This document provides details of a regional workshop titled "FTA's Impacts on Developing Countries: the Asian Context" that was held on March 17, 2009 at the ITD Training Center in Bangkok, Thailand. The workshop consisted of 4 sessions covering investment issues, intellectual property rights issues, environmental issues, and labor issues. Each session included a presentation from GSEI researchers and a comment and discussion period. The document also provides an agenda outline with timing, speakers, and topics for each session of the workshop.
FTA’s Impacts on Developing Countries: the Asian Context
1. Regional Workshop :
FTA’s Impacts on Developing Countries:
the Asian Context
17 March 2009
ITD Training Center
th
15 Floor Chamchuri Square Office Tower
Bangkok, Thailand
2. Regional Workshop
“FTA’s Impacts on Developing Countries: the Asian Context”
March 17, 2009 at ITD Training Center,
th
15 Floor, Chamchuri Square Office Tower- Bangkok, Thailand
08.30 - 09.00 Registration
09.00 - 09.15 Welcome Remarks
By Dr. Sorajak Kasemsuvan, Executive Director, ITD
09.15 - 09.30 Deliver Background and Objectives of the Workshop
By Thanphuying Dr. Suthawan Sathirathai, Chairwoman of GSEI
09.30 - 10.15 Session I: Investment Issues
Speaker
• GSEI Researcher
- Assoc.Prof. Dr.Lawan Thanadsillapakul, School of Law,
Sukhothai Thammathirat Open University
10.15 - 10.30 Coffee Break
10.30 - 11.15 Session II: Intellectual Property Rights (IPRs) Issues
Speaker
• GSEI Researchers
- Assoc.Prof.Dr. Jiraporn Limpananont, Social Pharmaceutical Unit,
Faculty of Pharmaceutical Sciences, Chulalongkorn University
- Dr.Jade Donavanik, Faculty of Law, Siam University
11.15 - 12.00 Comment & Open Discussion
Moderator:
Dr. Watcharas Leelawath, Deputy Executive Director, ITD
Commentator :
Assoc.Prof. Henry Gao, School of Law, Singapore Management University
12.00 - 13.00 LUNCH
13.00 - 13.30 Launching of “SEATRANET"by ITD
13.30 - 13.45 SEATRANET Q & A
13.45 - 14.30 Session III: Environmental Issues
Speaker
• GSEI Researcher
- Dr.Sujitra Vassanadumrongdee, The National Center of Excellence for
Environmental and Hazardous Waste Management, Chulalongkorn University
14.30 - 14.45 Coffee Break
14.45 - 15.30 Session IV: Labour Issues
Speaker
• GSEI Researcher
- Ms. Theerada Suphaphong, , ASEAN Inter-Parliamentary Myanmar Caucus
15.30 - 16.15 Comment & Open Discussion
Moderator:
Assoc.Prof.Dr. Kiti Prasertsuk, Associate Dean for International Affairs,
Faculty of Political Science, Thammasat University
Commentator:
Assoc.Prof. Henry Gao, School of Law, Singapore Management University
16.15 - 16.30 Closing ceremony
3. I
The Preparation of the Framework Guidelines for Evaluating
the FTA Impacts Project
Executive Summary
One important activity in the preparations for the negotiation of a free trade
agreement (FTA) is the study and assessment of possible impacts as well as potential
benefits and costs of such an agreement for Thailand. The focus of such studies and
assessments done so far of both the positive and negative effects of an FTA has mainly
been on the economic impact from trade, and there are limitations in the capability to
assess two critical aspects of the costs of an FTA, namely its environmental and social
costs. As a consequence, the government often lacks comprehensive information for policy
decision-making, and decisions are largely made on the basis of economic and trade data.
This is one reason the results of those studies and policy-making on FTAs not quite
acceptable to the public, particularly to people directly affected by the social and
environmental impacts of the agreements.
In this connection, if a framework can be developed for an assessment of both the
overall impact of an FTA and of specific issues which may have broad impacts on Thailand
in the agreement, then this will add clarity to the country’s strategy on FTA negotiation and
make the strategy more comprehensive in terms of making preparations for the negotiation
and minimizing negative economic, social and environmental impacts. Such a framework
will also add transparency and fairness to the consideration of the interests of various
groups, and appropriate measures can then be devised to cushion the impacts and provide
remedies to those sectors of the society which may be affected by FTAs.
In this study, a framework has been developed to assess the impact of FTA
negotiations, comprising two parts. These are (1) a framework for overall assessment of
FTAs and (2) a framework for assessment of six specific issues, namely: environment,
labour, investment, agriculture, intellectual property and dispute settlement.
The aforementioned assessment framework contains a check list of issues and
information to be used in detailed consideration of such important issues as controversial
issues, sensitive issues, demands which Thailand should not accept, and issues which are in
conflict with Thailand’s obligations under relevant international agreements.
4. II
1. Framework for overall assessment
In reviewing approaches used by other countries in assessing the impacts of FTAs,
we have found that the European Union (EU)’s is an interesting model. The EU applies the
concept of sustainable development as a framework for impact assessment and policy
decision-making on its FTA negotiation. In 1999, the European Commission decided to
integrate the concept of sustainable development into trade negotiation. It has developed
an assessment tool called “Trade Sustainable Impact Assessment” (Trade SIA) which the
EU has employed in its trade negotiations with other countries.
The main principles of Trade SIA are: the assessment has to encompass all three
aspects of sustainability – economic, social and environmental; the assessment process has
to be conducted with transparency; stakeholders have to be involved; the assessment
outcome must be revealed to the public; the selection of people to conduct the assessment
must be done openly; the people to conduct the assessment must be independent, work with
transparency and use scientific information and evidence in their work.
In Thailand’s case, the overall assessment of FTA negotiation has largely focused
on its economic aspect, looking at economic growth rates, changes in exports and imports
or the effect on balance of trade. The main tools used are economic models such as Global
Trade Analysis Project, or GTAP, model. An overall assessment that is based on the
concept of sustainable development, encompassing economic, social and environmental
aspects, has not yet been conducted.
Such an approach is partly why FTA negotiations have become a subject of social
contention in the country, drawing broad opposition from the civil society sector. Several
parliamentary commissions have continually monitored the government’s policy and
actions on FTAs. In drafting the 2007 Constitution, the Constitution Drafting Committee
also attached much importance to the process of FTA negotiation, aiming to resolve
problems that had occurred and prevent future problems. It sought to amend the concerned
provisions to take into account changes in political and economic contexts at both domestic
and international levels. In the end, Section 224 of the 1997 Constitution was amended and
became Section 190 of the 2007 Constitution.
5. III
We propose in this study that, to keep to the intent and provisions of the
Constitution and to address past problems, an impact assessment of Thailand’s FTA
negotiation should be conducted in 3 stages, as follows:
Stage I – pre-negotiation assessment: This is to study and assess impacts in
various aspects – both positive and negative – which may arise from concluding an FTA.
The framework for such a study may be based partly on the framework proposed in this
study report. (See details in Chapters 2 to 8.) The result of Stage I assessment will be
useful in the drafting of a “negotiation framework” as stipulated in Section 190 paragraph
three (which will be addressed in more detail in the next part).
Stage II – impact assessment of the draft FTA: This is to study and assess
impacts of an FTA after the negotiations have produced the final draft, and details about
the substance, provisions and obligations are known. The result of Stage II assessment will
be useful for the government in making a decision whether to sign and/or give consent to
be bound by the FTA. It will also provide useful information for preparing measures to
resolve problems or provide remedies for those who would be affected by the FTA (in
accordance with Section 190 paragraph 4)
Stage III – assessment of the implementation of the FTA: This is to study and
assess actual impacts of the FTA on various sectors of the society after the agreement has
been implemented for a certain period of time. Follow-up assessments should also be
conducted every year during the first five years after the agreement enters into force and
every three years thereafter.
In making a policy decision whether to sign or give consent to be bound by an FTA,
most governments tend to explain to their publics that concluding an FTA has both positive
and negative sides, and in making the decision, the government has to look at “the overall
picture.” Such a line of explanation is a main problem that causes disagreement in the
process of policy decision-making concerning FTAs because it is not clear what “the
overall picture” means. Is it the sum of all positive and negative effects that an FTA has on
all production sectors or of all negotiating topics under the agreement being calculated for
net output? What groups would benefit and what groups would lose? Why should
particular groups benefit or lose from the agreement?
6. IV
In response to these questions, we make the following proposals on impact
assessment of an FTA and policy decision-making:
An impact assessment of an FTA should address both positive and negative
effects of the agreement and encompass economic, social and environment aspects. (See
details of this proposal in Chapters 2 to 8 of the report.)
