US trade shocker one step closer to reality

ScreenHunter_954 Jan. 22 10.33

By Leith van Onselen

I have written previously about the risks posed to Australia’s sovereignty and consumer welfare from the Trans-Pacific Partnership (TPP).

If the TPP goes ahead, it will establish a US-style regional regulatory framework that meets the demands of major US export industries, including pharmaceutical and digital.

The draft chapter on intellectual property rights, revealed by WikiLeaks, included a “Christmas wishlist” for pharmaceutical companies, including the proposal to extend patent protection and strengthen monopolies on clinical data. As part of the deal, the US is reportedly seeking patents for “new forms” of known substances, as well as on new uses on old medicines – a proposal which would lead to “evergreening”, whereby patents can be renewed continuously.

The pact poses a huge risk to Australia’s world class public health system, which faces cost blowouts via reduced access to cheaper generic drugs and reduced rights for the government to regulate medicine prices. It also risks stifling innovation in the event that patent terms are extended too far.

The US is also seeking to insert an Investor-State Dispute Settlement (ISDS) clause into the agreement, which could give authority to major corporations to challenge laws made by governments in the national interest in international courts of arbitration. So effectively, US companies would be allowed to sue the Australian Government under international law – a move that is being pursued by Philip Morris against Australia on plain packaging and graphic warnings for cigarettes.

The US is also opposing a proposal that would allow the circumvention of technology that restricts products to certain regions, even though this was recommended by the Australian parliament’s Inquiry into IT Pricing, as well as opposing the parallel importation of goods made under authorisation in other countries – both of which would act to maintain higher prices (to the detriment of Australian consumers).

Australia’s Trade Minister, Andrew Robb, has signaled Australia’s unbridled support for the TPP provided Australia gains significant access to agricultural markets, even labeling the agreement as a “platform for 21st-century trade rules”.

Now it appears that the TPP is only months away from being closed after a senior US trade representative declared the that the deal was at the “endgame”, whilst a former trade negotiator for the US threatened that failure to land the TPP would have “grave consequences”:

In a bullish assessment, Wendy Cutler, the acting deputy US Trade Representative, told a conference on emerging Asia that the TPP “is going to be completed and it is going to set the economic architecture for the region”…

Former US ambassador to Australia Jeff Bleich said that the TPP countries were “on the cusp of closing out the agreement”.

He said it “would be one of the most significant world trade agreements in all of world history”.

Like Australian officials, the Obama administration view the TPP as a significant new framework for rules-based engagement…

Mr Johnson told the conference that a failure to land the TPP would “be very serious” and Andrew Stoler, a former trade negotiator in the US, agreed it would have “grave consequences”.

In a separate report, Business Council of Australia chief executive, Jennifer Westacott, welcomed the TPP, citing that it would improve market access to some of Australia’s biggest trading partners:

On the TPP, Ms Westacott said it was “in all our interests to see a speedy conclusion to the TPP negotiations” given that five of Australia’s top 10 trading partners were in the region.

“It will serve as a platform for Australian business to access regional markets, and provides a regional architecture for more open markets, including the deepening of the trans-regional financial sector and capital markets,” Ms Westacott said.

AI Group chief executive Innes Willox said the TPP had the potential to cover areas not so far addressed in existing FTAs, such as e-commerce and behind the border barriers.

Of course, any marginal gains to Australian business could be more than offset by losses to Australian taxpayers and consumers via potential blow-outs in the Pharmaceutical Benefits Scheme, legal costs arising from fighting law suits under the ISDS clause (not to mention loss of sovereignty in setting public policy), or higher costs for digital content.

It also highlights why the text of the TPP must be released for public and parliamentary scrutiny before the agreement is signed by the Government, so that all of the costs and benefits posed by the deal can be weighed-up. Otherwise, Australia risks being sold-out for short-term political gain rather than sound long-term decisions.

[email protected]

Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. I agree.

    The text ought be made public and a formal consultation period of 2 months allowed.

    The major social services organisations must think that there clients will be sheltered from the bad effects by the government, otherwise they would surely be speaking out.

    Is there no major industry group that thinks it’s members will be worse off with this agreement?

    Time for some guest articles on this topic, or at least more cross references to other articles. In another month the horse will have bolted.

