BY EVA CHENG
Australia's right to draw up or maintain non-profit-oriented social policies will be under threat from the "free trade" agreement (FTA) that the Coalition government seeks to make with President George Bush's US administration. Formal negotiation on the agreement is due to start in March.
The Pharmaceutical Benefits Scheme (PBS), which for 53 years has allowed most Australians access to medicine at affordable prices, is particularly under threat.
Under a FTA, the participating countries seek to remove most "trade barriers" between them within an agreed time frame. This FTA will be between the US and Australia — a bilateral deal. Its fundamental mechanism, however, is no different from "multilateral" agreement that the World Trade Organisation (WTO) aims to strike among its 144 members under the so-called Doha Round which it hopes to complete by the end of 2004.
In both cases, these agreements are described as fair because they will, theoretically, open the countries' economies up equally for trade. But such "equality" is illusionary. When the parties involved are of vastly different economic strengths, as is the case between imperialist powers and their poor Third World counterparts, the stronger parties will benefit disproportionally.
Moreover, as under the WTO, the fine print of a FTA can always give the stronger party a better deal under the disguise of an apparent mutual give-and-take.
Australia is not an oppressed nation. But its gross domestic product is less than 4% that of the US.
Trade minister Mark Vaile said last August, discussing what the Coalition government is prepared to offer in return for the US's acceptance of the FTA, "everything is on the table".
The US-Australia FTA was formally put on the agenda last November. But since at least 1998, the US pharmaceutical industry has been openly objecting to the dampening effects of Australia's PBS on its profits here.
In 2000, the Pharmaceutical Research and Manufacturers of America (PhRMA), the peak body of US drug companies, even provocatively asked Washington to put Australia on the "Special 301" watch list because of its "trade distorting" PBS.
In the name of "self-defence" against alleged unfair trade practices, section 301 of the US trade act authorises the US government to be judge and jury in trying a trading partner against such allegations. The "guilty" countries can be punished with US economic sanctions. Although that request wasn't taken further, the PhRMA hasn't eased its campaign against the PBS.
The PBS's crime, according to the PhRMA in its submission to the United States Trade Representative (USTR) on February 18, 2000, is that it undermines the intellectual property rights of US pharmaceutical manufacturers "by devaluing the value of [their] patents".
In a similar submission to the USTR in 1999, the PhRMA found fault with the PBS decision to introduce "reference pricing" for drugs with "similar clinical activity". The PBS requires a benchmark price be established for each class of drugs based on cost-effectiveness. Unsurprisingly, the cheapest generic drugs tend to dominate the reference price. The PhRMA found this outrageous.
In that 1999 submission, the PhRMA was appalled that manufacturers have to "justify the price of their drug through economic and therapeutic evidence", adding the scheme's annual A$860 million savings generated for Australian citizens were in fact, involuntary "subsidy" extracted out of the drug industry's pocket, a move that should stop.
According to the Age on November 23, the US is also asking the Coalition government for other major concessions, such as to "abandon our power of veto over foreign investment proposals from US companies; change our [genetically modified] food labelling laws; dismantle our 'single desk' [virtual monopoly] organisations for the marketing of commodities like wheat; and even relax our quarantine rules". It's hardly a secret that the powerful Hollywood players would also like to see the end to Australia's local content rules in film and television.
The attack on quarantine control of imports could open the door to more foreign diseases. Specifically, it could mean letting mercury-laden US seafood onto our dinner plates. Among other severe health risks, mercury poisoning can inflict permanent damage to a developing brain. Coal-fired utility boilers release around 40 tonnes of mercury a year in the US and most of this toxin ends up in the waterways and is deposited in fish and other seafood.
The methylmercury contamination has become so bad that the US Food and Drug Administration warned in January and March 2001 that pregnant women, women of childbearing age who may become pregnant, nursing mothers and young children should not eat larger and longer-living predator fish most prone to contamination, such as shark, swordfish, king mackerel and tilefish. The FDA further advised that these more vulnerable groups can "safely" consume other types of cooked fish but only up to 340 grams per week.
Seafood happens, however, to be a US$9 billion industry in the US, and it is eager to export.
The Coalition government argues that the FTA will boost Australia's GDP by up to A$4 billion a year. But this projection is based upon the politically unrealistic assumption that all identified trade barriers between the two countries will be removed. Sugar and dairy products, two areas which Australian producers will have most to gain from, are severely protected by high tariffs in the US and these tariffs are defended by a powerful lobby.
The Coalition government makes no secret of its intention to bring, by way of this FTA, Australia's economic relationship with the US on par with their close "security" relationship.
From Â鶹´«Ã½ Weekly, January 29, 2003.
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