Benefits and impacts from each issue (or each chapter), whether positive or
negative, cannot be traded off among one another, such as those between the increase in
exports due to reduced tariffs and the problem of patients’ access to medicines due to
extension of patent protection, as this would amount to a trade-off between economic
numbers and human lives. Hence, overall consideration of an FTA is not simply
calculating the benefits and losses in all issues together for net output. (There is also a
problem about the practicality of such an approach, as not all impacts of an FTA can be
translated into numbers, such as the costs and impacts from changing the legal regime to
protect plants into patent law, and the costs of impact on national food security.)
As a result, overall assessment must be compared with a “reference
framework” or “criteria for consideration” that are higher than the benefits from each
chapter of the agreement. (In other words, it should not be a comparison between chapters
or sectors within the FTA.) Reference frameworks which can be used as a framework for
decision making are, for example, the development strategy and development goals
specified in the National Economic and Social Development Plan, the sustainable
development approach, and the Sufficiency Economy philosophy.
Regarding the assessment process, we propose that impact assessment of an FTA
should be conducted with the principle of “public participation in impact assessment” so
that academicians, stakeholders and interested members of the public can participate in the
process of studying and assessing the impacts of each FTA. Public participation in the
impact assessment process are divided into 2 main stages, namely, in the selection and
identification of issues to be assessed, or public screening & scoping, and in the
consideration of assessment reports, or public reviewing.
Public screening & scoping is a process in which the public, stakeholders and
academicians join in formulating an assessment framework, making comments and
7. V
recommendations on issues or topics the impacts of which should be studied. At an initial
stage, the six issues for assessment framework proposed in this study can be used as
examples. Then, those participating in public scoping can then choose, improve or identify
issues to form an assessment framework as appropriate and in line with the different
contexts, negotiating topics and demands in the negotiations of each FTA.
Public reviewing is a process in which the public, stakeholders and academicians
give additional inputs, comments or recommendations to an FTA impact assessment report
in order to make the report more complete and comprehensive. It will also contribute to
improving communication and create common understanding about the positive and
negative effects which may arise from concluding an FTA with each country, on the basis
of data from the study.
The participation of various sectors in public reviewing should be done on a
continual basis – from the stage of making an inception report and progress reports to that
of drafting of the draft final report.
Section 190 paragraphs three and five and Section 303 (3) of the 2007 Constitution
contain provisions related to the negotiation process of a treaty (as stipulated in paragraph
two) specifically on the issues of public participation, preparation of a “negotiation
framework” and conduct of studies in order to prepare for the negotiation of a treaty. In this
connection, we make the following proposals for an FTA impact assessment process which
is consistent with the preparation of a “negotiation framework” as provided for by the 2007
Constitution. The details of the proposals are divided into 4 stages:
(1) Conducting studies for the purpose of making preparations before the
negotiation of a treaty
This stage involves studies and/or assessment of potential impacts of concluding an
FTA before the negotiation starts with the purpose of making preparations. It may include
impact assessment as well as other necessary studies, depending on the context of the
negotiations to be undertaken with each partner country. (Public participation in this stage
is through public scoping and public reviewing as proposed above.)
(2) Making of a “draft negotiation framework” (first draft)
This stage involves analyzing the study results from Stage (1) together with other
related information such as the government policy, the plan for the administration of state
8. VI
affairs (pursuant to Section 76 of the Constitution), and National Economic and Social
Development Plan, and coming up with the first “draft negotiation framework”.
(3) Public hearing and making of a “negotiation framework” (second draft)
This stage involves submitting the first “draft negotiation framework” to public
hearing process in accordance with Section 190 paragraph three, and taking in
recommendations from the hearing to revise the draft negotiation framework. The draft
that passes through the consideration by the National Assembly will be the final draft of the
“negotiation framework” which will be used in the formal negotiation.
Systematic public involvement from the stage of conducting impact assessment to
that of submitting the negotiation framework will ensure their meaningful participation,
which is not only done in order to be in compliance with the law. It will also benefit the
negotiation.
2. Assessment framework for specific issues
In coming up with the assessment framework, we drafted a conceptual framework
for impact assessment drawing on recommendations from those involved in the first
meeting of the focus group. We then worked on the details of 6 specific issues to be
assessed in accordance with the said conceptual framework and present the outcome to the
meeting of focus group twice in order to listen to comments and recommendations from
those involved in the negotiations as well as stakeholders in different sectors. We
subsequently revised each issue in the FTA impact assessment framework again based on
the comments and recommendations. We submitted the revised framework to those
concerned again on 20 October 2008 for final comments and revised it into the final
version of the impact assessment framework.
The contents of the impact assessment framework for specific issues appear in
Chapters 2 to 8 of this report. They are structured as follows:
(1) Topics/issues to be assessed;
(2) Reasons/needs for being assessed;
(3) Means/tools for assessment;
(4) Outcome of the assessment;
(5) Proposals for the negotiation and/or proposals for prevention of and remedies to
minimize impacts;
(6) Persons in charge.
9. VII
2.1 Assessment framework of FTA’s impact on the environment
We propose 8 issues, classified into 3 groups, that should be assessed for their
impact on the environment:
• Group I: Regulatory impact related to oversight of natural resources and the
environment
Issue 1: Are there any demands in FTA negotiations that will require Thailand to
change its environmental law and enforcement of such law, and if so, to what extent?
Issue 2: Are demands in the FTA negotiations consistent or inconsistent with the
obligations under multilateral environmental agreements (MEAs)?
• Group II: Environmental impact due to regulatory changes as a result of
concluding an FTA
Issue 3: Will demands related to protection of investment in the FTA negotiations
affect the country’s ability to protect the environment, and if so, to what extent?
Issue 4: Will demands related to protection of intellectual property affect the
country’s ability to protect the environment, and if so, to what extent?
• Group III: Environmental impact due to expansion of economic activities as a
result of the FTA
Issue 5: Will the FTA negotiation affect the country’s resource base (such as forest
resources and forest products, water resources, mineral resources, fishery resources), and if
so, how?
Issue 6: Will the increase in investment, production and consumption as a result of
the FTA lead to an increase in green house gas emissions and in wastes and residues, and if
so, to what extent?
Issue 7: Will the FTA negotiation lead to an increase or decrease of goods which
pose high environmental and public health risk (e.g. used products, hazardous wastes,
prohibited hazardous substances)?
Issue 8: Will the FTA negotiation affect the country’s biodiversity and ecosystem,
and if so, how?
10. VIII
2.2 Assessment framework of FTA’s impact on investment
We propose 26 issues, classified into 13 groups, that should be assessed for their
impact on investment:
• Group I: Impact on treaty-making process and the 2007 Constitution
Issue 1: Negotiations of an FTA under Section 190 of the present Constitution and
the problems in the process of making treaties in accordance with international law, in
which Thailand has much less bargaining power, will in principle affect national sovereign
authority.
• Group 2: Regulatory impact related to supervision of investment
Issue 2: Are there any demands in the FTA negotiations which will require
Thailand to change its investment laws and regulations and enforcement of those laws and
regulations, and if so, to what extent?
Issue 3: Will the FTA negotiations lead, directly or indirectly, to changes in any
investment-related laws and regulations, and if so, to what extent?
Issue 4: Are there any demands in the FTA negotiations which are consistent or
inconsistent with obligations under bilateral or multilateral agreements that Thailand has
concluded with other partners? Are these demands different from the WTO rules, and if so,
to what extent?
• Group 3: Impact on natural resource base and environmental protection as a result
of demands of the FTA
Issue 5: Will the demands in the FTA negotiation on national treatment together
with laws and regulations that will be abolished or changed under the FTA open access to
the country’s national resource base once prohibited to foreign investment?
Issue 6: In relation to the lack of laws and regulations to determine the nationality
of legal personalities and lax nature of Thai laws, do such legal loopholes allow foreign
investors to register as Thai legal personalities without falling under the Foreign Business
Action, restrictions on land ownership, and prohibitions against doing businesses in the
negative list of industries which are not liberalized?
Issue 7: Does the defined scope of Thai Government’s responsibility in the
enforcement of domestic laws, rules and regulations affect the enforcement of laws
protecting natural resource bases and the environment?
11. IX
Issue 8: Does the demand under the FTA which requires Thailand to take greater
responsibilities than provided for in international law on state responsibilities affect the
organic law on public hearing, the exercise of freedom of expression under the Constitution
through assembly, demonstration and protest against foreign investments such as against a
nuclear power plant?
Issue 9: Will the provisions under the FTA stipulating that a State party do not have
be accountable under MEAs if it is not a State party to those MEAs affect Thailand’s
environmental protection, and if so, to what extent? Will these affect the enforcement of
domestic laws and any international obligations?
• Group 4: Impact on labour, unemployment and employment conditions, workplace
health and safety
Issue 10: Will the FTA negotiation which obliges Thailand to open its labour
markets at both the executive level and other levels of employment to executives and
workers coming in with investments, with no requirement on their nationalities, affect the
country’s employment problem? Will this lead to unemployment among Thais?
