Global Trade and Its Impact on Public Health

1. Global Trade and Its Impact on Public Health Lily Walkover, CPATH fellow Center for Policy Analysis on Trade and Health (CPATH) Ellen R. Shaffer PhD MPH, Joe Brenner MA www.cpath.org International People’s Health University June 28, 2007

2. Introduction: Public Health And Global Trade • Global trade agreements address public health concerns • Public Health not generally involved • Sustainable economic development is a public health issue • Trade negotiations are at a crossroads: we can make a difference

3. Outline: GLOBALIZATION & PUBLIC HEALTH 1. Context: Economic Globalization 2. Trade Agreements and Public Health • Public Health’s Right to Regulate • Environment, Tobacco Control • Services • Affordable Medicines 3. Public Health Representation in U.S. Trade Negotiations 4. Prospects for Progress: Bringing Public Health Voice to Sustainable Development

4. 1. Context: Economic Globalization • Threats to Global Health • Global Economic Trends • Barriers to Development • Sustainable Development: Prevailing Economic View Vs. Public Health View • The Trade Landscape • Trade Policy at a Crossroads

5. Threats to Global Health • Widespread threats to global health persist AIDS, TB, Malaria Infectious diseases Chronic illnesses: Hypertension, diabetes Environmental: Cancer, respiratory • Coexisting with both unprecedented wealth and economic inequality • Americas have greatest income inequalities

6. Inequalities: Health Care Expenditure Gap 89% of all global expenditures on health care goes to 16% of the world’s population Total world expenditure on healthcare $2.2 trillion Expenditure by the U.S. $1.1 trillion % GNP spent on health care U.S. 14.1% SubSaharan Africa 1.6% Benatar SR. Ethics and Tropical Diseases: Some global considerations. In: Cook G, Zumla A, editors. Manson’s Tropical Diseases, 21st Edition. Edinburgh: Elsevier Sciences. 2002:Pp 85-93; from Michele Barry, Yale

7. Global Economic Trends • Manufacturing, agriculture grow in low/middle income countries • Growth of services sector in wealthier nations • Greater quantity and accelerated pace of cross-border financial transactions and exchanges • The integration of economic and political systems across the globe • Who will control and benefit?

8. Prevailing Economic View Facilitate tradeto increase the wealth of corporations and the poor. Deregulation: Reduce laws and regulations: Facilitate faster flow of capital, Foreign Direct Investment Privatization: Turn public entities into private enterprises Save public funds, increase access Sustainable Economic Development : Competing Views

9. Public Health Views:Sustainable Alternative • Countries determine mix of foreign investment and local development • Accountable, democratic governments • Strong social institutions and infrastructure • Assure access to affordable vital services • Health care, education, water and sanitation • Promote equity • Reject trade policy that benefits few while inflicting economic harm on many

10. Note C

11. “Liberalize” trade: Facilitate global corporate transactions Reduce barriers to trade – “protections” for locally made goods & services Tariffs (e.g. barriers to trade in steel) Regulations (e.g. barriers to trade in services) What Do Trade Agreements Do?

12. Stalemate • The major countries have sought “liberalizing” measures for their competitive sectors (services, goods) but have been unwilling to make offsetting concessions in their noncompetitive sectors (agriculture) • Popular opposition: Seattle, Cancun, Hong Kong, Guatemala, Thailand • Deadlock at WTO meetings: 1999, 2003, 2005, 2006

13. Trade Policy at a CrossroadsTrade Gains Modest Recent studies by Carnegie and the World Bank show a one-time global income gain of less than $60 billion under any realistic new WTO trade scenario. That is 0.146 percent (about one-seventh of one percent) of current global gross domestic product (GDP). • Kym Anderson, William J. Martin, and Dominique van der Mensbrugghe, Global Impacts of the Doha Scenarios on Poverty, September 18, 2005.InPoverty and the WTO: Impacts of the Doha Development Agenda, ed. Thomas W. Hertel and L. Alan Winters (Washington: World Bank, 2006), • Sandra Polaski, Winners and Losers: Impact of the Doha Round on Developing Countries. Carnegie Endowment for International Peace, 2006.

