The Trans-Atlantic Trade and Investment Partnership

The Transatlantic Trade and Investment Partnership (TTIP) is currently being negotiated in secret between the United States and the European Union. Both sides account for nearly half of global GDP, approximately 30% of global exports, and have investments of over $3.7 trillion in each other's economies. If concluded, the TTIP is set to be the largest FTA in history. Both sides are seeking to increase transatlantic market access, enhance regulatory cooperation on a range of issues, and address common challenges associated with emerging markets. The US and the EU have held seven rounds of TTIP negotiations thus far, with the seventh round concluded on 3 October 2014. 

Peter Van Ham attributes the resurgence of transatlanticism to the decline of Western ideological dominance as part of the changing global balance of power. He explains that in the face of emerging economies, the TTIP offers the US and the EU an opportunity to defend their shared interests from a position of strength and re-write global trade rules in their favor. Regulatory harmonization across the Atlantic is designed to strengthen the collective US-EU position and prevent standard-setting power from being lost to China. Marc Venhaus agrees that the TTIP provides the US and the EU with a "first mover" advantage - a means of establishing new rules and norms based on shared economic interests and values that, due to the deadlocked Doha Development Round, could no longer be realized within the framework of the WTO. 

The TTIP, if concluded, would entrench a system of global trade that places the EU and the US under one common umbrella, leaving emerging powers standing at the rain-soaked periphery, still largely dependent on Western demand. Venhaus explains that the TTIP is an attempt to alter geo-economic dynamics by reinstating the US and the EU at the helm of a global trading system they once dominated. 

Cartoon © Katrina Geddes

Cartoon © Katrina Geddes

Developed nations such as the US have increasingly abandoned multilateralism in favor of bilateral FTAs which are generally more effective in extracting concessions from emerging powers. This shift towards bilateralism adversely affects access to medicines as developing countries agree to unreasonably high levels of IP protection as part of trade negotiations characterized by unequal bargaining power and an absence of public health representatives. As patent protection expands, generic competition is delayed, reducing the affordability and accessibility of medicines. As the TTIP is negotiated solely between the US and the EU, its impact on access to medicines in developing countries is not easily discernible - but herein lies its greatest threat. As public attention focuses on the economic and labor consequences of the TTIP for US and EU citizens, little attention is paid to the long-term consequences of US-EU cooperation on intellectual property norms. The development of global rules and standards on intellectual property rights as part of the TTIP may set a dangerous precedent for expectations in future free trade agreements with developing countries. US-EU regulatory harmonization threatens to lock in intellectual property norms which prioritize pharmaceutical profits at the expense of affordable healthcare, setting new global standards that may later be imposed on developing countries. 

Faisal Chaudhry explains that the relative parity between the US and the EU makes careful scrutiny of the TTIP all the more important, as agreement between equals is a more effective channel for pushing TRIPS-plus standards and thereby normalizing rules that reduce access to medicines. The US and the EU's mutual agenda of promoting a high level of intellectual property protection and resolving any areas of regulatory divergence will only produce provisions which enhance, rather than reduce, patent protection. This may occur in the form of extended patent terms, an expanded scope of patentability, stricter data exclusivity rules, patent-regulatory linkage and greater restrictions on pre-grant opposition procedures. 

Alarmingly, the TTIP is also set to contain an Investor-State Dispute Settlement (ISDS) provision which would allow US pharmaceutical companies to sue EU Member States for government measures that promote access to medicines but negatively affect future earnings on pharmaceutical IP or similar EU investments. Lawsuits could be brought against public health measures such as price controls, reimbursement and therapeutic formulary decisions, marketing approvals, pharmacovigilance decisions and stronger patentability standards. The fear of foreign litigation would severely compromise the willingness of Member States to utilize TRIPS flexibilities such as patent reform and compulsory licensing, thereby eroding the public health policy space painstakingly carved out by TRIPS. The absence of these flexibilities would further delay the onset of generic competition, reducing the affordability and availability of medicines in Europe. 

The TTIP, like its trans-Pacific counterpart the TPP, is still being written - and we need to seize the pen. While negotiations continue, greater publicity should occur to expose the potential adverse effects of these agreements on access to medicines. The US and EU governments should be actively encouraged to commit to the following goals: 

  1. TRIPS-plus provisions should be removed from the text of the TTIP to prevent the creation of an unreasonable global standard for IP protection that may be applied to future trade agreements with developing countries. 
  2. The US and the EU should actively encourage the use of TRIPS flexibilities by national governments and refrain from including ISDS in the text of the TTIP.
  3. The US and the EU should ensure that their trade policies do not undermine the right to health and access to medicines. The TTIP must not be used to create higher norms for IP rights in a non-transparent, non-representative manner. 
  4. More research should be conducted on new business models for incentivizing pharmaceutical R&D which do not involve rewarding research with monopolies. Instead, new models which encourage innovation while simultaneously expanding access to affordable medicines should be promoted. 
  5. Free trade agreements such as the TTIP and the TPP should incorporate by reference the Doha Declaration on TRIPS, reflecting the commitment made by WTO members to promote access to medicines for all. 

 

Written by Katrina Geddes.

Published on 12 January 2015. 

References:

1. Van Ham, P. (2014) 'TTIP and the Renaissance of Transatlanticism', Clingendael Report, Netherlands Institute of International Relations, available at www.clingendael.nl

2. Chaudhry, F. (2013) 'The TAFTA/TTIP and Treatment Access: What does the agreement mean for intellectual property rights over essential medicines?', The Transatlantic Colossus, Berlin Forum on Global Politics, available at https://drive.google.com/file/d/0B_JwAVpWmqN4U3FQX3RGQjRXem8/edit

3. Venhaus, M. (2013)''The Transatlantic Trade and Investment Partnership as a new strategy to marginalize emerging powers: a divided free trade order in the making?", The Transatlantic Colossus, Berlin Forum on Global Politics (see n 2).