Issue 11: Does the FTA negotiation require that Thailand take responsibilities in
enforcing laws that affect investment, such as labour law, employment standards and
standards regarding the workplace, work periods and wages? Can Thailand enforce these
laws in cases where foreign investors use hiring contracts or subcontractor agreements,
instead of employment contracts in accordance with the labour laws to avoid legal
responsibilities for the employees? Can Thailand enforce the laws on workplace health and
safety if foreign investors use hiring contracts instead of employment contracts, and if so,
to what extent?
• Group 5: Impact on growth of domestic industries
Issue 12: Will the FTA negotiation which include pre-entry national treatment
thereby affecting the screening of investors and investment zoning in accordance with the
country’s long-term economic plan, and prohibit the use of TRIMs or investment measures
which Thailand has been using, affect the growth of Thai industries?
Issue 13: Will the enforcement of intellectual property product laws which is more
stringent than WTO rules, such as on drug patents and industrial designs, affect the self-
reliance of these industries? Will this lead to rising costs? Will it close the opportunity for
long-term development as a result of the need to pay for these patents?
12. X
Issue 14: Where Thai investors are effectively discriminated by not being provided
with investment promotion privileges because they do not meet such requirements as those
related to investment caps and investment for export, and are therefore not granted those
privileges accorded to foreign investors and have to pay business taxes, import duties and
other taxes, Thai investors will then have to bear higher production costs while foreign
investors are granted investment promotion privileges, tax and non-tax incentives as well as
exempted from paying income taxes and import duties. Will this situation affect the
existence and development of domestic industries? What are the benefits and losses when
foreign nationals can use natural resources without paying taxes while Thai nationals have
to pay taxes but are discriminated against in terms of lesser privileges?
• Group 6: Impact on national revenues and taxes
Issue 15: Will the government has to be responsible if under the FTA, it is
prohibited from enforcing laws that adversely affect investment, including tax measures,
but the complexity of tax problems causes the government to significantly lose revenues
from business and personal income taxes, and its effective enforcement of tax laws has
caused foreign investors to pay taxes in full or be assessed with accurate interpretation of
facts? In this case, there are a number of ways to legitimately but dishonestly avoid taxes
such as transfer pricing, thin capitalization, and treatment of gain and loss from foreign
exchange.
Issue 16: What is the ratio between the government’s loss of revenues due to
reduced tariffs and the consumers’ benefits, when also comparing with impacts on
domestic industries and production which may fall and ensuing unemployment?
• Group 7: Impact on intellectual property protection
Issue 17: How much effect will the FTA obligations that Thailand has to make its
intellectual property laws stricter have on Thai people’s living conditions in each aspect
such as medical issues, medicines, costs drug patents, treatment and diagnosis, and effect
on the agricultural sector (See impact of intellectual properties on medicines and
agriculture)? How will other intellectual property-related problems affect the costs in
terms of both visible and invisible losses?
Issue 18: Do demands under the FTA that Thailand has to amend its laws along the
line of the other State party and then to enforce such laws affect the country’s sovereign
authority when its legislative, administrative and judicial branches may not exercise their
13. XI
respective authorities in enacting, enforcing and adjudicating on the laws independently but
are forced to follow foreign laws?
• Group 8: Impact on the zoning of agricultural, investment, conservation and
concession areas
Issue 19: Will that fact that the investment zone covers the whole country so that
no specific investment zone can be defined, affect the zoning of agricultural, investment,
industrial and conservation areas? Will a problem arise when the territorial coverage of the
treaty and the investment area which are different are merged as the same issue?
Issue 20: When the agreement stipulates that foreign investors shall be protected
from expropriation and if the government through its officials either by mistakes or
fraudulently permit foreign investors to invest in a conservation area, is the government
able to withdraw such investment permission without making compensation for the
expropriation? Or in the case of concessionary investments, if a concession expires and it
is withdrawn, does the government have to compensate for the expropriation because this is
a case where enforcement of domestic laws affects foreign investors’ investment activities
under the provisions on protection of investment?
• Group 9: Impact on liability to provide diplomatic protection for foreign nationals
Issue 21: Because Thailand has no law on nationality of legal personalities, foreign
legal personalities can in practice register as Thai and have a status as Thai legal
personalities, which create liability to provide protection for these foreign legal
personalities as Thai nationals under international law, namely diplomatic protection.
• Group 10: Impact on financial stability
Issue 22: FTA negotiation obliges Thailand to allow free movement of capital and
profits out of the country. Fund transfer conditions which Thailand used to impose, such as
requiring that outward transfer be made in installments, may no longer be applied. In
addition, the broader definition of investment also broadens the scope of how investment
outputs are classified, and funds can be transferred out of the country unhindered because
they are profits from investment. Will these affect financial control? Are there any
effective measures for short-term capital control, as this issue could have severe and swift
effect on financial stability?
14. XII
• Group 11: Impact on “public policy making” and “crisis management”
Issue 23: The FTA may put limits on state power in setting public policy and crisis
management measures such as limits on the use of compulsory licensing policy if such
policy would affect investors, or on the privatization policy.
• Group 12: Impact on sovereign authority in legislative, administrative and judicial
aspects
Issue 24: Negotiating an FTA with a superpower may indirectly affect national
sovereign authority in enacting laws as laws must be enacted in line with those of the said
superpower, such as laws on intellectual property protection. Enactment of laws should
appropriately reflect social, economic and political conditions as well as the living
conditions of people in each country. In a sense, the legislative power to enact laws may
emanate from the people but does not reflect their needs.
Issue 25: The requirement on the use of arbitration as a dispute mechanism is
widely accepted in both public and private sectors as well as in domestic and international
trade and investment. However, in using this mechanism, issues of public interests need to
be separated from other obligations. They cannot and should not indiscriminately be
subject to this mechanism.
• Group 13: Impact due to multi-layered agreements, particularly those under the
framework of ASEAN
Issue 26: Thailand is an ASEAN member country and has been bound by many
liberalization commitments within the ASEAN framework, and under the provisions on the
ASEAN Investment Area (AIA), Thailand has already made horizontal liberalization for
every country through the definition of “ASEAN investors”. The impact therefore has to
be considered also at the regional level.
2.3 Assessment framework on FTA’s impact on agriculture
We propose 7 issues, classified into 2 groups, that should be assessed for their
impact on agriculture:
• Group 1: Core issues
Issue 1: Non-tariff measures (NTMs) on technical barriers to trade, such as
packaging and labeling requirements, and sanitary and phytosanitary measures (SPS).
15. XIII
Issue 2: Non-tariff measures on rules of origin (RoO) and change of tariff
classification (CTC).
Issue 3: Amendment/change/making of domestic laws and their conflict with the
obligations of Thailand under international agreements.
Issue 4: Structural changes in Thailand’s production and marketing structure.
• Group 2: Specific issues
Issue 5: Genetically modified organisms (GMOs)
Issue 6: Food and health security
Issue 7: Agriculture and water resources
2.4 Assessment framework on FTA’s impact on agriculture
We propose 5 issues, classified into 3 groups, that should be assessed for their
impact on labor:
• Group 1: Regulatory impact related to implementation of labor policy
Issue 1: Are there demands that would result in Thailand changing its labor laws?
Issue 2: Are there demands that are consistent or in conflict with Thailand’s
obligations under multilateral agreements?
Issue 3: How will demands, if any, affect the enforcement of labor law?
• Group 2: Indirect and persistent impacts
Issue 4: Impacts resulting from changes in the business sector; industries positively
or negatively affected by the FTA; impact issues, e.g., employment, wages, labor skill
development, productivity enhancement, compensation, etc.
• Group 3: Sensitive issues
Issue 5: Impacts that are sensitive issues.
2.5 Assessment framework on FTA’s impact on dispute settlement
We propose 6 issues, classified into 2 groups, that should be assessed for their
impact on dispute settlement:
16. XIV
• Group 1: Regulatory impact related to dispute settlement
Issue 1: Are there demands in the FTA negotiations that would result in Thailand
changing its laws on dispute settlement and the enforcement of such laws? If so, to what
extent?
Issue 2: Are there demands in the FTA negotiations that would affect the issuance
of measures to protect and maintain the public interest of Thailand? If so, to what extent?
Issue 3: Are there demands in the FTA negotiations on investment protection that
would affect the sovereign authority of the Thai courts? If so, to what extent?
Issue 4: Are there demands in the FTA negotiations that are consistent with or in
conflict with obligations on dispute settlement mechanisms in multilateral environmental
agreements? If so, to what extent?
• Group 2: Social impact resulting from the dispute settlement process and the
substance/provisions of the FTA
Issue 5: Are the substance/provisions in the FTA fair (e.g., responsibility for
compensation for indirect damage)? If so, to what extent?
Issue 6: Is the dispute settlement process under the FTA transparent and open to
public participation? If so, to what extent?
2.6 Assessment framework on FTA’s impact on intellectual property
2.6.1 Assessment framework on issues related to drugs
We propose 6 issues, classified into 4 groups, that should be assessed for their
impact on intellectual property related to drugs:
• Group 1: Regulatory impact related to intellectual property and drugs
Issue 1: Are there demands in the FTA negotiations that will result in Thailand
changing its patent laws? If so, to what extent?
