Pacific Rim free trade deal comes with high price

The United States is leading secret negotiations with 11 other countries over the Trans-Pacific Partnership Agreement.

Representatives of 12 nations meet in Hawaii to negotiate the Trans-Pacific Partnership Agreement [Marco Garcia/Reuters]

On the tropical shores of the island of Maui in Hawaii, 12 Pacific Rim countries are negotiating the Trans-Pacific Partnership (TPP) Agreement behind closed doors.

The current meeting in Hawaii between the US, Canada, Australia, New Zealand, Brunei Darussalam, Chile, Japan, Malaysia, Mexico, Singapore, Peru, and Vietnam is the latest and possibly final round of negotiations that have been grinding along and evolving for seven years.


The White House dubs it “the most progressive trade agreement in history”, with the economies of all 12 nations set to benefit.

However, the deal has drawn critics from various spheres. Among the loudest are analysts concerned by how the deal will affect the availability and price of medicine. 

Medicine for life

Four years ago, at 59 years old, New Zealander Diana Goodman successfully beat breast cancer, only to develop a heart condition called atrial fibrillation. The condition makes the heart beat out of rhythm and can cause blood to pool in the arteries, leading to heart attacks and strokes.

Goodman takes five different types of medication every day, mainly to keep her heart pumping at a regular pace, and has no doubt the medication keeps her alive. 

“I could well have had a stroke or heart attack if I was not on the medication,” she said.

Goodman pays just $20 every three months for four different types of medication.

That’s because her medications are subsidised by New Zealand’s procurement agency, PHARMAC. It works on behalf of the government to purchase medicines at highly competitive prices and then passes the savings on to taxpayers through subsidised medicine.

The aim is to keep prices low so everyone, regardless of their economic situation, can afford their medication.

The TPP would make the introduction of generic drugs more difficult, and thus raise the price of medicines. In the poorest countries, this is not just about moving money into corporate coffers: Thousands would die unnecessarily.

by Joseph Stiglitz, economist

But while Goodman takes her life-saving medication in Auckland, delegates from her government are participating in negotiations that could push the price of medication up so high, she and millions around the world, will no longer be able to afford it.

Trading away health

One of the key components causing alarm among opponents of the TPP is the changes to intellectual property laws.

It’s hard to see a link between the price of medicine in New Zealand and legal TPP jargon, but they are connected.

At the moment, pharmaceutical companies get a 20-year patent right over medicines they develop.

Once that period expires, generic versions of the same medication are then created by other companies and sold at cheaper prices. Although of the same molecular makeup, the medication often costs only four to 10 percent of the original price.

Using a tendering strategy whereby it awards a company offering the best price for the subsidised supply for a fixed term, PHARMAC claims to save the taxpayer about $30m each year.

It is a very successful model according to Dr Erik Monasterio, a consultant clinical forensic psychiatrist, a senior lecturer at the University of Otago in New Zealand, and a critic of the TPP.

“PHARMAC’s procurement strategies are actually the best of a market model. They get companies to compete with each other and we buy generic medications so we get really good value,” he told Al Jazeera.

Monasterio co-authored a report published in the leading medical journal, The Lancet, which warned “the  new proposed agreements for trade and investment threaten the ability of governments worldwide to provide affordable healthcare and to put in place health and environmental laws that protect public health and mitigate health inequity”.

The authors pressed for an independent Health Impact Assessment (HIA) to establish what risks the TPP poses to healthcare systems. Those calls were echoed by the New Zealand Medical Association, but the request was rejected by the government. 

Monasterio fears the TPP will delay the entry of generic medications into the market which will then limit PHARMAC’s ability to deliver the best value for money.  

Members of the medical community are not the only ones concerned. Some of the best and brightest minds in the world are alarmed by the TPP. 

One of them is a Noble Memorial Prize laureate for economics and a former World Bank chief economist Joseph Stiglitz.

In an open letter to TPP negotiators published in the New York Times he said:

“… the TPP would make the introduction of generic drugs more difficult, and thus raise the price of medicines. In the poorest countries, this is not just about moving money into corporate coffers: Thousands would die unnecessarily.”

  Will the Pacific trade deal protect workers?

“There is a real risk that it will benefit the wealthiest sliver of the American and global elite at the expense of everyone else,” Stiglitz stated. 

Controversy and compromises

Because the negotiations are being held behind closed doors, the general public is kept in the dark as to the actual details of the agreement. Only scraps of information have been made public through leaked documents.

But while taxpayers and the public have not been consulted on the agreement, there are about 600 advisers who have, the vast majority of whom represent corporations.

Celeste Drake from the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) is one of a handful of trade specialists who saw the US proposals and she is alarmed.

“Based on what I have seen of the text, it repeats the mistakes of prior trade agreements,” Drake told Al Jazeera.

“And in some cases doubles down on rules that promote the interests of global corporations and economic elites. It is not designed to share prosperity or rising wages and does not have the public interest in mind,” Drake said.

Roughly half of all international trade passes through the Asia-Pacific region and the TPP could assure New Zealand reaps the benefits of this traffic.   

A spokesperson for New Zealand’s Ministry of Foreign Affairs and Trade told Al Jazeera the TPP “would deepen economic ties … by opening up trade in goods and services and boosting investment flows.”

The ministry added that: “The TPP would safeguard New Zealand’s longer term trading interests.”

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The ministry cites an independent study completed by economists connected to the East West Center and Peterson Institute that claims a “high quality agreement” could boost New Zealand’s GDP by almost $2bn in the year 2025.

Bitter pill to swallow

Monasterio believes that while the TPP may benefit some businesses, the poorest in society are likely to pay the price. 

Income inequality in New Zealand is among the highest in the developed world.

“When you increase the price, then the kind of people that are less likely to buy the medications that they need are the cultural minority groups and those who are already vulnerable,” Monasterio said.

For Diana Goodman, the risk is real.

“My medication is absolutely lifesaving. If I had to pay the true cost then it is also very expensive. These are subsidised for a reason…because people will not be able to pay the full price, ” she said.

Source: Al Jazeera