Wednesday, August 04, 2004

Something on Which We Agree

I rarely agree with John Quiggin on political matters, so when such an instance does arise, it's worth commenting on. Today he makes an excellent case against the Australia-USA "Free Trade" Agreement, which turns out to be little more than an excuse for America to foist harsh intellectual property laws on the Australians.

I know that “Trade agreement said harmful to small faraway country” is the stereotype of a boring newspaper story, but this one is really important to Americans as well as Australians, and to anyone interested in health policy. If you ever hope to see affordable health care in the US, you’d better hope that (against all the odds) this agreement falls at the final hurdle.

Although it’s called a Free Trade Agreement, it’s nothing of the kind. Australia has hardly any trade barriers to speak of, and the US has given very little ground on its barriers and subsidies. The important bits of the agreement are those relating to intellectual property and (closely related) pharmaceuticals. In both areas, the Americans have pushed Australia to adopt the strong IP approach prevalent in the US, which of course is primarily concerned with preventing people from producing and marketing products covered by patents and copyrights. In other words, it’s a free trade agreement that’s primarily concerned with making trade less free.

On IP, the main, though not the only, concession made by Australia has been lengthening the term of copyright from the life of the author + 50 years (already overly restrictive) to life + 70 years. For some examples of the kind of nonsense copyrights on the works of long-dead authors can produce you need only look at the recent squabbles over This Land is Your Land (written more than 60 years ago) and Ulysses ( written set 100 years ago and completed more than 80 years ago)

The real action though, is in pharmaceuticals. Under the Pharmaceutical Benefits Scheme, the Australian government bargains with drug companies over bulk purchases of pharmaceuticals which are then sold at subsidised prices to the public. Before drugs can be included in the scheme, they undergo a cost-benefit assessment by an advisory committee. Big Pharma hates this, not so much because of the loss of profits in Australia as because of the fear that the US government might one day follow the Australian example. They managed to get Congress to pass legislation demanding that the Administration report on progress in “opening up” the Australian market. Then in the FTA, they inserted a clause allowing US drug companies to seek a review of unfavorable decisions, and some additional clauses about patent protections. The Australian government said that this concession was meaningless, and kept on saying it until they were black in the face.
For once we see eye to eye on something, though I myself am more exercized by the intolerable length of copyright required by the agreement than I am by the pharmaceutical agreement, which says something or other about my own values I suppose.

Anyway, I know that there are those who will make the argument that IP needs protection because it strengthens the incentive to innovate, yada yada yada, to which I can only respond "thanks for the arguments, but I've heard them all before, and in any case I believe in them myself - up to a point." It's one thing to make a pragmatic case for some degree of intellectual property protection, but it doesn't necessarily follow from it that more protection is always for the better; honesty demands that we recognize that there are costs as well as benefits to the enforcement of intellectual property rights, and that where the United States at least is concerned, the deadweight loss of the laws currently on the books now outweighs the purported benefits. Who, on sitting down to write a book or a play, says to him or herself "It'll only be worth seeing through if I can hold the copyright for 70 years after my death, and not a day less!"

One thing to take away from looking at this lopsided treaty is that it makes the best possible case for the existence of trading blocs like the European Union (though that isn't necessarily saying very much); only between powers of relatively even economic heft is it possible to get treaties that extract genuine concessions on both sides, though in the case of free trade, what are popularly called "concessions" by those make them might more properly be called victories for their own people. The sheer stupidity of seeing negotiators fighting tooth and nail to preserve the freedom to beggar their own populace is awe-inspiring.