[Ip-health] Digging Thailand into an FTA-shaped hole

Kannikar Kijtiwatchakul kakablueblue at gmail.com
Mon Jan 28 21:46:46 PST 2013

 Digging Thailand into an FTA-shaped hole

By Kannikar Kijtiwatchakul


Published: 29 Jan

After a series of warnings from civic groups that any international trade
agreement without public consultation violates the constitution, the
Commerce Ministry finally, albeit reluctantly, held a public hearing on the
draft framework of the Thai-EU Free Trade Agreement (FTA) last Wednesday.

The ministry, however, let the public know about the hearing only two days
in advance - an inappropriate move given the hearing involved a very
complex trade agreement with far-reaching repercussions. It reflected the
authorities' tendency to ignore the concerns of civil society groups that
the trade deals may give certain trade privileges to big business at the
cost of the well-being of ordinary Thai people.

It was also disappointing that a so-called public hearing on such an
important issue lacked the presence of top executives from the Department
of Trade Negotiations (DTN) and the Commerce Ministry to listen to the
opinions of about 200 active citizens and other stakeholders.

Worse, those who chaired the forum could not reassure its participants that
their voices would be well recorded and submitted to parliament together
with the draft framework.

Let's decipher the details of the draft framework (it can be accessed at
www.DTN.go.th) so as to understand the concerns of those who have monitored
the FTA's talking points and why they have called for changes.

The four main areas of concerns are: medicine becoming inaccessible for the
poor; threats to the sustainability of farmers' livelihoods; the promotion
of excessive drinking of alcohol; and arbitration to settle cases of
disputes between investors and the state.

It's an open secret that the Thai business sector has heavily lobbied for
the Thai-EU FTA to protect local business, especially Thai exports, which
now enjoy trade privileges under the Generalised System of Preferences, or
GSP, which allows an exemption from the more general rules of the World
Trade Organisation (WTO). By the end of 2014, the GSP benefits will be
terminated and the predicted damage to Thai exports would be about 80
billion baht, according to Siam Commercial Bank research.

The DTN, however, has estimated that the Thai export loss would reach 290
billion baht. Many believe this is an exaggerated figure.

Interestingly, the draft FTA mentions nothing about the potential social
costs and damage to the national budget _ the draft neglects to dwell on
how much the trade privileges will cost the country in the long term.

It is a fact that the European Trade Commission has been eyeing the growing
liquor market in Thailand. Competitive prices are key to the success of EU
products in the Thai market. Hence its demand for a 90% alcohol tariff
reduction within seven years.

Already, Thailand has one of the highest death tolls in traffic accidents
in the world with more than 3,300 deaths roughly a year. During the 2013
New Year holiday period, 365 lives were lost to road accidents. While the
main cause of these tragedies was drunk driving, many deaths were among
non-drinkers. The social damage from drinking is immeasurable if we include
other alcohol-related social problems. The cheaper the alcohol, the greater
the number of Thai drinkers.

Ironically, while the price of alcoholic drinks will go down, those of
medicines will go up if trade negotiators fail to heed local concerns.

In the section on Intellectual Property Rights, the draft framework
emphasises that the negotiations will be "in harmony with the WTO".

At a glance, this sounds unproblematic. It seems to mean "we agree on what
we have agreed". No harm done.

But in trade bargaining games, the phrase "in harmony with" here is
translated as an invitation for further negotiations. It means that if the
bilateral partners have agreed on a certain issue that exceeds the
requirements under the WTO agreement, then the negotiation is considered in
line with the framework.

If the DTN is sincere about closing all the loopholes, it should make the
wording more precise by changing this phrase from "in harmony with" to "not

The overly broad framework has also worried public health authorities in
the Food and Drug Administration and health activists.

The EU has sent strong signals that it will demand an extension of 20-year
medicine patents and five years of data exclusivity. Both demands will
aggravate the drug monopoly situation in Thailand. And just like with any
monopoly, the price of imported medicines will dramatically rise and become
unaffordable for ordinary people. The rural poor will be hit the hardest.