14. 2. Trade Rules vs. Public Health Priorities • Right to Regulate • Trade Dispute Resolution • Tobacco Control • Services • Intellectual Property and Access to Medicines • Agriculture

15. Trade Rules Vs. Public Health Priorities • “Liberalize” trade • Reduce barriers to trade • Threaten to pre-empt a wide range of laws, regulations, policies, and programs to prevent disease and promote health

16. Laws and Regulations At Risk • Public subsidies for “safety net” health services • Affordable medications • Food safety/GMO foods • Quality standards for health care services and products & allocation based on need • Clinician licensing • Health insurance & patient protection • Distribution of alcohol, tobacco, firearms • Occupational safety & health • Public administration of water & sanitation

17. Vectors of Pre-Emption: Trade Agreement Rules • GATS (General Agreement on Trade in Services) • Laws and regulations that are “more burdensome than necessary to ensure the quality of a service” can be challenged as barriers to trade • Can bargain away health “protections” for services, affordable medicines vs. economic “protections” for goods, agriculture

18. Enforcing Trade Rules:WTO Dispute Resolution • 3 WTO-appointed trade “experts” decide in closed session if a WTO policy has been violated • Can impose economic sanctions on losing country • Challenges domestic sovereignty to regulate and protect health and access to vital human services

19. Countries’ Right to Regulate Vs. Corporations’ Right to Sue • Bilateral/regional agreements like NAFTA provide a unique “investor’s rights” mechanism • Foreign corporations can directly challenge national government actions. • Grounds: the loss of current or future profits, even if is caused by a government agency prohibiting the use of a toxic substance.

20. NAFTA Challenge to Health: Metalcad • State of San Luis Potosí - permission to re-open waste disposal facility denied. • Geological audit - waste disposal site would contaminate local water supply. Community opposed re-opening. • Metalclad Company- local decision was an expropriation of its future potential profits. • Metalclad successfully sued Mexico. Awarded $16.7 million.

21. Does Public Health Ever Win?Rarely and Barely • 2 cases in 10 years upheld public health • Global trade dispute panels: no concept of public health • Decisions set poor precedents, delayed public health protections

22. WHO/PAHO on Tobacco and Trade “Transnational tobacco companies…have been among the strongest proponents of tariff reduction and open markets. Trade openness is linked to tobacco consumption.” D. Woodward, N. Drager, R. Beaglehole, D. Lipson. Globalization, global public goods, and health. In: Trade in Health Services: Global, Regional and Country Perspectives. N. Drager and C. Vieira, Eds. Washington, DC: PAHO, 2002. pp 6-7.

23. Chilling Effect On Public Health Regulations • Canada proposes "plain" packaging for cigarettes • American tobacco companies threaten NAFTA suit for "expropriation" of their intellectual property – their trademarks • Canada withdraws proposal • Will WHO framework convention for tobacco control violate WTO rules?

24. Intellectual Property Rules and Access to Affordable Medicines

25. Global AIDS Pandemic • 38 million people with HIV/AIDS • 5.8 million could benefit now from effective drugs • Generic antiretrovirals inaccessible to millions • 3x5 failed: ARVs increased 440,000 to 1M in the developing world receiving treatment

26. TRIPS • Trade-Related Aspects of Intellectual Property Rights • WTO Agreement • 20 year product and process patents • can’t produce generics domestically while patent in effect • Phased in: • Covered all high income countries as of 1996 • Middle-income countries as of 2005 • Least Developed Countries will be covered as of 2015

27. What Do Patents Do? • Monopoly rights to originator, can sell product without competition • Protection for originator’s “intellectual property”

28. Role of Patent Policy • Key incentive to innovation • Fairly compensates investments in R&D • Assures timely access to new life-saving drugs OR • Props up exorbitant pharma profits in absence of actual innovation • Perpetuate monopoly as long as possible by extending patent terms, lengths. • Discourage fair competition by generics

29. Political Crisis for Pharma • Public outcry about high prices • U.S. pays highest prices in the world • Reimportation proposals • Quality control: • COX-2 inhibitors (painkillers) • Crisis in Innovation • Fewer new drugs in research pipeline • Business model stuck in vicious cycle • Driven to seek blockbuster, copycat drugs

30. Pharma Political Strategy:Trade Agreements A. Protect high prices in US market • Block reimportation (“parallel importation”) B. Seek higher prices in other developed countries • Pharma: price controls harm quality, access, innovation C. Maintain IP structure in regional trade agreements with low/middle-income countries • “TRIPS-Plus” trade rules extend patents • Restrict production and sale of generics • Market to small number of wealthy individuals

