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Un-edited statements from the health sector and beyond

The impact of the Trans-Pacific Partnership on health: Why an independent, comprehensive health impact assessment is crucial prior to signing

Joshua Freeman, Gay Keating, Rhys Jones, George Laking, Marilyn Head, Alexandra Macmillan Tuesday 28 October 2014, 10:46AM

Joshua Freeman, Gay Keating, Rhys Jones, George Laking, Marilyn Head, Alexandra Macmillan


Trade agreements can restrict policy options available to governments to protect the health of their citizens. For this reason there have been repeated calls for greater involvement of the health sector in developing the terms of these agreements.

Currently, New Zealand and 11 other Pacific Rim countries are negotiating a trade agreement claimed to be the most comprehensive and far-reaching to date; the Trans-Pacific Partnership (TPP). In stark contrast to the involvement of transnational corporate interests in the TPP negotiation process, independent health experts have effectively been excluded.

The TPP has therefore evoked widespread alarm from the health sector both internationally and in NZ, and in response political leaders have made general assurances that specific direct threats to health will be avoided. However, in light of the available evidence, such assurances are unconvincing because the TPP would entitle foreign corporate investors to sue participating governments for introducing health policies that compromise their anticipated profits.

The health sector must be permitted to meaningfully engage in the TPP debate to ensure that the freedom to implement sound public health policy is not compromised and that health inequities are not exacerbated. Prior to any agreement being signed, it is essential that an independent, publicly released, and comprehensive health impact assessment be performed. Only then can the claimed projected benefits of the TPP for domestic commercial interests begin to be balanced against the longer term health risks to the wider population.


International trade agreements have direct and indirect effects on population health that are complex and far-reaching. Such impacts have been described extensively in the medical literature [1,2,3,4] and are mediated through effects on the sales and marketing of harmful substances; effects on access to medicines and healthcare; and effects on the social and environmental determinants of health such as poverty, income inequality and pollution.[5,6,7]

The Trans-Pacific Partnership (TPP) is a trade agreement currently in the late stages of negotiation between New Zealand, the USA, and 10 other Pacific Rim countries. Although this agreement has been negotiated in secret, leaked documents confirm that the TPP would allow the New Zealand Government to be challenged by foreign investors for introducing health regulations that reduce anticipated profits (see endnote *).

Risks from the TPP for key health issues such as tobacco, pharmaceutical funding, alcohol, and environmental health including climate change, have been extensively described previously.[8,9,10,11,13,14]
Thus on 12 May 2014 over 270 health professionals sent an open letter to the NZ Prime Minister.[8] Following on from earlier letters [9,10,11,12,13,14] the letter expressed concern that the TPP would have major long term implications for population health in NZ. The open letter asked that New Zealand's ability to introduce regulations to improve or safeguard health, not be hampered by foreign investors whose primary concern is to maximise profits.

The following article was prompted by a reply to the original letter from the Minister of Trade (Hon Tim Groser) and an article subsequently published in New Zealand Doctor by the former Minister of Health (Hon Tony Ryall) in which assurances were given that New Zealand would benefit from the TPP and that health interests would be protected.[15,16]

The TPP as a constraint on preventative health policy: the need for an independent health impact assessment

Trade agreements can constrain preventative health policy by empowering foreign investors to sue governments if changes to health regulations interfere with the value of an investment or its anticipated profits (known as "Investor State Dispute Settlement" or "ISDS"). Referring to this phenomenon, the Director General of the World Health Organization (WHO) stated earlier this year:

"One particularly disturbing trend is the use of foreign investment agreements to handcuff governments and restrict their policy space... In my view, something is fundamentally wrong in this world when a corporation can challenge government policies introduced to protect the public from a product that kills."[17]

Indeed, we argue that ISDS provisions in the TPP pose such complex and pervasive risks to population health that an independent, systematic and comprehensive health impact assessment (HIA) is essential prior to any agreement being signed. The scope of such an assessment must be broad and encompass both the direct and indirect effects of the TPP on health and health equity in NZ over both the short and long term. Such an HIA has been advocated by the WHO, alongside strengthened representation of public health in the negotiation process.[18] (see endnote ΐ)

