Next up, Malaysia and Thai FTAs

Last week the US concluded what looked like a disastrous round of FTA negotiations in Seoul, Korea. This week the USTR meets with the Malaysia FTA negotiators. The USTR is also pushing for an agreement with Thailand. These three Asian FTAs will be the subject on a Congressional hearing on Thursday, the 20th. The title of the hearing is: Asian Free Trade Agreements: Are They Good for the USA? This is an important question to ask.

The US is publishing for these and dozens of other bilateral trade agreements, and few people in the United States have much insight into the purpose, scope or details of the agreements. In fact, they are so complicated; few of the USTR negotiators can keep track of everything. If I was to provide a simple explanation, I would say that the US offers some very modest "market access" deals to countries, so they can increase exports to the US, in return for measures that (1) promote the interests of "our" big pharmaceutical companies and entertainment publishers (movies and music), and (2) allow a handful of "our" service companies to enter their markets. But this is fairly crude and incomplete.

In the Korea negotiations one of the big demands by the US is to cut back the Korean "screen quotas," that mandated theaters to show Korean movies at least 40 percent of the time (146 days per year). The US wants this cut back, so that Koreans will watch more Hollywood films. The creative community in Korean is highly mobilized in opposition to this, which they fear will devastate the Korean film industry. If the USTR "wins" this negotiation, it will reduce global cultural diversity.

The issue I follow the closest in the Korea FTA negotiations are the US proposals to create rules, committees and procedures to give the US Department of Commerce and the USTR the ability to exercise influence and control over the way Koreans reimburse pharmaceuticals and other medicines. Lobbyists for big pharmaceutical companies, like Pfizer, Merck, or Swiss owned Norvartis, largely developed the USTR positions. These proposals are highly controversial, and were the biggest dispute in last week's negotiating meltdown in Seoul. The USTR strongly objected to Korea's efforts to tie its reimbursement policies (co-payments, etc), to the prices of medicines, practices which are essential for any country to control drug prices.

In the Malaysian negotiations this week, and later the next round of Thai negotiations, one of the big issues will be the efforts by USTR to impose very tough intellectual property (IP) rules, particularly as they relate to medicines. Earlier this year the US government pressured the World Health Organization (WHO) to recall a Thailand official who criticized the USTR proposals on the grounds they would harm patients there. In recent years, Malaysia has issued compulsory licenses on patents for AIDS drugs, and now, like Thailand, actually provides for treatment to HIV+ patients. All of this is threatened by the USTR proposals, which are said to be modeled after a very tough agreement it obtained earlier from Singapore, a much higher income country.

We have proposed much different approaches to these FTAs (here and here) - substituting or deemphasizing chapters on IP with chapters on Access to Knowledge (A2K).

This how (2004) incomes in these countries compare to the US.