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FTAA: Brazil’s Poison Pill – Part 1


FTAA: Brazil's Poison Pill - Part 1

Will the AIDS case in Brazil be worsened if the FTAA is
established? The US wants to see
Brazil strengthening
Intellectual Property Rights. Brazil is asking itself though
if it is worth to sacrifice lives through the compromising of
its AIDS program, in order to enhance agricultural exports.

by:
Andrea
Garrafa Gouveia

 

The goal of establishing and consolidating a free trade environment for the American continent has necessitated
new initiatives since the collapse in December 1999 of the Seattle WTO Ministerial, given the resulting inability of member
nations to establish new rounds of free trade negotiations. Consequently, the FTAA (Free Trade Area of the Americas) has
gained significant momentum in recent years in its effort to establish the American continent as an area of free trade among all
34 member countries (with the exception of Cuba).

Despite the vital and enthusiastic support of its most vocal and most prominent promoters, the United States and
Canada, the FTAA’s eventual success will depend ultimately on the support of Brazil—Latin America’s largest economic power,
where temperate attitudes towards free trade agreements remain lukewarm.

Brazil, like most Latin American countries, fears that further trade liberalization brought about by the FTAA may
have long-term negative results, increasing economic dependency of individual countries on the dominant American
market. Moreover, trade disputes between Brazil and the United States, specifically with respect to intellectual property rights
and non-tariff barriers have intensified significantly over the last couple of years.

The purpose of this article is first, to focus on the trade dispute between Brazil and the US over intellectual property
rights, and, secondly, to explore the effects, both direct and indirect, that the FTAA, if implemented, might have on the current
AIDS crisis in Brazil.

Over the last two decades, Brazil has been developing the world’s most successful program against AIDS and other
Sexually Transmitted Diseases. By producing its own generic versions of innovative, experimental medicines, thereby forcing
pharmaceutical companies to lower prices for additional AIDS drugs, the Brazilian government has been able to grant free
access to drugs to treat AIDS to those infected with the HIV virus.

The many successes of Brazil’s program between 1997 and 2002 have amazed the entire world, successes most
notably including no less than a 50 percent reduction in the AIDS-related death rate, and a reduction by 80 percent in the
volume of hospitalizations, which saved the country around US$ 677 million, between 1997 and
20001 (By 2002, the total savings had already reached US$ 1
billion)2. The successful campaign is seen as a model to follow by countries in Latin
America, Africa and Asia.

Because Brazil’s relationship with the United States is complex, its position on free trade negotiations is still not
clear. For if Brazil agrees to enter negotiations over FTAA with the US, she may have to make costly concessions in order
to accommodate established Brazilian goals.

Brazil, for example, wants to see the US drop agricultural subsidies. The United States, on the other hand, wants to
see Brazil to begin to strengthen Intellectual Property Rights, in part by paying authorized market prices for patented
medicines it uses in treating AIDS and any other diseases.

Following are the basic concerns of both the United States and Brazil, concerns which complicate negotiations over FTAA:

The US argues that pharmaceutical companies will lose incentive for the continued researching and developing of
drugs designed to cure and/or control targeted diseases if, after expending their financial resources to research and develop
medicines for the cure and control of such diseases, these companies are then prevented from enjoying the financial rewards
of selling those drugs to the public.

Brazil, on the other hand, along with other developing countries, argues that since the United States is a wealthy
country, she can afford to allow these expensive, life-saving drugs to be made available to people in need.

Furthermore, Brazil argues, since the pills themselves are actually quite inexpensive to produce, many developing
countries are themselves equipped to manufacture these drugs, thereby addressing their own AIDS crises. And to bolster this
claim, the Brazilian government cites its own dramatic success in having reduced the numbers of AIDS infections below all
predictions of the World Bank and other analysts. Brazil claims that by treating Brazil’s own AIDS crisis in this manner,
the government has reduced by no less than an astounding 50 percent the number of AIDS deaths in Brazil.

Thus, from a Brazilian perspective, the simple question is this: Is it worth the cost of sacrificing lives through the
compromising of a successful AIDS program, in order to enhance agricultural exports?

The focus of this article will be to examine and evaluate in considerable detail the question of whether the results
gained and further expected by the AIDS Campaign developed by Brazil will be negatively affected by trade initiatives, which
would be advisable economic policies for developing countries, specifically for those engaged in trade liberalization through
the FTAA.