We argue that failure to take such action would be equivalent to an act of medical negligence; regardless of assurances from the Minister of Trade that he would "simply not conclude an agreement that opens NZ up to successful lawsuits when the government is simply running the country in line with good public policy principles".[15]

Although we do not doubt the sincerity of this statement, when the complexity and scale of the health risks are considered, such statements simply cannot responsibly be assumed to constitute an appropriately rigorous safeguard. Indeed the very fact that such broad and non-specific assurances are being given by the Minister of Trade without the benefit of a formal, independent health impact assessment serves to highlight one of the key reasons for our concern.

Moreover it is difficult to accept assurances from the former Minister of Health that health is high on the agenda of TPP negotiators when there has been so little public health representation in the negotiation process. Whereas hundreds of US corporate advisors have been granted access to negotiation drafts of the TPP, independent health advisors, including representatives from the WHO, have effectively been excluded.[19]

Effective health policy should be precautionary and responsive to new evidence, putting domestic health concerns ahead of foreign investor’s interests

The Ministers also suggest that the TPP may include exceptions for regulating specific harmful substances like tobacco. But this misses the key point that it is impossible to fully anticipate future health risks and the range of health policy responses required to address them. Historic examples illustrate that good health policy should be responsive to new evidence as it becomes available.

For example, lead paint was used for many years before the health risks to young children became undeniable; until recently synthetic cannabis-like drugs were sold over the counter in NZ; and thalidomide was initially sold without prescription to thousands of pregnant women before leading to death and serious deformity in thousands of children.

These examples illustrate why New Zealand's freedom to modify regulation based on the ‘precautionary principle’[20] must not be undermined by the TPP. Indeed, even when the evidence of harm is substantial, industries such as Tobacco have a long and consistent history of systematically undermining and legally contesting the available scientific evidence, aiming to ensure that the benefit of any doubt is given to their own commercial interests rather than health.[21]

In the context of ISDS provisions of the TPP, this historical lesson is extremely relevant. Had the precautionary principle been applied freely when the harm of tobacco was first demonstrated, much needless suffering and countless early deaths could have been avoided.[22,23]

Unanticipated future health risks are thus an extremely important consideration. Indeed, it is important to acknowledge that even with the benefit of a comprehensive and broad scope HIA prior to signing, it would still be impossible to fully anticipate or accurately quantify all possible future health threats and the impact of the TPP on our ability to deal with them effectively.

Even the best HIA would necessarily be limited to those risks that we currently know about and can reasonably anticipate. This is a crucial point that must be central to any serious evaluation of the health risks of the TPP.

While ISDS provisions are contained in some of NZ’s existing trade agreements, ISDS provisions in the TPP would bring with them a whole new level of risk
While earlier World Trade Organisation arrangements allowed lawsuits between member governments, agreements such as the TPP extend this right to foreign individual and corporate investors.

This means that foreign investors based in any one of the 12 TPP countries could challenge domestic regulations, policies or even court decisions that are perceived by them to result in a significant loss of their investment’s value or expected profits. The large number of countries involved in the TPP along with the rapid growth in ISDS claims over the last decade also means that the TPP would represent a major increase in risk for independent health policy making in NZ (see endnote θ).

Moreover, the TPP would for the first time expose the NZ Government to possible ISDS lawsuits from transnational corporations based in the USA. US companies have an extensive track record of aggressively pursuing claims under existing trade agreements (see endnote θ for supporting data).

For example the claim for US$500 million that is currently being brought against the Canadian Government by US pharmaceutical company Eli Lilly, challenging a Canadian Federal Court ruling for its application of domestic patent law.[24]

Another case was filed by a US waste treatment firm against Canada in response to a temporary ban on PCBs (polychlorinated biphenyls) contaminated waste, even though PCBs are known to be carcinogenic and to cause developmental problems in children.

