Joe Hendren

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Tuesday, September 11, 2007

A free trade deal with the US - at what price?

What concessions would New Zealand have to make to get a free trade deal with the United States? Any rational analysis of any proposal for a free trade agreement should consider this question, yet the media continue to pedal meaningless Pollyanna that there are only gains to be made. Quite frankly, it defies crediability to make a US FTA sound like a never ending gobstopper that will not lead to any tooth decay.

New Zealanders are very poorly served by their media when it comes to coverage of trade issues - I have written a little on this issue before.

Ironically the US publishes a report ever year on 'Foreign Trade Barriers' where it lists the laws and regulatory mechanisms of other countries the US Trade Representative considers 'significant barriers to US exports'. The 2007 report on New Zealand can be found here. So when those concerned about the negative impacts of free trade say they are concerned that the US has New Zealand's GE and other environmental legislation they have a credible source - a branch of the US Government itself. Apologies for the long quotes from the above document - but I think Uncle Sam makes an admirable case as to why a free trade agreement with the US is a bad idea, and even for those who support free trade, I think it shows it is a deal New Zealand could do without.

US-NZ FTA will weaken environmental laws
Despite New Zealand having far from a complete ban on genetically modified organisms, the US regards our current environmental protection laws, including the Environmental Risk Management Authority (ERMA) as a "trade barrier".
" independent body, reviews applications for the release of new organisms, including biotechnology products that contain living organisms. ERMA assesses applications on a case-by-case basis and can issue three types of approvals: contained field test, conditional release, and full, unconditional release. The Ministry of Agriculture and Forestry (MAF) enforces compliance of field tests and conditional release approvals. To date, ERMA has only approved a small number of contained field tests. There have been no applications for either a conditional or a full release of products derived by the use of biotechnology in New Zealand.... Meeting New Zealand's biotechnology food labeling regulations can be extremely burdensome and is especially relevant for U.S. agricultural exporters who deal primarily in processed food."

The US is also complaining about our "Sanitary and Phytosanitary Measures". These are regulations to minimise the risks to our agricultural industries of a disease being introduced that could lead to a widespread infection of New Zealand livestock or plants. I could be cheeky here and describe this as the US wanting to remove the 'trade barriers' on the introduction of mad cow disease!

A US-NZ FTA could even hit your ipod
In negotations for a free trade agreement, the US would aim to stop New Zealanders making a digital copy of music they have bought legitimately. I quote again.
"The U.S. music industry opposes a proposed amendment to the New Zealand Copyright Act that would legalize the duplication of sound recordings in other formats for a purchaser's private use."

US-NZ FTA means you will pay more for healthcare
The US also want to ensure New Zealanders pay more for their medications. The New Zealand drug buying agency Pharmac, which describes its primary role as "to improve the value of expenditure by DHBs on pharmaceuticals". Pharmac has been in the US sights for some years, as they regard the agency as a block on the ability of its pharmaceutical corporations to make even larger profits.
"The U.S. Government continued to raise concerns about New Zealand's support for innovation in the research and development of innovative pharmaceutical products. New Zealand's Pharmaceutical Management Agency (PHARMAC), a stand-alone Crown entity, administers a Pharmaceutical Schedule that lists medicines subsidized by the New Zealand government. The schedule also specifies conditions for prescribing a product listed for reimbursement.... New Zealand does not restrict the sale of non-subsidized pharmaceuticals in the country. However, private medical insurance companies will not cover the cost of non-subsidized medicines and doctors are often reluctant to prescribe them to patients who would have to pay the cost themselves. Thus, PHARMAC's decisions have a major impact on the availability and price of non-subsidized medicines and the ability of pharmaceutical companies to sell their products in the New Zealand market."

Even though its not explicitly stated above, one way to encourage the use of non-subsidised medications would be to remove or limit the subsidies. Greater privatisation of health care services would no doubt help too.

The US Trade Representative then talks about the efforts of Peter Dunne and United Future, during coalition negotiations with Labour in 2005, to make the world a safer place for the US drug multinationals.

Despite complaining about the monopolistic nature of the operation of Pharmac, the US also want to maintain and extend patents so their corporations can enjoy monopoly profits for longer.
"United States pharmaceutical companies have expressed concerns about a prohibition of patents for methods of medical treatment in New Zealand’s draft patents legislation. The industry also is concerned by the Cabinet's decision in mid-2004 to halt a study on the economic impact of extending patent terms for pharmaceuticals. The draft patents bill fails to address the issue of patent term restoration for pharmaceuticals."

Maintaining pharmaceutical patents for longer can only mean one thing - New Zealanders will pay significantly more for their health care while the US pharmaceutical corporations make larger profits.

US-NZ FTA means yet more American sitcoms
The US dislikes local content broadcast quotas either even when such quotas are voluntary. They clearly do not think we get enough of a dose of Americana on our TV screens. Perhaps the US wants to impose more reruns on Friends et al. Ironically one reason Labour could not introduce a mandatory quota as per their election pledge in 1999 was that this was contrary to a 'commitment' made under the General Agreement on Trade and Services by the National Government in 1994. Its a clear example of how so called trade liberalisation agreements can be profoundly undemocratic.

Despite New Zealand's laws on foreign investment in land and businesses being among the most liberal in the world, the US still regard any screening mechanism (even if it is a monkey with a rubber stamp) as a threat to its economic interests.

So next time you hear an activist marching down the street about how a free trade agreement with the US will written by US corporations, don't write it off as a conspiracy theory, go look up what the US Trade Representative is saying. It took me one simple Google search to find this - its a shame the mainstream media appear to be so hesitant to look up something so obvious.

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At 9:31 am, Blogger Terence said...

Nice post Joe. I find it unbelievable the way that a free trade deal is taken as invariably good in debates on our relationship with the US. Imagine that shedding our No Nukes policy just so we could loose Pharmac...


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