Prescription Drug Comparative Effectiveness Act of 2003

Mr. Speaker, I thank the gentleman from Ohio, and I doubt anyone can hold a candle to him relative to trade.

Mr. Speaker, I rise in opposition to this trade proposal, in a way reluctantly. I had held such hope that this particular proposal could be the template for trade agreements that could be negotiated between the developed democracies of the world, and that following on the Jordan Free Trade Agreement, we could actually produce the first trade agreement between developed democracies that would provide the gold standard for the world, that we could really use proactively. This one falls far short of doing that.

You might ask the question, Would we have this agreement before us if Australia did not have troops in Iraq? It is kind of interesting that this is coming up at this particular moment.

One of my concerns about this agreement is that Australia may become another back door trade route to the U.S., sort of the new Hong Kong, because of all the current difficulties in Hong Kong NOW. This agreement is imperfect. It does not really provide a comprehensive set of provisions to really deal with trade between nations that want higher standards of living, but that in fact you will get more Chinese goods and Chinese investment going into Australia and then coming here under this so-called ``free trade'' agreement because of all the economic and commerical difficulties that Hong Kong is having since the handover to the Chinese.

We know that this particular agreement would allow drug companies to challenge decisions on coverage and payment, so we further weaken the abilities of developed democracies to try to provide affordable health care for all their people.

The agreement is absolutely inadequate in terms of comprehensive labor and environmental standards. We should accept no less. In fact, my dream would be that we would learn how to strike trade agreements between developed countries, and then ask third world nations to join that consortium in order to raise standards of living around the world, rather than force all nations in this race to the bottom, including our own, where wages among the majority have fallen.

Mr. Speaker, I include for the Record an article from the Wall Street Journal, ``Trade Agreement May Undercut Importing of Inexpensive Drugs,'' and also a set of standards we should use in any trade agreement based on a review of some of our other trade agreements. There standards should be expected from any trade agreement this Nation negotiates.

I ask my colleagues to vote ``no.'' This agreement is too incomplete and imperfect.

[From the New York Times, July 12, 2004]

Trade Agreement May Undercut Importing of Inexpensive Drugs

(By Elizabeth Becker and Robert Pear)

Washington, July 11.--Congress is poised to approve an

international trade agreement that could have the effect of

thwarting a goal pursued by many lawmakers of both

parties: the import of inexpensive prescription drugs to help

millions of Americans without health insurance.

The agreement, negotiated with Australia by the Bush

administration, would allow pharmaceutical companies to

prevent imports of drugs to the United States and also to

challenge decisions by Australia about what drugs should be

covered by the country's health plan, the prices paid for

them and how they can be used.

It represents the administration's model for strengthening

the protection of expensive brand-name drugs in wealthy

countries, where the biggest profits can be made.

In negotiating the pact, the United States, for the first

time, challenged how a foreign industrialized country

operates its national health program to provide inexpensive

drugs to its own citizens. Americans without insurance pay

some of the world's highest prices for brand-name

prescription drugs, in part because the United States does

not have such a plan.

Only in the last few weeks have lawmakers realized that the

proposed Australia trade agreement--the Bush administration's

first free trade agreement with a developed country--could

have major implications for health policy and programs in the

United States.

The debate over the drug imports, an issue with immense

political appeal, has been raging for 4 years, with little

reference to the arcane details of trade policy. Most trade

agreements are so complex that lawmakers rarely investigate

all the provisions, which typically cover such diverse areas

as manufacturing, tourism, insurance, agriculture, and

increasingly, pharmaceuticals.

Bush administration officials oppose legalizing imports of

inexpensive prescription drugs, citing safety concerns.

Instead, with strong backing from the pharmaceutical

industry, they have said they want to raise the price of

drugs overseas to spread the burden of research and

development that is borne disproportionately by the United

States.

Many Democrats, with the support of AARP, consumer groups

and a substantial number of Republicans, are promoting

legislation to lower drug costs by importing less expensive

medicines from Europe, Canada, Australia, Japan and other

countries where prices are regulated through public health

programs.

These two competing approaches represent very different

ways of helping Americans who typically pay much more for

brand-name prescription drugs than people in the rest of the

industrialized world.

Leaders in both houses of Congress hope to approve the free

trade agreement in the next week or two. Last Thursday, the

House Ways and Means Committee endorsed the pact, which

promises to increase American manufacturing exports by as

much as $2 billion a year and preserve jobs here.

Health advocates and officials in developing countries have

intensely debated the effects of trade deals on the ability

of poor nations to provide inexpensive generic drugs to their

citizens, especially those with AIDS.

But in Congress, the significance of the agreement for

health policy has generally been lost in the trade debate.

The chief sponsor of the Senate bill, Senator Byron L.

Dorgan, Democrat of North Dakota, said: ``This administration

opposes re-importation even to the extent of writing barriers

to it into its trade agreements. I don't understand why our

trade ambassador is inserting this prohibition into trade

agreements before Congress settles the issue.''

Senator John McCain, an author of the drug-import bill,

sees the agreement with Australia as hampering consumers'

access to drugs from other countries. His spokesman said the

senator worried that ``it only protects powerful special

interests.''

