[Ip-health] FTAs

[Peter Drahos]

Countries that are following Thailand's experience with issuing
compulsory licences and are contemplating signing a FTA with the US
should perhaps take a look at the dispute resolution chapter of those
FTAs.  We know that the chances of the US winning a WTO dispute with
Thailand over Thailand's implementation of the TRIPS compulsory
licensing standard lie between zero and zero.

Dispute resolution chapters of FTAs may well set up a different
political dynamic.  The degree of transparency of the dispute
resolution process depends on what the parties have agreed to on
transparency.  Clearly, third parties cannot participate in the way
they can in the WTO.  By targeting the threat of cross-retaliation on
those domestic groups (usually infuential) with the most to gain from
the FTA, the US might get a settlement that it would never have got
in the WTO.  A state might decide to pay some of the monetary
assessment (a remedy available under FTAs) that US could demand if it
won in order to make the problem go away.  (The US would calculate
the monetary assessment with the help of the US pharmaceutical
industry.) The legal arguments available to both parties would depend
on the terms of the FTA and its negotiating history.

FTAs are, in effect, setting up a system of many trade courts and
this will have long-term ramifications both for the WTO's dispute
resolution mechanism and for weaker states in the trade system.  Hard
to see how it favours the weaker players.

Peter Drahos