Obama's secretive TPPA is driven by self-interest, patents and trade protectionism leading to costly medicines...

Barack Obama’s response to public criticism on the US trade deals with Europe and Asia-Pacific is less than convincing.

UNITED States President Barack Obama will soon be making a trip to Asian countries, including Malaysia. The Trans Pacific Partnership Agreement (TPPA) will be on his agenda, just as the Trans­atlantic Trade and Investment Partnership (TTIP) was a priority during his trip to Europe last week.

The TTIP is the agreement the US and European Union are negotiating — a counter­part to the TPPA that the US is negotiating with 11 Asian and Pacific countries, including Malaysia.

At a live-TV press conference in the Netherlands, Obama responded to strong public criticism against the TTIP and TTPA.

There is no point worrying about the provisions having effects on consumer and environmental protection until the deal is done, he said. Consumer and environmental protection would in fact be strengthened by trade deals.

“I spent my whole political life fighting for consumer protection,” he said, adding there is no ground for worries that companies can take action to weaken consumer and environmental protection.

The President’s comments on the TTIP presumably apply also to the TPPA since both contain similar provisions, and the criticisms from US and other lawmakers and NGOs also apply to both. Consumer and health groups have indeed been vocal in their criticisms and protests against the TPPA and TTIP.

They include Public Citizen, an organisation of America’s leading consumer advocate Ralph Nader, and Medecins Sans Frontieres (MSF), the Nobel Prize winning medical group.

In Malaysia, groups representing consumers, patients, health and the environment, including the Consumers Association of Penang, Malaysian Council for Tobacco Cont­rol, the Malaysian Aids Council and several patients’ organisations, have been actively campaigning against the TPPA.

Obama’s response will not assure the critics. His first point, that there is no point worrying until the deal is done, will hit a raw nerve.

Lawmakers, including in the US Congress, and NGOs in countries involved in the two trade deals, have been disgruntled that the talks are held in secret and that they don’t have access to the texts.

The secrecy of the negotiations, the inability of the public to give feedback, and the lack of legitimacy of the process, is one of the maj­­or criticisms against these two trade deals.

Nevertheless, there is enough information, from leaked chapters, and from provisions in existing US free trade agreements, for the public to have a good idea what the trade deals entail. Obama’s advice that there is no point worrying until the final texts are revealed is likely to earn scorn rather than an assurance.

Second, the critics have good reasons to be worried or outraged.

These agreements would make it very difficult or even impossible for patients and government health authorities to have access to the much cheaper generic versions of the medicines, because of the tighter patent reg­ime the US is proposing in the TPPA.

As a result, millions of patients could be deprived of life-saving drugs since they, and their governments, cannot afford to buy the branded products.

According to MSF, the first generation of HIV drugs have come down in price by 99% over the last decade, from US$10,000 (RM33,000) per person per year in 2000 to roughly US$60 (RM196) today.

This is due to generic production in India, Brazil and Thailand, where these drugs were not patented.

This dramatic price drop enabled HIV/AIDS treatment to be scaled up for over six million people in developing countries.

According to MSF, the US proposals in the TPPA would cause many problems.

These would include extending the term of the patents beyond the already lengthy 20 years, the provision of “data exclusivity” (which will require generic companies to undertake their own costly clinical trials), and widening the scope of what medicines are patentable.

In Malaysia, several patient and medical groups in 2012 issued a joint statement opposing the US proposals, which they say will reduce access to medicines.

“We categorically oppose US demands for longer and stronger patents on medicines and medical technologies that are essential to save Malaysian lives,” said leaders of six groups.

The groups involved include the National Cancer Society Malay­sia, Breast Cancer Wel-fare Association, Malaysian AIDS Council, Malaysian Treatment Access and Advocacy, Malaysian Thoracic Society and Malaysian Mental Health Association.

They said that cancers require affordable chemotherapy medicines.

HIV second line medicines like Kaletra are required to save lives, and are often out of reach to persons living with HIV.

Many other conditions depend on generic medicines, such as cancer, tuberculosis, malaria and diabetes. They asked that the US proposals be rejected.

But it is not only medicines that are affected. Consumers of information, media and books too will be affected by tighter copyright laws that are likely to result in more expensive use of information materials and the Internet.

Health groups such as the Malaysian Council for Tobacco Control point out that measures to control cigarette sales, such as requiring plain packaging, will be threatened as the tobacco companies can sue the governments for affecting their revenues.

Under an investor-state dispute system (ISDS) in the TPPA, foreign investors can sue governments in an international tribunal, on grounds that their future revenues are affected by new policies.

Many cases against governments for their health and environmental policies have been already brought by companies under free trade agreements that contain this ISDS, and other bilateral investment treaties.

A tobacco firm has sued Australia and Uruguay for their plain-packaging policy.

A Swedish company made a US$2bil (RM6.5bil) claim against the German government for its policy to phase out nuclear power after the Fukushima nuclear accident.

Germany has told the European Commission to exclude the ISDS mechanism in the TTIP, and the Commission has suspended negotiations with the US on ISDS.

In the TPPA, however, the ISDS is still the lynchpin of the whole agreement, as it is a strong enforcement mechanism that hangs over the heads of governments that naturally do not like being sued by companies in an international tribunal for millions or billions of dollars.

Thus, Obama’s assurances that there should be no worries about companies taking action on governments for their consumer and environmental policies ring hollow when many such actions have already been taken under existing US FTAs and other treaties.

Contributed by Global Trends Martin Khor The Star/Asia News Network

The views expressed are entirely the writer’s own. 