Gary C. Hufbauer, a senior analyst at the Institute for

International Economics, said ``the Australia free trade

agreement is a skirmish in a larger war'' over how to reduce

the huge difference in prices paid for drugs in the United

States and the rest of the industrialized world.

Kevin Outterson, an associate law professor at West

Virginia University, agreed.

``The United States has put a marker down and is now using

trade agreements to tell countries how they can reimburse

their own citizens for prescription drugs,'' he said.

The United States does not import any significant amount of

low-cost prescription drugs from Australia, in part because

federal laws effectively prohibit such imports. But a number

of states are considering imports from Australia and Canada,

as a way to save money, and American officials have made

clear that the Australia agreement sets a precedent they hope

to follow in negotiations with other countries.

Trade experts and the pharmaceutical industry offer no

assurance that drug prices will fall in the United States if

they rise abroad.

Representative Sander M. Levin of Michigan, the senior

Democrat on the panel's trade subcommittee, voted for the

agreement, which could help industries in his state. But Mr.

Levin said the trade pact would give a potent weapon to

opponents of the drug-import bill, who could argue that

``passing it would violate our international obligations.''

Such violations could lead to trade sanctions costing the

United States and its exporters millions of dollars.

One provision of the trade agreement with Australia

protects the right of patent owners, like drug companies, to

``prevent importation'' of products on which they own the

patents. Mr. Dorgan's bill would eliminate this right.

The trade pact is ``almost completely inconsistent with

drug-import bills'' that have broad support in Congress, Mr.

Levin said.

But Representative Bill Thomas, the California Republican

who is chairman of the Ways and Means Committee, said, ``The

only workable procedure is to write trade agreements

according to current law.''

For years, drug companies have objected to Australia's

Pharmaceutical Benefits Scheme, under which government

officials decide which drugs to cover and how much to pay for

them. Before the government decides whether to cover a drug,

experts analyze its clinical benefits, safety and ``cost-

effectiveness,'' compared with other treatments.

Joseph M. Damond, and associate vice president of the

Pharmaceutical Research and Manufacturers of America, said

Australia's drug benefit system amounted to an unfair trade

practice.

``The solution is to get rid of these artificial price

controls in other developed countries and create real

marketplace incentives for innovation,'' Mr. Damond said.

While the trade pact has barely been noticed here, it has

touched off an impassioned national debate in Australia,

where the Parliament is also close to approving it.

The Australian trade minister, Mark Vaile, promised that

``there is nothing in the free trade agreement that would

increase drug prices in Australia.''

But a recent report from a committee of the Australian

Parliament saw a serious possibility that ``Australians would

pay more for certain medicines,'' and that drug companies

would gain more leverage over government decisions there.

Bush administration officials noted that the Trade Act of

2002 said its negotiators should try to eliminate price

controls and other regulations that limit access to foreign

markets.

Dr. Mark B. McClellan, the former commissioner of food and

drugs now in charge of Medicare and Medicaid, said last year

that foreign price controls left American consumers paying

most of the cost for pharmaceutical research and development,

and that, he said, was unacceptable.

Executive Summary

NAFTA and The Future of Global Trade

The North American Free Trade Agreement (NAFTA) is now ten

years old. At its heart, it embodies the new heroic struggle

of working men and women to gain a foothold in the rough and

tumble global economy dominated by multinational corporate

giants. Unfortunately, it pits local workers and farmers

against global investors. It pits Neustro Maiz, a peasant

tortilla co-op in southern Mexico, against ADM, the US grain

trade giant. It pits Norma McFadden of Sandusky, Ohio, who

lost her middle class job with benefits at Dixon Ticonderoga,

against Ana Luisa Cruz of Cuidad Juarez, who earns $7 a day

with no benefits. For NAFTA to be credible as a model for

future trade agreements, it must be amended. People should be

more important than goods. A human face to trade must be

negotiated. Without it, the global divide between poverty and

wealth will exacerbate. More popular unrest will result from

unfair trade, and the social compact so necessary for global

cooperation will be shattered.

NAFTA is important because it serves as the major template

for a new global economic order integrating rich and poor

nations through trade and investment. Mexico, Canada and the

U.S. were to integrate their economies and, as a result, be

better positioned to compete globally. It was touted as the

neo-liberal model that would lift the economic condition of

all people. All ships, no matter how small, were to be

brought forward. But NAFTA worked exactly in the reverse.

Affected workers in all three nations saw their wages and

working conditions lowered. As capital moved across borders

with no social policies in place, NAFTA has triggered an

international race to the bottom as even Mexico has lost

218,000 jobs to China, a lower wage environment with a

notorious record of human rights abuses.

Capital and wealth have become more concentrated in all

three nations. The middle class in the U.S. is experiencing a

growing squeeze on benefits and job quality. In Mexico, an

endless supply of ``starvation wage'' workers was unleashed.

Now the Bush Administration is trying to spread the same

model to Central America using Central American Free Trade

Agreement (CAFTA), and throughout the rest of the Western

Hemisphere with the Free Trade Area of the Americas (FTAA).

