“Free” Trade Beyond The WTO

People’s Democracy

Organ of the Communist Party of India (Marxist)


No. 31

August 01,

Trade Beyond The WTO

Sen Gupta


to the brave new world of “Free” Trade. This is a world that extends beyond
the World Trade Organisation. This may be difficult to comprehend, but the fact
of the matter is that global capital, led by the US government, seeks more and
more to tread where even the WTO did not. The reason, of course, is simple. Not
content with what the WTO is able to deliver for it, the US is impatient with
the relatively “democratic” structure of the WTO. Having written most of the
rules through which the WTO operates, the US now feels constrained by attempts
within the WTO to question its suzerainty.


US has now developed a strategy that bypasses the WTO and actually goes much
beyond the onerous conditions that the WTO lays down. This is particularly in
evidence in the area of TRIPS, where the US is pushing for what are called Trips
Plus measures, i.e. even stronger Patent protection than what the TRIPS
agreement provides for. It is doing so through a series of Free Trade Agreements
(FTA) that it is negotiating at a regional or bilateral level.


in this, US interests are being driven by the interests of its pharmaceutical
and agri-business companies. Developing countries are required, under these
trade agreements, to include very high levels of protection in their national
laws, with grave consequences for public health and other national policy
FTAs have thus become instruments through which the US pressures countries
bilaterally, in some cases even threatening or imposing trade sanctions against



us look at some of the Free Trade agreements that the US is negotiating. In its
bilateral agreement with Thailand, for example, the US
pressuring Thailand to sign away citizens’ rights to life-saving medicines.
Relief agencies like Oxfam, in a report released on the eve of the XV
International AIDS conference in Bangkok, warns that US demands for the US-Thai
FTA to toughen existing intellectual property protection for drugs produced by
MNCs will hamper Thailand’s successful HIV/AIDS treatment programme and
undermine future access to affordable medicines.


In Thailand, there are 29,000 new infections of HIV/AIDS each year, of which
approximately 4,200 are children. Access to affordable medicines is a critical
component of the government’s strategy to scale up the current treatment
programme and prevent the spread of the epidemic. Thailand is currently
implementing a treatment programme based on a generic fixed dose combination
recommended by the WHO. This three-in-one tablet is around 10 times cheaper than
the patented brand name drugs, and enhances patients’ compliance by decreasing
the number of pills that need to be taken to two a day.

However, Thailand also urgently needs access to generic versions of other
patented medicines that are vital for people who develop side effects or
resistance to currently available drugs. For example, Efavirenz, a much needed
antiretroviral drug made by Merck, is too expensive because it is under patent.
Also essential is access to drugs to treat life-threatening opportunistic
infections, such as cytomegalovirus (CMV), which can cause blindness and death.
This can be treated by Glaxo Smith Kline’s ganciclovir, but because this drug
is patented, it is too expensive to be included in the government’s programme.

The patent rules in the proposed US-Thai FTA, will
close down the option of accessing such inexpensive generic medicines in the
future by preventing Thailand from issuing compulsory licenses to generic
manufacturers to manufacture these drugs or by importing such drugs from generic
manufacturers from outside Thailand.



US is negotiating bilateral treaties with a number of other countries, like
Singapore and Morocco. The largest such treaty, however, is the Free

Trade Area of the Americas (FTAA) — a proposed regional trade agreement
between 34 countries in North, Central and South America and the Caribbean,
except Cuba. If implemented, it will be the largest “free trade zone”
in the world, a US 13 trillion dollar market covering more than 800 million
people. FTAA negotiations were launched officially in 1998, and are scheduled
for completion by 2005.


draft FTAA agreement is a set of proposals that includes provisions on Patents,
services, investments, agriculture, and market access, among others. There are
nine FTAA Negotiating Groups, including one on patents, which are negotiating
text for the chapters in the agreement. Throughout the negotiations on
Patents, the United States has been pushing to increase the intellectual
property protection provided to pharmaceutical products held by MNCs and to
reduce the rights of countries in the region to take measures necessary to
protect public health.
In other words, the US is trying to impose standards
on pharmaceuticals that go much further than what is required in the WTO TRIPS
Agreement. Such standards that are being sought to be imposed through the FTAA

  • Sharp
    limitations on the grounds under which compulsory licenses on
    pharmaceuticals may be issued.

