After five years of negotiations, Pacific trade talks near deal

– World news selected by Gazette editors for Phuket’s international community

PHUKET: A dozen Pacific nations closed in on a sweeping free trade pact on Sunday in Atlanta after a
breakthrough over how long a monopoly pharmaceutical companies should be given on new biotech drugs.

The issue has pitted the United States, which has argued for longer protections, against Australia and five other delegations who say such measures would strain national healthcare budgets and keep life-saving medicines from patients who cannot afford them.

The terms of that compromise, hammered out after a third all-night round of negotiations between Australia and the United States, still had to find support from other nations such as Chile and Peru as of Sunday afternoon, people involved in the talks said.

The United States provides 12 years of exclusivity for drugs like cancer therapy Avastin, developed by Genentech, a division of Roche in order to encourage innovation. Australia insisted on five years of protection to control health care costs.

The two-track compromise would set a minimum threshold of five years during which drug makers would have exclusive rights to clinical data behind new drugs while adding an additional protection of several more years as applications for competing drugs are reviewed, people involved said.

Under a second track, pharmaceutical companies would have eight years of exclusive rights to a new product outright in some countries, they said.

It was still unclear how that set of standards would influence pricing for future drugs and whether it would go far enough to meet the demands of the pharmaceutical industry, which has pushed the United States delegation to draw a hard line on the issue.

TPP organizers pushed back plans for an afternoon news conference where ministers were expected to announce the trade deal.

Australian Trade Minister Andrew Robb said the delay came as other TPP partners reviewed the proposed terms on biologic drugs, and then finalized other outstanding details.

“We have largely completed with the Americans but then there are 10 other countries,” Robb told reporters. “I understand there are still two or three at most who have to work their way through.”

Earlier on Sunday, officials had been confident of completing a wide-reaching trade agreement that has been in negotiations for five years. Japan’s Economy Minister Akira Amari said he had called Prime Minister Shinzo Abe to notify him that a deal was within sight.

The trade pact, the Trans Pacific Partnership, or TPP, would lower tariffs and set common standards for 12 economies led by the United States and Japan.

U.S. President Barack Obama has pushed for a deal as a way to open markets to U.S. exports, including financial services and pharmaceuticals. U.S. officials have also promoted the deal as a counterweight to China.

By Saturday, the United States and Japan had reached agreement in principle on trade in autos and auto parts in talks that had also included Canada and Mexico. That agreement is expected to give U.S. automakers, led by General Motors and Ford, extended tariff protection against low-cost pickup truck imports from Asia, people briefed on the talks have said.

But it would also give Japan’s auto industry, led by Toyota Motor, a freer hand to source parts from Asia,
including from plants outside the TPP-zone like China, on vehicles sold in North America.

A “rule of origin” would stipulate that only 45 percent of a vehicle would have to be sourced from within the TPP, down from the equivalent ratio of 62.5 percent under NAFTA, officials have said.

New Zealand was also digging in its heels over dairy exports. It wants to ensure its dairy industry, dominated by Fonterra, the world’s largest dairy exporter, comes out a clear winner by opening markets like Canada, Mexico, Japan and the United States.

The Obama administration relied on Republican votes to win fast-track trade negotiating authority from Congress in July, setting up a straight yes or no vote on any TPP deal.

Many Democrats and labor groups have raised questions about what the TPP would mean for jobs in manufacturing and environmental protections. Meanwhile Republicans, including Sen. Orrin Hatch, the powerful chairman of the Senate finance committee, have urged the administration to hold the line on
intellectual property protections, including for biologic drugs.

— Phuket Gazette Editors