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TWN Info Service on Free
Trade Agreements
12 January 2007
Will We Lose Out on an FTA with the US?
Attached is an article in the SUN which questioned whether Malaysia will lose more than it will gain from
signing an FTA with the US.
It cited research and highlighted some negative experiences from other
countries which have entered into an FTA with the US
and wonder if Malaysia
will face a similar fate.
Best wishes,
Third World Network
2-1, Jalan 31/70A
Desa Sri Hartamas
50480 Kuala Lumpur
Tel: +603-2300 2585
Fax: +603-2300 2595
email: twnkl@po.jaring.my
websites: www.twnside.org.sg and www.ftamalaysia.org
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US FTA: Will we lose out, too?
By: Jacqueline Ann Surin
(SUN, Jan 11, 2007)
By tomorrow, the fourth round of negotiations for the free trade agreement
(FTA) between Malaysia
and the US would
have concluded in San Francisco.
While both governments have not set a specific deadline for the FTA
to be signed, ongoing negotiations suggest that they remain interested
in pursuing such an agreement.
What does an FTA do? FTAs are bilateral agreements that spell out the
rules governing how trade between two nations are conducted.
They are unlike multilateral trade agreements such as those under the
World Trade Organisation (WTO) where developing countries may have better
bargaining power through groupings.
Malaysians have cause to worry about any FTA that will be signed by
our government with the US.
These FTAs usually require developing countries to commit to legal obligations
that are more burdensome than those in the WTO. Indeed, these FTA obligations
are commonly called "WTO-plus obligations".
Additionally, US FTAs are usually more than just about trade. They also
encompass economic and social issues that will inevitably impact the
lives of Malaysians, most of whom today may not even understand what
an FTA is about.
Already there is evidence of how countries which have signed US FTAs
have lost out from these agreements. According to Third World Network's
research, Peru's
Health Ministry forecasts that just one of the six provisions in US
FTAs known as data exclusivity, that raises medicine prices, will more
than double their medicine spending.
Canadian estimates, meanwhile, indicate that if the same provision had
been enforced over the last five years, it would have cost an additional
US$600 million (RM2.14 billion) for prescription medicines alone.
At the same time, Colombia
has predicted that its generic medicine industry would lose up to 71%
of its market share.
If that's not convincing enough, even the United Nations (UN) Special
Rapporteur on the Right to Health is openly concerned that intellectual
property and other provisions of US FTAs will result in unaffordable
medicines.
A World Health Organisation commission on public health recommends avoiding
such provisions. Health and trade ministers from 10 Latin American and
African Union countries have already committed to doing this in their
nations' interest.
One community that will suffer most from such provisions would be AIDS
patients. See, patented AIDS medicines used to cost US$15,000 per patient
per annum but generic competition impressively reduced it to US$132
instead.
US FTAs, however, will make medicines for all diseases more expensive
again because of the stronger intellectual property protection provisions
in them.
The Committee for Asian Women, representing 39 women worker groups from
14 countries, has also pointed out that FTAs usually result in less
protection for workers, especially women who are less economically secure.
US FTA proponents have cited the benefits of, among others, greater
market access and foreign direct investments, and a spurt in innovation,
research and development.
But any gains may, in the end, either not materialise or be severely
offset. For example, Australia failed to achieve significant
additional market access for its main exports of beef and sugar in its
US FTA.
And while Mexico
was able to increase its vegetable exports to the US,
the US gained much
more market access for maize - Mexico's
main crop - and other key agricultural products. In Malaysia's
case, our country currently has higher tariffs than the US, so any tariff
cuts under an FTA would demand a bigger Malaysian sacrifice.
US
FTAs typically require zero tax on American exports. If our country
is then swamped with cheap American agricultural imports - some of which
are heavily subsidised - will our farmers be able to compete and survive?
UN studies and the World Bank have also found that stronger investor
protection in an FTA has not led to increased foreign direct investments.
Europe's experience has also shown that stronger intellectual
property protection has not led to more innovation.
Neither is it clear that stronger intellectual property protection will
result in the development of new, useful medicines since pharmaceutical
companies have shown that their priority is to develop medicines for
those who can afford it, not those who need it the most.
Undoubtedly, the issues arising from a US FTA are complex and manifold.
Malaysia's International Trade and Industry Ministry
is coordinating the FTA negotiations with the US, our single
largest trading partner.
And while the ministry has the support of other ministries and agencies,
the lack of public consultation and transparency thus far means that
Malaysians remain cut off from what's really at stake.
While there is always a chance that Malaysia may benefit from a US FTA,
the evidence that that will happen needs to be first provided before
any agreement is signed. Thus far, though, other countries' experiences
and international research have proven that signing a US FTA could be
a raw deal.
Jacqueline Ann Surin believes that you cannot be neutral on a moving
train. She is an assistant news editor at theSun. Comments: feedback@the
sundaily.com
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