Free Trade Agreements With The United States: 8 Lessons For Prospective Parties From Australia’s Experience

Free trade agreements are concluded by States in their sovereign capacity consistent with their perceived national interest. The negotiating objectives of the United States included establishing standards which built on existing international intellectual property agreements; enhancing protection for new technical areas (such as internet service provider liability); making Australia apply legal protection more consistent with U.S. law and practice; and strengthening domestic enforcement procedures (including criminal penalties) to address piracy and counterfeiting.

United States Trade Representative Robert Zoellick, Letter to Congress (2002), available atwww.ustr.gov/releases/2002/11/2002-n-3-australia-byrd (on file with the author).

Australia’s negotiating objectives were to implement internationally-agreed intellectual property standards and maintain a balance between intellectual property rights holders and the interests of others (including users, consumers, communication carriers and distributors, as well as the education and research sectors).

Dep’t Foreign Affairs & Trade, Statement of Australia Objectives, available atwww.dfat.gov.au/trade/negotiations/us_australia_objectives.html (on file with the author).

Australia agreed to the AUSFTA not because the copyright provisions were considered desirable or because Australia is a major producer of generic pharmaceuticals. There is at most a small industrial constituency in Australia resisting U.S. demands for market access. The potential for higher pharmaceutical prices was tolerated because Australian agricultural and farming interests would benefit.

Frederick Abbott, Intellectual Property Rights in Global Trade Framework: IP Trends in Developing Countries, 98 Am. Soc’y. Int’l L. Proc. 95, 97, 99 (2004). See also Kayleen Manwaring, The Price of Beef in a Copyright Market: the Effects of Chapter 17 of the Australia-US Free Trade Agreement, 23 Copy Reptr 60 (2005).

Australia’s acquiescence to U.S. demands to expand intellectual property rights protection was consistent with its preconceived policy to that end.

Ralph Fischer, The Expansion of Intellectual Property Rights by InternationalAgreement: A Case Study comparing Chile and Australia’s Bilateral FTA Negotiations with the US, 28 Loy. L.A. Int’l & Comp. L. Rev. 129, 164 (2006).

Nevertheless, the value to Australia of concluding a free trade agreement with the U.S. attracted controversy.

Compare Peter Drahos and David Henry, The Free Trade Agreement Between Australia and the United States Undermines Australian Public Health and Protects US Interests in Pharmaceuticals, 328 Brit. Med. J. 1271 (2004); Andrew Stoler, Australia-U.S. Free Trade: Benefits and Costs of an Agreement, in Free Trade Agreements: U.S. Strategies and Priorities 95 (Jeffrey Schott ed., Peterson Institute for International Economics 2004).

Thus, States such as New Zealand for example should be cautious about blindly following Australia and accepting the standard terms of a U.S. free trade agreement.

Anna Kingsbury, Intellectual Property Provisions in Bilateral and Regional Free Trade Agreements: What Should New Zealand Expect from a New Zealand/United States Free Trade Agreement?, 10 N.Z.B.L.Q. 222, 234-35 (2004).

Furthermore, the AUSFTA has implications for a single agency with which to regulate pharmaceutical products within a trans-Tasman market. The Australia New Zealand Therapeutic Products Authority (ANZTPA) was intended to replace both the Australian Therapeutic Goods Administration (TGA) and the New Zealand Medicines and Medical Devices Safety Authority.

See further Australia-New Zealand Agreement for the Establishment of a Joint Scheme for the Regulation of Therapeutic Products (Dec. 10, 2003) [2003] ATNIF 22; Joint Standing Committee on Treaties, Parliament of Australia, Inquiry into the Agreement Between the Government of Australia and the Government of New Zealand for the Establishment of a Joint Scheme for the Regulation of Therapeutic Products, Report No. 62, Canberra (2004).

The AUSFTA established an agreed floor: the United States and Australia will provide a minimum level of protection and any additional protection or enforcement if not inconsistent with that treaty. Australia and the U.S. have moreover affirmed the importance of existing international frameworks for intellectual property protection. In particular, the AUSFTA will be interpreted in light of the principles and rules established by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Agreement on Trade-Related Aspects of Intellectual Property Rights (Apr., 15, 1994) Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, Results of the Uruguay Round, 1869 U.N.T.S. 299, 33 I.L.M. 1143 (1994), [1995] ATS 38.