If these agreements are passed, it is clear that only the

same can be expected, that is, expanding job washout,

underemployment, and trade deficits in the U.S. without

improved living standards in the poor countries with whom it

trades.

A reformed trade model among trading nations is needed that

yields rising standards of living for workers and farmers.

This must be based on transparent and enforceable rules of

law concerning labor, environment and business. Continental

sustainable wage and labor standards should be adopted. Trade

accords must also incorporate industrial and agricultural

adjustment provisions, and currency alignment. An

infrastructure investment plan should be negotiated as a core

provision of any trade agreement. Along with complementary

systems for education and safe, reliable medical care for all

of their citizens, including the over 9 million immigrants

traveling as itinerant labor to the U.S. every year.

recommendations

Policy reforms are essential to amending NAFTA and other

trade agreements that have yielded such huge U.S. trade

deficits, job washout, and lowered standards of living.

a continental assessment of nafta should be launched to address its

shortcomings

An intracontinental parliamentary Working Group on Trade

and Working Life in America, comprised of U.S., Mexican, and

Canadian members, should be established with the goal of

amending NAFTA to address its shortcomings. Such a working

group should analyze the results of NAFTA and its impact on

workers, farmers and communities. The Working Group should

define a sustainable wage standard for workers in each

country and a continental labor registration system along

with enforceable labor and environmental standards. It would

identify the massive continental labor displacements that are

occurring, often with no social safety net in place. It would

explore options to deal with divergence in education and

health as well as currency fluctuations and impact of trade

on infrastructure, investment, and migration. It would

harmonize inequitable tax systems and augment credit systems

for the safe and non-usurious continental transfer of

remittances by mobile workers. It would also propose funds in

the form of adjustment assistance to cushion continental

economic integration. The organization would include as a key

component an intracontinental Agricultural Working Committee

to address the hardships faced by farmers and farm labor in

all three countries.

trade agreements should yield trade balances

If NAFTA were working in the interests of the U.S., there

would be a trade surplus with Canada and Mexico, as the U.S.

exported more than it imported. Exactly the reverse is true.

In 2003, the NAFTA trade gap equaled $100 billion--$42

billion with Mexico and $85 billion with Canada. This

represents a serious drag on U.S. gross domestic product and

a loss of wealth. Indeed the U.S.-NAFTA trade balance with

low-wage Mexico as well as Canada has turned decidedly more

negative, and worsened each year, contrary to NAFTA's stated

aims. When a trade agreement yields major and growing

deficits for more than three years, it ought to be

renegotiated.

develop an alternative trade block paradigm

Trade agreements must be structured to achieve rising

standards of living for a broad middle class, not just the

capital class. The current NAFTA model fails to address the

root causes of market dysfunction and growing U.S. trade

deficits i.e., the managed market and regulated trade

approaches being employed by its European and Asian

competitors. With NAFTA, the U.S. chose a low wage strategy

to meet this real competition from trading counterparts that

were gaining global edge. The U.S. must counter the managed

market and regulated trade approaches of its major

competitors.

harmonize quality of life up, not down

Rather than allowing transnational companies to set the

rules of engagement, democratic nations first should forge

international trade agreements with the world's developed

democracies and then invite in developing nations to

participate in this ``free world'' Global Trade Organization.

Such an effort holds the potential to transition these

nations upward to the same democratic, legal, and

environmental systems of the free world. Instead, the trade

relationships that have been forged link the economic systems

of first world democratic nations to Third World,

undemocratic, non-transparent systems. Social concerns like

education, environment, infrastructure, labor conditions, and

health have been ignored. The downward ``race to the bottom''

push of NAFTA continues to be felt in the U.S. as well as

Mexico and Canada.

trade accords should produce living wage jobs, less poverty and an

improved environment

If NAFTA were working, more good U.S. jobs would be

created, outnumbering job losses. In Mexico, workers would

experience a rising standard of living. Exactly the opposite

is true. Conservative estimates indicate the U.S. has lost

880,000 jobs due to NAFTA. These jobs are largely in U.S.

companies that merely relocate to Mexico paying ``hunger

wages.'' Wages in Mexico have been cut by a third. If NAFTA

were working in the interest of Mexicans, there would be a

reduction in poverty, a growing middle class, and

environmental improvement. Instead there is a rollback in

wages, deplorable working conditions, and growing economic

concentration of wealth in a few hands, forcing huge social

dislocation.

As U.S. jobs are sucked into Mexico, not only do more

people vanish from the middle class but also U.S. schools

lose property taxes. In a state like Ohio that has lost

nearly 200,000 jobs to Mexico, the economic decline is

visible. Ohio's income growth is declining. In 1999,

according to Ohio Department of Development statistics,

citizens in Ohio lost $30.7 billion in total income compared

to the past year. The state itself lost $15 billion. As a

result, college tuition has increased, with average student

undergraduate debt rising to record levels of $18,900.

Nursing homes are understaffed with low paid workers, and the

ranks of uninsured Ohioans has risen to 1.3 million. The

State is raising taxes on everything from sales, to gas

and to property to try to fill the gap of a fleeing

private sector. Quality of life is sliding backwards.

