[Ip-health] US-Peru Trade Deal the First Test of Renegotiated IP Provisions

[Sarah Rimmington]

Intellectual Property Watch

5 November 2007
US-Peru Trade Deal The First Test Of Renegotiated IP Provisions

By Martin Vaughan for Intellectual Property Watch
The United States House of Representatives is poised to pass the US-Peru
free trade agreement this week, in the first test of the new =93bipartisan
trade policy=94 that led to the renegotiation of trade agreements with
Colombia, Panama, Peru and South Korea.

The Peru pact includes new provisions that congressional Democrats
negotiated with the Bush administration with the aim of increasing
access to generic medicines, carving back some protections for patented
drugs that have been included in US bilateral trade agreements to date.

The House Ways and Means Committee approved the US-Peru deal in a 39-0
vote on 31 October, and the legislation is expected to pass the House
comfortably, though not without opposition from more liberal Democrats.
Lobbyists and congressional aides predict that as many as half of all
House Democrats will vote against it.

The trade pact is being considered under fast-track rules, meaning it
cannot be amended and it must be considered within a set timeframe.
After House action on the Peru deal slated for Wednesday (7 November),
the Senate is very likely to pass the legislation before it adjourns in
mid-December.

Changes to intellectual property provisions have not been much of a
factor in the House debate on the Peru agreement, where opponents have
focused on worker rights and economic conditions in the United States.
House Democratic leaders say the revised trade agreement represents
significant progress in prodding trading partners to abide by
internationally-recognised protections for workers and the environment.
Opponents argue that it is just one in a series of trade deals that have
heaped job losses on the US manufacturing sector, and that the Bush
administration cannot be trusted to enforce its new labour and
environmental provisions.

US-Peru Restores Some Flexibility on Health

House Government Reform and Oversight Committee Chairman Henry Waxman, a
California Democrat and a frequent critic of Bush administration trade
policies with respect to IP, announced his support for the Peru
agreement in a =93Dear Colleague=94 letter on 5 November. =93The revised Pe=
ru
FTA restores much of the flexibility needed to protect public health,=94
Waxman wrote.

Negotiations between congressional Democrats, their Republican
counterparts, and the Bush administration led to agreement this summer
on new language to be added to the four trade agreements in the areas of
labour, the environment, investment and intellectual property rights.
Over the objections of brand-name pharmaceutical firms, the White House
signed off on changes in several key areas related to protection of
innovative products (IPW, Bilateral/Regional Negotiations, 17 May 2007).

The agreement drops a requirement included in previous US bilaterals
that countries compensate patent holders for delays in the marketing
approval process by extending patent periods. For other products, the
agreement states that Peru =93shall=94 extend patent terms to compensate fo=
r
those delays. But in the case of pharmaceuticals, it states only that
Peru =93may=94 provide such compensation.

It also loosens data exclusivity requirements that name-brand drug firms
say they rely on to protect their IP in markets where patents are hard
to obtain or poorly enforced. The Peru agreement retains the
boiler-plate language that Peru protect clinical test data for a
=93reasonable period=94 of five years after an innovative product has
entered the market. But it stipulates that the five-year period must not
extend beyond the data exclusivity period in the United States.

Besides those changes, Peru and the US agreed to incorporate into the
text of the agreement a side letter stating that nothing in the
agreement impedes a party=92s ability to protect public health, and use
the flexibilities in the World Trade Organization Doha Declaration on
TRIPS and Public Health. TRIPS is the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights.

Those changes were also added to trade agreements with Colombia and
Panama. They were not added to the US-South Korea trade deal, in
recognition of South Korea=92s more advanced level of economic development.

Other key intellectual property provisions of the Peru agreement include
a requirement that Peru set up an online registration system for
trademarks, and beef up enforcement against copyright piracy, according
to US trade officials. It includes language recognising biodiversity and
traditional knowledge, and stipulates that parties shall make =93all
reasonable efforts=94 to recognise patents on plant varieties. That
includes an anti-backsliding provision to ensure that once patent
protection for plants or animals is provided, it must be maintained.

The opposition of brand-name drug manufacturers to the new patent
language has had some impact in the Senate, where two GOP members of the
Finance Committee cited weaker intellectual property provisions as one
reason they voted against the Peru deal in a 21 September markup of the
bill.

=93They want our taxpayers to fund billions of dollars in innovative
research and then take it from us for free,=94 Utah Republican Senator
Orrin Hatch said of US trading partners during that markup. Sen. Jon
Kyl, R-Arizona, also voted against the pact. The 21 September vote was
non-binding. The formal vote on Peru took place on 5 October, where the
agreement was approved by voice vote.

But the Peru deal is expected to easily gain majority support in the
Senate. Further congressional action on trade deals with Colombia,
Panama, and South Korea will be delayed until next year at the earliest.
But each of those agreements faces obstacles that make it unclear
whether any will be approved before Bush=92s tenure ends in January 2009.
The US-Colombia agreement is strongly opposed by labour unions, and US
beef producers and automakers are fighting the South Korea pact.
Meanwhile, a diplomatic imbroglio involving the election as head of
Panama=92s national assembly of Pedro Gonzalez - who is wanted in the
United States for the 1992 killing of a US soldier - has stalled that
agreement.

GAO Finds US Trade Policy Rubs Public Health

Meanwhile, Waxman and Sen. Edward Kennedy, D-Massachusetts, last week
released a report by congressional researchers that found that US trade
negotiators have shown only limited flexibility on drug patent
protections since Congress made =93respect for the Doha Declaration=94 a
negotiating objective in 2002 fast-track trade legislation.

=93Other than making concessions on compulsory licensing and parallel
importation provisions, and on side letters that state that the IP
chapter does not affect a country=92s ability to take necessary public
health measures, USTR has not changed its uniformly high demands with
regard to IP protection in its FTAs,=94 the report concluded.

GAO also found that internal Bush administration discussion of IP
provisions in free trade agreements did not include an examination of
the public health impact of those provisions. =93Regrettably, the US trade
strategy has prioritised patents over public health,=94 Waxman said in a
statement.

A USTR spokeswoman called the GAO report =93generally balanced and fair.=94
She added, =93USTR believes that strong IPR protection and support for
enhancing access to medicines are objectives that can and should be
pursued together.=94

Medical Innovation Prize Fund Bill Introduced

In related news, Sen. Bernie Sanders, an Independent from Vermont, last
month introduced legislation to replace the current system of rewarding
innovation by exclusive marketing rights to patent holders, with a
system of cash prizes paid from an $80 billion per year innovation fund.
The bill would allow generic competition for new drugs immediately.
Prize amounts would be proportionate to the degree of health benefits
delivered by a particular invention, as estimated by the managers of the
=93Medical Innovation Prize Fund.=94

Martin Vaughan may be reached at info@ip-watch.ch.

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--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: (202) 387-8030
Cell: (202) 422-2687
www.essentialaction.org/access/