Issue 2: Are there demands in the FTA negotiations that are consistent or in conflict
with obligations specified in TRIPs Plus?
Issue 3: In the FTA negotiations, will demands on intellectual property protection
affect regulatory changes in the registration of drug formulas?
17. XV
• Group 2: Impact of FTA demands on access to drugs
Issue 4: In the FTA negotiations, will demands on intellectual property protection
affect access to drugs, both in terms of value and patient quality of life?
• Group 3: Impact of FTA demands on drug self-reliance
Issue 5: In the FTA negotiations, will demands on intellectual property protection
affect the country’s capacity to develop its pharmaceuticals industry? If so, to what extent?
• Group 4: Impact on penalty clauses for violation of intellectual property on drugs
Issue 5: In the FTA negotiations, are there demands regarding the violation of drug
patents, drugs considered to be counterfeit, and criminal penalty clauses?
2.6.2 Assessment framework on impact on other issues related to intellectual
property
We propose 3 groups of issues that should be assessed for their impact on
intellectual property related to other issues:
• Group 1: In the FTA negotiations, are there demands that will result in Thailand
entering into other international agreements, namely:
- The Paris Convention for the Protection of Industrial Property
- The Patent Cooperation Treaty (PCT)
- The Convention for the Protection of New Varieties of Plants (UPOV)
- The Brussels Convention Relating to the Distribution of Programme-Carrying
Signals Transmitted by Satellite of 1974
- The WIPO Copyright Treaty of 1996
- The WIPO Performances and Phonograms Treaty of 1996
• Group 2: In the FTA negotiations, are there demands the scope of which exceed the
international agreements to which Thailand is party, namely:
- The Berne Convention for the Protection of Literary and Artistic Works
- The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs)
• Group 3: In the FTA negotiations, are there demands that will require Thailand to
change its laws on intellectual property and other legal rules and regulations,
namely:
18. XVI
- The Patent Act
- The Trademark Act
- The Copyright Act
- The Plant Variety Protection Act
- The Sui Generis Law on Data Exclusivity
……………………………………………………..
19. Session I: Investment Issues
By
Assoc.Prof. Dr.Lawan Thanadsillapakul,
School of Law, Sukhothai Thammathirat Open University
20. 1
The Preparation of the Framework Guidelines
for Evaluating the FTA Impacts: Investment Issues
Impact Issues 1: Impacts on the Treaty Making Process and the Constitution of Thailand, B.E.
2550
Issues Recommendations for Negotiation
Issue 1:In the FTA negotiation under Section Issue 1:To enact law and regulations relating to
190 of the present Constitution and problems the treaty making process in order to set the
related to treaty making process under standard and ensure that the treaty is made in
international law, Thailand has much less accordance with the Constitution and essential
bargaining power, which, in principle, affects legislations.
the sovereign of the nation.
Impact Issues 2: Regulatory Impacts on Investment Supervision
Issues Recommendations for Negotiation
Issue 2 :Whether and how the FTA negotiation Issue 2: To establish a center to supervise the
will result in Thailand being obliged to change treaty making process and to monitor
its investment laws and regulations and the obligations in and commitment on the
implementation of such laws and regulations. implementation of the treaty. There should not
be an effort to avoid bringing the treaty to the
parliamentary process under the Constitution by
enacting a legislation to support the treaty in
advance. In addition, legislations relating to
international investment should be
systematized.
Issue 3 : Whether and how the FTA Issue 3: To review, revise and categorize all
negotiation will result in the change on other legislations relating to the obligations under the
laws and regulations related to investment. treaty at every level.
Issue 4 : Whether the FTA contains obligations Issue 4: To prepare a matrix on all international
which are consistent or inconsistent with other agreements which Thailand has entered into
bilateral or multilateral agreements which with other nations and/or international
Thailand is party to and whether and how they organizations in order to show whether an
are in compliance with the WTO regulations. obligation is consistent or inconsistent with
existing legislations and whether there is a need
to enact a new legislation.
Impact Issues 3: Impacts on Natural Resources and Environmental Protection under the FTA
Issues Recommendations for Negotiation
Issue 5: Whether the FTA containing a Issues 5 and 6 There should be national
requirement on National Treatment and the legislations which cover all the aspects and
termination and change in the legislation relating mend the loopholes on the existing
thereto will result in a foreign country gaining legislations. For example, the unclear
access to Thailand’s natural resources in which criteria in determining the nationality of a
foreign investment used to be forbidden. juristic person which allows foreign persons
21. 2
to conduct business which are preserved for
Issue 6: Whether, due to the absence and Thai nationals under Thai laws e.g. land law
unclarity of law and regulation regarding the which forbids foreign persons to own Thai
nationality of juristic persons and the loopholes land unless there is an exception. There
in Thai legislation, foreign investors have been should also be legislation on the protection of
able to registered themselves as Thai juristic natural resources and sustainable use of
persons and therefore are exempted from the natural resources. There should be an
Alien Business Act, the prohibition of foreigner amendment of law relating to concession
to own Thai land and the specific list of which shall not be superseded by the FTA and
forbidden business for foreigners under FTA JTEPA. The amendment should provide clear
(negative list) specified in the FTA. benefit sharing between Thailand and foreign
investors.
Issue 7: Whether the government’s Issue 7: There should be a clause which
responsibilities regarding the implementation of stipulates that the implementation of laws
national laws and regulations affect the shall be in good faith and shall not be
implementation of legislations regarding the superseded by FTA and JTEPA. Certain
protection of natural resources and environment. legislations, for example: legislations relating
to environment, shall supersede FTA and
JTEPA.
Issue 8: Whether a clause in the FTA which Issue 8: The negotiation team should hold on
requires Thailand to take more liabilities than the to the principles of international law and
existing international law on State should not agree to any request which will
Responsibilities affects the public referendum oblige Thailand to take more responsibilities
process under the Constitution and constitutional than it already has under international law as
rights regarding freedom of expression such as it is inconsistent with human rights which
holding an assembly and public demonstration stipulate that all persons in the country have
against foreign investment, e.g. protest against participation right in the joint decision
the establishment of a nuclear plant. making of the people and the right regarding
freedom of expression as guaranteed by the
Constitution.
Issue 9: Whether and how the FTA which Issue 9: It is recommended that the craft-out
stipulates that the member parties shall not be principle is used or to that the reservation on
liable under the MEAs if such member country is national sovereignty regarding environmental
not party to MEAs affects the environmental protection and preservation is made and the
protection in Thailand. And whether and how it country party shall comply with Thailand’s
affects the implementation of national reservations under the treaty.
legislations and international obligations.
Impact Issues 4: Impacts on labor problems, unemployment and employment conditions,
occupational safety and health
Issues Recommendations for Negotiation
Issue 10: Whether the FTA negotiation which Issue 10: Thailand must negotiate for two-
results in Thailand being obliged to open its way liberalization in labor market with
labor market both at executive and other levels developed countries and Thailand must retain
without the restriction on nationality will affect its right to specify measures regarding
labor problems and create unemployment substantive requirements and procedural
22. 3
problems in the country. requirements of workers and professionals
even though there is an obligation on Mutual
Recognition under ASEAN. Thailand must
also have an institution which stipulates the
standards on supervision and monitoring of
professional occupations and labor.
Issue 11: Whether and how the FTA negotiation Issue 11: Thailand still lacks law and
will result in Thailand being obliged to regulations relating to institutional
implement other legislations which have an supervision on occupational health and safety.
effect on investment, for example: the Its national laws relating thereto must be
implementation of labor law, standard of effectively and strictly enforced. Regardless
employment conditions, working hours, working of whether the employers opt for employment
environment and wages. In case foreign investors contract or hire of work contract, the
opts for hire of work contract rather than employers must comply with laws and
employment contract or hire of services to avoid regulations on occupational safety and health
responsibilities under labor law, whether and in working environment and also with the
how Thailand can enforce its labor law and laws standards on machinery, chemicals,
relating to occupational safety and health. employment conditions, work place, working
hours, welfare, employment security and good
living conditions as stipulated under the labor
laws.
Impact Issues 5: Impacts on Thailand’s industrial growth
Issues Recommendations for Negotiation
Issue 12: Whether the FTA negotiation which Issue 12: The negotiation shall be based on
liberalizes investment even before the investment the principles of TRIMs without causing any
is actually made (pre-entry national treatment) growth reduction, e.g. no prohibition on
will affect the screening of investors and the technology transfer. The application of the
stipulation of investment areas under the long FTA should be non-discriminating among the
term national economic plan. Whether it will parties. The negotiation should also
prohibit the use of TRIMS or investment emphasize on technology transfer and
measures which have been used in Thailand. Thailand should not agree to any TRIMS –
And whether it will affect the industrial growth Plus. It should be ensured that Thailand
of the country. retains its ability to prepare and implement
the sustainable national development plan in
accordance with the economic plan.