    I appreciate your efforts so far.

    • Hansard 6-3-1891 Constitution Convention Debates

      The constitution of this federation will not be charged with the duty of resisting privileged classes, for
      the whole power will be vested in the people themselves. They are the complete legislative power of the whole of these colonies, and they shall be so.

      Hansard 1-3-1898 Constitution Convention Debates taken from Annotated version of the Constitution by Quick and Garran 1901.

      QUOTE Sir JOHN DOWNER.- I think we might, on the attempt to found this great Commonwealth, just advance one step, not beyond the substance of the legislation, but beyond the form of the legislation, of the different colonies, and say that there shall be embedded in the Constitution the righteous principle that the Ministers of the Crown and their officials shall be liable for any arbitrary act or wrong they may do, in the same way as any private person would be. END QUOTE

  2. From Oxford Dictionary.

    Definition of treason in English:

    Pronunciation: /ˈtriːz(ə)n


    1 (also high treason) [mass noun] the crime of betraying one’s country, especially by attempting to kill or overthrow the sovereign or government:
    ‘they were convicted of treason’

    More example sentences

    1.1 the action of betraying someone or something:
    ‘doubt is the ultimate treason against faith’

    Interesting to note that, in primary definition, treason is a crime against the government, but … apparently … as evidenced by the TPP … it is not treason when the government acts to betray us.

    • “””””especially by attempting to kill or overthrow the sovereign or government:”””””

      Under the current circumstances, you could just as easily put this under the definition for ‘Patriot’. 😀

      It is clear that the government (although elected), is grossly neglecting the welfare and the needs of the many in favour of propping up the few. If they keep this up then I would welcome the government being taken out!

    • Interesting to note that, in primary definition, treason is a crime against the government, […]

      I disagree. It says “betraying one’s country”.

  3. Can someone please explain what the supposed benefits of the TPP are (from our Government’s point of view)?

    The direct quotes from the politicians in the article were fairly vague.

    • The direct quotes from the politicians in the article were fairly vague.

      That’s the idea…. “What, you want a direct answer? Look, what’s that over there, is that a boat coming our way overloaded with dark skinned people?….. Sorry, have to run as I have a lobster lunch to get to”.

    • They will get high paying jobs in the multinationals that will benefit most from this when they leave parliament. See Andrew Peacock.

  4. WHY? I mean why would any Australian want this agreement?

    Is there a single line of this agreement that will profit a single Australian?

    The only winners IMHO will be Australian lawyers employed litigate US interests and Australian politicians that will get to sit one seat closer to the president at their next big pow-wow.

    Make no mistake about it signing the TPP is an act of TREASON!

    • As an older australian lawyer I think I would prefer to have a functioning health system CB! Why can’t we just pay Andrew Robb to do nothing…… He would be happier… We would be happier… Our international agreements become a humiliating demonstration of the lack of intellect of our Buffoon Negotiators. Perhaps we could hire Malaysia’s or New Zealand’s …. That really would be a good trade.

      • Sometimes I feel like I should have long ago earned a degree in Law given all the time I’ve wasted in the court rooms of the small east Texas town of Marshal .

        If there is one reality that I understand it’s the insane world of Intellectual Property protection, its a place where nothing is as it seems almost a parallel universe. There is no doubt that this dysfunctional system protects someone but its definitely not innovators, frankly as it stands innovators is the group that least benefits from Patent law. Today many innovators will specifically locate to countries where they can operate outside the reach of the US patent system, just so they can get the job done without legal interference in the process of invention. On my reading some of the provisions of the TPP seem to be specifically aimed at extending the reach of the dysfunctional US Patent laws into other countries. That’s unacceptable.

        It’s stupidity for any sovereign entity to surrender the rights of their citizens to develop products that benefit their population. Why! simply because someone waves a US patent….frankly I’d me more impressed if they waved a roll of toilet paper

      • “Why can’t we just pay Andrew Robb to do nothing…… He would be happier… We would be happier… ”

        I’d be happy if we doubled his salary on the condition that he did nothing.