TRIPS contains provisions (“flexibilities”) which seek to ensure that public health needs are met by lowering costs, increasing access to medicines and facilitating generic imports.

See e.g, Brook Baker, Arthritic Flexibilities for Accessing Medicines: Analysis of WTO Action Regarding Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, 14 Ind. Int’l & Comp. L. Rev. 613 (2003).

As a global agreement on intellectual property standards, TRIPS is especially relevant for States lacking that level of protection. TRIPS primarily affects developing States by imposing minimum legal standards and requiring enforcement. TRIPS has had little effect in developed market economies which already have strong intellectual property rights protection. Thus Australia’s adoption of TRIPS in 1995 did not necessitate significant change to its intellectual property laws (apart from lifting the standard patent term from 16 to 20 years).

John Revesz, Trade-Related Aspects of Intellectual Property Rights (Australian Productivity Commission Staff Research Paper, May, 28, 1999).

The Doha Declaration states that TRIPS “can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.”

World Trade Organization, Ministerial Declaration on the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and Public Health of Nov. 14, 2001, WT/MIN(01)/DEC/2, 41 I.L.M. 755 (2002).

The United States confronts mass copying of its intellectual property on a global scale. Its enforcement agenda springs from high intellectual property infringement in many States, particularly digital copyright “piracy.” Forging links between international trade and intellectual property gives it additional leverage. Although its market size induced the acceptance of TRIPS by other States, TRIPS did not meet its strategic goals for greater international intellectual property rights protection.

Susan Sell, TRIPS Was Never Enough: Vertical Forum Shifting, FTAs, ACTA, and TPP, 18 Intell Prop. L. 447 (2011).

The United States has moved through various international fora seeking to harmonise the world’s intellectual property laws in its own image. The WTO was the primary forum during the 1980s and 1990s. But after TRIPS, other States became hostile to the U.S. agenda because, rather than a one-size-fits-all approach, ambiguity permitted governments to craft laws which best served their own policy objectives. The U.S. agenda then shifted to bilateral and plurilateral trade agreements. The Anti-Counterfeiting Trade Agreement, for example, was a plurilateral agreement which sought to establish a model that other States could accede to. The pursuit of greater intellectual property protection in successive bilateral and regional trade agreements has been partly driven by a U.S. desire to achieve standards it anticipated but failed to secure from TRIPS. The U.S. pharmaceutical industry also viewed TRIPS as falling short of its objectives, particularly preventing the delayed introduction of patent protection in those States which supply generic medicines.

Within several months of the Doha Declaration, the United States embarked on a bilateral and regional trade negotiation strategy incorporating “TRIPS-plus” intellectual property standards at odds with the intent of that Declaration. The United States offers increased market access to close allies and small economies in exchange for heightened commitments on domestic intellectual property regulation. This regulation greatly exceeded the minimum standards required by TRIPS and hindered resort to the flexibilities offered by it.

Pedro Roffe & Christoph Spennemann, The Impact of FTAs on Public Health and TRIPS Flexibilities, 1 Int‘l. J. Intell. Prop. Mgmt. 75, 76-80, 86 (2006).

The United States bases its negotiation of free trade agreements on a model standard template. This template envisages a shared recognition of the importance of innovative pharmaceuticals in health care, research and development within the pharmaceutical industry and protecting intellectual property; promoting timely and affordable access to innovative pharmaceuticals through transparent, expeditious and accountable procedures;

For example, AUSFTA annex 2C(1)(c) emphasises “timely and affordable access to innovative pharmaceuticals” through “transparent, expeditious, and accountable procedures.”

Several substantive TRIPS-plus provisions commonly appear. These provisions relate to treaty accession, patent term extensions, data exclusivity, limiting compulsory licensing, protecting second-use patents, limits on excluding life forms from patentability, patent exhaustion, restricting parallel imports and various forms of patent linkage.

Katrina Moberg, Private Industry’s Impact on U.S. Trade Law and International Intellectual Property Law: A Study of Post-TRIPS US Bilateral Agreements and the Capture of the USTR, 96 J. Pat. & Trademark Off. Soc’y 228, 236, 244 (2014).

