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A grab for more corporate power: the Trans Pacific Partnership Agreement

By John Turner - posted Thursday, 12 December 2013

I am concerned about the proposed Trans-Pacific Partnership Agreement (TPPA), involving twelve nations across the Pacific, which is in its final stages of negotiation.

The TPPA is not only about trade. The United States, on behalf of its major industries, wants to change Australian law in many areas of domestic policy. These policies should be decided through public and parliamentary processes, not through trade negotiations conducted behind closed doors. I ask that the Abbott Government reject any proposals which could:

  • Extend patents on medicines leading to higher medicine prices
  • Reduce the ability to keep medicines affordable through the Pharmaceutical Benefits Scheme
  • Extend copyright at the expense of schools, libraries and consumers
  • Remove our protections for Australian cultural industries
  • Undermine government regulation of food labelling
  • Reduce our ability to regulate in the interests of the Australian public, their health and the world environment

I am especially concerned about proposals which would enable foreign investors to sue governments for millions of dollars of damages in international tribunals if government regulation is seen to "harm" their investment. These proposals are known as investor-state dispute settlement (ISDS).

ISDS reduces the ability of governments to regulate the activities of foreign companies even if these activities harm our health or the environment. The Philip Morris tobacco company is currently using ISDS in an obscure Australia-Hong Kong investment agreement to sue the Australian government over its tobacco plain packaging legislation.

Canada signed on to ISDS provisions in a trade deal with the United States, and now the Quebec provincial government is being sued by a US-based energy company because it is conducting an environmental review of shale gas mining. In a similar way, farmers and community members in NSW and Victoria have influenced their state governments to review and introduce new regulation on Coal Seam Gas mining. I am concerned that if Australia agrees to this proposal in the TPPA, governments could be sued for millions of dollars because of such regulation.

in regard to electronic items but even more so in regard to medicines, the US Government is ignoring the fact that much of the research which led to new products was government financed. The US Government, and thereby its citizens, has not had an adequate return on much of that research expenditure. In her excellent book, "The Entrepreneurial State" Professor Mariana Mazzucato (holder of the RM Philips Chair in Science and Technology Policy at the University of Sussex), as an example, discusses at length the degree to which Apple products, from the first personal computer to the latest "i" products are based on state funded discoveries which in turn were largely based on US military needs. The touch screen is one such component. Even the algorithm used by Google was a government funded development. Yet these companies avoid, to a large degree, USA state and federal taxes and in doing so deny an adequate return to the citizens who did pay their taxes to enable funding of the research that the companies have benefited from.

In my view little will be gained and much will be lost by Australian citizens if the Australian government accedes to restrictive pharmaceutical proposals in the TPPA. An extract from Mazzucato's book makes the point about US Government's unrecovered research expenditure point strongly,

...three-quarters of the new molecular biopharmaceutical entities owe their creation to publicly funded laboratories. Yet in the past ten years, the top ten companies in this industry have made more in profits than the rest of the Fortune 500 companies combined. The industry also enjoys great tax advantages its R&D costs are deductible, and so are many of its massive marketing expenses, some of which are counted as R&D (Angeli 2004). After taking on most of the R&D bill, the State often gives away the output at a rock-bottom rate. For example, Taxol, the cancer drug discovered by the National Institutes of Health (NIH), is sold by Bristol-Myers Squibb for $20,000 per year's dose, 20 times the manufacturing cost. Yet, the company pays the NIH just 0.5 per cent in royalties for the drug. In most other cases, nothing at all is paid in royalties. It is simply assumed that the public investment is meant to help create profits for the firms in question, with little to no thinking about the obvious distorted distribution of risk and reward this presents. (p.186).


The above indicates that the US government could be much more competent in recovering research costs form drug companies rather than attempting to make wealthy rip off merchants more wealthy through overcharging in other countries.

The Howard Coalition Government rejected similar proposals in the Australia-United States Free Trade Agreement, and I ask that our government do the same in the TPPA and all other trade agreements.

I also ask you to support enforceable workers' rights and environmental protections, and to release the text of any agreement for public and Parliamentary discussion before it is approved and signed by Cabinet. Corporations are bodies only made possible by laws which limit liabilities and as such have no right to have privacy or other rights when seeking benefits that might deprive ordinary citizens of their own personal rights or benefits.

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This is an extract from a letter faxed to the Trade Minister, the Hon Andrew Robb MP, five weeks ago.

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About the Author

John Turner has an applied science degree on top of a diploma in metallurgy.

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