It has been a while since the last HaT Bulletin in September 2015 ! I have been busy setting up the Health and Trade Network and surviving on consultancies until this network is financially sustainable. At the end of 2015, HaT members chose a Board from our list of 10 Founding Members to help the network evolve in these early days. In early January 2016, HaT members came together for our first physical General Assembly where we decided on the 2016 – 2021 HaT Strategy. More information about these meetings can be found at the end of this Bulletin.
It has also been a busy time for global trade. In Africa the Tripartite Free Trade Area (TFTA) was announced in September. In the same month, the European Commission released its proposal for investment protection in trade agreements which was quickly labelled as ‘Lipstick on Pig’ by protest groups. While the TPP negotiators came to an agreement in October after 7 years of negotiations after a battle over patents for biosimilars and a landmark exemption for tobacco in the investment chapter. In the TTIP, the main focus has been on investment protection and regulatory cooperation, although there are growing sectoral concerns as well in the areas of agriculture, alcohol and pharmaceuticals. The Trade in Services Agreement (TiSA) went to a plenary vote in the European Parliament. The bulletin will also take another look at the EU-Vietnam Trade Agreement which was signed in December ahead of the final chapter on investment protection being negotiated, which now includes the new so-called ICS.
TFTA: Pan-African free trade area announced
The Tripartite Free Trade Area (TFTA) is an amalgam of three existing African trading organisations: the East African Community (EAC); the Common Market for Eastern and Southern Africa (COMESA) and the South African Development Community (SADC). It will create the biggest free trade zone in Africa stretching from the North to the South of the country including 26 countries with a total GDP of one trillion US dollars (USD). In order to tackle the onerous task of combining the trade rules of the EAC, COMESA and SADC, the TFTA will take place in two stages: the first will involve steps to liberalise trading i.e. tariff liberalisation, rules of origin, dispute resolution and customs and transit procedures, amongst others; the second phase will cover trade in services, IP rights and competition policy. The implication for health will depend on how intellectual property, services and sectoral chapters on agriculture, alcohol, SMEs are managed in the agreement.
If you can help the Health and Trade Network to monitor the progress of this agreement, and would like to raise awareness about your health related trade campaigns in Africa, please send any information about your campaigns or activities to [email protected] . I can post them to our upcoming website and explore potential areas for collaboration.
If you can help the Health and Trade Network to monitor the progress of this agreement, and would like to raise awareness about your health related trade campaigns in Africa, please send any information about your campaigns or activities to [email protected] . I can post them to our upcoming website and explore potential areas for collaboration.
Investor State Dispute Settlement (ISDS) vs Investor Court System (ICS)
In September 2015, The European Commission – claiming to have listened to public opinion – produced its proposal for a ‘new’ Investment Court System (ICS) that would replace the ‘old’ ISDS in all on-going and future investment negotiations. However the proposed changes have been criticised as a mere ‘re-branding’ of the old ISDS system and not substantial enough to warrant support.
It is clear that the EU has not sufficiently addressed the key problems:
- ISDS gives exclusive rights to foreign investors
- ISDS forces governments to use taxpayers funds to compensate corporations for public health, environmental, labour and other public interest policies and government actions:
- ISDS undermines democratic decision-making: and,
- European and U.S. legal systems are capable of handling investment disputes.
The so-called ICS would still give exclusive rights to foreign investors and force taxpayers to compensate corporations for public interest policies and government actions. It will still undermine democratic decision-making and still undermine European and U.S. legal systems.
The key changes advocated by the Commission as improvements to the system are riddled with legalistic shortcomings in three key areas: funding, the right to regulate and preferential treatment for foreign investors. Indeed, the mechanism grants foreign investors the sole right to sue governments while national small and medium sized enterprises are denied access to these international arbitration courts.
The key changes advocated by the Commission as improvements to the system are riddled with legalistic shortcomings in three key areas: funding, the right to regulate and preferential treatment for foreign investors. Indeed, the mechanism grants foreign investors the sole right to sue governments while national small and medium sized enterprises are denied access to these international arbitration courts.
