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Unfree Trade?



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Yesterday’s vote in the Senate to approve the Peru Free Trade Agreement was a foregone conclusion–the vote last month in the House was the tough one. Nevertheless, the result is small victory for the Bush administration.

In looking over the Senate roll call, I was surprised to see that Jon Kyl voted no. He was the only Republican to do so. He has never before opposed a free-trade agreement. I figured that maybe there was some quirky Arizona angle (potential control-group senator McCain didn’t show up for the vote). So I called Kyl’s office. It turns out that the senator is worried that in its negotiations with trade-averse Democrats, the Bush administration has given too much away. This doesn’t bode well for pending agreements with Colombia and Panama.

Here’s an excerpt from a statement Kyl’s office emailed me:

My opposition to the Peru FTA is rooted entirely in the agreement reached by the U.S. Trade Representative (USTR) with members of the other body in May of this year.  That agreement forced the U.S. to renegotiate the Peru, Panama, and Colombia FTAs to add new requirements for labor and environmental protections and weakened traditional trade agreement protections for certain U.S. intellectual property (IP) related to pharmaceutical products.

I am concerned about the labor and environment provisions, but I am simply puzzled by the intellectual property changes.  I am not sure what my colleagues hoped to gain by weakening standard protections for U.S. intellectual property through this trade agreement.  I see no reason why U.S. legislators would want to weaken the ordinary protections that are normally accorded to pharmaceutical intellectual property in our bilateral trade agreements.  Peru did not, in the course of negotiations, ask us to weaken the IP requirements.  Peru was perfectly willing to abide by the greater protections of the original FTA.

If the goal of these changes was to provide better access to life-saving medicines in Peru, I worry that their effect could have the exact opposite result.  Countries with weaker IP protections will have a difficult time encouraging U.S. companies to do business there.  Respect for private property—including intellectual property—is essential to encouraging innovation.  Without assurances that new and creative products and services will not be stolen by unscrupulous competitors or forcibly devalued by governments, there is a reduced incentive to take the economic risks that are necessary to achieve groundbreaking inventions.

And why should we expect that those who want to weaken protections for U.S.-owned intellectual property will stop at pharmaceuticals?  Are computers, movies, music, and other products that involve valuable U.S. intellectual property next?  U.S. intellectual property is one of our most valuable exports; it is not in the national interest of the United States to unilaterally weaken protections for it.


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