NAFTA-related environmental enforcement remains largely

nonexistent. If NAFTA were working, environmental

improvement in Mexico would be upgrading; it is sliding

backward.

Transition U.S./Canadian displaced workers to comparable

employment and Mexico's workers and peasants to land holding

and living wage standard.

NAFTA--displaced workers in the U.S. largely have been

abandoned in their efforts to reposition to new employment.

Unemployment benefits expire, training is inadequate, and

health benefits expire or are unaffordable. Experienced

workers rarely find jobs with comparable pay or benefits.

Mexico's vast underclass, underpaid, and exploited, lacks a

living wage, affordable elementary education, basic health

care, and systems to gain property ownership and affordable

credit even for basic purchases. In order to move forward

with any future trade agreements, NAFTA must acknowledge its

human toll and respond accordingly. NAFTA provisions have led

to the displacement of thousands of small business,

industrial and agricultural workers throughout the U.S.,

Mexico and Canada. Little provision has been made to assist

these workers, farmers, and communities with any transitional

adjustment assistance. In Mexico, this has caused masses of

people to stream toward the border and the maquiladora zones

in search for jobs.

The North American Development Bank, which was established

to help local communities build their human and physical

infrastructures, has been an abject failure. It should

promote economic investment in those regions of Mexico and

the United States where jobs have been hollowed out due to

NAFTA, or infrastructure is needed. Bank assets could be

enhanced by financial contributions that flow from trade-

related transactions.

Create new continental law enforcement body to combat

growing crime along U.S.-Mexico border region related to

border workers, drugs, and unsolved murders of hundreds of

Mexican women.

The United States Departments of Labor and Homeland

Security should be tasked not only with stopping the

trafficking of bonded laborers but devising a continental

labor identification card. Along with mass migration, the

border has seen an explosion in the illicit drug trade. Law

enforcement officers on both sides of the border must battle

smuggling in narcotics and persons. A continental working

group should be directed to recommend a new solution for

combating crimes that result from the illegal drug and bonded

worker trade that spans the border.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I want to remind my colleague that we can get into the debate on reimportation of drugs at some time when it is relevant, because it has no application to this agreement.

I am pleased that the House today will pass the long-overdue U.S.- Australia Free Trade Agreement. I applaud the efforts of President Bush and the USTR in negotiating an agreement that opens markets for U.S. exports by eliminating tariffs, reducing nontariff barriers, opening services markets, and strengthening intellectual property protections.

This is an important agreement. The U.S. enjoys a $9 billion trade surplus with Australia, and Australia is our ninth largest goods export market. Australian firms in the U.S. employ about 85,000 Americans, and it is estimated that U.S. exports to Australia support more than 150,000 U.S. jobs. Under the terms of this agreement, over 99 percent of U.S. exports of industrial goods to Australia will become duty-free immediately. U.S. manufacturers estimate that the elimination of tariffs could result in nearly $2 billion per year in increased U.S. exports of manufactured goods.

This agreement also gives our farmers new opportunities. All U.S. agricultural exports to Australia totaling more than $400 million will receive immediate duty-free access. Key agricultural products that will benefit from immediate tariff elimination include soybeans and oilseed products, fresh and processed fruits, vegetables and nuts, and pork products. Our dairy farmers also will have immediate access to the Australian market.

Mr. Speaker, this agreement is also very important to my State of Illinois, which is home to companies including Caterpillar, Boeing, Motorola, Abbott Labs, and Zurich Life. Illinois exports to Australia directly support approximately 4,400 jobs in the State of Illinois. Additionally, there are 20 Australian-owned companies in Illinois, employing over 2,000 people. Nine hundred of these positions are manufacturing jobs. Trade with Australia supports numerous other high- paying jobs in areas such as transportation, finance, and advertising; and between 1999 and 2003, Illinois exports to Australia grew by 12 percent. This Free Trade Agreement means more jobs, better jobs, and higher-paying jobs in Illinois and America.

As chairman of the Subcommittee on Trade, it has been my privilege to have been involved in the completion of this trade agreement, and I thank my colleagues who worked so hard to make this a reality.

I would also like to express appreciation to staff, including, to name just a few, Angela Ellard, Stephanie Lester, Matt Howard, Tim Reif, Viji Rangaswami, Mike Castellano, Brian Gaston, Sam Geduldig, Brian Diffell, Andrew Shore, John DeStefano, Amy Heerink, Rachael Leman, Janet Nuzum, James Koski, Greg Sheiowitz, Chris McConnell, and Vergil Cabasco. I thank them.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I would like to remind everyone of a Dear Colleague that was released yesterday by our ranking minority member on the Committee on Ways and Means Subcommittee on Trade, the gentleman from Michigan (Mr. Levin), and our ranking member on the full Committee on Ways and Means, the gentleman from New York (Mr. Rangel); and this is in their Dear Colleague letter: ``The Australia Free Trade Agreement is worthy of support. Article 17.9.4 of the Australia FTA essentially codifies existing U.S. law in an international trade agreement. Current U.S. law allows patent holders to bar the import of their patented products. The patent provision will not have a practical effect due to the fact that Australia's domestic law prohibits the export of drugs purchased through its government-subsidized program which accounts for over 90 percent of all drugs sold in Australia.