    This is in spite of the fact that the TRIPS Agreement mentions no such
    limitations and the Doha Declaration, which was adopted by all WTO member
    states, confirmed that countries have “the freedom to determine the
    grounds upon which such licenses are granted.” The FTAA draft would,
    for example, limit compulsory licensing to declared “national
    emergencies” or other situations of extreme urgency and to the public
    sector only. Thus countries would no longer have the right to issue a
    compulsory license to remedy high prices that restrict access to medicines,
    or to foster competition in the private sector to increase access to
    patented essential medicines.

  • The
    extension of patent terms beyond the 20 years required in TRIPS.

    This would prolong the monopoly enjoyed by patent holders and further delay
    introduction of generic products.

  • Exclusive
    rights on pharmaceutical test data that have been provided to Drug
    Regulatory agencies.
    generic companies rely on these data to demonstrate that their product is
    safe and effective, this exclusivity will significantly delay the
    introduction of generics even when there are no patent barriers.

The agreement may restrict parallel importation to
within the FTAA region only, contrary to the Doha Declaration. As a result, FTAA
countries will not be able to access cheaper drugs through imports from the
international market.

The draft text also includes a proposal to prohibit the
export of drugs produced under compulsory license, which is currently
permissible under the TRIPS Agreement to a certain extent.



US is being very even handed in hammering out the Free Trade agreements and is
targeting developed countries like Australia too.
Australia the prime target of the FTA in the pharmaceutical sector is the
country’s “Pharmaceutical Benefit Scheme” (PBS). This scheme, hailed by
many, as a model arrangement that keeps drug prices low for essential drugs has
long been a target of US based pharmaceutical companies.


the 55-year-old scheme, low drug prices are negotiated by the combination of
stringent cost-benefit (or ‘pharmacoeconomic’) analyses and the market power
of a centralised buying system that the government oversees. That
Australian system works is obvious from the fact that drug prices in the United
States are around 160 per cent higher than in Australia; drugs in Canada and
Sweden cost about 50 per cent more.


the Free Trade Agreement being signed allows US pharmaceutical manufacturers to
ask for an independent review if the Pharmaceutical Benefits Advisory Committee
(PBAC) decides not to list their drug. The end result will be drugs listed at
higher prices than the PBAC originally thought justified by the pharmacoeconomic
evidence. The agreement also proposes changes to Australian patent laws, which
could delay the introduction of cost-effective generic drugs.


US Trade representative Robert Zoellick said after the fiasco of the Cancun WTO
meeting: “The U S trade strategy, however, includes advances on multiple
fronts. We have free trade agreements with six countries right now. And we’re
negotiating free trade agreements with 14 more. All our free trade agreement
partners, some quietly, some more actively, tried to help over the course of the
past couple of days. The results are very revealing to me, that over the past
few days, a number of other developing countries, that are committed to opening
markets and economic reforms, expressed their interest in negotiating free trade
agreements with the United States”. Clearly, the US is advancing this agenda
with a vengeance.



which represents the largest Pharmaceutical companies in the US, spent an
equivalent of Rs 1,000 crore (about equivalent to the total turnover of the
largest Indian pharma company) just on lobbying to change Patent laws across the

money to change policy:

budget initiatives

(July 2003–2004)




lobbying at the federal level, (there are 625 pharmaceutical lobbyists
on Capitol Hill; more than the number of Congressmen)


at state level


price controls and protecting patent rights in foreign countries and in
trade negotiations


‘a union-driven initiative in Ohio’ which would lower drug prices
for people who have no insurance to cover such costs


the US Food and Drug Administration


to research and policy organisations, ‘to build intellectual capital
and generate a higher volume of messages from credible sources’
sympathetic to the industry


a standing network of economists to speak against US drug price controls


the Canadian health care system