While the introduction of so-called judges – who are really arbitrators in disguise – to the courts appears to be a positive step, they will be extravagantly paid on a case by case basis providing a strong incentive to find in favour of the claimants in order to ensure future cases. This system also places an extra burden on US and European tax payers who are already required to foot the bill for millions of dollars and euros in compensation and settlements. The ISDS system not only undermines national (EU) and state level (US) sovereignty, but also threatens to increase the likelihood of claims incurring potentially even bigger financial costs than the ‘old’ ISDS system.
The right to regulate in the public interest is undermined by the need for governments to take the ‘measures necessary’ to achieve ‘legitimate’ objectives leaving the criteria to define what measures are necessary and what constitutes legitimate objectives open for interpretation, and ultimately, arbitration. In essence, an ISDS case cannot stop legislation going ahead, but it puts a hefty price tag on it when a government is sued for compensation for a future loss of profits: a bill which has to be met by taxpayers. The term right to regulate gives false impression of security. Health and public interest legislation remains under threat in the EU and the US if ISDS/ICS is included in the TTIP.
German High Court Judges Come out Against the ICS
In a hugely important statement, the largest association of judges in Germany has voiced opposition to the establishment of an international investment court in TTIP. The following is a summary of the statement translated from German by Powershift:
“The largest association of judges in Germany (DRB) opposes the establishment of an international investment court in TTIP, stating that “neither is there a legal basis nor the necessity”.
In the statement released on February 2nd, the DRB focused on the following points:
“The largest association of judges in Germany (DRB) opposes the establishment of an international investment court in TTIP, stating that “neither is there a legal basis nor the necessity”.
In the statement released on February 2nd, the DRB focused on the following points:
- The assumption that the courts in the EU member states are not sufficient to provide adequate legal protection for foreign investors lacks is fully unfounded. “Special courts for only certain groups are the wrong way”.
- The DRB also expressed significant doubts regarding the competence of the European Union to establish an international investment court, since it would severely interfere with the Member states’ judicial and legislative systems and of the Union itself.
- Another source of criticism is the lack of independence of the judges: The Commission’s proposal neither ensures financial independence nor does it provide clarity about the selection procedure.
Philip Morris vs Australia: a victory but no room for complacency
In December 2015, the tribunal in Philip Morris Asia Ltd. v. Australia issued the long-anticipated award on the case, declining jurisdiction, as known from a statement from Philip Morris. The case which concerns Australia’s Tobacco Plain Packaging Act 2011 prohibiting the use of trademarks, symbols, graphic or images on tobacco products and packaging has often been used by health advocates as a reason not to include ISDS in trade agreements.
Philip Morris argued that the 2011 measure had expropriated its intellectual property rights because it cannot use its logo in the cigarette package. Australia argued that Philip Morris had improperly made a foreign “investment” so as to avail itself of these proceedings. It also argued that Philip Morris misrepresented the nature of its investment to the Australian government. Further Australia argued that the case constituted an abuse of right.
The rejection of the case was rightly upheld as a moral victory for public health, even though an actual arbitration did not go ahead: the tribunal made it clear that Philip Morris had behaved in an underhanded way in order to challenge a legitimate piece of health legislation. Without an ISDS clause in the Australia-Hong Bilateral Investment Treaty (BIT) that Philip Morris attempted to use to bring the case, the threat could have not been made. This case has been used by health advocates around the world as an example to back up arguments that ISDS should never be included in trade agreements. This single victory against one tobacco company is extremely important: however it should not mean that opposition to ISDS should decrease by any means.
The threat of investor state arbitration will continue to be real for as long as ISDS exists in any format. As we have seen in Uruguay, even a protection for public health in Article 2 of their BIT with Switzerland has not been enough to prevent an ISDS case against the country for implementing an number of tobacco control measures.
Article 2
“Promotion, admission Each Contracting Party shall in its territory promote as far as possible investments by investors of the other Contracting Party and admit such investments in accordance with its law. The Contracting Parties recognize each other's right not to allow economic activities for reasons of public security and order, public health or morality, as well as activities which by law are reserved to their own investors.”
