Southern Africa: Free trade agreement will undermine access to health

Treatment Action Campaign (TAC)/AIDS Law Project (ALP) Memorandum on the
United States/Southern African Customs Union Free Trade Agreement
Negotiations
3 February 2004

Prepared by:Jonathan Berger (Law and Treatment Access Unit,AIDS Law Project)
and Njogu Morgan (International Desk, Treatment Action Campaign)

Introduction

On 4 November 2002, United States Trade Representative (USTR) Robert
Zoellick formally notified US Congressional leaders of President Bush's
intention to initiate negotiations for a free trade agreement (FTA) with the
Southern African Customs Union (SACU), which includes Botswana, Lesotho,
Namibia, South Africa and Swaziland. These negotiations are now underway,
with the next round scheduled for 23 February 2004 in Namibia. As far as we
are able to ascertain, the negotiators plan to conclude their discussions in
or around October 2004, with a US-SACU FTA being signed before the end of
the year.

The Treatment Action Campaign (TAC) and the AIDS Law Project (ALP) believe
that trade between nations, when conducted within the framework of a
reasonable and fair set of rules that adheres to the triple-bottom line of
environmental, social and commercial sustainability has the potential to act
as a tool for attaining developmental priorities. Our support for the
ongoing negotiations would therefore be predicated on the agreement strictly
adhering to these principles. Yet the US position, as clarified in Mr
Zoellick's correspondence with Congress, raises cause for concern.

In his letters to the Speaker of the House of Representatives and the
President of the Senate, Mr Zoellick set out reasons for entering into such
negotiations, as well as the USTR's "specific objectives for negotiations
with the SACU countries".1 In particular, Mr Zoellick raises the following
US objectives:

"We plan to use our negotiations with the SACU countries to ? address
barriers in these countries to U.S. exports - including high tariffs on
certain goods, overly restrictive licensing measures, inadequate protection
of intellectual property rights, and restrictions the SACU governments
impose that make it difficult for our services firms to do business in these
markets. We also see the negotiations as an opportunity to advance U.S.
objectives for the multilateral negotiations currently underway in the World
Trade Organization (WTO)."2

In our view, a number of the specific objectives identified have the
potential to undermine the financing and provision of health care services
in SACU countries, both in the public and private health sectors, as well as
the rights of people living with HIV/AIDS. In particular, if translated in
binding commitments, many of these objectives have the potential to limit
the ability of the South African government in discharging its
constitutional obligations, primarily in respect of the right of access to
health care services. In our view, such undertakings would be an
unconstitutional exercise of power.

This memorandum highlights our concerns in respect of two key areas:
intellectual property (IP) and trade in services.3 We are equally concerned
about two other key areas, namely investment and government procurement. In
respect of the former, our concerns are informed largely by the potential
for the investment provisions in any FTA to entrench a dispute settlement
mechanism entitling investors to sue governments directly. While the other
parts of the FTA would only be enforceable as between states, the investment
chapter would provide the back door for a pharmaceutical company, for
example, to sue a SACU member state for failing to amend its legislation in
line with the chapter on IP.

In respect of government procurement, we support a principled approach of
transparency that is efficient and swift. Yet we are concerned that rules on
procurement may unfairly preclude necessary and urgent action, such as the
procurement of essential medicines for dealing with a health emergency, such
as a cholera outbreak. We believe that SACU states should not be held
hostage to an unwieldy and unnecessary tendering process.

Intellectual property

With respect to intellectual property rights, the US government's specific
objectives are as follows:

"-- Seek to establish standards that reflect a standard of protection
similar to that found in U.S. law and that build on the foundations
established in the WTO Agreement on Trade-Related Aspects of Intellectual
Property (TRIPs Agreement) and other international intellectual property
agreements, such as the World Intellectual Property Organization Copyright
Treaty and Performances and Phonograms Treaty, and the Patent Cooperation
Treaty.

-- Establish commitments for SACU countries to strengthen significantly
their domestic enforcement procedures, such as by ensuring that government
agencies may initiate criminal proceedings on their own initiative and seize
suspected pirated and counterfeit goods, equipment used to make or transmit
these goods, and documentary evidence. Seek to strengthen measures in SACU
countries that provide for compensation of right holders for infringements
of intellectual property rights and to provide for criminal penalties under
the laws of SACU countries that are sufficient to have a deterrent effect on
piracy and counterfeiting."

Quite clearly, the US sees the SACU negotiations as an opportunity to
extract standards of intellectual property protection in excess of what the
Agreement on Trade-Related Aspects of Intellectual Property (or TRIPS)
currently requires. This is consistent with its approach to other regional
and bilateral trade negotiations. A review of a range of such trade
negotiations initiated by the US indicates that it has sought to extract
greater concessions than those provided under existing international trade
rules, largely to the detriment of developing countries.

