This analysis is based on the draft Free Trade Area of the Americas text made available following the ministerial meeting in Quito. It is on the web at http://www.ftaa-alca.org. Like the first draft of the agreement made public, the current text is almost entirely in brackets, indicating that provisions are still under negotiation. Also like the first draft, the current text is stripped of footnotes indicating which countries support which provisions, making it very hard to anticipate which proposals are most likely to be included in the final draft. The FTAA negotiators must include this information for more informed public scrutiny to occur; excluding this information serves only to hide from citizens their countries' negotiating posture -- all of the other negotiators know which countries introduced and support which provisions.

Essential Action prepared a detailed analysis of the intellectual property provisions of the first draft text and their impact on access to medicines, in the form of comments submitted to the Office of the U.S. Trade Representative. Those comments are on the web at: http://lists.essential.org/pipermail/ip-health/2001-August/001761.html. They describe the importance of the damaging provisions that are highlighted in this short memo. Essential Action prepared a shorter, more narrative version of its analysis for the Foreign Policy in Focus series. That is on the web at: http://www.fpif.org/briefs/vol6/v6n13meds_body.html.

Any analysis of the new draft must begin with the caveat that, because the text is so heavily bracketed and because country supporters of varying provisions remain secret, it is hard to state anything about the new draft with certainty. There are many directly contradictory provisions in the current text, and no way to know which version will end up in the final text, assuming a final version is ultimately negotiated.

What can be said is this: Some version of all of the provisions from the first draft that would, if enacted, hinder access to medicines, remain in the second text.

Key problem provisions in the current text would:

1. Limit compulsory licensing to the public sector and for emergencies (Article 5.1 (a) and (b) on page 9.31).

2. Prohibit the export of compulsorily licensed goods (Article 5.1(c) on page 9.31).

3. Bar the use of compulsory licensing until four years after a patent was granted (Article 5.3 on page 9.31).

4. Prohibit sublicensing of compulsory licenses (Article 5.3 on page 9.31).

5. Link approval to market pharmaceuticals to patent status, effectively making FDA-type agencies into patent enforcement agencies (Article 1.5 on page 9.41)

6. Require all countries to grant five years of exclusivity protections to marketing approval data, imposing an important bar to timely compulsory licensing (Articles 1.2 and 1.4 on page 9.41).

7. Extend the patent term, to offset regulatory delays (Article 8.2 on page 9.33) and to match extended terms in other countries (Article 1.5 on page 9.41)

8. Require judicial review of all matters related to intellectual property (Article 1.6) on page 9.44); in contrast, the WTO TRIPS agreement permits administrative review of compulsory licensing decisions.

9. Require harsh penalties, including criminal enforcement, for intellectual property violations -- although, importantly, criminal enforcement would not be required for patent violations (Article 4, page 9.47).

There are other potential problems for ensuring broad access to medicines and use of compulsory licensing in the investment chapter of the new FTAA text.

These include the same problems as from the previous draft:

* Performance Requirements that would potentially prohibit compulsory licensing;

* Expropriation provisions that would make compulsory licensing not feasible, by setting compensation arrangements that would undermine compulsory licensing's competition-inducing and price reduction benefits.

* Investor standing to sue governments to enforce investment protections.

Intellectual property is specifically included as a kind of investment covered by the investment chapter. There are various provisions that would exempt compulsory licensing, but these, of course, are bracketed and may be removed. They are also insufficient; even if the compulsory licensing exclusion is maintained, a wrongly issued compulsory license would be subject to the investment provisions and its compensation scheme, and that prospect alone would deter issuance of compulsory licenses.

Robert Weissman
rob@essential.org

Essential Action
P.O. Box 19405
Washington, DC 20036
Tel: 202-387-8030
Fax: 202-234-5176

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