Reports highlight costs of free trade deal

Managing Intellectual Property, 27 June 2004

Reports highlight costs of free trade deal

Emma Barraclough, Hong Kong

Politicians from Australia’s opposition party could try to derail the Australian-US Free Trade Agreement (AUSFTA) after a Senate select committee claimed the deal could push up drugs prices and give copyright owners in Australia even more protection than they enjoy in the US.

A special Senate committee released an interim report on June 25, arguing that the government had failed to show that provisions in the AUSFTA designed to give more protection to originator drugs companies would not lead to higher pharmaceutical prices in Australia.

“If the enabling legislation does indeed open the way for pharmaceutical companies to effectively extend the term of their patent monopoly, thus delaying the introduction of generic drugs, it would seem that the government’s claim that drug prices will not rise as a result of the AUSFTA is not sustainable,” said the report. “This is an important matter for the future of the public health system in Australia, and not one that should be skimmed over for the sake of potential gains in other areas of the economy.”

The opposition party-dominated committee is due to release its full findings on August 12. The Labor Party, the country’s main opposition party, will then decide whether to block legislation that will enact the free trade deal. Because the Labor Party is the largest party in the Senate - Australia’s upper house - their support is crucial to getting the bill passed.

Australia’s politicians are only able to vote the trade deal up or down and cannot propose amendments to the terms of the AUSFTA negotiated by the two governments. Given its expected gains to the country’s large and important agricultural sector, Labor politicians will be under pressure to back the agreement - despite concerns about the potential costs to Australia of implementing the intellectual property aspects of the deal.

Last week an academic commissioned by the Senate committee to assess the AUSFTA claimed that the deal had the potential to delay the introduction of generic drugs into the Australian market, which she said would increase drug prices.

Philippa Dee also estimated that Australia could eventually pay 25% more each year in net royalty payments overseas if Australia implements the AUSFTA provisions on copyright - far more than the government itself had earlier estimated. The deal will extend copyright protection by 20 years.

Last week also saw the release of a report by the Joint Standing Committee on Treaties, a 16 member parliamentary committee dominated by government politicians. They backed the AUSFTA but recommended a series of amendments to Australia’s IP laws to protect Australian consumers.

The committee urged the government to give libraries and schools a statutory right to academic material, amend the Copyright Act to replace the Australian doctrine of fair dealing with a doctrine resembling the fair-use defence used by the US and consider adopting a higher, US-style standard of originality for copyrighted material.

Legislation to enact the AUSFTA was introduced into the government-controlled House of Representatives last week. It is expected to go to the Senate later this year.

The report by the Joint Standing Committee on Treaties is at http://www.aph.gov.au/house/committ...

Philippa Dee’s report is here.

The Senate select committee report is here.