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Making free trade fair

Bangkok Post

Making free trade fair

13 August 2006

Academics caution that, if unstudied, free trade deals can cost a country in environmental problems and intellectual property issues, reports Supara Janchitfah.

Ukrit Kungsawanich, a fruit grower in Rayong, was worried when he read in the news that a US company is trying to patent a drink made with mangosteen extract.

"How can the company do that? It makes me worry about the future of the Thai farmer. Do we have to patent our mangosteen’s plant variety? How can we know the details of the intellectual property rights (IPR) required in free trade agreements?" These were only a start to the many questions he had concerning the free trade deals and their requirements.

Ukrit, having earned two college degrees in the US, is better off than most Thai farmers. Yet, even he feels powerless when he thinks about the free trade talks. "How can other farmers know about what will happen to them? How can they know about the implications of IPRs on the environment?" he asked.

Because of concerns like these that the majority of Thais are not informed on or involved in the FTA process, academics from around the world were invited to Bangkok last week to share their past experiences and coming concerns about trade liberalisation, in a seminar titled, "Lessons Learned from the Thai-US Free Trade Agreement: Can We Create Fair and Responsible Trade?"

Thanphuying Suthawan Sathirathai, the director of the Good Governance for Social Development and Environment Institute, told participants who attended the seminar that a joint effort by academics was needed to assure free trade deals were to the advantage of the public majority.

"We should at least be able to draft fair text agreements on environmental aspects, investment and intellectual property rights (IPR)," she said.

Dr Kengkarn Louvirojanakul from the Legal Affairs Division of the Ministry of Foreign Affairs had complied documents from the United States Trade Representative and prepared a background paper for the seminar. He said the US’s interest in an FTA with Thailand stems from the potential reduction of Thailand’s high tariffs and trade barriers. The FTA would particularly benefit US agricultural producers through an opportunity to significantly increase their export sales to Thailand with this reduction.

In the past decades, the US has had a trade deficit with Thailand. According to the Bank of Thailand, in 2003 Thailand exported $13.6 billion worth of goods to the US, while it imported only about $7.1 billion worth. Thailand was the US’s 16th largest market for farm exports.

Dr Kengkarn said that an FTA would also boost US export of goods and services to Thailand’s information technology, telecommunication, and the financial service sectors.

"To maintain preferential access for the US investors in Thailand is also a top priority for US business," he said.

Dr Kengkarn also presented the desired objectives for the FTAs’ environmental chapter on behalf of other participants at the conference. Most critical, he says, is that the agreement should ensure that trade promotion is in accordance with sustainable development. Corporate investors should be responsible and held accountable for the environment, as well as for promoting the sustainable development of it.

He added that an FTA’s text should not violate either party’s Constitution, and must provide for equal sovereign rights of both parties. Many other issues were raised about public involvement in the FTA’s process. Participants voiced the need for deals to allow opportunity for public hearing and to give rights to the people and the community to reject unwanted investment in their areas without it being considered a legal infringement on FTAs.

The academics also raised concerns over the prohibition of technology transfer, mentioned in the FTA’s Investment Chapter. Many proposed a public fund be set up to provide for technology transfer, though others mentioned that, even then, there will be conflicts with IPR stipulations.

Hira Jhamtani from the think-tank Third World Network explained how IPRs in FTAs would impact the environment and public interest. In addressing the issue, she raised the case of the US company trying to patent mangosteen extract as well as that of a Japanese company that attempted to patent the traditional Thai massage and exercise known as ruesi dad ton (hermit body twists) as a trademark.

Both of these cases revealed how the Patents Cooperation of Treaties (PCT) works. The PCT is designed to enable an individual to more easily apply for a patent in multiple countries. The PCT benefits countries with inventors who wish to apply for patents in other countries. There are only few net intellectual property exporters in the world, but many net importers. Developing countries will have to pay for the use of patents, trademarks and so on in the future, Jhamtani explained.

"The FTA with the US, and perhaps also with other developed countries typically include extensive provisions on IPRs, and try to remove or reduce the flexibility provided for in TRIPS and establish even higher standards of IPRs in developing countries," she added.

TRIPS - Trade-related Aspects of Intellectual Property Rights - is a provision in WTO agreement that sets the international minimum standards on IPRs.

Jhamtani pointed to 10 additional treaties listed in the US’s proposed FTA text that protect IPRs on plant varieties, microorganisms, software, broadcast signals, trademarks, films, music and so on.

Many FTAs with the US require the developing country accept the Party to Union for the Protection of New Varieties of Plants (UPOV 1991), or provide similar rights to plant breeders and allow for the patenting of plants and animals.

"When a country accedes to UPOV 1991, it loses the flexibility of choosing a sui generis system of plant variety protection that can protect farmer’s rights," she said.

IPR provisions like these could have implications on biodiversity and traditional knowledge as related to biodiversity which would lead to food security and environmental management problems, she says.

For example, Thai farmers may be made to pay for the patent on a rice variety that they have been planting for many generations if it has been successfully patented by corporations. Farmers, unable to afford such costs, would then have to stop growing the rice. This would come as a risk to food security.

She also explains that the extensive IPR protection in FTAs could have significant impact on a developing country’s budget in this way, since they will have to pay more royalties for the use of technology and so on.

IPR-related provisions are not limited to just the IPR chapter of the FTA, she cautioned. There are also pertinent IPR regulations written into other parts of the agreement including the investment, services, and dispute settlement chapters.

"Developing countries must look into such provisions very carefully," she said, adding that developing countries should only consider acceding to IPR agreements after undertaking an in-depth cost-benefit analysis and understanding the implications such protections will have on development, environment, and society.

Dr Alica Puyana, an academic from Mexico, expresses concerns about FTAs with the US as well, saying that NAFTA, which went into effect about 12 years ago, has not benefitted the Mexican majority. Instead, the deal has primarily benefitted the US, she says, citing Mexico’s stagnant GDP and America’s economic rise as evidence of the FTA’s bias.

Since the agreement, there have been changes in Mexico’s food security and production strategies. While the country has shifted production to focus on profitable exports, it has also become more reliant on foreign producers for food. This greater dependence on imported food worries Puyana who says Mexico went from being self sufficient in corn to where Mexico imports over 25 percent of the produce.

Puyana also blames NAFTA for negative impacts on the environment. While per capita income has risen with the agreement, soil erosion, municipal solid waste and water pollution have increased faster than GDP, she says.

She adds that a number of enviromental conflicts, largely related to biodiversity, contamination of water supply, and toxic waste storage, have developed as well.

Puyana says these impacts have the same effect as if every dollar that Mexican economy grows, 10 cents is thrown away. "In effect, environmental degradation is like an additional tax placed on the Mexican people, a tax that gives nothing in return," she said.

While these cases were filed with the NAFTA Council, many of the investigations will not be made public.