31. TRIPS Challenge to ARVs in South Africa • Pharma files TRIPS suit • Withdraws due to international outcry, 2001 • Led to Doha Declaration, 2001

32. Doha Declaration on the TRIPS Agreement and Public Health Paragraph 4. “We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health.” • World Trade Organization Ministerial Meeting, 2001 • Compulsory licensing allowed • Can authorize generic production of patented drugs

33. TRIPS-Plus • Debate: Maximum or Minimum? • Can bilateral and regional agreements give patent holders greater monopoly rights than they enjoy under TRIPS? • US: Yes, through bilateral/regional FTAs • India, China, Brazil, South Africa: No, use the WTO

34. U.S. Imposes TRIPS-Plus Rules • CAFTA – enacted • Proposed: • Andean FTA: Peru, Panama, Colombia • South Korea • Thailand: withdrew from negotiations after coup, issued Compulsory Licenses • Southern African Customs Union: withdrew from negotiations

35. Agriculture, Trade and Obesity • Global agribusiness and transnational shifting of raw materials to processed foods, high calorie soft drinks and snacks • Nutrition transition during globalization – dietary convergence and consumption of foods high in fats and sweeteners • Cultural change: urbanization, eating outside house, global supermarkets Michele Barry, MD, Yale

36. 3.Democracy in Trade Policy: Who Decides? • Who decides for the US? • Campaign for Public Health Representation • Trade Advisory Committees • 2007: New Views in Congress • Public Health Goals

37. Democracy in Trade Policy Who Decides for U.S.? • US Trade Representative (USTR) Susan Schwab, appointed by the President • “Fast Track” Rules: Congress has limited authority to amend trade agreements • Expires June 30, 2007 • The public can speak up

38. Campaign forPublic Health Representation • US Trade Representative Advisory Committees • Mechanism for domestic input into trade negotiations • Provide formal, informal advice to executive branch • 110 meetings in 2001

39. Trade Advisory Committees:Big Business: 42 Public Health: 0

40. Public Health Takes Action • Public health and medical groups file federal lawsuit for representation: 2005 • One tobacco control rep appointed • USTR reports appointing 2 public health reps to Committees on Pharmaceuticals and Intellectual Property • Now 42 to 2-3 • 2007: Congress demands greater transparency, accountability

41. 4. Prospects for Progress: Public Health Voice for Sustainable Development

42. Public Health Campaigns • Help reframe the debate on global trade and economic development • Declare health care & water vital human rights • Engage in dialogue and decision-making process to protect health care services and promote public health

43. Call for Accountability:Health Must Take Priority Over Commercial Interests • Assure that health care and public health takes priority • Assess impact of trade agreements on health • Include public health community in negotiations • Exclude provisions that could harm health, access to medications, health care, and other vital human services • Assure universal access to health care, water and sanitation, affordable meds, education, and environmental safety • American Public Health Association, Medical Students Assn, Nurses Assn, Public Health Officers, World Federation of Public Health Associations

44. States, Cities, TownsConcerned “State and local officials are gravely concerned about the prospect of the Singapore FTA dispute resolution mechanism… no provision remotely similar to NAFTA’s should be included in future agreements…” • Executive Directors of National Conference of State Legislators, National League of Cities, National Association of Towns& Townships - Comments to USTR, Fed. Register, August, 2002

45. 2007: New Views in Congress • Freshmen members dubious on trade • Re-negotiating Andean agreements • Resistance on Korea • Democrats’ Statement of principles • Opposition to renewing Fast Track

46. Getting Specific: Public Health Objectives for 2007CPATH and Major Public Health Groups • To assure democratic participation by public health and transparency in trade policy • To develop mutually beneficial trade relationships that create sustainable economic development • To recognize the legitimate exercise of national, regional and local government sovereignty to protect population health

47. Getting Specific: Public Health Objectives for 2007 • To exclude tariff and nontariff provisions in trade agreements that address vital human services • To exclude tobacco and tobacco products • To exclude alcohol products • To eliminate intellectual property provisions related to pharmaceuticals from bilateral and regional negotiations… and promote trade provisions which enable countries to exercise all flexibilities provided by the Doha Declaration

48. Protect Global Health Center for Policy Analysis on Trade and Health (CPATH) Joseph Brenner MA Ellen R. Shaffer PhD MPH www.cpath.org cpath@cpath.org Join the Listserv – send blank message to: join-G-H@list.cpath.org Phone: 415-933-6204 Fax: 415-831-4091