To meet "standards of protection similar to that found in U.S. law", SACU
nations would be required to adopt a range of TRIPS-plus provisions,
including limiting compulsory licenses to national emergencies or to
governmental, non-commercial use only. This is clearly is conflict with the
Declaration on the TRIPS Agreement and Public Health adopted at the WTO
Ministerial Conference at Doha in November 2001, which unambiguously states
that "[e]ach Member has the right to grant compulsory licences and the
freedom to determine the grounds upon which such licences are granted".4

Further, SACU members would be required to bar parallel trade, to extend
patent monopolies for administrative delays, to link drug registration
rights to patent
status, to enhance protections for clinical trial testing data and to adopt
criminal enforcement for patent violations, including improvidently granted
compulsory licenses.

In short, the specific objectives in respect of IP would significantly
undermine the ability of SACU member states' to make use of the regulatory
flexibilities and public health safeguards identified in the Doha
Declaration. If implemented, the negotiating objectives would severely limit
access to essential medicines used in the prevention and treatment of a
range of health conditions, including but not limited to HIV/AIDS.5

In addition, by seeking to impose TRIPS-plus provisions on SACU members, the
USTR would be violating the principal negotiating objectives in the US Trade
Act of 2002, which require "respect [for] the Declaration on the TRIPS
Agreement and Public Health, adopted by the World Trade Organization at the
Fourth
Ministerial Conference at Doha, Qatar on November 14, 2001",6 as well as
Executive Order 13155, which deals specifically with access to "HIV/AIDS
pharmaceuticals or medical technologies".7

Trade in Services

With respect to trade in services, the US government's specific objectives
include pursuing "disciplines to address discriminatory and other barriers
to trade in the SACU countries' services markets."8 As mentioned above, the
US plans to use the negotiations to address "overly restrictive licensing
measures" and "restrictions the SACU governments impose that make it
difficult for our services firms to do business in these markets."

If implemented, these negotiating objectives would render a range of
legislative provisions in the South African Medical Schemes Act, for
example, as unlawful. Such provisions increase access to health care
services, by ensuring that unfair discrimination on the basis of health
status is prohibited and by ensuring that medical scheme beneficiaries are
guaranteed a minimum package of care, regardless of financial contribution.

It is not only trade in health care services that is of concern to TAC and
the ALP. Similar arguments apply with equal effect, for example, to any
regulatory steps taken by the state to ensure access to financial services
for people living with HIV/AIDS. In our view, the state has a constitutional
obligation to regulate the insurance services industry in such a manner, to
ensure that people with HIV/AIDS have access to life cover and funeral
benefits, as well as access to insurance services necessary for accessing
financing for housing.9

Conclusion
The ALP and TAC are concerned that the US/SACU FTA negotiations have the
potential to result in binding commitments on SACU member states that
undermine access to health care services, the rights of people living with
HIV/AIDS and the ability of such states to comply with their domestic,
regional and international human rights obligations. In our view, such an
agreement would not only unlawfully conflict with certain national
constitutions and human rights instruments,10 but would also serve to
advance the interests of the US at the expense of the health and welfare of
the people of Botswana, Lesotho, Namibia, South Africa and Swaziland.

1 Copies of these letters are attached hereto.

2 Emphasis added

3 A more detailed and technical document will be supplied in due course.

4 Declaration on the TRIPS Agreement and Public Health, WTO Res.
WT/MIN(01)/DEC/2, 4th Sess., Ministerial Conference, 20 November 2001 at
paragraph 5(b).

5 Many thanks to Professor Brook Baker of Northeastern University School of
Law in Boston, US, for identifying the implications of the USTR trade
objectives.

6 19 U.S.C. § 3802(b)(4)(C)

7 In part, Executive Order 13155 reads as follows:

"(a) In administering sections 301-310 of the Trade Act of 1974, the United
States shall not seek, through negotiation or otherwise, the revocation or
revision of any intellectual property law or policy of a beneficiary
sub-Saharan African country, as determined by the President, that regulates
HIV/AIDS pharmaceuticals or medical technologies if the law or policy of the
country: (1) promotes access to HIV/AIDS pharmaceuticals or medical
technologies for affected populations in that country; and (2) provides
adequate and effective intellectual property protection consistent with the
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS
Agreement) referred to in section 101(d)(15) of the Uruguay Round Agreements
Act (19 U.S.C. 3511(d)(15))."

8 Emphasis added

9 In this regard, see Government of the Republic of South Africa and Others
v Grootboom and Others (2001 (1) SA 46 (CC)) at paragraph 36, where Justice
Yacoob writes as follows:

"For those who can afford to pay for adequate housing, the state's primary
obligation lies in unlocking the system, providing access to housing stock
and a legislative framework to facilitate self-built houses through planning
laws and access to finance." [Emphasis added]

10 In particular, SACU members would be unlawfully preventing themselves
from discharging their obligations arising from the ratification (where
necessary) of any or all of the following human rights instruments: the
African Charter on Human and People's Rights, the Universal Declaration of
Human Rights, the International Covenant on Civil and Political Rights, the
International Covenant on Economic, Social and Cultural Rights, the
Convention on the Elimination of All Forms of Discrimination against Women,
and the Convention on the Rights of the Child.

[ENDS]