Issue 13: Whether the application of legislations Issue 13: Thailand should enact legislations
relating to intellectual property will be stricter relating to the protection of intellectual
than the WTO regulations, e.g. pharmaceutical property which emphasize on development
and industrial design patent, and whether the and do not create obligation at WTO-Plus
patent fee will affect the self-reliance of such level. It should allow Thailand to specify its
industries, cause higher production cost and own public policies on heath and medical
lessen the long-term development opportunity. treatment. An independent center which shall
distribute knowledge and assist the
registration process in a friendly manner
should be established.
23. 4
Issue 14: Thai investors are discriminated as they Issue 14: Thailand should enact legislations
are not eligible to receive investment promotion, which allow self development of small and
e.g. measures on the specification of investment medium enterprises (SMEs) and SMEs shall
amount and investment for export etc, which be eligible to obtain privileges by receiving
result in Thai investors not receiving the same investment promotion. The types of business
benefits as foreign investors. Thai investors also which are eligible to receive the promotion
have to pay corporate income taxes, import may be classified. It should be ensured that
taxes and other taxes which results in higher Thai investors will not be subject to pay more
production costs while foreign investors receive taxes than foreign investors. There should
privileges, both tax and non-tax benefits, are not also be legislation on tax and effective tax
subject to pay income tax and get exemption collection system, training on international
from import tax. The issue which should be taxes for officers, measures to prevent
considered is whether these circumstances affect dishonest tax evasion and tax evasion in form
the status and development of local industries of tax structure. Local entrepreneurs may
and what are the advantages and disadvantages? obtain the same rights as foreign investors
Foreign investors can use Thailand’s natural even though the investment amounts are
resources and get tax exemption while Thai different.
nationals have to pay taxes and get less benefits.
Impact Issues 6: Impact on National Income and Tax
Issues Recommendations for Negotiation
Issue 15: Under the FTA, the government is Issue 15: In the FTA negotiation, tax issues
prohibited from enforcing legislations affecting shall not be considered as indirect
investment, including tax measures. The expropriation of property. There should be
complications of tax problems have caused the effective tax legislation and collection system,
state to lose much of its income from the training on international taxes for officers,
collection of corporate and individual income preventive measures for dishonest tax evasion
taxes. It should be considered whether the state and in form of tax structure to effectively deal
will be hold liable if the effective enforcement of with legal tax evasion; for example: the
tax laws will cause foreign investors to pay taxes effective use of arm’s length measures to
in full or to be assessed to pay tax by the tackle transfer pricing problems, tax structure,
interpretation of the circumstances. Regarding e.g. thin capitalization, in order to collect
this, there are many legal but dishonest ways for taxes from investors in full.
tax evasion, e.g. transfer pricing, thin
capitalization and treatment of gain and loss
from foreign exchange etc.
Issue 16: How much the decrease of the state’s Issue 16: To study the advantages and
income caused by import tax reduction is in disadvantages of the liberalization in all
proportion to the consumers’ benefits and in systems and at every level, e.g. production
comparison with the impact on local industry cost since the entry to Thailand until the
that will have to close down and unemployment. remittances are made to overseas, the fact that
local industries are being forced to exit the
market and the production is being replaced
by importation.
24. 5
Impact Issues 7: Impact on the Protection of Property Rights
Issues Recommendations for Negotiation
Issue 17 : Whether and how much the Issue 17: To enact intellectual property law
obligations under the FTA which results in that emphasizes on sustainable development.
stricter intellectual property law will affect the (Please conduct study on intellectual property
livelihood of Thai people in each sector, e.g. and other issues.)
medical treatment, medicine, patent fee,
diagnosis of disease, nursing and the impact on
agriculture (please consider the impact of
intellectual property relating to medicine and
agriculture) including other problems relating to
intellectual property. Whether and how much
visible and invisible loss it will cause.
Issue 18: Whether the obligations under the FTA Issue 18: There should be a legal framework
which oblige Thailand to amend and enforce its and institute to consider the enactment of
legislation will have an effect on its sovereignty legislations in accordance with the FTA and
on its legislative, executive and judicial powers in compliance with the Constitution and the
by losing the opportunity to enact, implement Treaty Making Act.
and enforce the law independently and in
accordance with the wish and consideration of
the state without having to enact, implement and
follow the laws which have the characteristics of
foreign legislations.
Impact Issues 8: Impacts on the Specification of Agricultural Areas, Investment, Reserved
Areas and Concession Areas
Issues Recommendations for Negotiation
Issue 19: Whether the investment area that covers Issue19: It is the duty of the negotiation
the whole territory of the country which results in team to study the issue thoroughly.
Thailand not being able to specify its investment
areas will affect the specification of the
agricultural, investment, industrial and reserved
areas. The problem on the specification of the
territorial coverage of treaty and the specification
of the investment areas are combined, even though
they are different issues.
Issue 20: The agreement stipulates the protection Issue 20: To enact effective legislations
for foreign investors from the expropriation of regarding concession which are not
property. In case that the government lets foreign superseded by the FTA.
investors invest in preserved areas by mistake or
corruption, can such investment be revoked
without compensation? Or, in case of the
expiration and cancellation of the concession, does
the government have to compensate for the
expropriation of property? This is because it is the
25. 6
case of the implementation of internal law which
affects foreign investment under the investment
protection section.
Impact Issues 9: Impacts on Diplomatic Protection
Issues Recommendations for Negotiation
Issue 21: In practice, many foreign entities can Issue 21: To enact laws or specify and
register and have the legal status of Thai juristic standardize regulations regarding the
persons due to the fact that Thailand does not have nationality of juristic persons, taking future
legislation on the nationality of juristic persons. benefits into consideration and in
This creates the state’s liability to such foreign accordance with the international allocation
entities as Thai nationals who shall have the of persons.
protection under the principles of international law
which is diplomatic protection. To supervise and amend measures under the
Nationality Act to prevent loopholes which
may result in a person getting Thai
nationality dishonestly.
Impact Issues 10: Impacts on Financial Stability
Issues Recommendations for Negotiation
Issue 22: The FTA negotiation obliges Thailand to Issue 22: To stipulate effective financial
allow free remittances of capital and profits measures and supervision.
overseas without falling under the conditions used
in the past, e.g. Thailand can no longer request the
remittances to be made in installments. In addition,
the fact that the definition of “investment” is very
broad results in a broader definition of investment
products which can be remitted overseas without
limitation as investment profits. Will this affect
financial control and is there any effective short
term capital control which rapidly and directly
affects financial stability?
Impact Issues 11: Impacts on Public Policies and Crisis Management
Issues Recommendations for Negotiation
Issue 23: Whether the FTA agreement will result in Issue 23: To specify public policies before
the limitation of state power in issuing public the entry into FTA negotiation and ensure
policies and crisis management, e.g. limitations on that the state’s public policies supersede
the policies on the enforcement of rights over patent the FTA and JTEPA.
if it affects investors and privatization of public
services.
26. 7
Impact Issues 12: Impacts on Legislative, Executive and Judicial Powers
Issues Recommendations for Negotiation
Issue 24: To enter into FTA agreement with a Issue 24: The FTA should clearly specify
superpower country may indirectly affect the the legislative rights and sovereignty to
legislative power by the state being obliged to enact regulate the state as the liberalization at
legislations whose characteristics are similar to that the bilateral level in the present model
of such superpower countries, e.g. intellectual which uses preferential treatment hinders
property law etc. It should be noted that laws should market mechanism. The cancellation of
reflect the society, economy and politics of each state’s measures, legal framework and
state. In this case, even though the law is enacted by regulations, both tariff and non-tariff
the legislative power, it does not reflect the actual barriers, without proper mechanisms to
need of the people. regulate private sectors and manufacturers
will result state’s barriers being replaced
by significant market powers and
significant market factors which will
distort market competition and lead to
more serious market failure as there is no
state power to supervise and the people
will have no one to rely on. In market
mechanism, the state shall maintain its
sovereignty in supervising and monitoring
as it has duty to take care of its people
while business entities do not.
Issue 25: The obligation to use arbitration to solve a Issue25:Legislations regarding arbitration
dispute in trade and investment is widely used and shall clearly stipulate the differentiation of
accepted at private, public and national levels both disputes which can be brought to
nationally and internationally. However, when using arbitration and disputes that cannot
this mechanism, public interest should be (Arbitrability). In addition, this also
differentiated from other obligations and this involves the petition to reconsider the case
mechanism should not be applied in all or the revocation of the arbitration’s
circumstances. decision relating to factual or legal issues.
If there is no clear indication, in case the
arbitrators misinterpret the law in their
decision, such decision cannot be revoked
and this will cause damage to the state.
Therefore, there should be an amendment
of the relevant legislations.