``Article 17.9.4 matters only to the extent that the United States is allowing the import of prescription drugs from Australia, or which are covered by a patent owned by an Australian firm. As a practical matter, with or without the Australia FTA, there is little possibility of importing prescription drugs from Australia.''

Mr. Speaker, I yield 3 minutes to the gentlewoman from Washington (Ms. Dunn), cochair of the U.S.-Australia Caucus and a member of our Committee on Ways and Means.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the Australia FTA does not prevent Congress from passing legislation on drug reimportation. Under the U.S. Constitution, no trade agreement could do this. Any law passed by Congress will always trump any FTA. There is nothing in the Australia FTA or H.R. 4759 that changes U.S. patent laws or the Federal Food, Drug and Cosmetic Act. The patent provision in the FTA restates U.S. law and applies to all patents, not just pharmaceuticals. Not including this provision would be devastating to U.S. intellectual property rights holders in every sector.

Australian law already bans the exportation of drugs dispensed under its pharmaceutical benefits scheme. Unlike Canada, Australian law expressly prohibits other parties such as a wholesaler or pharmacist from exporting non-PBS dispensed drugs. Therefore, any change in U.S. law would have no practical effect on reimportation to Australia due to Australia domestic law, regardless of the FTA; and, therefore, Australia would have no plausible basis to claim harm or pursue sanctions.

Mr. Speaker, I yield 2 minutes to the gentleman from Ohio (Mr. Portman), one of our colleagues on the Committee on Ways and Means.

Mr. Speaker, I yield myself such time as I may consume. The State of Vermont exported $12.8 million of merchandise to Australia in 2003. Vermont's high-value exports to Australia include food for infants, aircraft and sports equipment; and if the FTA was in place in 2003, 99.8 percent of Vermont's exports would have entered Australia duty free.

American exports to Australia directly and indirectly support over 270,000 jobs in the United States.

Mr. Speaker, I yield 1 minute to the distinguished gentleman from Texas (Mr. Brady).

Mr. Speaker, I yield 2\1/2\ minutes to the distinguished gentleman from Pennsylvania (Mr. English).

Mr. Speaker, I yield myself such time as I may consume.

Oregon is a trader with Australia right now, and Australia is the 10th largest market for Oregon goods that are exported with total exports valued at over $257 million in 2003. Oregon's high-volume exports to Australia include chassis trucks, fertilizers, vehicle parts, and helicopters.

Oregon exports to Australia directly support approximately 1,200 jobs. Additionally, there are 12 Australian-owned companies in Oregon employing over 300 people. Trade with Australia supports numerous other high-paying jobs in areas such as transportation, finance, and advertising.

Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Michigan (Mr. Knollenberg).

Mr. Speaker, I yield 3 minutes to the distinguished gentlewoman from Connecticut (Mrs. Johnson).

Mr. Speaker, I yield myself such time as I may consume.

Australia is the eleventh largest market for Ohio goods exports, with total exports valued at around $389 million in 2003. Ohio primarily exports high-valued products to Australia, such as aircraft engines and parts, other aircraft parts, auto parts, forklifts, pet food, and household appliances. If the FTA was in place in 2003, over 93 percent of Ohio's exports would have entered Australia duty free.

Ohio's exports to Australia directly support approximately 1,854 jobs. Additionally, there are 17 Australian-owned companies in Ohio, employing 1,800 people, with 1,300 of these positions in manufacturing jobs. Trade with Australia supports countless other high-paying jobs in areas such as transportation, finance and advertising.

The Bureau of Economic Analysis reports that Australian businesses have more than $817 million invested in Ohio.

Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Texas (Mr. Hensarling).

Mr. Speaker, I yield 2 minutes to my distinguished colleague, the gentleman from Illinois (Mr. Weller).

Mr. Speaker, I yield myself such time as I may consume to simply remind all those paying any attention to the debate that we enjoy a $9 billion trade surplus with Australia at the present time, and that will expand greatly with the passage of this free trade agreement.

Mr. Speaker, I reserve the balance of my time.

I am sorry I cannot yield my time, but I will, Mr. Speaker, use some of my time at the present moment.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the administration strongly supports H.R. 4759, which will approve and implement the U.S.-Australia Free Trade Agreement as signed by the United States and Australia on May 18 of this year. The U.S.-Australia FTA advances U.S. national economic interests and meets the negotiating principles and objectives set out by the Congress in the Trade Act of 2002.

The agreement enhances our close trade relationship with Australia and will further open Australia's market for U.S.-manufactured goods, agricultural products, and services. As soon as the FTA enters into force, tariffs will be eliminated on nearly all manufactured goods traded with Australia. In addition, Australia will eliminate tariffs on all exports of U.S. agricultural products.