The AUSFTA is one such TRIPS-plus arrangement. For example, Article 17.9.7 restricts compulsory licensing to a more stringent standard than under TRIPS. The United States, having failed in multilateral fora to restrict this exemption to specific diseases, has achieved a restriction to a TRIPS-plus standard of “national emergency, or other circumstances of extreme urgency.” Article 17.9.8 of the AUSFTA locks the parties into enhanced protectionist patent terms (an extra five years maximum) if there are delays in issuing patent approval. Article 17.9.4 prohibits parallel importation, which is something the United States had not achieved through multilateral negotiations. According to the United States, parallel importation-including to address national public health emergencies-is inconsistent with Article 6 of TRIPS.

Frederick Abbott, The TRIPS-Legality of Measures Taken to Address Public Health Crises: Responding to USTR State-Industry Positions that Undermine the WTO, in The Political Economy of International Trade Law 320 (David Kennedy & James Southwick eds., 2002).

In contrast to the open and transparent multilateral processes, the bilateral negotiating process for the AUSFTA was closed and secretive.

Australia followed this approach for the China-Australia Free Trade Agreement, negotiations for which commenced in 2005 and concluded in 2014. The text was only publicly released in 2015 after signature.

A closed negotiation process has implications for interested non-governmental actors. Impeded access is not a concern for the U.S. pharmaceutical industry inasmuch as the U.S. Trade Representative is a captured regulatory agency. Industry unsurprisingly pursues high standards for intellectual property protection and enforcement, and linking these issues to productivity, economic growth, employment and living standards. Its research and development costs are partially funded by sales revenues. Pharmaceutical arbitrage-or the pricing gaps which encourage demand for cross-border pharmaceutical parallel trade-reduce the financial gains for States such as the United States which support product innovation. Voluntary differential pricing schemes which benefit low income consumers are also discouraged. But it is primarily a fear of arbitrage which justifies increased pharmaceutical intellectual property rights and related appropriation powers. Some forms of arbitrage are beneficial and deliver lower consumer prices without harming innovation.

Kevin Outterson, Pharmaceutical Arbitrage: Balancing Access and Innovation in International Prescription Drug Markets, 5 Yale J. Health Pol’y, L. & Ethics 193 (2005).

Australian special interest groups contributed to the AUSFTA negotiations with varying degrees of success. The higher education sector, for example, seized the opportunity to set a new agenda: the possibility of transforming the current closed set of fair dealing defences into a single broad exception derived from the U.S. fair use model.

Mary Wyburn, Higher Education and Fair Use: A Wider Copyright Defence in the Face of the Australia-United States Free Trade Agreement Changes, 17 A.I.PJ. 181, 203 (2006).

By concluding bilateral and regional agreements, the United States is gaining greater influence over the domestic health care and drug coverage programs of its trading partners. This trend has implications for access to and the affordability of pharmaceuticals.

Carlos Maria Correa, Implications of Bilateral Free Trade Agreements on Access to Medicines, 84 Bull. World Health Org. 399 (2006).

The U.S. (and Australian) pharmaceutical industry perceived a free trade agreement to present an opportunity to undermine the evidence-based, strict and effective procedures underpinning Australia’s Pharmaceutical Benefits Scheme (PBS).

See generally Deborah Gleeson, Kyla Tienhaara & Thomas Faunce, Challenges to Australia’s National Health Policy from Trade and Investment Agreements, 5 Med. J. Aus. 354 (2012).

Unsurprisingly, the pharmaceutical industry criticises aspects of the PBS (particularly reference pricing and cost effectiveness) as a nontariff barrier to overseas markets and an abusive and discriminatory price control. The PBS limits the freedom of drug manufacturers to charge whatever the market will bear and does not allow them to recoup investment in research. Consumers are accessing innovative medicines without contributing substantively to their cost. Criticism about high medicine prices in the United States was deflected by claiming that Australia was “free-riding” on U.S. product development and undermining innovation.

A contrary position is that the PBS is not a trade barrier and free trade arguments are simply being enlisted to undermine social policies which are barriers to excess corporate profit.

Clive Hamilton, Buddhima Lokuge & Richard Denniss, Barrier to Trade or Barrier to Profit? Why Australia’s Pharmaceutical Benefits Scheme Worries U.S. Drug Companies, 4 Yale J. Health Pol’y., L. & Ethics 373, 374, 377 (2004).