In response to the threat of ISDS litigation from US firms, the ban was lifted after 15 months, but even then compensation was sought through the ISDS process and awarded to the company for loss of profits during the time of the ban.25 In another contemporary case, a US mining company is seeking $250 million dollars from the Canadian Government,26 in response to a partial moratorium on hydraulic fracturing for coal seam gas (fracking), a process that can contaminate water supplies and the environment with toxic chemicals as well as contribute to the health threats of climate change.[27]

This latter case is particularly salient for NZ in view of the recent report from the Parliamentary Commissioner for the Environment, which concluded that regulation of fracking in NZ is currently inadequate and requires substantial revision and strengthening.[28]

A further concern is that ISDS cases do not even have to be filed in order to influence health policy. In response to a series of ISDS cases filed against Canada under the North American Free Trade Agreement (NAFTA) for example, a Cabinet directive was issued requiring that all new health regulations be screened by trade lawyers for compatibility with international trade agreements.[29] Moreover, already in NZ, action on plain packaging of cigarettes has been delayed until the results of an ISDS case against Australia for its plain packaging laws and a parallel challenge at the World Trade Organisation have been resolved.30 These examples illustrate the ‘chilling effect’ that ISDS provisions in the TPP would almost certainly have on NZ preventative health policy in future.

“Safeguards” against foreign investor lawsuits: grounds for continuing scepticism

The Ministers have given assurances that there will be safeguards against investors bringing lawsuits against governments. However, the 2012 leaked investment chapter did not indicate that even the standard, existing, trade agreement protections for countries (based on the language of GATT Article XX and GATS Article XIV) would apply.[31]

It is standard practice in US free trade agreements that such protections do not apply to the investment chapter. Moreover, even if negotiations since that time have reinstated these standard safeguards, they have an extremely poor track record with success in only 1 of 40 attempts by countries to use them as a defence against investor companies.[32] (see also endnote ‡).

The Trade Minister has said that the New Zealand position is that there should be “…greater transparency in the administration and operation” of investment tribunal dispute processes.15 We agree, but consider that “greater transparency” of investment tribunal processes should be considered a fundamental necessity rather than a ‘safeguard’, alongside other reforms to ensure fair and open due process. Concerns over inconsistencies and potential conflicts of interest in investment tribunal dispute processes have even been acknowledged by the United Nations Conference on Trade and Development (UNCTAD) and the Organisation for Economic Cooperation and Development (OECD).[33,34]

The fact that any new ‘safeguards’ referred to by the Minister would be dependent on a judicial process that is conceded to require “greater transparency” raises serious questions about the likely effectiveness of any such safeguards. Moreover, ultimately it would be the arbitrators on an investment panel, not a panel with health expertise or concern, who would interpret New Zealand’s obligations under the agreement (see also endnote §).

In reply to the call of health professionals for open discussion on the health implications of the TPP, Ministers have said that, after New Zealand has signed the TPP, there will “almost certainly” be an opportunity for further public consultation.[15,16]

But even if Ministers will “absolutely certainly” hold consultation at that point, waiting until after the TPP is signed to consider our health concerns will be too late. Public consultation at that point could not introduce additional safeguards for health, because New Zealand would have to go back and convince the other 11 countries to reopen the agreement and consent to the changes. In practice, after signing the agreement, NZ would, be in a take-it or-leave-it position (see also endnote **).

Controversies over the claimed projected economic benefits of the TPP

Fair distribution of economic wellbeing and employment is unquestionably an underpinning of health and health equity. Although the NZ Government’s stated goal in the TPP is to reduce barriers for NZ exporters and to improve their competitiveness in the Asia-Pacific region, controversies remain over the so-called economic benefits of the TPP.