  5. Wow, grave importance, huh ? The fix must really be in.

    One of the bedrock principles of the Liberal Party is the staunch defence of private property. The ability of a private firm to maximise profits via patent protection of its hard earned intellectual property is always going to be superior to considerations of reducing costs to users. The former is an issue for competitive markets to sort out. Never mind if pharmaceutical companies operate an oligopoly – this is about private property. The National Party certainly aren’t going to get squeamish about higher drug costs and digital rights if it can increase rural exports. Besides, we can always just increase subsidies to rural areas to offset any higher cost of medical care in those areas.

    Fundamentally, the Liberal Party don’t believe in socialized health care to begin with. What do they care if the cost of pharmaceuticals and medical technology rise? Long-term it just gives them the rationale to reduce government involvement in the health care sector and let it fall to individuals to manage their own costs, all the while admonishing people to take better care of themselves and reminding us they are firm believers in competitive markets.

    The ISDS clauses are also perfectly aligned with Liberal Party philosophy regarding the intrusion of government regulation into the ability of private markets to maximise profits on legal products. They have made it clear there will be no more of this nanny statism which tries to corral people into norms of behavior with the objective of providing a better outcome for the collective; this is fundamentally about the primacy of an individual, trusting people to make adult choices and assuming responsibility for the consequences of their actions. You know, fairy tales.

    But most importantly, this is about supporting the economic primacy of the United States of America, which, let’s face it, is probably the least worst option we have. If that means higher costs and less control here as part of our contribution to continued US hegemony over the region, so be it. God bless America.

    • The National Party certainly aren’t going to get squeamish about higher drug costs and digital rights if it can increase rural exports.

      Methinks it would have been well to place that key word “if” in very big BOLD CAPS.

  6. Leith you’ve probably scanned the DFAT TPP sure limited such as it is but still worth a look. An encouraging breadth of submissions gave been made and there is basic explanation of position on more contentious points. The intellectual property rights sphere remains of concern.

    Ps. Highlighting potential benefits as increasing opportunities for trade in mining tech and dairy in Peru leaves one a little underwhelmed!

    • The reasons for keeping the text secret are particularly pathetic.

      The idea that those chumps in Canberra will be signing off with out any scrutiny of the specific deal – as against the wholesome motherhood statements being trundled out about the joys of freer trade – is frightening.

      The pressure to ratify whatever they cook up will be immense. Would not want to bank on some spine from Shorten or that blow hard Howes. They seem very eager to cuddle up to neo classical ideology at the moment.

      Surely, there are a few people with brains left in the LNP who will ensure that the agreement is subject to thorough debate before ratification.

      “2. Why isn’t the Government releasing the negotiating texts?

      The countries in the TPP negotiations have agreed to keep the negotiating documents confidential, but we do provide regular public briefings on the status of the negotiations. This is normal practice in international negotiations. In the case of the TPP, this confidentiality safeguards our negotiating positions and strategies, which cover sensitive national interests in relation to market access and Australia’s trade and commerce more broadly.

      Even if it were possible to release negotiating texts, these texts would be potentially misleading. The obligations under discussion evolve as negotiation rounds progress. Initial claims are amended gradually over the course of many negotiating rounds until all parties reach their final positions, delivering text that all parties can agree. The difference between early works-in-progress texts and the final text can be vast. The text has no status until all parties have agreed to it.

      The Government holds regular public consultations and individual stakeholder meetings to seek input from the community, and to provide updates on the TPP negotiations. TPP negotiators also hold meetings with stakeholders and interested members of the public during negotiating rounds, to talk about progress in the negotiations. The Department of Foreign Affairs and Trade (DFAT) posts progress reports on the DFAT website at the end of each negotiating round.

      The TPP Agreement must go through the same democratic processes as other treaties that the Australian Government considers. Once the parties agree on the final text of the TPP Agreement, the Government will make the agreement available publicly and open to scrutiny before the Parliament considers passing it into law. After Ministers table the final TPP text in the Parliament, the Parliament’s Joint Standing Committee on Treaties will coordinate a public review of the agreement. The Committee can then invite submissions and evidence at public hearings, to help determine whether it should recommend to Parliament that the TPP be ratified. More information on the treaty making process can be found on the DFAT Treaties page.”

    • If this is the best that we are going to get from the astroturfer on this issue, then we should be very, very scared indeed.