For AUSFTA, U.S. negotiators pushed for enhanced transparency when evaluating drugs for inclusion in the PBS, an appeals mechanism for denied applications, and pricing mechanism changes. Australians were understandably concerned that AUSFTA would adversely affect their ability to obtain affordable medicine. The Australian government reassured the public that the PBS would not be dismantled and the AUSFTA would not lead to increased drug prices. After the treaty’s conclusion, however, drug manufacturers expressed delight with the implications for prices, profits and investment. Whereas the PBS uses health economics and therapeutic referencing systems, AUSFTA promotes pharmaceutical reimbursement. Paragraph (d) of the Agreed Principles to AUSFTA suggests a compromise as follows:

Most provisions affecting the PBS are located in Annex 2-C (Pharmaceuticals), Chapter 17 (intellectual property rights) and side-letters between Australian Trade Minister Vaile and U.S. Ambassador Zoellick confirming certain understandings. The United States and Australia both espoused victorious but somewhat contradictory messages, possibly to sooth domestic constituencies. The U.S. Trade Representative indicated that “Australia will make a number of improvements in its Pharmaceuticals Benefits Scheme (PBS) procedures that will enhance transparency and accountability in the operation of the PBS, including establishment of an independent process to review determinations of product listings.”

United States Trade Representative, Summary of the US-Australia Free Trade Agreement, Free Trade “Down Under” (Feb. 8, 2004).

In Australia considerable attention focused on AUSFTA’s impact on the PBS.

Austl. Dep’t of Health & Ageing, Australia-United States Free Trade Agreement and the Pharmaceutical Benefits Scheme, 2005; Kate Burton & Jacob Varghese, The PBS and the Australia-U.S. Free Trade Agreement, Australian Parliamentary Library Research Note No. 3 (2004); Maurice Rickard, Free Trade Negotiations, the PBS and Pharmaceutical Prices, Parliament of Australia (Feb. 10, 2004); Ken Harvey, Thomas Faunce, Buddhima Lokuge & Peter Drahos, Will the Australia-United States Free Trade Agreement Undermine the Pharmaceutical Benefits Scheme?, 181 Med. J. Aust. 256 (2004).

Overall, the AUSFTA did not create any immediate and measurable price rises. Indeed, certain outcomes benefited the PBS. Greater listing transparency and enhanced stakeholder engagement brings openness and certainty to the process.

Bryan Mercurio, The Impact of the Australia-United States Free Trade Agreement on the Provision of Health Services in Australia, 26 Whittier L. Rev. 1051, 1097-9 (20042005).

That said, AUSFTA transformed intellectual property protection into a foreign policy issue. The Department of Foreign Affairs and Trade (responsible for conducting negotiations) focused on the treaty text and overlooked copyright policy goals. And whereas Australia could previously formulate its own policy position, it now has to be satisfied that Australian law and practice complies or is consistent with its AUSFTA obligations.

Commonwealth Parliamentary Debates, House of Representatives Hansard, 22, 31 (Dec. 5, 2005).

The impacts of a U.S. free trade agreement are not self-evident.

Compare, for example, Thomas Faunce et al, Assessing the Impact of the Australia-United States Free Trade Agreement on Australian and Global Medicines Policy, 1 Glob’n. & Health 1 (2005); Lauren McLeod, Andrew McRobert & David Wilson, Australia-U.S. Free Trade Agreement-Impact on Intellectual Property Rights, 16 I.P.L.B. 153 (2004).

The United States claimed to have made substantive gains in intellectual property rights protection through AUSFTA but the outcome fell short of its ambitions.

Peter Drahos, Buddhima Lokuge, Tom Faunce, Martyn Goddard & David Henry, Pharmaceuticals, Intellectual Property and Free Trade: The Case of the U.S.-Australia Free Trade Agreement, 22 Prometheus 243, 249 (2004).

Some provisions which initially aroused controversy offer little if any real change for Australia. For example, Article 17.10.4 of the AUSFTA requires Australia to implement measures which prevent pharmaceutical product marketing that is alleged to be patent-infringing. In other words, pharmaceutical marketing approval is linked with patent validity. Concerns were expressed that this would encourage patent “evergreening”: that is, effectively extending existing patents beyond their 20 year term by obtaining additional patents on different aspects of the same product. The practice is a regulatory barrier for market entry by generic manufacturers and endemic in the United States and Canada. In 2004 amendments were made to the Therapeutic Goods Act 1989 (Cth) to establish a certification process.