Impact Issues 13: Impact from Agreements at Different Levels, especially under ASEAN
Framework
Issues Recommendations for Negotiation
Issue 26: Thailand is already an ASEAN member. Issue 26: The issue has to be solved
Under the ASEAN Framework, Thailand is obliged through ASEAN channel which is quite
to significant liberalization. The ASEAN Investment difficult as it is a regional resolution.
Area – AIA has already liberalized investment to all However, what Thailand must do is to
members under the definition of “ASEAN Investor”. enhance and develop its capacity to
Therefore, the impact must be considered at the benefit from the liberalized market and
regional level. not to be solely taken advantages of
because of market liberalization.
27. Session II: Intellectual Property
Rights (IPRs) Issues
By
Assoc.Prof.Dr. Jiraporn Limpananont
Social Pharmaceutical Unit,
Faculty of Pharmaceutical Sciences, Chulalongkorn University
&
Dr.Jade Donavanik
Faculty of Law, Siam University
28. 1
The Preparation of the Framework Guidelines
for Evaluating the FTA Impacts: Intellectual Property Rights
on Pharmaceuticals
During the past decade, “drug patents and access to medicine” have been a
much-argued issue both at national and global levels. The interests of the drug patent
system have triggered research and development in medicine that groups of
international pharmaceutical companies in developed nations have generally used as a
response to the challenge of the negative effects of drug patents on access to needed
medicines. One example is the anti-HIV virus medicine in developing nations and
underdeveloped countries, which is very expensive when compared with the cost of
living for the people in such countries because of the marketing that occurred at the
time of the patents.
According to reports from the stock exchange, the pharmaceutical industry is a
highly profitable industry. , It has had a great influence on the development of the
economy and politics in the United States of America by using the mechanism of
monopolization in connection with the drug patent system, as can be seen from the
efforts of the US in pushing forward the Agreement on Trade-Related Aspects of
Intellectual Property Rights under the framework of the WTO until it succeeded in
negotiations with Uruguay in 1994. Furthermore, the US continues to strive for more
stringent rights protection of intellectual properties, called “TRIPs-plus”, which can
be seen from the bilateral Free Trade Agreements made between the US and other
countries. This includes the demands of the US in supporting TRIPs-plus during the
drafting of the Thai-US FTA, which is an example of how the US creates terms to
protect rights for intellectual properties at a higher level than the guidelines specified
by TRIPs.
While the domestic pharmaceutical industry is a generic drug industry that
does not enjoy the level of research and development of new medicines, the long-
standing monopolization and other domination mechanisms used by transnatinal
pharmaceutical companies affect the development of national industries and causes
national pharmaceutical instability.
The framework for the evaluation of the impact of FTA agreements regarding
the chapter on drug patent is as follows:
29. 2
Issues: That Should be Evaluated by Impact Issue Groups
Table 1: Issues that should be evaluated by impact issue groups:
Impact Issue Groups Impact Issues Evaluated
Regulatory impacts associated Issue 1:
with intellectual properties In negotiating FTA agreements, are there any
and medicine. demands that will prompt Thailand to change its
patent laws or not? If so, to what extent?
Issue 2:
In negotiating FTA agreements, are there any
demands to conform or not with cases that specify
more stringent multilateral agreements in the area
of intellectual properties (TRIPs Plus)?
Issue 3:
In negotiating FTA agreements, will the demands
regarding protection of intellectual properties
affect the changing of regulations of the drug
registration process
Impacts on access to medicine Issue 4:
In negotiating FTA agreements, will the demands
regarding protection of intellectual properties
affect access to medicine, both in terms of price
and the quality of life of the patients?
Impacts on self-dependence in Issue 5:
medicine In negotiating FTA agreements, will the demands
regarding the protection of intellectual properties
affect the local drug manufacturers? If so, to what
extent?
Impacts on penalties for the Issue 6:
infringement In negotiating FTA agreements, are there any
demands regarding the patent infringed product is
counterfeit? Are there any criminal sanctions?
Note: This document explains the details of issues that should be evaluated for issues
4-6 only.
30. 3
1. The evaluation of impacts in terms of quantity associated with demands for
the accessibility and the local generic drug industry
The evaluation of the impacts of Free Trade Agreements in terms of quantity
on the pharmaceutical market is a challenging issue because the characteristics of this
market are specific, complex and may also be in general a good example for
explaining markets with large varieties of products. These varieties have arisen
because medicine is marketed in different dosages, forms, package sizes and trading
names. The differences of these varieties have resulted in, firstly, evaluations of the
consumption, demand, and medical expenses that affect public policies for the
pharmaceutical market by making the latter more stringent, and, secondly, evaluations
using economic simulations with complex dimensions and numerous hypotheses that
are difficult to understand.
However, a literature review revealed that researchers have developed
research instruments for the evaluation of impacts of the extension of drug
patents by using economic instruments since about 1990. The studies associated
with the findings of this research can be summarized as follows:
• Chaudhuri and colleagues (2003) 1 investigated the impacts of drug patents
on prices, expenses and consumer welfare by studying the quinolones medicine group
in India and using the two-stage demand estimation approach. The research findings
indicated that, in cases where there was no price control in India, the product patents
in this group caused the pharmaceutical industry in the country to lose 50 million US
dollars in profit, while consumer welfare was reduced by 713 million US dollars.
• Chutima Acklipan and colleagues (2005) 2 studied the impacts and
guidelines of bilateral Free Trade Agreements. Projected impacts of the expansion of
rights protection for intellectual properties on the price and access to medicine, as
seen in this study, are predictors for the expenses that will occur if the patent right
protection is expanded for 1-10 years. Based on calculations fusing the lists of new
medicines registered with the Food and Drug Administration from 1999 to 2004 (with
an average per year of 60 items), it was found that the average annual medicine
expenses would increase from 257.24 to 2,636.78 million baht if monopolization was
1
Chaudhuri S., Goldberg PK., Jia P. Estimating the Effects of Global Patent Protection in
Pharmaceuticals: A Case Study of Quinolones in India. Working Paper, 2003.
2
Chuttima Ackalipan, Atchara Aeksangsri, Roongpet Sakunbamroongsin, Suwit Wiboonponprasert,
Siripa Udomacksorn, Wiroj Tangsatien and colleagues. The impacts and guidelines of
bilateral Free Trade negotiation: expected impacts on the issue of expanding rights protection
in intellectual properties on prices and access to medical supplies. Research Report. 2005.
31. 4
extended for one year; they would increase from 33,466.69 to 216,456.53 million baht
per year if monopolization was extended for 10 years
Serna (2549) 3 studied the impact of data monopolization on the price of
medication and access to medication by using the Almost Ideal Demand System. The
findings of the study indicated that the prices of medication would increase to 9.6% in
the first year under the Free Trade Agreement and rise to 55% and 100% at the 6th and
12th years respectively. Furthermore, the generic names in the pharmaceutical market
would be reduced by 40% in the 6th year to 30% in the 12th year.
Gamba MEC (2549) 4 studied the impact of the USA-Columbia Free Trade
Agreement by using the Model of Impact of Change in Intellectual Property Rights
developed by Rovira, 2006, on the recommendations of the PAHO Working Group on
the Aspects of the TRIPS Agreements and Access to Medicine, 2004. The research
findings indicated that, according to the terms laid down by the US extending the
monopoly of drug patents, if Columbia accepted the proposals in their entirety,
medication prices in 2020 would increase by 40% and the medication expenses would
increase by 919 million US dollars.
Jiraporn Limpananont and colleagues (2008) 5 calculated the impact of
American trade conditions on Thailand’s access to medicine and health during
negotiations for a Thai-US Free Trade Agreement (FTA). The trade restrictions
sought by the US examined in the study emerged when discussing Intellectual
Property Rights in the 6th round of Thai-US FTA negotiations.
This study calculated the impact on the access to medicine resulting from the
extension of patent term for 2, 5, and 10 years and the data exclusivity for 5 and 10
years. The extension of the patent period could be from the delay of patent approval,
drug registration, or linkage between patent and drug registration. The econometric
analysis of the impact from various contributing factors was developed from the
Model of Impact of Changes in the Intellectual Property Rights (MICIPR) proposed
by Rovira (2006).
In the cases of the extension of patent term for 2, 5, and 10 years, the periods
during extension of patent term resulted in more of a monopoly or less of one. The
extension of patent terms could also affect the IP system and drug system, which
would then have be balanced and checked by the system administration. However, the
study did not cover other consequences from this factor.
3
Serna J.P. Possible Impact of US-Peru FTA on Access to Medicines Due to Data Exclusivity
Protection for Drugs. Conference entitled “Developing a Methodology to Assess the Impact of
TRIPS-Plus Provisions on Drug Process” 31 July- 1 August, 2006 organized by ICTSD,
WHO and the World Bank Institute.
4
Gamba MEC. Intellectual Property in the FTA: impacts on pharmaceutical spending and access to
medicines in Colombia. Mision Salud and Fundacion IFARMA. 2006.