If so, it will be proved that such initiatives entail even undesirable outcomes, despite the established assumptions of
economic theorists, academics, policy analysts, private sector experts, and policymakers, all of whom subscribe to the theory that
trade and investment liberalization invariably promote overall growth and prosperity.

American Union

The Free Trade Agreement of the Americas, or FTAA, consists in an ambitious attempt to join into a single free
trade area the economies of the Western Hemisphere, in which barriers to trade and investment would be eliminated. Though
the FTAA had been first envisioned by former US President George Bush in 1990, initial talks did not actually occur until
Bill Clinton’s presidency, during the First Summit of the Americas, which took place in Miami in 1994, where gathered
together were all 34 leaders of the Western Continent (all but Fidel Castro). These leaders were committed to achieving
substantial progress in the development of the negotiations and to reaching an agreement by the year 2005.

Trade officials would initially develop the structure and scope of negotiations over the next two years, following the
1994 Summit. Though up until 1997, the public would have no involvement in this movement, in 1998, opposition to the
FTAA began to grow. Civic societies and businesses had become better organized by the time of the Second Summit of the
Americas, which would occur in Chile in 1998.

At this Second Summit, the FTAA negotiations were formally launched and the leaders agreed that the "…process
be transparent and take into account the differences in the levels of development and size of the economies in the
Americas, in order to facilitate full participation by all
countries."3

Several other meetings have been held so far in order to achieve further progress in the negotiations. The last
meeting took place this year, in Panama, on February 15, where the member countries were each supposed to present proposal
for liberalization of the market to industrial, agricultural and services imports, including government procurement.

Nonetheless, many countries postponed their presentation and the meeting did not run as expected, as reported by
the media. Through the negotiation process, trade offs will be made regarding the nine negotiation groups disclosed below:

Intellectual Property Rights

Agriculture, including Sanitary and Phytosanitary Measures

Services

Investment

Market Access, including standards

Dispute Settlement

Competition Policy

Government Procurement

Subsidies, Anti-Dumping and Countervailing duties

As each of the 34 member countries is experiencing its own level of economic development, each individual
country’s willingness to make concessions concerning the above negotiation groups will depend on its own stage of economic
development. For example, the US might make concessions on access to its agricultural market in exchange for stronger
language in observance of intellectual property. In similar fashion, Argentina may give ground on access to its service market, but
only in exchange for the cessation of agricultural subsidies by the United States government.

The FTAA has been charged with the mission of being "WTO-plus", meaning that the agreement has to meet al least
the level of liberalization reached through the World Trade Organization, as in the case of NAFTA, which cover areas not
currently covered by the global trade body, such as rules on investment, enforcement of intellectual property rights,
government procurement and competition policy.

Some of the groups who defend the FTAA and help to spread the "idea" throughout the hemisphere are: some
coalitions of corporate interest hoping to take advantage of market access; policymakers who see in the FTAA a way to resolve
national priorities; and policy analysts, who believe in the economic theory that trade and investment liberalization promote
overall prosperity and growth.

The goal of the organizers is to put a Free Trade Agreement for the Americas into action by January 2005. If put
into effect, the FTAA will totalize a population of more than 800 millions, with GDP (Gross Domestic Product) estimated in
US$ 11 trillions4.

To be continued

1 "WHO Model List of Essential Medicines",
World Health Organization. 22 April 2002.
http://www.who.int/medicines/organization/par/edl/lopinavir.doc  (28 February 2003)

2 Marco Victória, "Can Universal Access to HAART Change the Profile of TB-HIV Co-Infection?", World Health Organization. June 2002. <

http://www.who.int/gtb/whats-new/durban/June15/Morning/1
 (3 March 2003)

3 FTAA – Free Trade Agreement of the Americas,

Second Draft Agreement, Draft Text on General and Institutional Issues, 2001. (Washington, D.C.: 15 February 2003).

4 " FTAA expands bad trade
policy", California State University, 26 April 2001 
http://www.csulb.edu/~d49er/archives/2001/spring/opinion/v8n107-revelations.shtml 
(April 2003)

 

Andrea Garrafa Gouveia just finished her Master’s Degree in International Commerce and Policy at George
Mason University. She welcomes comments at afgarrafa@yahoo.com

 

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