Related posts:

1.  Investor treaties in trouble
2.  TPPA negotiations hot up in early 2014
   3. Winds of change blowing in Asia
   4. Looming danger on contrast and competition of economic models
   5. An eventful week on the TPPA
   6. TPP affecting health policies?
   7. ASEAN plans world's largest trading bloc in Asia, RCEP ...

Investor treaties in trouble

Several countries are reviewing these agreements, prompted by the number of cases brought by foreign companies who claim that changes in government policies affect their future profits.

THE tide is turning against investment treaties that allow foreign investors to take up cases against host governments and claim compensation of up to billions of dollars.

Indonesia has given notice it will terminate its bilateral investment treaty (BIT) with the Netherlands, according to a statement issued by the Dutch embassy in Jakarta last week.

“The Indonesian Government has also mentioned it intends to terminate all of its 67 bilateral investment treaties,” according to the statement.

It has not been confirmed by Indonesia. But if this is correct, Indonesia joins South Africa, which last year announced it is ending all its BITS.

Several other countries are also reviewing their investment treaties.

This is prompted by increasing numbers of cases being brought against governments by foreign companies who claim that changes in government policies or contracts affect their future profits.

Many countries have been asked to pay large compensations to companies under the treaties.

The biggest claim was against Ecuador, which has to compensate an American oil company US$2.3bil (RM7.6bil) for cancelling a contract.

The system empowering investors to sue governments in an international tribunal, thus bypassing national laws and courts, is a subject of controversy in Malaysia because it is part of the Trans-Pacific Partnership Agreement (TPPA) which the country is negotiating with 11 other countries.

The investor-state dispute settlement (ISDS) system is contained in free trade agreements (especially those involving the United States) and also in BITS which countries sign among themselves to protect foreign investors’ rights.

When these treaties containing ISDS were signed, many countries did not know they were opening themselves to legal cases that foreign investors can take up under loosely worded provisions that allow them to win cases where they claim they have not been treated fairly or that their expected revenues have been expropriated.

Indonesia and South Africa are among many countries that faced such cases.

The Indonesian government has been taken to the International Centre for Settlement of Investment Disputes (ICSID) tribunal based in Washington by a British company, Churchill Mining, which claimed the government violated the United Kingdom-Indonesia BIT when its contract with a local government in East Kalimantan was cancelled.

Reports indicate the company is claiming compensation of US$1bil to US$2bil (RM3.3bil to RM6.6bil) in losses.

This and other cases taken against Indonesia prompted the government to review whether it should retain its many BITS.

South Africa had also been sued by a British mining company which claimed losses after the government introduced policies to boost the economic capacity of the blacks to redress apartheid policies.

India is also reviewing its BITS, after many companies filed cases after the Supreme Court cancelled their 2G mobile communications licences in the wake of a high-profile corruption scandal linked to the granting of the licences.

But it is not only developing countries that are getting disillusioned by the ISDS. Europe is getting cold feet over the investor-state dispute mechanism in the Trans-Atlantic trade agreement (TTIP) it is negotiating with the United States, similar to the mechanism in the TPPA.

Two weeks ago, Germany told the European Commission that the TTIP must not have the investor-state dispute mechanism.

Brigitte Zypries, a junior economy minister, told the German parliament that Berlin was determined to exclude arbitration rights from the Transatlantic Trade and Investment Partnership (TTIP) deal, according to the Financial Times.

“From the perspective of the [German] federal government, US investors in the European Union have sufficient legal protection in the national courts,” she said.

The French trade minister had earlier voiced opposition to ISDS, while a report commissioned by the UK government also pointed out problems with the mechanism.

The European disillusionment has two causes.

ISDS cases are also affecting the countries. Germany has been taken to ICSID by a Swedish company Vattenfall which claimed it suffered over a billion euros in losses resulting from the government’s decision to phase out nuclear power after the Fukushima disaster.

And the European public is getting upset over the investment system. Two European organisations last year published a report showing how the international investment arbitration system is monopolised by a few big law firms, how the tribunals are riddled with conflicts of interest and the arbitrary nature of tribunal decisions.

That report caused shock waves not only in the civil society but also among European policy makers.

In January, the European Commission suspended negotiations with the United States on the ISDS provisions in the TTIP, and announced it would hold 90 days of consultations with the public over the issue.

In Australia, the previous government decided it would not have an ISDS clause in its future FTAs and BITS, following a case taken against it by Philip Morris International which claimed loss of profits because of laws requiring only plain packaging on cigarette boxes.

In Malaysia, the ISDS is one of the major controversial issues relating to the TPPA. Many business, professional and public-interest groups want the government to exclude the ISDS as a “red line” in the TPPA negotiations.

Prime Minister Datuk Seri Najib Tun Razak had also mentioned investment policy and ISDS as one of the issues (the others being government procurement and state-owned enterprises) in the TTPA that may impinge on national sovereignty, when he was at the Asia-Pacific Economic Cooperation Summit and TPPA Summit in Indonesia last year.

So far, the United States has stuck to its position that ISDS has to be part of the TPPA and TTIP. However, if the emerging European opposition affects the TTIP negotiations, it could affect the TPPA as this would strengthen the position of those opposed to ISDS.

Meanwhile, we can also expect more countries to review their BITS. Developing countries seeking to end their bilateral agreements with European countries can point to the fact that more and more European countries are themselves having second thoughts about the ISDS.

Contributed by  Martin Khor Global Trends The Star/ANN

• The views expressed are entirely the writer’s own.

Related posts:

 1. TPPA negotiations hot up in early 2014

 2. Winds of change blowing in Asia
3. Looming danger on contrast and competition of economic models
4. An eventful week on the TPPA
5. TPP affecting health policies?
6. ASEAN plans world's largest trading bloc in Asia, RCEP ...