5
Jitraporn Limpananon and colleagues (2008) report “The impact and measures to handle the case of
extended protection of the rights to intellectual property associated with the US-THAI FTA:
dimensions of impact on access to medication and health”, received financial support from the
Food and Drug Administration
32. 5
In the cases of the market monopoly due to data exclusivity, the study showed
that the results could vary. If the patented drugs came to the market faster, the period
of market monopoly due to data exclusivity might not extended past the life of the
patent. However, if the government decides to implement government use, data
exclusivity will limit the Thai Food and Drug Administration’s ability to register such
generic drugs.
It appears that data exclusivity has more negative consequences in a situation
where a new drug has no patent or the existing patent term is shorter than the data
exclusivity period. To assess the impact, MICIPR was conducted based on the
following assumptions: (1) the patent term of new patented drugs remains 14 years,
which is longer than a market exclusivity period of 5 and 10 years from the data
exclusivity; (2) the number of new drugs (new originals and new generics) coming to
the market annually is constant; (3) one new patented drug is marketed once every
three years; and (4) this model does not include the parameter of government use of a
drug patent. From these assumptions the data exclusivity will not extend the market
monoploly after 2054 (around the next 50 years) because all new drugs are patented.
Comparing the negative impacts from the extensions of the patent term with
the data exclusivity, the results yielded differrences along the same time frame. In the
next 5 years (in 2013), the economic impact from 5 years of data exclusivity is 81,356
million Baht which is greater than the impact from 5 years of patent term extension
which is 27,883 million Baht. But in the next 15 years (in 2023), the economic
impact of 5 years of data exclusivity, which is 125,888 million Baht, is less than the
impact from 5 years of patent term extension which is 136,922 million Baht.
2. The evaluation of impacts associated with pharmaceutical demands on the
health of the population
In the area of health impact, no studies were found on the direct impact of the
extension of rights protection of drug patents on people’s health. However, the
impacts from not being able to access the medicine on health problems could be used
for comparison. The researcher found the following examples of studies about the
effects of receiving anti-AIDS virus on people’s health problems.
Freedberg KA and colleagues 6 compared the budget-effectiveness of access
to 3 anti-viral drugs (anti-AIDs virus medicine) to analyze life years saved and the
quality adjusted life years gained by patients by using the Markov Model and the CD4
value to measure the progression of the disease. The data imported into the model
came from large RCTs.It was found that the group of patients who were unable to
access anti-AIDs virus medicine had between 1.97-4.61 flife years saved and between
1.53-3.96 QALY gained. On the other hand, the patients who were able to access the
6
Freedberg KA, Losina E, Weinstein MC, Palteil AD, Cohen CJ, Seage GR, Craven DE, Zhang H,
Kimmel AD, and Goldie SJ. The cost effectiveness of combination antiretroviral therapy for
HIV disease. N Engl J Med 2001; 344(11): 824-831.
33. 6
3 anti-AIDs virus medicines had between 3.51-7.45 life years saved and between
2.91-6.63 QALY gained.
Miners AH and colleagues 7 compared the budget-effectiveness of the use of
2 anti-viral drugs compared with the use of 3 anti-viral drugs over a time period of
twenty years in order to analyze the life expectancy, life years saved and quality-
adjusted life years gained. They used the Markov Model over this time period to
analyze the progress of the disease, funds and outcomes of medication use. It was
found that the group of patients who accessed 2 anti-viral drugs for twenty years had
11.6 years’ greater life expectancy and 9.3 years of life quality gained, while the
patients who could access 3 anti-viral drugs had life expectancies of 14.5 more years
and 11.7 more life quality years gained.
• Wood E and colleagues 8
Wood E. and colleagues analyzed the impact of not receiving anti-AIDs virus
medicine in the cases of the number of babies infected at birth, the total number of
AIDS patients and the average life expectancy at birth in the South African population
during the period between 2000-2005. They formed a population projection model to
predict the future impact on 4 situations using anti-AIDS medication and found that if
there was no use of anti-AIDS virus medicine in the years from 2000 to 2005, there
would be 276,000 infants infected with HIV and 2,302,000 million people with AIDS.
Furthermore, this lack of medication would cause the average life expectancy of the
South African population to be 46.6 years in 2005. This prediction was compared
with a reduction in the number of people with AIDS to 430,000 people and possible
increases in life expectancy of 3.1 years from birth if anti-AIDS medicine was
available for 3 uses by infected people and AIDS patients for 25% of the population.
Jiraporn Limpananont and colleagues (2008) 9 The analysis on the impact
on health was based on Markov modeling of the use of antiretroviral therapy among
HIV/AIDS patients in hospitals in Thailand.
The results from the analysis of the impact of access to health from Thai-US
FTA on HIV/AIDS drug patents in Thailand were as follows. Under the extensions of
market exclusivity, the total cost of treatment during the lifetime of HIV/AIDS
7
Miner AH, Sabin CA, Trueman P, Youle M, Mocroft A, Johnson M, and Beck EJ. Assessing the cost-
effectiveness of highly active antiretroviral therapy for adults with HIV in England. HIV
Medicine 2001; 2: 52-58.
8
Wood E, Braitstein P, Montaner JSG, Schechter MT, Tyndall MW, O’Shaughnessy MV, and Hogg
RS. Extent to which low-level use of antiretroviral treatment could curb the AIDS epidemic in
sub-Saharan Africa. The Lancet 2000; 355: 2095-2100.
9
Jitraporn Limpananon and colleagues (2008) report “The impact and measures to handle the case of
extended protection of the rights to intellectual property associated with the US-THAI FTA:
dimensions of impact on access to medication and health”, received financial support from the
Food and Drug Administration.
34. 7
patients will increase, resulting in the increase of government expenses. If the
government can issue a CL, have generic drugs available as soon as the patent
expires, and face no additional barriers from the Thai-US FTA, then the cost of
lifetime treatment for HIV/AIDS will substantially decrease. If the patent term is
expanded to 10 years, after which the government could procure a generic drug that is
five times cheaper than the original product, the results indicated that the total cost
would be 1,031,299 Baht. This cost is one hundred percent higher than if the
government issued a CL, which would only cost 586,564 Baht.
The impacts on the access to medicine were evaluated in terms of life-year
gained (LY gained), and disability-adjusted life-year (DALY) averted. Assuming that
the government had a fixed budget of 3 billion Baht for 120,000 HIV/AIDS patients,
the study reported the impact from patent extension. The longer the patent extension,
the greater the limitation on access to medication, resulting in the decrease of LY
gained and DALY averted.
The scenario in which access to medicine is the hardest is when extending
market exclusivity for 10 more years while having a generic drug that costs five times
less than the original product. Although the patents of ARV drugs have expired, the
government will not be able to provide the ARV program that could cover all
HIV/AIDS patients. Due to drug resistance, HIV/AIDS patients need access to the
third line ARV regimens, which are more expensive than the first and second line
ARV regimens. The substantially higher costs of the third line ARV regimens result
in higher total lifetime costs of treating HIV/AIDS patients, which is also more than
the government budget.
3. The evaluation of impacts associated with demands regarding the violation of
medical patents, consideration of counterfeits, and criminal penalties
This is a new issue and currently no studies have been found on this topic.
There should, however, be studies about the impact on the administration and
management of the government, the agencies responsible, and the expenses that
would be incurred, including the impact on the national pharmaceutical industry.
Suggestions for Negotiations
1. Use the evaluation as a process of participation by various sectors in
negotiating the framework of the agreement.
2. If the evaluation results find that demand generates negative results for
Thailand:
2.1 Unacceptable for the following reasons:
• The access to medicine is the issue of human right, the health of the
people, or the sovereignty of the country.
• The demand exceeds standards or goes against international
agreements.
35. 8
• The demand requires laws to change in order to be implemented,
the change depending upon the legislative body that has a separate
authority from the administration.
2.2 Offensive measures should be used during the negotiations by stipulating
terms for each of the US demands, such as in the following cases:
(1) In cases of extension of the pharmaceutical market monopoly to exceed
the term of the patent because of the delayed issuance of patent
documents.
• The US must help develop the setting up of patent databases in order
for patent procedures using digital systems to be flexible, accessible
and capable of searching in both Thai and English before
implementing measures to extend monopolies in the pharmaceutical
implementation of exceed the term of the patent due to the delayed
issuance of patent documents.
• Specify the nature of the delay caused by the applicant’s own fault e.g.
in cases where the applicant for the patent was unable to send the
documents within a week after the application date, or where the
applicant did not apply to request an inspection of the patent within a
week after the announcement that the request was not entitled to an
extension of the term of the monopolization due to delay.
(2) In cases where the extension of the pharmaceutical market monopoly
exceeds the term of the patent due to a delay in registering the medication
formula.
• In applying for registration of the medication formula, notification
must be given requesting the correct status of the patent of that
medication. If the notification is incorrect, the right to request an
extension of the monopoly as a result of the delay will be forfeited.
