[Ip-health] Statement on 2nd round of KORUS FTA

[heeseob nam]

http://www.bilaterals.org/article.php3?id_article=5313

Korean Civil Societies Statement on 2nd Round of Korea-US FTA Talks

- What the Korean government should take away from the crippled talks
of 2nd round is not to withdraw certain negotiating teams but to stop
the negotiation itself -

The second round of FTA talks between Korea and United States ended on
July 14, 2006 with cancellation of the final day's entire schedule.
In the second round, drug pricing policy of the Korean government
became the central issue.  The Korean government announced to reform
its drug pricing policy of the national healthcare system by adopting
measures to positively list reimbursable prescription drugs rather
than the current "negative list", which only lists the exclusions.
This positive list system was planned on May 2006 and is expected to
take effect on September 2006 when the third round of the KORUS FTA
talks will be held in Seattle.

The US negotiators refused to attend the Pharmaceutical and Medical
Device Working Group meeting from July 11 and expressed its strong
opposition to the positive list system. Wendy Cutler, Assistant USTR
and chief American negotiator, blamed that the system "can be used to
discriminate against innovative drugs," which are usually supplied by
U.S. and thereby "limit the access of Korean patients and doctors to
most innovative drugs in the world." Subsequently, the U.S.
negotiating teams did not attend the sessions for trade protection and
service sectors and Korean side followed suit on Friday by canceling
the meetings for commodity trade and environment.

We would first like to discuss the actions of both Korean and U.S.
governments towards the new drug pricing policy planned by Korean
government. The positive list system has been in operation in many
OECD countries. If it discriminates against innovative drugs and
limits patients' access to these innovative drugs, the positive list
system would already be abolished and failed to exist. However, the
potential problems that the U.S. chief negotiator argued did not occur
in any countries. The U.S. position on the positive list system is
motivated by its aim to keep high prices on drugs supplied by U.S.
pharmaceutical companies and ignores constitutional obligation of
Korean government to implement comprehensive and systematic policies
to maintain public health. In this regard, the U.S. government
deserves reproach.

However, the Korean government should be the focus of greater
criticism since it provided an excuse. Before the official launch of
KORUS FTA this February, the Korean government made a promise the U.S.
to address, as a precondition of the KORUS FTA, four areas of concern
to the U.S.: beef; automobiles; pharmaceuticals; and screen quotas.
With respect to the pharmaceuticals, Korean government agreed at the
trade action agenda meeting last October, that no new drug
reimbursement pricing policies would be introduced in the near future.
Further, Korean government promised to set up an independent mechanism
under which pharmaceutical companies could appeal the drug
reimbursement decisions.

We view the actions of both governments' negotiators to be intentional
performances to disguise the substantive issues surrounding the
problem. To the U.S. negotiators the Korean government's
pharmaceutical drug policy becomes the weapon for obtaining another
greater concessions from the Korean side during the next round of
talks. The U.S. pharmaceutical companies, even under the positive list
system, has the power to file a suit against the Korean government
through investor-government dispute and/or non-violation provisions
after the KORUS FTA becomes effective. Reportedly, both sides have
agreed to the investor-government dispute provision and as such the
U.S. pharmaceutical companies may claim damages from the Korean
government and request for abolishment of the positive list system.
Further, when Korean side concedes to accept the U.S. request to
introduce patent term extension and independent appeal system in drug
pricing process, the positive list system loses its effect. Moreover,
the U.S. pharmaceutical company, usually a patent holder for the
drugs, is a single producer and the Korean government's power to
negotiate the drug price would be limited. In addition, the
independent appeal system would further weaken the negotiating power
of the Korean government. Therefore, the strong opposition displayed
by the U.S. to the positive list system is merely negotiating strategy
and tactic to gain more leverage in order to intervene on such matters
as Korean drug policy and obtain term extension on drug patent, and
linkage between patent and drug approval process from Korean side.

Likewise, the action of the Korean government is nothing more than
fabricated performance. The Korean government has already agreed to
protect intellectual property right holders as the investors, which
would certainly weaken the effective function of the positive list
system. During the second round, tens of thousands citizens intensely
protested against the KORUS FTA, and public opinion in Korea took a
turn from pro-FTA. The Korean government's action to cancel the final
day's meeting was to appease the public and nothing more.

The dramatic performance staged by both sides clearly reveals the
presence of significant problem in connection with free trade talks,
as the nation's public policy such as national healthcare system
becomes a political pawn subject to trade negotiation. This will
happen regularly when the proposed KORUS FTA is signed. Free trade
agreement, in particular the KORUS FTA, would allow every public
policy to be controlled by business interests. The shows played by
both governments should be stopped. The business interests cannot take
precedence over public interests.

July 14, 2006

Association of Korean Doctors for Health Rights
Association of Physicians for Humanism
Health Right Network
IPLeft, Intellectual Property Left
KANOS, Korea HIV/AIDS Network of Solidarity
Korea Dentists Association for Health Society
Korea Leukemia Patients Group
Korea Social Insurance Trade Union
Korean Federation of Medical Groups for Health Right
Korean Pharmacists For Democratic Society
Korean Progressive Network 'Jinbonet'
Nanuri+ HIV/AIDS Human Rights Advocacy Group of Korea
Public Pharmaceutical Center
Solidarity for Worker's Health


--
HeeSeob Nam
IPLeft (www.ipleft.or.kr)
Tel.: +82 2 6050 1621
Mobile: +82 11 470 1180
Fax: +82 2 6050 1700
hurips@gmail.com