratic laws.

The recent example of Eli Lilly suing Canada is a prime example of the effects of ISDR. This past September, Eli Lilly – a global pharmaceutical company based out of Indiana – filed a $500 million lawsuit against Canada for the country’s allegedly wrongful invalidation of two Eli Lilly patents. The suit was brought under NAFTA and alleged that Canada, by invalidating the patents, had broken the terms of the treaty by unfairly treating their investment – i.e. the patents. The two patents – one for Zyprexa, an anti-psychotic, the other for Stratera, used to treat ADHD – were found to have no proven utility. Both cases were adjudicated fully within Canada’s court system. But when the Supreme Court of Canada refused to hear the case, Eli Lilly moved to have the case completely removed from Canada’s judiciary to an arbitration tribunal that will decide the case.

Here’s why this is important: If successful, Eli Lilly will have successfully bypassed Canada’s court system and removed ultimate decision-making about the granting of patents from Canada to an international arbitration group of three. A pharmaceutical company will diminish Canada’s sovereignty and subsequently open all participating nations within NAFTA to similar treatment by international corporations. Any health regulation, environmental regulation, civil rights legislation, or intellectual property decision reached via democratic processes by elected legislators could be undone. This is a substantial development under NAFTA, and the same language that allows Eli Lilly to sue Canada is being pushed by the United States for inclusion in the TPP.

Fast-Track Legislation

The most worrisome aspect of the TPP is procedural. The free trade agreement, as mentioned above, is and has been conducted in complete secrecy. But for Wikileaks publishing two chapters of the draft agreement, little would be known. Even members of Congress are being kept out of the loop. Senator Ron Wyden of Oregon introduced S. 3225 on the senate floor back in 2012, requesting that the US Trade Representative disclose TPP documents to Congress. This bill was moved to the finance committee where it has sat dormantly since the day it was introduced (May 23, 2012). That same day, Senator Wyden stated:

“The majority of Congress is being kept in the dark as to the substance of the TPP negotiations, while representatives of U.S. corporations – like Halliburton, Chevron, PHRMA, Comcast, and the Motion Picture Association of America – are being consulted and made privy to details of the agreement. . . . More than two months after receiving the proper security credentials, my staff is still barred from viewing the details of the proposals that USTR is advancing.”

The Obama Administration is seeking to fast-track the legislation through both houses of Congress. Free trade agreements are considered “congressional-executive agreements” and do not require a two-thirds majority in the Senate for validation; only simple majorities in both chambers of Congress are needed. Under the Trade Act of 1974, Congress can provide authority to the Obama Administration to fast track the agreement. The administration would introduce that agreement on the floor of both the senate and house. There would be minimal debate, no amendments would be permitted, and the bill would be voted on within 90 days.

Conclusion

There are a number of other critical concerns about the TPP that were not discussed above. These include cell phone unlocking, increased ISP liability with respect to copyright infringement, data privacy concerns, and projected impact upon American employees. It should be stressed that the most pressing aspect of the TPP is the complete lack of transparency. It is difficult for watchdog groups to examine the trade agreement if it is passed in secret. The concerns raised about the TPP are warranted and deserve a complete public and legislative vetting, not a 90-day fast tracked legislative formality.*

* Besides what is hyperlinked above, the following links are also very useful. The Trans-Pacific Partnership is opaque but important. Please look at the following links to gain better understanding of the TPP.

Electronic Frontier Foundation

Public Citizen

Raw Story

NY Times Editorial Board

About Sean Dugan

Sean Dugan is a recent graduate of the University of San Francisco School of Law and holds a B.A. in History from the University of Berkeley. His legal interests are expansive but he holds a special affinity for intellectual property rights. When not focusing on the law, Sean enjoys politics, the AMC series 'Breaking Bad,' and the city of San Francisco. His greatest passion is cheering for the Boston Celtics. His second greatest passion is rooting against the Los Angeles Lakers.
Posted in: Business, Consumer, International, International Law, Law