Canada implemented a similar scheme in 1993 after entering the North American Free Trade Agreement.

An alternative position is that the AUSFTA effected considerable change albeit not yet apparent. The AUSFTA demonstrated that free trade agreements can reach farther into domestic policy than ever imagined before.

Laura Chung, AUSFTA, KORUS FTA and Now TPP: Free Trade AgreementsAre Now Reaching Further into Domestic Health Policies than Ever Before, 22 Currents: Int’l Trade L.J. 26, 27 (2013).

On this view, the AUSFTA contained detailed obligations and a strict implementation timetable which drove rapid, wholesale amendment of Australian copyright law. However, there was a pre-existing domestic reform agenda which the agreement partly galvanised and partly blocked, as well as setting a wholly new policy agenda post-AUSFTA.

Kimberlee Weatherall, Of Copyright Bureaucracies and Incoherence: Stepping Back from Australia’s Recent Copyright Reforms, 31 Melb. U. L. Rev. 967 (2007).

In the post-AUSFTA environment, some copyright reviews were prompted by the treaty whereas others were not. For example, a new safe harbour regime was introduced for internet service providers because of the AUSFTA.

See generally YiJun Tian, WIPO Treaties, Free Trade Agreement and Implications for ISP Safe Harbour Provisions (The Role of ISP in Australian Copyright Law), 16 Bond L.R. 186 (2004).

In sum, Australia strove to do the absolute minimum necessary to implement its treaty obligations. For example, AUSFTA gave Australia only limited options on how to enact new anti-circumvention laws. Although the agreement summarised the U.S. system for managing copyright exceptions, reference to the associated U.S. machinery was omitted from the text and Australia was left with some choice as to how to manage the system and by whom. Ultimately the final arrangement looks very little like the U.S. model which formed the basis for the AUSFTA provision.

Emma Caine & Kimberlee Weatherall, Australia-U.S. Free Trade Agreement: Circumventing the Rationale for Anti-Circumvention?, 7 Internet L. Bull. 121 (2005).

Australians were assured that the PBS would not be adversely affected by the AUSFTA. Academics, non-government organizations and others were worried that the U.S. had obtained substantial inroads. The Agreed Principles of Annex 2C, for example, supported the valuation of “innovative pharmaceuticals.” Procedural changes included establishing an independent review process and providing hearing opportunities for applicants before an expert formulary committee, the Pharmaceutical Benefits Advisory Committee (PBAC). Such changes, it was feared, would facilitate greater industry influence in decision-making, undermine the PBAC’s capacity to deliver independent, evidence-based assessments, and erode Australia’s capacity to ensure value for money. A joint U.S.-Australian discussion forum, the Medicines Working Group, was the means by which the United States would direct or influence future domestic policy-making in Australia around medicines.

Admittedly, the gains made by the United States were limited to matters of process and transparency in the formulary listing process. But there is no evidence that the AUSFTA impacted upon PBS decision-making, pricing mechanisms, or actual medicine prices. Many of AUSFTA’s substantive provisions either reflected existing practices about transparency and timeliness, or were improvements to PBAC processes already underway or proposed. The independent review process cannot remake PBAC decisions and is only a quality assurance mechanism. The Medicines Working Group is a discussion forum having limited terms of reference, is chaired by health officials, and has no decision-making, advisory or reporting function.

By way of further illustration, the AUSFTA ostensibly permits direct to consumer advertising (DTCA) via the internet.

AUSFTA, annex 2-C, art. 5 (“Each Party shall permit a pharmaceutical manufacturer to disseminate … through the manufacturer’s Internet site … truthful and not misleading information regarding its pharmaceuticals that are approved for sale in the Party’s territory”).

Perhaps most importantly, the prices of PBS medicines have not risen since the AUSFTA. Indeed, under administrative arrangements introduced in 2005 to reduce the price of generic products, the prices of many still-patented PBS medicines have been reduced. In 2007, when the PBS was separated into two formularies, it was feared that Australia had caved to U.S. pressure through the Medicines Working Group to dismantle reference pricing. However, the changes were a domestic response to longstanding concern about the need to reduce the price of generic products, take advantage of many patent expiries and generate savings to offset new listing costs.

It is disconcerting then that U.S.-Australia negotiations occurred despite a paucity of data.

