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Take it or Leave it  
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Take it or Leave it  

In a question-and-answer session on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Bali earlier this month, US Commerce Secretary Penny Pritzker parried questions from Indonesian journalists about how the Trans-Pacific Partnership (TPP), a sweeping, yet-to-be-finalized trade pact spearheaded by the United States, might affect their country.

One of the journalists asked if it was true that the TPP would block access to medicines for millions of poor people in developing nations; Pritzker said she "[couldn't] really state to the specifics." Another wanted to know to what extent Indonesia would be involved in deciding the contents of the agreement; Pritzker gave a quizzical response, saying that the 12 economies now negotiating were the ones that would ultimately make decisions, and that if others wanted to join it was up to them.

"So it would be a loss for countries like Indonesia or not?" the second reporter asked. "I don't understand," Pritzker said.

The reporter: "How much of Indonesia's role will be in there?" Pritzker: "You've got the 12 players right now, trying to come to an agreement."

It was a guileful reply, and, some would say, rather disingenuous. The Indonesians had good reason for their concern. A fully formed TPP would carry major implications for the archipelago, even if it keeps out of the negotiations.

"It will set a precedent for the whole region," Judit Rius, manager of Doctors Without Borders/Médecins Sans Frontières' Access Campaign in the United States, said of the TPP. "Indirectly, directly, Indonesia will of course be affected."

The TPP first made a splash in 2011, when parts of the draft text leaked for the first time. Outrage over the fact that most of the chapters had nothing to do with trade but rather set rules on corporate rights, intellectual property (IP) and more was exacerbated by the secrecy of the negotiations, open only to several exclusive 'trade advisory committees' dominated by moneyed interests from the private sector - big US pharmaceutical companies among them.

Among other grievances, critics say, the TPP would broaden, strengthen and lengthen patent monopolies in unfair ways, especially with regards to medicines. Some countries, for example, have issued compulsory licenses, a tool governments use to let companies make or import drugs still under patent, or to do so themselves. The World Trade Organization (WTO) allows states to grant compulsory licenses to 'protect public health'. In 2012, Indonesia issued seven of them on HIV drugs, some of which also have use against Hepatitis B.

No country had employed compulsory licenses on that scale before or since, said Brook Baker, a law professor at Northeastern University in Boston, United States. "It was a very important and bold example of actually using the flexibility that other countries had been reluctant to use because of pressure from the US and Europe," he said.

Not only would the TPP's IP provisions impinge on that flexibility, but measures that impose data-exclusivity, lower the bar of patentability and more would serve to delay the arrival of more affordable generic drugs to the market, keeping prices up longer. What's more, even for countries not party to the pact, the mere existence of the agreement could directly affect their access to medicines (see accompanying story "Broader, Stronger, Longer").

The larger danger, critics contend, lies in the prospect that what the TPP puts forth could be foisted upon Indonesia later on. Statements by the United States Trade Representative (USTR) indicate that the TPP is meant to set new standards that will eventually apply to as many economies as possible, including China. "The most obvious concern is that the agreement is intended to convert the entire region," said Krista Cox, an attorney with Knowledge Ecology International, a US-based nonprofit. "I think there will be intense pressure later on." Rius agreed. "I am sure that if they are successful in the TPP, they will use a variety of trade and political measures, every way you can imagine, to try to influence other countries to adopt these norms," she said.

Once the TPP is consummated, Indonesia could find itself in a difficult position, "encircled by some of its key trading partners," Baker said. Indeed, four ASEAN nations--Malaysia, Vietnam, Singapore and Brunei--have been part of the TPP talks. If the pact takes effect, their new legal obligations might conflict with ASEAN's harmonization agenda and the bloc's own efforts to establish a trade area.

More broadly, Indonesia might have a hard time entering into bilateral agreements with a TPP member without that country wanting Indonesia to adopt provisions from the pact, so as to prevent Indonesia from having the advantage, Cox said. If the United States--Indonesia's largest trading partner--behaved that way, it would carry enormous weight. "The US has huge bargaining power because people really want access to US markets," she said.

If Indonesia was deemed to have overstepped a line, the United States could threaten it with trade sanctions via its Special 301 Report, to which it adds states with 'inadequate' IP regimes, Baker said. Five years ago, for instance, after Thailand incurred the wrath of US pharmaceutical companies by issuing compulsory licenses on several medications, there were rumblings the USTR would put it on the seldom-used Priority Foreign Country list, the report's most severe trade category. "[Issuing the licenses] was completely lawful on Thailand's part," Baker said. "It was on a scale even more modest than what Indonesia is doing."

An IP expert with an international organization who asked not to be named likened Indonesia's situation to a Catch-22. Joining the TPP at all was probably against its best interest, she said. But better to enter now, while there was still a chance to affect the contents, than later, when it would be "take it or leave it." "It will be that the only way to influence the treaty is to join the negotiations," she said.

Already there had been talk of Korea, the Philippines and Thailand signing on, said Burcu Kilic, a legal counsel with Public Citizen's Global Access to Medicines program. At a certain point, psychological reasons would come into play. "It's like you're at school, and there's a club everyone's joining," she said. "They won't have any choice. They wouldn't like to be alone."

The TPP represented a US attempt to change global norms through improper channels, said Stephanie Burgos, a senior policy advisor with Oxfam America. It would be better to work through an inclusive multilateral institution like the WTO. The secrecy of the negotiations was also troublesome. Cox dismissed Pritzker's claim that the talks needed to go on behind closed doors for practical reasons and that there would be a period for public review later on. "We hear that argument all the time," she said. "When it's finally made public it's usually too late to change anything."

Indonesia does have some things going for it. Its economic weight would make it more difficult to pressure than, say, Laos or Cambodia, Burgos said. And countries had defied the United States before. The reason the Free Trade Area of the Americas was never completed was because of Argentina and Brazil. "They said, we'd rather leave it," Burgos said.

Something similar could happen here. "We've been encouraging developing countries to really stand up to the US," she added. "Everybody doesn't have to accept the US position."

 

PHILIP JACOBSON