Notes from today’s hearing on the proposed US-Korea Free Trade Agreement
March 14, 2006
Today the Trade Policy Staff Committee (TPSC) held hearings on the upcoming FTA negotiations with Korea. The TPSC is an inter-agency body comprised of negotiators from the US Trade Representative’s office, as well as advisors from the Departments of Agriculture, Commerce, Labor, State and Treasury. The purpose of the hearing was to solicit advice for the USTR to consider when it is “amplifying and clarifying negotiating objectives” and for the public “to provide advice on how specific goods and services and other matters should be treated under the proposed agreement.” An Economic Minister from the Korean embassy, two union representatives, and 24 business representatives testified. Written comments can be submitted until March 24 – guidelines for submissions are listed in the Federal Register notice requesting comments. Below are brief notes from some of the testimony given at the hearing.
Korean Ambassador Seok-young Choi testified that the US-Korea FTA is one of the Korean’s top priorities, citing a report from the Korea Institute for International Economic Policy predicting that the agreement would lead to a 2% increase in Korea’s GDP and create 100,000 new jobs. Nevertheless, it is important the FTA does not favor one party over the other – it should be a win-win situation for both parties.
Choi further said that, like the U.S., Korea has “jumped on the bandwagon of competitive liberalization. It is currently engaged in many simultaneous bilateral FTA negotiations, and it is currently studying the possibility of beginning negotiations with China.
Richard Holwill, representing the U.S. Korea Business Council (part of the American Chamber of Commerce) testified that U.S. drug companies have problems gaining market access in Korea, and complained that the Korean process for pricing was not “science-based” and did not reflect the cost of drug development. Regarding intellectual property, he said TRIPS should be built upon, and that obligations in article 39.3 (data protection) needed attention.
Joe Damond from the Pharmaceutical Research and Manufacturers of America gave testimony that Koreans want greater access to new American pharmaceuticals, but that their National Health Insurance (NHI) was structured in a way that made this difficult. PhRMA contends that the FTA should reform Korea’s reimbursement system, which is biased against non-Korean companies; lacks transparency; does not take into account the cost of drug development; is not “science-based;” favors generics; and discourages innovation and technological development in Korea. Damond’s comments focused mostly on the NHI instead of intellectual property, though he also said data exclusivity and patent/regulatory linkage provisions should be included in the FTA.
In contrast, the Generic Manufacturer’s Association’s Shawn Brown stressed that rules concerning the pharmaceutical industry (both national laws and international agreements) need to balance the need for innovation with access to existing medications. The intellectual property provisions in recent FTAs, however, often exceeds US law and delays generic entry – therefore raising the price of medicines. His testimony offers examples of such provisions, including:
• U.S. law contains strict limits to the length of patent extensions. FTAs do not.
• U.S. law includes a five year period of data exclusivity for strictly defined New Chemical Entities. Some FTAs require data exclusivity for “same or similar” products for periods of “at least” five years.
• U.S. law and FTAs both link marketing approval of generic drugs to the expiration of the originators patent. However, U.S. law includes safeguards not found in the FTAs, such as limits on the types of patents that can be listed.