The U.S.-Australia FTA further solidifies our relationship with an important partner in the global economy and a strategic ally. It sets a strong example of the benefits of free trade and democracy. Opening markets is part of

the President's six-point plan for continuing to strengthen America's economy and to create more opportunities for American workers and farmers.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, Australia is the 15th largest market for New Jersey goods exports, with total exports valued at nearly $307 million in 2003. New Jersey primarily exports high-valued products to Australia such as pharmaceuticals, printed media, medical equipment, perfumes, and chemicals. If the FTA was in place in 2003, 99.44 percent of New Jersey's exports would have entered Australia duty free. New Jersey's exports to Australia directly support approximately 1,400 jobs. Additionally, there are 13 Australian-owned companies in New Jersey, employing 900 people. Seven hundred of these positions are manufacturing jobs.

Trade with Australia supports numerous other high-paying jobs in areas such as transportation, finance, and advertising.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I want to congratulate my colleague from North Dakota on his support for this Free Trade Agreement and also explain to folks that Australia is the third largest market for North Dakota goods exports, with total exports valued at over $47 million in 2003. North Dakota's exports to Australia include tractors, front-end loaders, beans, and agricultural sprayers. These exports support approximately 220 jobs in North Dakota. The Australia-U.S. Free Trade Agreement provides tremendous opportunities for North Dakota businesses, offering them preferential access to a strong economy and growing market. And I think the gentleman's folks back home will particularly appreciate his support, as do all the rest of us, for this important Free Trade Agreement.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would like to reiterate a comment I made earlier from the Dear Colleague released yesterday by the gentleman from Michigan (Mr. Levin) and the gentleman from New York (Mr. Rangel). And it says: ``The patent provision will not have a practical effect due to the fact that Australia's domestic law prohibits the export of drugs purchased through its government-subsidized program which accounts for over 90 percent of all drugs sold in Australia.''

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I want to congratulate the distinguished gentleman from California (Mr. Dooley) for his commitment to these fundamental principles that are involved here in the best interest of this country as well as our good friend and ally Australia for all these years. I thank him.

Mr. Speaker, I yield 3 minutes to the distinguished gentleman from Florida (Mr. Shaw).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would like to remind my colleague that the Australian government prohibits the export of drugs from Australia. They subsidize drugs for their own people, and they prohibit the export of those drugs.

Mr. Speaker, I yield 2 minutes to another gentleman from Florida (Mr. Mario Diaz-Balart). This is not a repeat. This is his younger brother.

Mr. Speaker, I yield 3 minutes to the distinguished gentleman from California (Mr. Cunningham).

Mr. Speaker, I yield 4 minutes to the distinguished gentleman from Arizona (Mr. Kolbe).

Mr. Speaker, I yield 2 minutes to our distinguished colleague, the gentleman from California (Mr. Rohrabacher).

Mr. Speaker, I yield 10 minutes to our distinguished colleague, the gentleman from California (Mr. Dreier), the chairman of the Committee on Rules.

(Mr. DREIER asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield such time as he may consume to the

gentleman from California (Mr. Dreier).

Mr. Speaker, I yield myself such time as I may consume.

I would like to just reiterate in closing that this is an important agreement, and Australia is a close ally and friend of the United States. As the Australian Trade Minister Mark Vaile has said, this FTA is the commercial equivalent of the ANZUS treaty on security issues signed in 1951. This agreement represents the best FTA ever negotiated regarding industrial products, over 99 percent of which will become duty free immediately. And it is estimated that U.S. exports to Australia support more than 150,000 jobs currently. And in addition, Australian farms in the U.S. employ over 85,000 Americans. The U.S. already enjoys a $9 billion trade surplus with Australia, and this agreement is clearly in our national interest; and I strongly urge my colleagues to support this agreement. Vote ``yes'' on H.R. 4759.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, I yield 30 minutes of my time to the gentleman from New York (Mr. Crowley), and I ask unanimous consent that he be allowed to yield such time as he sees fit.

Mr. Speaker, I yield myself such time as I may consume.

I am in opposition to H.R. 4759, Mr. Speaker. It deals with issues of credibility, and it deals primarily with issues of pharmaceutical drugs and the possibility of reimportation, an issue dear to the hearts of many of the seniors in this country who are paying outrageous prices and are not being helped by the recent Republican pharmaceutical benefit.

We have been repeatedly either lied to or have had information withheld. I know many of my colleagues are aware that the actuaries in CMS knew that the drug bill was going to cost closer to $500 billion, or $550 billion rather than the $400 billion which was promised. That information was withheld.

For those of my colleagues who read The New York Times this morning,

they are aware of further withholding of information on the part of the Republicans. I guess it is not a lie, but I only bring it up at this point to indicate that I do not think we can trust any statements as to what the trade negotiator or trade representative may or may not be negotiating with Australia and what their intention is in the future.

We were told by OMB in the pharmaceutical drug bill that 2.4 million employees would lose their retiree prescription benefits when we voted for this last pharmaceutical bill under Medicare. Well, guess what? Just earlier this week, we received from the CMS, another branch of the administration, a memo showing that 3.8 million workers will lose their drug benefits as a result of the Republican drug bill. A mere mistake of 1.4 million Americans who are going to lose drug benefits after we were opportuned to pass that bill with the idea that only 2.4 million would lose coverage.

