The costs associated with the increased patent protections for pharmaceutical drugs in the trade agreement between Canada and the European Union has long been one of the most controversial elements of the deal. At least one study has pegged the cost to provincial health care at more than a billion dollars. In response to those concerns, the Conservative government promised to compensate the provinces for the increased costs. Earlier this year, when officials from Health Canada appeared before a House of Commons committee, they acknowledged that it is hard to estimate the actual cost but that they knew that the agreement would increase the costs of drugs in Canada.
Last week, Steve Verheul, the lead Canadian CETA negotiator, appeared before another House of Commons committee and was asked if the department has done any analysis on the financial impact of the extended patent protection. Remarkably, Verheul said that it has not, arguing that it is difficult to come up with a projection. In fact, when pressed on the issue, Verheul speculated that perhaps costs would not increase since Canadians already pays higher prices for pharmaceutical drugs than consumers in European countries such as the UK, France or Germany.
These comments from Canada’s lead CETA negotiations are simply bewildering.
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Donald Trump’s surprise U.S. presidential election victory promises to result in an overhaul of U.S. trade policy, including the immediate end of support for the Trans Pacific Partnership, the controversial trade pact involving 12 Pacific countries including Canada, the U.S., and Japan. While President Barack Obama held out hope that the TPP could be salvaged during the “lame duck session” of Congress that occurs immediately after the election, his administration was quickly forced to concede that the deal has become politically toxic and stands no chance of passage. Since U.S. ratification is required for it to take effect, it’s effectively dead.
My Globe and Mail column notes that the Canadian government’s view of the TPP was always difficult to discern. It was negotiated by the previous Conservative government, but Prime Minister Justin Trudeau and International Trade Minister Chrystia Freeland have been non-committal, focusing instead on TPP public consultations that are still scheduled to run until early 2017.
Their ambivalence was not a function of trade skepticism – the Liberals emerged as enthusiastic backers of the trade deal between Canada and the European Union – but rather stems from the recognition that Canadian interests in the TPP were largely defensive in nature. With agreements already in place with many TPP countries, the agreement offered at best limited benefits for Canada’s economy.
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Donald Trump’s stunning win of the U.S. Presidency on Tuesday night has sparked numerous articles speculating about the implications for various policies and issues. Given how little Trump said about digital policy, predictions about telecom or IP policy are little more than educated guesses. Trade policy was a major Trump issue, however, as his opposition to the Trans Pacific Partnership and vow to renegotiate NAFTA was repeated at virtually every campaign stop. Senate Majority Leader Mitch McConnell confirmed yesterday that the TPP would not be brought up for a vote this year, leaving Trump to decide on its future. Officials in other TPP countries such as Australia, New Zealand, and Malaysia have now acknowledged that the TPP is likely dead.
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The Canadian government moved quickly from signing the trade agreement between Canada and the European Union on Sunday to tabling Bill C-30, the CETA implementing legislation, on Monday. While most of the attention has focused on the political issues surrounding CETA in Europe and the potential gains for Canadian exporters due to tariff reductions, the implementing bill provides a reminder that there are significant costs associated with CETA that have generated far less discussion. In fact, the majority of the 140-page bill features changes to Canada’s intellectual property rules, requiring changes that largely serve European interests.
Mandated reforms to patent protections (in the form of term restoration provisions) and the expansion of protections for dozens of European geographical indications was always part of the price to be paid for CETA. There were concerns expressed throughout the negotiations on both issues. Geographic indications rules grant protections to foods widely produced around the world and establish new marketing and naming restrictions on Canadian food producers. Meanwhile, the patent term restoration provisions are likely to increase health care costs in Canada by delaying the availability of generic pharmaceuticals due to the extension in the term of protection for patented pharmaceuticals.
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International Trade Minister Chrystia Freeland has faced a challenging week given the possible collapse of the trade agreement between Canada and the European Union. Freeland and the Liberal government have worked hard to get CETA to the finish line with some changes to the investor – state dispute settlement rules (the rules should be dropped altogether) and frequent travel across Europe to garner support for the deal.
Back at home, the reaction to the CETA problems from the Conservative opposition has been embarrassing. Trade critic Gerry Ritz criticized Freeland, speaking of the need for adult supervision and calling on the government to get the job done. Freeland rightly called him out on the comments, but she could have also noted that the record suggests that it is the Conservatives that failed to get the job done on CETA. In April 2010, the Conservative government said it would be finished in 2011. In 2011, reports said it would be done in 2012. In October 2012, the projection was a deal by year-end. It took until the fall of 2013 for a ceremony marking an “agreement-in-principle”. That too proved to be premature as there was another event celebrating an official draft in 2014 followed by more legal drafting and the renegotiation of controversial ISDS provisions that led to the release of another text earlier this year. In other words, Freeland inherited far less than advertised on CETA and the Conservatives might not want to remind the public that their biggest trade accomplishment never actually involved a signed, final text.
The Ritz remarks have attracted attention, but comments yesterday from Prime Minister Justin Trudeau may have a longer and more damaging impact on Freeland.
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