      As someone who works in R&D, I can vouch are the ridiculousness of the patent demands. That we will cede to them is just mind boggling.

      The ISDS is another one, too. Any regulation or law that affects a corporation could results in a law suit. That an anti-monopolostic regulation or anti-oligopolistic regluation could result in the government being sued is mind boggling.

  7. I cannot believe it is actually happening. We don’t have anymore a government, but a foreign capitals agent.

    • dumb_non_economist

      What is somewhat amusing is the “World Gov” conspiracy crowd, it isn’t a WG I’d be worried about, but what’s happening here right now.

      • Disagree d_n_e … given the lessons of history past, if one gives any credence to “World Gov” conspiracies — as one logically should, since history is replete with examples of those who wished to “rule the world” — then one should be more concerned about just what form such a government might take, and, what its fundamental morality (or lack of) and consequent actions might be.

        If power corrupts, and absolute power corrupts absolutely, I would not wish to be around to witness the actions of an out-in-the-open World Gov.

        Consider just how the expectations of the average member of the Russian “proletariat” would have altered, on seeing what kind of government they actually ended up with — as compared to the idealistic utopian fantasies they were sold on — in consequence of the Bolshevik “revolution”.

        Alexander Solzhenitsyn should be required reading for all who find any appeal whatsoever in such utopian Global Government fantasies.

      • dumb_non_economist


        I sort of don’t agree, if we have any sort of WG it’s going to be from the push of global companies in the back ground to protect their investments and dissuade any sort of real competition. They’ll effectively have that with TPP etc.

  8. Got to agree with this call.

    It sounds like an anti-free-trade deal to me.

    Copyright laws, intellectual property rights.

    They aren’t compatible with real property rights and freedom of commerce.

  9. So what can we do about this, we’ve all got time to post on this site, can we start pressuring a member of parliment e.g. calls and emails? Can we try to get this issue talked about in the mainstream press e.g. writing about it in the comment section of any and every story?

    I’m open to ideas.

  10. Of all the lobby group CEOs, Jennifer Westacott is in need of a writer, her statements are worthless and equivalent to glove puppet’s.

    The other statements from US officials about ‘grave consequence’ and “be very serious” if it failed standard pompous drivel from officials to make it urgent.

    It’s quite clear that Abbot is Harold Holt – all the way with LBJ, and judging by what Abbott says on everything, he is just as vacuous as Holt.

    If, or when, this becomes ratified it should create such a reaction in the population that tanks will have to be brought out on the streets. And then the gvt will be overthrown.

    • No one cares enough to do anything Jake. We are just content to blog about how expensive property is.

      • You are right, but one hopes to see tanks in Canberra as international news crews report the gvt is escaping to seek refuge in California.

  11. It is great that everyone is on the same page with this & recognises that USA interests will reign supreme to Australia’s detriment. There’s not a big readership here -currently- so most of the population do not even know about it.

    “The Age” seems to me to be the best large distribution News Paper in the country. A suggestion :Everyone here should write to the Editor- [email protected] & include a link to this article. Also I guess to other lesser papers.

    May be better than doing nothing.

  12. I’m glad that you are talking about this very important subject. We shouldn’t be letting these trade groups make agreements that can become legally binding without the due process of parliamentary debate in the first place. These agreements will cause our country to lose our sovereignty, leaving us the taxpayer beholden to corporations. This particular agreement could end up costing the taxpayers billions and may make public health unfeasible. Instead we should be pushing for stronger sovereignty against corporations where our country can act in the interest of Australia against a company for the greater good. Companies have no legal obligation for social good, only profit and thus they are poor choices as vessels for placing our trust. For the love of your country, don’t let them sign us op to the TPP.

  13. Our farmers suffered after World War Two as we sold produce to Britain for cheaper than it could be sold in other markets. Back in those days we were part of the sterling trade area. We are now going to be part of the US dollar trade area. As I said previously, just as with Britain, this is not a business relationship alone. It can not just be analysed in terms of dollars and sense. It’s much bigger than that.

  14. deanis123MEMBER

    You would think it will be possible to make a case for criminal abuse of public office (or Misfeasance in Public Office?) on at least some of the Commonwealth public officials involve in organising this agreement if enacted? Anyone knowledgeable in this area of law?