Now my colleagues may or may not care about another almost 1.5 million workers being denied their retirement drug benefits, I know the Democrats do, but I raise these two issues, a difference of almost $200 billion low-balling us on the cost of a drug bill and then subsequently, just today, finding out that 1.5 million more workers are going to lose their benefits. Now how can we depend on the administration to tell us anything straight that is in this trade bill?

I get now to my point. We are concerned that intellectual property language allows pharmaceutical manufacturers to contractually prohibit reimportation of prescription drugs from Australia. We know that. Once we approve this language, any attempt to pass reimportation language will immediately run afoul of the Australian Free Trade Agreement. This is not just about the U.S. and Australia. This is a bill that was engineered by the pharmacy lobby.

Let me point out, when the trade representatives met, they have a board, there were 15 members of the pharmaceutical industry sitting down to advise the trade representative and not one representative of the consumer community. What does that tell us? It tells us that certainly the trade representative representing the administration can undermine the will of the people in this country and the majority of Congress through trade negotiation power over which we are powerless to change after we vote today.

The last time that I checked, reimportation of pharmaceutical drugs was a domestic health policy issue that should be debated in Congress, and we should be making domestic health policy in this Chamber, not the U.S. Trade Representative.

Now, the trade representative is promising to use this language over and over again in future free trade agreements, and eventually it is going to come back to haunt us.

Now I have no doubt that the trade representative knows how to negotiate free trade, but I have a real question if he has any interest in protecting the health care of American citizens. Not only have we given PhRMA the keys to the kingdom, we are now letting them pillage their way through our health care programs.

In a brief moment of honesty, the U.S. Trade Representative admitted that transparency requirements in annex 2(c) of the Fair Trade Agreement actually do apply to a Medicare Part B drug reimbursement decision. In its current form, the proposed change to an average sales price reimbursement system does not meet the transparency requirements of the FTA, it opens the door to challenges, and it frustrates the ability of this body to pass reasonable, safe reimportation that will lower the cost of drugs for our senior citizens by, in many cases, 50 percent, far more than the mere 5 or 10 percent that this cockamamie Buck Rogers discount card that the administration has brought out.

So we are here with a subtle underlying problem, and that is the health care of 42 million seniors in this country, and now it turns out almost 4 million more employed Medicare beneficiaries or people who are receiving their benefits as retirees, and we cannot sell them down the river, Mr. Speaker. That is not the right thing to do.

We could argue the trade bill all day long, take some of these things out, and it is probably all right, but it is engineered not to be amended. We were not allowed to amend it in markup in committee, we cannot amend it here on the floor, it is up or down. So our only choice is to vote it down, send it back to the committee, do it right, and then proceed.

So I urge a no vote.

Mr. Speaker, at this point I yield the balance of my time to the gentleman from Ohio (Mr. Brown) and ask unanimous consent that he be allowed to yield that time as he sees fit.

Mr. Speaker, I rise today in opposition to H.R. 4759, the U.S.-Australia Free Trade Agreement (FTA). Once again the administration has given the pharmaceutical industry open access to the cookie jar. The result, to no one's surprise, is a free trade agreement that ensures the continued profitability of pharmaceutical manufacturers at the expense of average Americans who must buy drugs from other countries just to afford the prescriptions they need.

This agreement is about trusting the administration on prescription drugs. Unfortunately, the administration's recent record on this issue shows they are less than willing to tell the truth. During the debate on the Medicare prescription drug bill the administration hid the fact that the prescription benefit would cost $534 billion instead of the projected $400 billion.

Just today we learned that the administration has again missed the mark on an important estimate. According to this morning's New York Times 3.8 million people will lose retiree health coverage under the new Medicare law. This CMS estimate is 1.4 million people higher than the 2.4 million we were told during the Medicare debate.

The moral of the story is we can't trust the administration to make domestic health policy without congressional guidance. I don't trust USTR and the administration on prescription drugs, and you shouldn't either.

Less than one year ago, this House passed a bipartisan bill directing the Secretary of Health and Human Services to promulgate regulations allowing for reimportation of prescription drugs. There remain a number of pending proposals in the Senate that would legalize reimportation, as well. However, instead of fronting the reimportation issue in open debate, the administration took a back door approach, slipping language into the Australia agreement that effectively prohibits Congress from passing reimportation legislation.

Last time I checked, reimportation was a domestic health policy issue that should be debated in Congress. When the administration realized they were losing the battle, however, they turned to trade negotiation authority and their wealthy donor friends at the Pharmaceutical Research and Manufacturers of America (PhRMA), to find another alternative.

Last year the pharmaceutical industry spent $108 million on federal lobbying, and it is now clear they have purchased the keys to the kingdom. PhRMA used its power and influence during the FTA negotiations to obtain language that effectively precludes Congress from passing legislation allowing reimportation. As a result, U.S. citizens will never have access to affordable prescription drugs and the pharmaceutical manufacturers will continue to profit at the expense of Americans' health.

A vote for this FTA sets a dangerous precedent for the future of domestic pharmaceutical policy. Deputy U.S. Trade Representative Josette Shiner has already explained what will happen next. Testifying before the Senate Finance Committee, Ms. Shiner said the pharmaceutical provisions in the Australia FTA ``lay the groundwork for future FTAs,'' which will ``steer us in ongoing and future global, regional, and bilateral negotiations--including upcoming FTA negotiations and consultations with Canada and other major trading partners bilaterally and in international fora like the OECD.''

