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Time to raise the flag

The Courier-Mail, Brisbane

Time to raise the flag

By Mike O’Connor

9 January 2006

The Free Trade Agreement with the United States, we were told last year, was a political and bureaucratic triumph, with Trade Minister Mark Vaile and his Canberra mandarins being fearless in their negotiations with our star spangled cousins.

The image with which we were presented was one of our side involved in mortal combat with the Americans in which no quarter was asked and none given.

It was rough, it was tough but in the end our team of bronzed Aussies, baggy green caps slightly askew, stumbled out of the negotiating room claiming victory.

They’d held the line against the Yanks and hammered out a good deal for the home side.

There was dancing in the streets for the signing of this deal meant, we were told, that the prices of American-made goods would tumble and the Australian economy would boom.

"It’s a major achievement for the Government and for the Australian economy and will create 30,000 new jobs," beamed Vaile, predicting a $6 billion boost for the nation over the first two years of the agreement.

True, there was that awkward business over sugar quotas which showed that the "free" part of the Free Trade Agreement only applied to trade in those commodities which it suited the Americans to make free.

It did not suit them to give Australian producers access to their sugar markets so they told us to to get stuffed. It wasn’t a free trade agreement. It was a bit of a free trade agreement and our access to the US sugar market was kept at 87,000 tonnes a year.

Seven months after it was signed, our Best Friend and Ally signed another free trade agreement, this one with a number of Central American countries, one which allowed them to export an extra 100,000 tonnes of sugar a year into the US, rising to 150,000 tonnes over 15 years.

It seemed that the US negotiators had the leeway to allow Australian producers an extra 150,000 tonnes a year if they’d wished. It simply hadn’t suited them to do so.

So much for the much vaunted "spirit" of the agreement. Suddenly, Vaile and his merry band looked like a bunch of rank amateurs who had been played off a break by the Americans who had laughed all the way back to Washington.

There has, however, been one burr beneath the saddlecloth of the FTA which has continued to irritate the American corporate flank and it is that which relates to the Pharmaceutical Benefits Scheme.

The issue is the amendment forced upon Prime Minister John Howard by the Labor Party which prevents drug companies from taking out repeated patents on their products to stop cheaper generic copies being made and sold.

The Federal Government looks certain to cave in to US pressure and use its Senate majority to delete this amendment, the suggestion being that while it may do this, it would also be pushing the Americans hard on the issue of sugar.

Forget sugar. The Americans won’t budge and the Federal Government knows it, its rhetoric being the near literal sugar coating on the pill it is about to administer to the electorate.

As far back as October, 2004, the International Federation of Pharmaceutical Manufactures Association was whining about the amendment, threatening to shift its members’ research and development activities out of Australia if it went through.

The Government says removing the amendment and allowing companies to prevent generic copies being made won’t affect the cost of drugs.

Maybe it won’t, and I don’t pretend to understand the intricacies of the PBS. It does, however, seem strange that the drug companies have been so strident in their demands to have the restriction removed.

The Government would have us believe that the restrictions contained in the amendment don’t stop the drug companies maintaining higher prices and maximising their profits.

It would have us believe that it is not about the money yet in the history of the pharmaceutical industry, it’s always been about the money. If it’s not about the money, why are they so desperate to have the amendment dumped? And the impact of the FTA on trade figures? We’re buying more from them and they’re buying less from us. Too many more world-beating deals like this and we might as well run up the Stars and Stripes over Parliament House.