Philip Morris argued that the 2011 measure had expropriated its intellectual property rights because it cannot use its logo in the cigarette package. Australia argued that Philip Morris had improperly made a foreign “investment” so as to avail itself of these proceedings. It also argued that Philip Morris misrepresented the nature of its investment to the Australian government. Further Australia argued that the case constituted an abuse of right.
The rejection of the case was rightly upheld as a moral victory for public health, even though an actual arbitration did not go ahead: the tribunal made it clear that Philip Morris had behaved in an underhanded way in order to challenge a legitimate piece of health legislation. Without an ISDS clause in the Australia-Hong Bilateral Investment Treaty (BIT) that Philip Morris attempted to use to bring the case, the threat could have not been made. This case has been used by health advocates around the world as an example to back up arguments that ISDS should never be included in trade agreements. This single victory against one tobacco company is extremely important: however it should not mean that opposition to ISDS should decrease by any means.
The threat of investor state arbitration will continue to be real for as long as ISDS exists in any format. As we have seen in Uruguay, even a protection for public health in Article 2 of their BIT with Switzerland has not been enough to prevent an ISDS case against the country for implementing an number of tobacco control measures.
Article 2
“Promotion, admission Each Contracting Party shall in its territory promote as far as possible investments by investors of the other Contracting Party and admit such investments in accordance with its law. The Contracting Parties recognize each other's right not to allow economic activities for reasons of public security and order, public health or morality, as well as activities which by law are reserved to their own investors.”
Trans-Pacific Partnership : the Public Health Threat continues
Key health concerns in the TPP are focused around the patent provisions that will excessively boost excessively boost patent and data protections for brand name drug companies while preventing price-lowering generic competition. Prolonging patents through "data exclusivity windows" via the TPP would keep an increasingly important category of drugs, known as biologic agents, out of the hands of the patients. Biologic agents include vaccines, blood products and gene therapies -- agents that are often the only available treatment for certain diseases. Different countries have managed to negotiate different IP protections for biologics. Australia for example kept their five year window on exclusivity, Canada has an eight year window and has forgone any future chance to reduce this by signing the TPP. Medecines San Frontieres (MSF) stated that:
‘the big losers in the TPP are patients and treatment providers in developing countries. Although the text has improved over the initial demands, the TPP will still go down in history as the worst trade agreement for access to medicines in developing countries, which will be forced to change their laws to incorporate abusive intellectual property protections for pharmaceutical companies.’
As the TPP now enters the phase where national governments consider the texts for final approval, the Health and Trade Network supports MSF’s call for all signing parties to seriously consider whether they want to lock in these dangerous patent protections that will increase medicine prices in the developing countries of the TPP and set dangerous precedents for all future trade agreements.
As the TPP now enters the phase where national governments consider the texts for final approval, the Health and Trade Network supports MSF’s call for all signing parties to seriously consider whether they want to lock in these dangerous patent protections that will increase medicine prices in the developing countries of the TPP and set dangerous precedents for all future trade agreements.
Tobacco Carve-Out: A smoke screen victory and lessons for TTIP
The historic carve out of tobacco in the TPP’s investment chapter was greeted with mixed reactions from across the public health community highlighting. It was a victory for tobacco control advocates who worked hard over the last few years to ensure a carve out, however for others, the measure does not go far enough and many more were left wondering if tobacco, why not alcohol, unhealthy food and IP as well?
In an article by Ellen R. Shaffer & Joseph E. Brenner, the authors describe how the exclusion allows signing parties to elect protections from investment settlement disputes for all measures “related to the production or consumption of manufactured tobacco products (including products made or derived from tobacco), their distribution, labeling, packaging, advertising, marketing, promotion, sale, purchase, or use, as well as enforcement measures, such as inspection, recordkeeping, and reporting requirements. [A] measure with respect to tobacco leaf that is not in the possession of a manufacturer of tobacco products or that is not part of a manufactured tobacco product is not a tobacco control measure.”