Australia largely relied on Centre for International Economics, Economic Analysis of AUSFTA: Impact of the bilateral free trade agreement with the United States, Aust’l Dep’t Foreign Affairs & Trade (2004).

The U.S. pharmaceutical industry has long objected to the lack of harmonization, particularly about marketing approval requirements imposed by national regulatory authorities. Governments also wish to induce companies to bring new medicines to market more quickly. Thus simplified registration standards and processes might speed up market entry, especially if differential requirements deter innovators.

The trajectory of national intellectual property laws has been influenced by TRIPS. Whether TRIPS was beneficial for Australia cannot be assessed in isolation but requires considering all of Australia’s gains and losses under the WTO agreements then under negotiation. TRIPS was not thought to be in Australia’s national interest because Australia is a net importer of intellectual property. But Australia’s intellectual property exports are now growing faster than its imports.

In 2002, before the conclusion of the AUSFTA, the U.S. received around $834m in intellectual property royalties from Australia as compared with $723m from China.

Commentators disagree on whether the AUSFTA contributed to a harmonisation of intellectual property standards between U.S. and Australian law.

For an overview of the legislative changes which were required to Australian patent law to accord with AUSFTA, see Lauren McLeod, Andrew McRobert & David Wilson, Australia-U.S. Free Trade Agreement-Impact on Intellectual Property Rights, 16(10) I.P.L.B. 153 (2004).

Successive free trade agreements build on their predecessors. The United States has established a web of free trade agreements with Canada and Mexico (1992), Jordan (2001), Singapore (2003), Chile (2003), several Central America States (2004), Bahrain (2004), Morocco (2004), Peru (2006), Oman (2006), Panama (2007) and South Korea (2007). For example, much of the AUSFTA intellectual property chapter was imported from agreements concluded by the U.S. with Chile and Singapore.

On the free trade agreement with Singapore, see Peter Kang & Clark Stone, IP, Trade, and U.S./Singapore Relations-Significant Intellectual Property Provisions of the 2003 U.S.-Singapore Free Trade Agreement, 6 J. World Int’l. Prop. 721 (2003); Kenneth Chiu, Harmonizing Intellectual Property Law between the United States and Singapore: The United States-Singapore Free Trade Agreement’s Impact on Singapore’s Intellectual Property Law, 18 Transnat’l L. 489, 509 (2005).

More recent patent law proposals go further than both AUSFTA and KORUS. The Trans-Pacific Partnership (TPP) between twelve States including the United States and Australia poses the most aggressive intellectual property provisions for pharmaceuticals to date.

For background, see Roma Patel, A Public Health Imperative: The Need for Meaningful Change in the Trans-Pacific Partnership’s Intellectual Property Chapter, 16 Minn. J.L. Sci. & Tech. 477 (2015). For Australia’s position, see Department of Foreign Affairs and Trade, Trans-Pacific Partnership Agreement Negotiations (2016), available athttp://www.dfat.gov.au/fta/tpp (on file with the author).

For three reasons, the dynamics of the TPP do not favor the maximalist position proposed by the United States. First, the United States seeks to convince relatively poor States to adopt the same or higher intellectual property protection and enforcement mandates that exist in the U.S. or are reflected in agreements concluded with high-income countries. The United States wishes to selectively export the protections available under U.S. law but not the exceptions. States which accepted these standards in free trade agreements sought to achieve access to U.S. markets, and many TPP States have already implemented these agreements. U.S. proposals moreover abandon data-exclusivity flexibilities which were granted to Peru and Colombia in free trade agreements concluded with them.

Second, the United States intends to harmonize substantive patent and data protection law in TPP member States to U.S. standards. The proposals build upon recent free trade agreements by restraining the flexibility permitted under TRIPS. This position adversely affects the availability of affordable medicines in developing States and increases the price of inputs for many industries. The TPP prevents pharmaceutical innovators in developing countries from undertaking research and development via reverse engineering and creating functional equivalents or product improvements. The TPP will prevent independent action by States to develop generic medicines. Prospective parties would be unable to adopt the kind of pregrant opposition processes found to be useful in India. U.S. proposals are a long-term campaign to implement standards that will ultimately be globalized to include India among others.