It has been assumed that reducing export barriers would, as a matter of course, generate “higher incomes for New Zealanders”.[15] However, the assumption that economic gains from the TPP would be shared equitably among New Zealanders has been challenged by economists and health policy analysts who point out that similar investment agreements have exacerbated income inequality and health disparities in many countries.[35,36,37]

The concern is that economic benefits of the TPP (to the extent they materialise) would accrue disproportionately to the most wealthy, whereas the majority of the population (and in particular, disadvantaged minorities) would bear most of the risks.38,39 This concern was expressed succinctly by the Nobel Prize winning economist, and former Chief Economist of The World Bank, Joseph Stiglitz, in the New York Times earlier this year:

“There is a real risk that it (the TPP) will benefit the wealthiest sliver of the American and global elite at the expense of everyone else”.[40]

Later he states:

“Corporations may profit (from the TPP), and it is even possible, though far from assured, that gross domestic product as conventionally measured will increase. But the well-being of ordinary citizens is likely to take a hit.”

Another Nobel Prize winning economist, Paul Krugman, has argued that “the economic case (for the TPP) is weak at best…”.[41]

Along similar lines, The Sustainability Council of New Zealand recently published a detailed technical report, challenging assumptions used to estimate economic gains from the TPP.[42] The authors concluded that as a result of flaws in these assumptions, the economic gains for NZ have been overestimated. Furthermore, since then, there have been multiple reports indicating that New Zealand’s initial goals in the negotiations are unlikely to be realised.[43,44,45]

Moving beyond personal assurances: specific requests from the health professional community

It is clear that the TPP could have significant direct and indirect effects on health outcomes for New Zealanders. While we appreciate personal assurances from the Ministers of Health and Trade that health outcomes for New Zealanders will not be compromised, in view of the complexity and scale of the risk we do not think these assurances constitute a sufficient safeguard.

We therefore call for:
1.    A comprehensive and independent formal health impact assessment (HIA) of the draft agreement to be performed by appropriately qualified and independent health experts18 prior to signing any agreement. This HIA should be broad-reaching, including the impacts on regulation outside of the health sector that provide the crucial underpinnings of health;
2.    The complete HIA to be made publicly available well in advance of any agreement being signed, and that reasonable time is provided for the findings of the HIA to be thoroughly assessed and publicly debated;
3.    An unequivocal guarantee to be given that NZ's laws and policies will not be able to be challenged by other states or foreign investors under the ISDS process. For example, specific and unequivocal assurance that NZ will not tolerate provisions in the TPP that would allow:
•    A tobacco company to make an investor claim against the NZ Government because of our domestic cigarette packaging laws;
•    A fossil fuel company to make an investor claim against the NZ Government because of any regulation to reduce carbon emissions or to minimise the environmental health risks associated with hydraulic fracturing, as described in the latest report from the Parliamentary Commissioner for the Environment;28
•    A pharmaceutical or other company to make an investor claim against the NZ Government because of regulations on the marketing and sale of medicines such as antibiotics, the labelling of food or medicines for health reasons or on PHARMAC’s advisory and purchasing processes;
•    ISDS claims by the food and beverage industries in response to implementation of any policy recommendations recently put forth by the NZ Medical Association46 and the NZ Beverage Guidance Panel[47] to reduce childhood obesity.


According to commentary in The Lancet, in the context of emerging 21st century regional trade agreements, it is crucial for the public health community to be permitted to engage with trade policy issues to ensure that policy space is not eroded and health inequities are not exacerbated.[4] While the economic benefits of the TPP are controversial, the associated health risks are indisputably far-reaching, complex, and profound.

Despite general assurances from the Ministers of Trade and Health, every indication signifies that the proposed TPP would empower foreign corporations to sue the NZ government in response to regulations designed to protect health. Prior to any agreement being signed, a formal independent health impact assessment of the TPP is therefore not only a reasonable and responsible proposal, but an absolutely essential act of due diligence. Failure to perform and respond appropriately to such an assessment would be tantamount to medical negligence.