• Specify the nature of the delay caused by the applicant’s own fault in
requesting registration for the medication formula, such as in cases
where the applicant registers the medication formula but could not
send all of the documents within a week after submitting the request to
register it; as a result, the applicant will not have the right to request an
extension of the pharmaceutical market monopoly that exceeds the
term of the patent due to the delay in registering the medication
formula.
36. 9
(3) In cases involving a link between the registration of the medication
formula and the patent status.
A link between the registration of the medication formula and the
patent status increases the burden on government officials. Therefore, the
standard time period for considering the medication formula registration
that is used as the basis for the consideration of the delay must be
extended.
• Government officials are not guilty of civil or criminal offenses in
registering the formula of a new generic medication that is still
patented in the following cases: if the owner of the registration of the
original medication formula did not notify the patent status of that
medication when registering the new formula; or if s/he did not report
everything; or until it is proven that the government officials intended
to violate the law or intended not to proceed to change the registration
of the new generic medication upon receiving notification from the
owner of the original formula.
(4) In the case of DE
• Due to new measure regarding monopoly in the pharmaceutical
market, a preparation period is designated wherein bargaining may
take place for as long as possible. There must be a minimum
preparation period of at least 10 years.
• The monopoly in the pharmaceutical market is canceled if that
medicine has no patent.
• Limit the boundaries of monopolies of DE to include only new
medications that are new chemical compounds; government officials
have demanded some of the information used in registering the
medication formula as trade secrets only, because the US demands
monopolies in the pharmaceutical market for the reason that Thailand
does not give protection according to the TRIPs agreement, section
39.3, (see above) but gives protection specifically for new medications
that are new chemical compounds and gives some of the information
used in registering the medication formula as trade secrets.
• During the period of monopoly under DE,exceptions must be made to
enable registration of new generic drug in cases where the patent rights
are exercised by the government (Government Use) according to
Measure 51 under the Patent Act of 1979 (vol. 3), amended in 1999.
37. 10
2.3 Accept on the condition of having compensatory standards by using the
interest that some branches receive from the agreement in order generate
acceptance from every branch with a fair distribution of interest, rather
than clustering only in specific branches.
2.4 Accept those demands arising from the results of the evaluation that have
minimal impact on the goals of an acceptable negotiation framework.
……………………………………………
38. 1
The Preparation of the Framework Guidelines
for Evaluating the FTA Impacts: Intellectual Property Rights
(Excluding Medical Products)
Shall consider both the positive and negative impacts and specific impacts
such as the fact some areas obtain benefits and others lose benefits; shall evaluate the
economic, technological, social and environmental dimensions. The topics for
evaluation are classified into 3 groups as follows.
Group of Issues Issues
1. Whether the FTA − Paris Convention for the Protection of Industrial
preparation shall make Property
requests such that Thailand
− Patent Cooperation Treaty – PCT
participates in other
international agreements, or − Convention for the Protection of New Varieties of
not. Plants – UPOV
− Convention Relating to the Distribution of
Programme-Carrying Signals Transmitted by Satellite
(1974) or Brussels Convention
− Copyright Treaty of the World Intellectual Property
Organization in 1996
− Treaty Regarding Shows and Sound Recorders of
WIPO in 1996
2. Whether the FTA − Berne Convention for the Protection of Literary and
negotiation has too many Artistic Works
requests compared to the − The Agreement on Trade Related Aspects of
international framework Intellectual Property Rights –TRIPs
where Thailand acts as a
member, or not.
3. Whether the FTA − Patent Act
negotiation makes requests
affecting Thailand so the − Trademark Act
country has to change its
intellectual property laws and − Copyright Act
other laws and regulations, or − Plant Protection Act
not.
− Data Exclusivity Law.
1. Proposals for Negotiation
1.1 Initiate the processes for evaluating the participation of several parties in the
negotiation framework
Regarding the negotiation of bilateral agreements with other countries in the
past, the organizations and negotiating team have attempted to request several parties
to participate in the negotiation, but on close consideration, we can find that the
participation of several parties and the duties of the organizations or negotiators are
different. This is because the negotiators perceived that they themselves have the right
to identify the country’s intentions and have the right to oblige the country, which is
39. 2
an important mechanism for peace and happiness among Thai people. This is a
narrow view. With a broad and open view, we find that those who have the actual
rights are the people throughout the country and that the word “people” does not mean
“Non Government Organizations (NGOs), since people is a more meaningful concept.
The main question is that not all the parties participate in the negotiation since they
are powerful in society. Thus, the thing to do is to participate with them and apply the
data obtained from them during negotiation, since such data is obtained from
observation and empirical study; it is not generated data.
If we are able to coordinate theoretically or use theory to coordinate practically
or pragmatically in negotiations with counterparties by indicating that the actual
power comes from the people, not the government or negotiators, then various issues
shall rely on the field data and the grounded theory. U When such items are included
in the proposals in bilateral agreements, they shall be used in the actual situation
without any advantages / disadvantages for the negotiators on the basis of game
theory or a win-win outcome. Normally, people understand that it is not feasible to
achieve such an outcome as win-win; thus, the win-win situation is assumed and so
we accept the negotiation outcomes or the outcomes of other actions. If we are able to
act like this, negotiations will be beneficial to Thailand. If not, we shall have to find
other appropriate guidelines in the future. If we go the wrong way or cannot find the
right way, this may be damaging for the nation and the people.
2. If the outcome of the evaluation shows that such requests negatively impact
Thailand, then:
2.1 The requests should not be accepted for the following reasons:
1) There are impacts on human rights, health or the country’s sovereignty;
2) The requests exceed the standard or are inconsistent with international
agreements;
3) The requests lead to an amendment of the law, and this depends on the
fact that the legislative branch has a separate authority from the administrative branch.
All of the three above-mentioned issues are examples of guidelines for
denying the acceptance of proposals or requests politely and in general terms. One
such proposal appeared in the FTA between Singapore and the USA. Considering that
the USA will make the same proposal to Thailand, Thailand should not accept the
following.
• Well-known trademarks and geographical indicators should not be considered
as the same issue, and trademarks should not have priority, since the
geographical indicators are characteristic rights of communities, i.e. the rights
of the majority of people. Thus, we should pay attention to this issue first, and
in case of any disputes in the field of trademarks, we will have measures for
solving any problems.
• Another issue is participation in the Internet Corporation for Assigned Names
and Numbers (ICANN), especially in terms of dispute resolution, (since
ICANN is the consulting company of the US government only) and the
dispute resolution process of ICANN is no different from dispute resolution
according to general theories. In addition, the acceptance of such resolution
40. 3
processes may lead to the fact that the processes in Thailand are threatened in
terms of fairness.
• The issue of the protection of copyrights for temporary data storage in
electronic form. Such temporary data storage does not cause any damage to
the owners, except when storage is for a specified period of time and for
trading, or when the storage concerns computer programs or is permanent.
This kind of data storage may be considered to be a “violation”.
• The extension of the copyright period from 50 years to 70 years is not
necessary, since the extension is is for protecting the heirs of the author. In
addition, in the case of a juristic person, the 50-year period for benefiting from
the copyrighted work is appropriate.
• The protection of encoded satellite signals, since the prevention of the
violation of copyrights on the contents is sufficient.
• The protection of patents concerning plants and animals, in addition to
protection of higher life forms, which is a minor issue. Regarding the
protection of patents concerning plants and animals, if the potential of Thai
scientists is not realized, the agricultural field may be monopolized by
multinational companies and foreign researchers. Thus, it is inappropriate to
acceptthis proposal at the present time.
• The restriction of the use of compulsory licenses concerns the submission of a
proposal or request that contradicts the context of the Doha Declaration,
according to which the use of compulsory licenses is expanded because a
country needs to access patented inventions, especially medical products and
can have access to inventions essential for life. If there are any restrictions, it
will be necessary to identify an acceptable definition of technology that can
restrict compulsory licenses, since the USA is one of the countries that uses
compulsory licenses in patented technologies.
• Data exclusivity in the pharmaceutical and agro-chemical areas enjoys 5-year
and 10-year periods respectively. It is a form of protection that looks like
market monopoly and may limit access to the agro-chemicals that are
necessary and can be found from other sources not imported by the owner of
the prototypes. In addition, such products are imported by the owners into the
patent protection system. Thus, it is not necessary to protect the release of
such products to the market.
Accept conditions for example having measures to indemnify damages by
taking the benefits that some areas may obtain from an agreement in order to
distribute them to the areas that lose the benefits.
(1) The registration of trademarks regarding scent, since this represents an
expansion of the characteristics of trademarks; the use of scent as a symbol for
Thailand has not been seen much or may never have been seen. The creation of a
distinctive scent is not difficult. Thus, it is impossible to protect Thai people to the
same extent as foreigners. But the main concern is the method for auditing the
trademark regarding scent so it may be necessary to expand the auditing unit, namely,