Third, the TPP contains provisions which have previously been considered and rejected by States during the TRIPS negotiations. One provision in TRIPS, for example, permitted the U.S. to continue to implement its own relatively lax standard on patentability without requiring other States to do so. The TPP, however, potentially exports that standard to all member States. Patent/registration linkage is not mentioned in TRIPS or required in many States, including most TPP countries. Nevertheless, it has become a common feature of U.S. free trade agreements.

Is the U.S. model an appropriate global standard? Standards which increase intellectual property protection but constrain domestic drug coverage programmes advance pharmaceutical industry interests and attempt to export and impose U.S. values abroad. Free trade agreements reflect the U.S.’ enduring adherence to market-based solutions, coupled with a conviction that government intervention is unnecessary and unhelpful. Thus the U.S. Trade Representative is mandated to pursue “the elimination of government measures such as price controls and reference pricing which deny full market access for United States products” in overseas markets.

Trade Promotion Authority Act, Public Law No. 107-210 (2002); International Trade Administration, Pharmaceutical Price Controls in OECD Countries: Implications for U.S. Consumers, Pricing, Research and Development, and Innovation, U.S. Department of Commerce (2004).

One U.S. objective regarding trade-related intellectual property rights is that the “provisions of any multilateral or bilateral trade agreement … entered into by the United States reflect a standard of protection similar to that found in United States law.”

Trade Act of 2002 §2102(b)(4)(a)(i)(II), 19 U.S.C. §3802(b)(4)(A)(i)(II) (2006) (emphasis added).

The United States deploys an aggressive trade agenda to expand markets for U.S. goods and services which can clash with the social equity or fairness objectives of other States.

Ruth Lopert & Sara Rosenbaum, What is Fair? Choice, Fairness and Transparency in Access to Prescription Medicines in the United States and Australia, 35 J.L. Med. & Ethics 643, 651 (2007).

Current U.S. strategy is damaging its own political interests because the United States will not secure substantive copyright harmonisation or build long-term support for future multilateralisation of its preferred standards. An apparent disregard for Australian traditions generated a perception of U.S. unilateralism, double standards and high-handed ignorance.

Robert Burrell & Kimberlee Weatherall, Exporting Controversy? Reactions to the Copyright Provisions of the U.S.-Australia Free Trade Agreement: Lessons for U.S. Trade Policy, U. Ill. J.L. Tech. & Pol’y 259 (2008).

Furthermore, the gains produced by the AUSFTA were at best limited.

Id. at 261.

A free trade agreement with the United States must accommodate a nation’s historical trajectory, competing ideology and different philosophy.

Patricia Ranald, The Australia-U.S. Free Trade Agreement: A Contest of Interests, 57 J. Austl. Pol. Econ. 30 (2007).

Trade partners require space to implement their international obligations in a manner that satisfies their particular circumstances. One of the pitfalls of bilateral-in contrast to multilateral-negotiations is exposure to bargaining power inequality. Powerful States can demand much and offer little in terms of market access. For example, a U.S. free trade agreement from Malaysia’s point of view is likely to adversely affect pharmaceutical product access because the intellectual property protections exceed what is appropriate for its social and economic needs.

Robert Galantucci, Data Protection in a U.S.-Malaysia Free Trade Agreement: New Barriers to Market Access for Generic Drug Manufacturers, 17 Fordham Intell. Prop. Media & Ent. L.J. 1083, 1099 (2007).

Consensus from the European Union is vital if a new multilateral standard is to be established. But the European Union may not accept the U.S.’ lead in setting new international intellectual property standards. Europe has distinctive philosophical underpinnings to copyright protection. For example, all economic rights in copyright must be “freely and separately” transferable, and persons acquiring copyright by contract shall “enjoy fully the benefits derived from that right” (Article 17.4.6(a), AUSFTA). Other recent U.S. free trade agreements contain similar provisions. The United States evidently seeks to prevent trade partners from introducing unwaivable or unassignable rights of a kind that enjoys support within Europe. Germany and Austria, for example, prohibit the outright assignment of copyright. Article 17.4.6(a) could also prevent unwaivable rights to equitable remuneration (such as those created under the EU’s Rental Rights Directive) and exclude the compulsory collective administration of rights (which enjoys some popularity in Europe). One provision in AUSFTA about the graphic representation of trademarks intends to ensure that Australia does not follow the European approach which has made it almost impossible to register olfactory marks. In sum, there are formidable political and cultural obstacles deterring the European Union from subscribing to the standards laid down in recent U.S. free trade agreements.