‘Free trade’ is seldom either

I’m not a fan of free trade agreements generally, nor ones with the US specifically. The “compromise” involved in reaching them usually involves surrendering some sovereignty to the other partners in the treaty, with the smaller countries, in particular, being forced to give up more than the larger countries.

A case study in what’s wrong with the push to “free trade” with the US, in particular, was highlighted in today’s Sunday Star-Times. A lobbying firm working for the US pharmaceutical industry has attacked Pharmac, New Zealand’s central drug purchasing agency.

The industry lobbyists claim New Zealand doesn’t get access to new drugs, and that spending is low by OECD standards. However, this lack of budget growth is actually a measure of the success of Pharmac in keeping costs down.

As for funding new, rather than tried-and-tested, drugs, Pharmac spokeswoman Jude Ulrich pointed out: "If Pharmac had funded COX-2 inhibitors at the same rate as Australia, it would have had 330 – 1900 people die of heart attacks over a four-year period." The Star-Times reported that she said its decision not to do so had allowed funding for 18 other drugs, saving 487 statistical lives a year. Put another way, there’s a very sound argument to be made for Pharmac’s more cautious approach.

What’s really going on here is that US pharmaceutical companies want to be able to make unrestrained profits in New Zealand, just as they do in the US. But we have national healthcare in New Zealand, so an American style pharmaceutical “wild west” free-for-all can only exist if our system is ended—not coincidentally, something else US industry wants. Ain’t gonna happen.

New Zealand has to look closely at “free trade” deals to see what tangible things we gain, and ignore promises made—they can be broken. More often than not, such agreements end up coming at too high a cost for workers, for consumers and for the economic sovereignty of small nations.

There are examples of agreements that work, that actually do a decent job of balancing the interests of the parties in the treaty. The CER agreement between New Zealand and Australia is an example; it is without a doubt light years ahead of anything New Zealand could ever get with the US. The US pharmaceutical industry’s war on Pharmac hints at why that is the case.