TRIPS & FREE TRADE AGREEMENTS/ECONOMIC PARTNERSHIP AGREEMENTS M Forere, lecturer - UKZN
Normative Framework of FTAs • Tariffs imposed on imports – trade barriers • Article I of GATT – Most Favored Nation (MFN) • Article II of GATS - MFN • Article V of GATS allows exception to non-discrimination and MFN - FTAs • Article XXIV of GATT: exception to MFN – allows free trade areas
cont. Normative Framework of FTAs. • XXIV (4): The contracting parties recognize the desirability of increasing freedom of trade by the development, through voluntary agreements, of closer integration between the economies of the countries parties to such agreements… • Article XXIV (5): Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the formation of a customs union or of a free-trade area or the adoption of an interim agreement necessary for the formation of a customs union or of a free-trade area.
FTAs and the Right to Health • “States have to ensure that the trade rules and policies they select are consistent with their legal obligations in relation to the right to health.” Prof. Paul Hunt – 1st Spec Rap on the Right to Health – report in his mission to the WTO in 2004 • “If the FTA has negative impact on the right to health for the poor & vulnerable, state has an obligation under international human rights law to revise those terms.” (ibid)
Watch out!!! • Impact on government revenue • FTA removes tariff – govmt revenue for developing countries and LDCs • E.g. EU products make 40% of sub-Saharan Africa imports – FTA with EU will cut governments revenue substantially • Such revenue loss compels governments to cut on public spending, e.g, on health • Revenue loss also compels governments to privatize public services such as health • Result: no access to health for poor people
continuation : watch out!!! 2.Trade in Health and Health related services • Health is one of the fastest growing economy in the world economy – BIG PHARMA • In developing countries, it is also a growing economy – middle class & medical aids • Trade in Health would allow the BIG PHARMA to have access to health services in developing countries – leading to privatisation • The privatisation of health sector detrimental to those who cannot afford to pay for health services
continuation : Items to look for in an FTA agreement 3. Stronger IP Rights – TRIPS PLUS • recap: Stronger IPRs cause prices to sky-rocket • High medical prices limit access to health -governments do not afford treatment for everyone
U.S. trade deals recently completed or on the horizon • Free Trade Area of the Americas (dead 2005) • CAFTA (post-ratification/implementation pressures) • Southern African Customs Union (suspended 2006) • Botswana, Lesotho, Namibia, South Africa and Swaziland • U.S. bilateral Free Trade Agreements • Jordan, Chile, Morocco, Singapore, Oman, Bahrain, Peru • Thailand and Malaysia (suspended) • S. Korea, Columbia, Panama (pending) • Trade Promotion Authority (Fast-Track) expired June 30, 2007
EU Economic Partnership Agreements • Also seek TRIPS-plus provisions: • Patent term extensions • Data exclusivity up to 10 years plus 1 more • Enhanced enforcement/anti-counterfeiting measures – Financing of Ugandan Counterfeit Goods Bill
Other FTAs • Japan and EFTA (Iceland, Liechtenstein, Norway, and Switzerland) also seek TRIPS-plus IPRs. • Bilateral investment treaties (BITS) • There are also South/South and regional trade agreements where more powerful parties might seek unfair trade terms; not much evidence yet of seeking higher IPRs. • Some developing countries have vowed to avoid IPR+ FTAs (India/Brazil/S. Africa), but it is uncertain whether promises will last.
Ripple Effects • How do other countries and IP right holders benefit from bilateral and regional trade agreements? • Art. 4: most-favored-nation treatment.
Other TRIPS-plus Pressures • U.S. Special 301 List • Generalized System of Preferences • WTO Accession
Trying to Avoid Unilateral Pressure/Sanctions • Countries may have agreed to adopt TRIPS in part to avoid unilateral trade sanctions imposed by the US (11 sanction actions against 7 countries prior to TRIPS) • US used unilateral carrots and sticks during WTO TRIPS negotiations • Unilateral pressures continue post-TRIPS
U.S. Special 301 Watch List • Annual USTR "Special 301" Report details "the adequacy and effectiveness of intellectual property protection“ worldwide. • Reports include information on WTO disputes, "out-of-cycle reviews,” and countries placed on the “Priority Foreign Country,” "Priority Watch List" or regular "Watch list." • Major IP industry file their own 301 submissions • US National Trade Estimate Report on Foreign Trade Barriers also surveys "significant foreign barriers to U.S. exports."
301 Procedures and Sanctions • Watch List countries are contacted and usually promise to investigate • Priority Watch List countries are contacted with precise complaints and objectives • Priority Foreign Countries are notified re most onerous and egregious polices; failure to make progress can result in trade sanctions • Paradoxically, US has to use WTO for TRIPS violations but can act unilaterally re TRIPS+
Generalized System of Preferences • The U.S. creates trade pressure by offering and threatening to withdraw special (non-tariff) trade preferences. • In 1987, the U.S. imposed 100% tariffs (trade sanctions) against several Brazilian industries because Brazil had not “modernized” its intellectual property law. • The U.S. in 1998 temporarily withheld trade preferences on four classes of products in S. Africa.
WTO Accession Agreements • U.S. can add pressure and make demands for TRIPS-plus IPR provisions in WTO accession negotiations • Cambodia – data exclusivity • China – six year of data exclusivity