* The open letter to the Prime Minister (12 May 2014) is hosted at http://www.orataiao.org.nz/TPPA+Letter. The letter raised again [9,10,11] serious concerns about the far-reaching, unintended consequences of the TPP on health in New Zealand, by placing the rights of transnational corporations above the right of everyday New Zealanders to choose domestic policies that best meet their health needs. Regulation will always need updating to protect health from hazardous products (including greenhouse gases), to accommodate changes in disease patterns and changing health technologies. The letter described how rules in the TPP would however allow transnational corporations to sue the New Zealand Government should the value of their investment or anticipated profits be threatened by changes in New Zealand health policy (examples of industries currently seeking compensation including tobacco, fossil fuel and pharmaceutical)—and how the very threat of litigation through these rules could have a significant ‘chilling effect’ on domestic regulation for health. In addition, rights the TPP would grant to transnational pharmaceutical companies on patents and monopolies would make medicine more expensive, increasing health costs.
ΐ In 2008 the WHO Commission on Social Determinants of Health recommended action to ensure that health and health equity was not harmed by global trade.[18] This included recommending the institutionalisation of health equity impact assessment of global, regional, and bilateral economic agreements. The commission also recommended that government policy-setting bodies, with support from WHO, ensure and strengthen representation of public health in domestic and international economic policy negotiations. And it recommended that national governments, in collaboration with relevant multilateral agencies, strengthen public sector leadership in the provision of essential health-related goods and services and the control of health-damaging commodities.[18,4] These recommendations lie alongside subsequent calls for greater coherence between trade and health policy.[2]
θ The following graphs show rates of ISDS cases according to home states and the change in the number of ISDS cases over time. They are sourced from the United Nations Conference on Trade and Development IIA Issues Note, April 2014 (available at www.unctad.org.diae)  

Figure 10 o most frequent home states

 Figure 6 - known ISDS cases

‡ Although the Ministers assure there will be safeguards and exceptions on the ability of companies to sue countries, not only are standard existing protections for countries not included in the TPP,Error! Reference source not found. and even then few countries have successfully used them as a defence against investor companies, [32] but furthermore, such safeguards would only be able to be argued as a defence once a case has begun and they would be subject to the vagaries of an investment tribunal's interpretation.
§ The fact that investor state dispute settlement (ISDS) processes can proceed is highly concerning. Further concerns are raised by the fact that the tribunals are presided over by lawyers that rotate their roles between acting as presiding judges and litigators on behalf of corporations. The need for "greater transparency in the administration and operation of ISDS proceedings" makes it all the more alarming that under the TPP, these flawed proceedings would override and subordinate NZ's domestic legal system.
** We are also concerned that public consultation at this point would not provide a sufficient check or balance on the ratification process, since at that point the Executive of the NZ Government, (which would have the power to ratify the agreement), would have only three choices. It could either abandon the agreement altogether; delay ratification until the necessary laws were implemented; or ratify the agreement prior to implementing the necessary laws. We note that many changes might not require legislation, but might be achieved by regulation or administrative decision. In some situations the problem will arise from the inadequacy of existing regulations that cannot be reformed, as in the example of fracking. Even if there was Parliamentary opposition, taking the latter option of ratifying the agreement early on would exert enormous pressure to pass the necessary legislation, since NZ would then be in breach of its obligations and liable to claims under ISDS provisions or whatever the relevant dispute process might be. Finally, a further concern is the fact that the US President does not have Trade Promotion Authority, allowing the US Congress to selectively approve parts of the TPPA and reject others after the agreement has been signed. This process, referred to as “certification” would essentially give the US the right to decide what a country's obligations are under the TPP even once the agreement is signed. It would allow the US to refuse to bring the agreement into force with that country until it has changed its laws, regulations and administrative processes to fit their expectations and interpretation of the agreement. In practice certification has in the past allowed US officials to essentially draft another country’s relevant laws to ensure they satisfy their demands. In Guatemala, for example, the USTR even demanded that new pharmaceutical laws be implemented that were not in the formal text, and which the government had consistently opposed during the negotiation process (see http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11307872).

PDF of paper


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