The extended patents will also affect the competitive edge of local
pharmaceutical companies which are now able to provide cheaper, quality
generic versions. If the EU's wishes are granted, this will be a second
blow the government has dealt to local pharmaceutical firms.

Before 1992, the local pharmaceutical industry was on the rise, with a
domestic market share of 70%. The best Thai pharmacists had been successful
in developing generic medicines.

But when the US government threatened to cut GSP benefits, the government
at that time agreed to amend the Patents Act in an exchange for GSP
privileges. It was a death sentence for the local pharmaceutical industry.

Since then, the market share has reversed to 30% generics and 70% imported

Unlike Thailand, India fought tooth and nails to protect its pharmaceutical
industry against trade talk pressures. Before 1992, Thai and Indian
pharmaceutical industries were competitive. India escaped the external
pressure until 2005 when it finally agreed to observe intellectual property
rights following the 2000 Trade-Related Aspects of Intellectual Property
Rights (Trips) agreement. But with the 13-year gap between Thailand and
India, New Delhi has exploited the time to develop medicines.

Now standing at the forefront of the world's pharmaceutical industry, India
has been dubbed as "The world's drug store" with its cheap generic

Like it or not, we have to acknowledge that Thailand is not in a position
to afford expensive patented medicines to care for its population under any
social healthcare scheme.

To make matter worse, the Thai-EU negotiations on intellectual property
rights will not only cover medicine patents, they will also push for
patents of plant varieties.

Under the WTO agreement, member countries were offered two plant protection
options by either adopting a plant patent or an effective sui generis
system, the special statutes that fit its unique characteristics. But
several countries including Thailand chose a third option by promulgating
their own plant protection laws. In 1999, Thailand's Plant Variety
Protection Act came into effect.

There have been concerns that the EU will pressure Thailand to abandon the
Act and adopt the 1991 UPOV Convention (New Plant Variety Convention). If
that is the case, more hardships are in store for local farmers.

At present, the Act protects plant patents for 12-20 years. The adoption of
the UPOV Convention will further extend plant patents to between 20-25
years. The most vulnerable, and in highest demand, are the annual plants
(rice, corn, for example), whose patents will be extended to almost double
from 12 years to 20 before the farmers are granted the right to save seeds.

Worse still, under the UPOV Convention, signatory states are encouraged to
do away with farmers' rights to save seeds. Saving seeds for new farming
seasons is a key part of a farmer's way of life and a basic right for food
security, under the Food and Agriculture Organisation (FAO) treaties.

The UPOV Convention, as bio-diversity advocates worldwide have critiqued,
avoids direct violation of the FAO treaties by giving an "option" for each
country to issue laws prohibiting seed saving. In practice, however, it is
pretty much like an obligation.

Isn't this a modern-day feudal system, where farmers break their backs on
the farms to make gigantic transnational seed conglomerates wealthier?

The last main issue of concern is the setting up of the arbitration system
to handle investor-state dispute settlement (ISDS). Australia, Japan and
India have been adamant about excluding the arbitration system in their FTA

In recent years, foreign investors have brought their disputes to
arbitration in several countries. When any government has lost, the damages
have been massive both in compensation value and by suspending public
policies protecting locals. Among ISDS cases that saw investors win over
governments was a toxic waste management dispute in Mexico, where the
government had to give 480 million baht in compensation to an American

Thailand lost a case with the Don Muang Tollway Public Company under
arbitration in 2011. Apart from paying compensation of over 1.2 billion
baht in addition to another 140 million baht in lawyers' fees, the result
was a failure to maintain a public policy on moderate toll fees for local

What members of the parliament should do when they are scrutinising the
Thai-EU FTA draft framework this week is to look at the areas that affect
people's lives. Weigh the long-term adverse consequences for the people
with the short-term damages of GSP loss. Then ask yourself if we really
should sacrifice the well-being of Thai society and ordinary people to help
big business.

*Kannikar Kijtiwatchakul is researcher on Intellectual Property Rights and
Access to Medicine, at the Drug System Monitoring and Development
Programme, Chulalongkorn University.*

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