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Submission to Department of Foreign Affairs and Trade on Australia-United States Free Trade Agreement

January 2003
Australian Doctors' Fund
15 January 2003

US FTA Task Force
Office of Trade Negotiations
Department of Foreign Affairs and Trade
BARTON ACT 0221

Dear Secretary,

The Australian health care finance and delivery structures are critical elements in ensuring the quality of life of all Australians.

Whilst they can be divided into a series of separate services, their interrelation provides for its effectiveness.

Part of the structures have been developed, on purpose, not on ensuring the greatest financial return, but in maximising the greatest health care returns. Thus the public (taxpayer) financing of health care delivery assists in the delivery of, what may be, financially non-profitable health care services.

Hence, many aspects of Australian health care delivery and finance cannot be morphed to commercial enterprise models without compromising the desired health care outcomes of the community its serves.

In contrast, the US health care system, maintains a much stronger commercial profile. However, this has proven to have devastating social consequences.

An Australia - United State Free Trade Agreement (AUS-US FTA) that would allow the commercial strength of the US managed health care system intrude into the Australian community is a serious threat to all Australians, their way of life and, their health.

In Australia, the public funding of pharmaceutical subsidies, through the Pharmaceutical Benefits Scheme (PBS), is a key component of the Australian health system. It enables the Australian government to bring proven medications to the Australian community at affordable prices. An AUS-US FTA that would foster the dismantling of such a system, or provide for equivalent compensation/subsidy, would be difficult to justify, particularly to those Australians who rely on the $4 billion subsidies for their medications.

In opening up the processes that allow sovereign nations to determine social policies for their constituents to commercial forces, will simply, in our view, degrade the effectiveness, economy and equity of the current Australian health care system.

Canadian and US citizens have had adverse health experiences¹ with the North American Free Trade Agreement (NAFTA) upon which the AUS-US FTA may be modelled on.

Of particular note, such FTA's have bypassed the usual safeguards of sovereign nations, particularly, their legal systems. In some cases payments of millions of taxpayer's dollars has been required to compensate foreign investors, when a project is aborted (or competes with publicly funded activities) by the receiving country to prevent adverse health outcomes to its citizens.

The Taskforce should take the opportunity to review the NAFTA Chapter 11 Cases² in order to ensure that an AUS-US FTA does not lead to such consequences and that the Australian public is protected from the potentially economic and socially destructive consequences of such an open ended agreement.

There are many serious questions that arise in relation to health care with any AUS-US FTA that need answers before any agreement is ratified. These include:

What safeguards will protect Australian patients from corporate shareholders?
What will be the safeguards for maintaining Australia's right to legislate to protect budgetary provisions to Australian public hospitals without having to pay a financial penalty?
Will Australia be required to compensate a company for forgoing profits or for "appropriating particular works" even though Australia was protecting the health of its citizens as has occurred under NAFTA?
What protection will the agreement provide to the integrity of the Australian PBS and other government subsidised health care schemes?
Who will determine the appropriate standards of Australian health care and training where there are differences between the two countries? Will a lowest common denominator approach be taken? What about requests for compensation to reach new higher standards?

There are obviously other important sectors that would be impacted by an AUS-US FTA. These include Australia's investment restrictions, through legislation, on the strategic industries of media, telecommunications and airlines. What impact would unrestricted access mean to Australia's national security?

The Taskforce may also seek to take note of the concerns expressed in the submissions from National Association of Practising Psychiatrists (No 481), Dr Shirley Prager (No. 578) and Australian Doctors' Fund (No. 646) to the Joint Standing Committee on Treaties on the Multilateral Agreement on Investment (MAI).

This submission has been prepared for and on behalf of the Australian Doctors' Fund by:

Dr Shirley Prager
Management Committee Representative

Mr Glen Ramos
Assistant Executive Director

Footnotes:

¹ Public Citizen. Harmonization Alert. Vol 2 No 9. http://www.citizen.org/documents/harmmar1.PDF
² Public Citizen. http://www.citizen.org/trade/nafta/CH__11/articles.cfm?ID=1177