After twenty years of ongoing negotiations, the European Union (EU) and the Southern Common Market (Mercosur) have come to agree on a free trade deal that promises to create a new combined market of 800 million people.1 This EU-Mercosur FTA will eliminate 93% of tariffs on Mercosur exports and 91% of tariffs on EU exports.1 With tariff reductions applied to both trading blocs, the EU and Mercosur have both claimed the FTA as a victory for their respective party – however, although free trade deals have the potential to shrink disparities between high and low income countries, there is serious reason for concern that this EU-Mercosur FTA seems to prioritize EU profit interests over Mercosur’s developmental needs.
Presuming that a reduction in customs duties will lower the cost of imported pharmaceuticals, Mercosur’s FTA decision to eliminate the 14% customs duties on pharmaceuticals exported by the EU illustrates Mercosur’s desire to gain access to future EU pharmaceutical innovations.2 Although Mercosur potential access to future pharmaceutical developments seems like a significant benefit of the FTA, the true impact of the agreement does nothing to foster a self-sustaining pharmaceutical industry in any Mercosur nation, and simply preserves the status quo.
Over the course of the negotiation process, the EU has pushed hard for intellectual property provisions that would create additional and longer patent monopolies over essential drugs – such provisions are known as TRIPS-Plus, because they go beyond the regular standard established by the TRIPS Agreement. Thanks to intense and continuous pressure from civil society organizations from Mercosur countries (especially ABIA/GTPI in Brazil), different generations of trade negotiators have prevented the adoption of TRIPS-Plus measures, given their negative impact on the right to health. Comparing leaked versions from the text issued in 2016 and 2018 with the final text of the agreement, it is remarkable that none of EU TRIPS-Plus proposals were included. However, the final version of the text released does not contain all articles of the IP chapter[1], thus causing uncertainty about its full scope.
Despite the victory in removing TRIPS-Plus provisions, no progress was made toward a new approach to medical innovation or patent monopolies. In the European Union there is growing momentum around high drug prices and the need for a new and innovative pharmaceutical system; and in Mercosur countries, long-standing debates about the innate biases of the TRIPS agreement and the need for alternatives continue to dominate public discourse – yet, despite shared concern over the pharmaceutical industry, the FTA makes no commitments to foster needs-driven research and development or innovation incentives tailored to access provisions.
In this sense, by upholding the strict intellectual property rights (IPR) provisions recommended by the TRIPS agreement, the EU-Mercosur FTA perpetuates an unjust power dynamic where the global North is incentivized to profit off of the global South. Although EU and Mercosur have both declared the FTA as mutually beneficial, the innate biases of an FTA with strong IPR regulations will always favor larger net-exporters of intellectual property. Considering the limited amount of technical knowledge readily available for international diffusion and the lack of internal infrastructure for the development of generic and innovative medication within Mercosur nations, this FTA ensures that Mercosur’s access to the EU’s pharmaceutical industry remains limited by market barriers imposed by EU patent holders.
While some may argue that the FTA signals an openness by both parties to freely and equitably share technical knowledge, the IPR details of the FTA and the recent domestic actions taken by the EU portray a different reality.1 Stemming from a desire to maintain patent control over its current roster of medicines, the EU ensured that comprehensive provisions on the protection of trade secrets and intellectual property rights were included prior to accepting the FTA.2 This compulsion to protect trade secrets and intellectual property rights, rather than diffuse potential life-saving advancements into Mercosur nations, exposes the EU’s true profiteering aims. These aims are further illustrated by the EU’s recent adoption of Supplementary Protection Certificates that can extend patents for up to five additional years in the EU.3 By internationally encouraging strict adherence to TRIPS regulations, while domestically pursuing TRIPS-plus regulations, the EU seems to value monopolies over pharmaceutical innovation and drug production.
Furthering their control over the growth and development of Mercosur industries, the EU has also used the FTA to gain access to the government procurement processes of Mercosur nations.1 With government procurement serving as a significant avenue for local investment, the encroachment of the EU into this process undermines the purchasing power of Mercosur’s national governments.4 Given the power imbalance between both trading blocs, the EU’s decision to interfere in the stimulation of national economies is predatory and wildly unjust. In addition, the FTA also includes IP enforcement in the scope of custom regulations. This addition could imply border measures on IP that provide custom authorities with the power to seize and destroy generic medicines based on suspicion of IPR infringement. Episodes of wrongful seizures of legitimate generic medicines in transit have already occurred in European customs where such regulations exists, a prospect that could significantly damage Mercosur’s access to medicines.
While the EU-Mercosur FTA creates a larger market for industries such as agriculture and meat, the FTA does nothing to ensure that Mercosur will develop the technological capacity to keep its population healthy.1 The IPR provisions included in this FTA gives no safeguard against the profit-driven pharmaceutical-patent industry and leaves the pricing of life-saving medications under the auspices of greedy drug patent owners. The future of universal access to medicines depends on the affordability of essential medication and generic drug competition – and without any clear commitments to health equity within this FTA, it seems unlikely that the EU will willingly sacrifice its pharmaceutical profits to satisfy the needs of an otherwise constant Mercosur demand.5
While many of the sections in the FTA may not directly impact access to medicines, other provisions may prove detrimental over the long-term for the most vulnerable populations in South America. After working hard to impede the inclusion of TRIPS-plus provision in the Agreement, now is the time for civil society to present a united front against other measures that could hinder the fulfillment of human rights, such as the right to health, during the debates in the national congresses. Civil society and social movements must pressure elected officials to reject legislation that places profit over people, and must remain vigilant as the FTA enters the final stages of negotiation.
Sources
- Brunsen, J., Schipani A., Harris B., & Mander B. (2019, June 30). EU-Mercosur Trade Deal: What It All Means. Retrieved from https://www.ft.com/content/a564ca96-99e7-11e9-8cfb-30c211dcd229
- European Commission. (2019). Key elements of the EU-Mercosur Trade Agreement. Retrieved from http://europa.eu/rapid/press-release_QANDA-19-3375_en.htm
- Wodecki, B. (2019, July 3). EU SPC Waiver for Generics Comes Into Force. Retrieved from http://www.ippromagazine.com/ippromagazinenews/article.php?article_id=6842
- Rede Brasileira Pela Integração dos Povos . (2019). The European Union – MERCOSUR Agreement: still an avoidable tragedy. Retrieved from http://gapwatch.org/wp-content/uploads/2019/07/Rebrip_FTA_2019.pdf
- Associação Brasileira Interdisciplinar de AIDS. (2017, May 22). International Conference on the Politics of Access to Medicines and Human Rights (Brazil). Retrieved from http://gapwatch.org/news/international-conference-on-the-politics-of-access-to-medicines-and-human-rights-rio-de-janeiro-brazil/928