Many in the public health field are concerned that the elective element of this carve-out weakens the provision which should in fact be enshrined in international law. Jane Kelsey argues that it also means the election can only be used on a case by case basis, allowing the industry to pressure by repeatedly bringing cases. The elective element opens opportunities for companies to lobby and pressure governments not to use it. Even if a country whose to elect the provision however, there is still a danger that a company can use the Most Favoured Nation clause in the TPP to bring in ISDS chapters from other trade agreements such as NAFTA where the elective exclusion does not exist. Despite the existence of the Framework Convention on Tobacco Control (FTCT), tobacco policies are still captured by the chapter on services (eg. advertising, retail) or labelling rules in the chapter on technical barriers to trade.
Having ratified the FCTC, the European Commission should be far more strict about dealing with this deathly product in the TTIP, however if the TPP process has been anything to go by: they will have an uphill struggle against pressure from the industry and USTR who negotiated such weak regulations in the TPP. Recent history has also shown us that the EC are not always consistent in refusing to deal with the industry: providing heavily redacted letters to the Corporate Europe Observatory in response to a freedom of information request for example.
The signatory parties of the TPP should bear in mind the weaknesses of the proposed tobacco carve out, and work to strengthen the exclusion or refuse to sign without full public health safeguards. Likewise in the TTIP: it would be unacceptable to endorse an agreement that gives any leeway to the tobacco or any other harmful industries to bring investor state disputes, or be able to circumvent legislation on advertising or licensing through the TTIP, TISA or any other trade agreement.
The Dutch Presidency of the EU
Every six months, a European Member State takes over the Presidency of the European Council. On the first of January 2016, the Dutch government took on this role and included a strong focus on trade in their priorities, especially the TTIP. They aim to encourage the negotiations to move on quickly in 2016 and potentially facilitate the start of free trade agreements with Australia and New Zealand, and modernising the EU-Mexico trade agreement. They also aim to be a ‘galvanising force in the post-Nairobi debate on the future and role of the WTO in the multilateral trade system.’
TISA
Back in September 2015, the Uruguay ‘created a blue print of how to beat these corporate-driven agreements’ by leaving the Trade in Services Agreement following immense public pressure from domestic unions and activists. The TiSA is being negotiated by several countries from the global north and south within which EU member states are represented by the European Commission. The secretive nature of the talks is highly contested by its opponents, and HaT is especially concerned about the liberalisation of healthcare and social services and the potential for back door deregulation of services not traditionally associated with the agreement such as tobacco licensing.
European Parliament Supports Exclusion of Healthcare Services from TiSA
On the 3rd February the European Parliament voted on a resolution to recommend to the European Commission to protect, among other things ‘EU public services, such as education, health, social services, social security systems, and audiovisual services.’ Relying only on leaked texts via Wikileaks which may well now be out of date, it is difficult to know what other measures are included. While the EP should be supported for drawing this clear red line, we need to ensure that the TiSA does not facilitate a brain drain of trained service sector workers from the poorer to the wealthier countries in the agreement. The act of excluding public services from TiSA should also exclude and government decision relating to them from investor state disputes.
European Parliament Supports Exclusion of Healthcare Services from TiSA
On the 3rd February the European Parliament voted on a resolution to recommend to the European Commission to protect, among other things ‘EU public services, such as education, health, social services, social security systems, and audiovisual services.’ Relying only on leaked texts via Wikileaks which may well now be out of date, it is difficult to know what other measures are included. While the EP should be supported for drawing this clear red line, we need to ensure that the TiSA does not facilitate a brain drain of trained service sector workers from the poorer to the wealthier countries in the agreement. The act of excluding public services from TiSA should also exclude and government decision relating to them from investor state disputes.
Sale of the Century? EU-Vietnam Trade Agreement
This agreement was finalised in December 2015, but the full texts only went online earlier this month. A crucial fact is that it is the first trade agreement signed with the new Investor Court System which sets a precedent for the Commission to use it in other trade agreements: most notably with China where discussions have started on an investment agreement. With high levels of health, transport, social care and other services in government hands, this trade agreement – in combination with Vietnam also signing the TPP – could lead to the Sale of the Century for Vietnam. In the next bulletin we will try to bring you more details on these areas and the provisions for intellectual property which will be key for access to medicines.