While I have no doubt the USTR knows how to negotiate a free trade agreement, I question whether they have any idea how their negotiations affect domestic health policy. During the negotiations with Australia, USTR pushed for language that would have decimated how the Veterans Administration and the Department of Defense buy drugs for our soldiers, veterans and their families. Though this language was later removed, the final agreement is so ambiguous, there are no guarantees Australia will not challenge our domestic drug procurement procedures. Besides the VA and Department of Defense, this could also affect Medicaid, Medicare and other federal programs.

In a brief moment of honesty, the Administration admitted that the transparency requirements in Annex 2-C of the FTA actually do apply to Medicare Part B drugs. Though no changes are currently necessary to comply with the FTA, there is no guarantee that we won't have to act in the future to change Medicare drug policy because of the Australia FTA and future agreements that share this transparency language. One possible problem in the near future is the switch to average sales price for Part B drugs in 2006. It is very clear that this payment policy change does not meet the transparency requirements of Annex 2-C, but as long as PhRMA is happy, I guess we should all rejoice and turn our backs on policies designed to lower the cost of Part B drugs for Medicare beneficiaries.

I urge all members today to think long and hard about what this vote means for the future of domestic prescription drug policy. Don't let anyone tell you that this vote is just about the U.S. and Australia and therefore you have nothing to worry about. If you have been touting the benefits of reimportation to constituents, but decide to vote for this FTA, I suggest you be prepared to deal with the backlash. If you truly care about reimportation and want to be able to use the issue on the campaign trail, vote against the U.S. Australia Free Trade Agreement.

Mr. Speaker, I rise in strong support of this legislation.

I would like to take a few minutes to first follow up on the discussion that we had at the opening of the rules debate this morning on the House floor.

One of our colleagues, I do not remember exactly who it was, I think it may have been my friend, the gentleman from Michigan (Mr. Levin), talked about the fact that there had been no consultation on the issue of this pharmaceutical drug reimportation issue; and I said at the time that I was going to get some information on the consultative process which took place as it relates to the free trade agreement, and it does include a great deal of discussion on the issue of the pharmaceutical question.

The administration, as I said this morning, held extensive, extensive consultations with Congress on the Australia Free Trade Agreement. There were, in fact, 29 briefings that were held with the Committee on the Judiciary and members of the Committee on Ways and Means on the FTA. There were actually eight briefings that were held specifically on the pharmaceutical question in a bipartisan way, and they related directly to the intellectual property rights issue, which is an important question.

So this argument that somehow there was no consultation with the Congress on the issue of the pharmaceutical question is a specious one. Actually, Members and staff who have clearances received the text on the intellectual property rights issue, which included patent provisions, in March of 2003, 16 months ago. So I think it is important for us to note that there has been an important process that took place.

My good friend and fellow Californian (Mr. Rohrabacher) was just here in the well, and I know that there has been, again, some confusion on this issue of whether or not the free trade agreement itself somehow includes a provision that would prevent the United States Congress from dealing with the reimportation issue. I will say right now what I said this morning when we were debating the rule: There is absolutely nothing whatsoever in this legislation that regards the issue of drug reimportation.

What I would like to do is say that the free trade agreement has nothing in it, the implementing language has nothing in it at all. Any law that the United States Congress passes always will trump the free trade agreement. So the very important thing that we need to realize is that our Constitution grants us that authority. So the patent provision in the free trade agreement restates U.S. law and applies to all patents, not just pharmaceuticals. Not including this provision would be devastating to the U.S. intellectual property rights holders in every sector of our economy, including pharmaceuticals.

I know my friend, the gentleman from California (Mr. Rohrabacher), is a great screenwriter. It would include, obviously, intellectual property when it comes to our very important entertainment industry as well.

Australian law states, already states that there is a ban on the exportation of drugs dispensed under the PBS, the Pharmaceutical Benefits Scheme that exists. Unlike Canada, Australian law explicitly prohibits other parties such as a wholesaler or a pharmacist from exporting nonPBS-dispensed drugs. That is Australian law. It has nothing whatsoever to do with the free trade agreement itself.

So I think we need, and I am happy that my friend is going to be supportive of this legislation and was going to be supportive earlier, but now what I want him to know is that he can be an even greater enthusiast in support of this now that we realize that there is nothing in this free trade agreement that deals with the issue of drug reimportation.

Now, let me just make a couple of comments on some things that had troubled me.

First, and this does not trouble me at all, it is simply praise for the gentleman from Illinois (Mr. Crane), the chairman of the Subcommittee on Trade. He educated me and a lot of others over the years on the importance of trade liberalization. Trade liberalization, breaking down barriers, does enhance opportunities for the free flow of goods, services, and capital and how that improves the quality of life worldwide. I learned so much of that from the gentleman from Illinois (Mr. Crane). He has been a great teacher on it.

The thing that has concerned me about this debate today is that some are trying to use the U.S.-Australia free trade agreement as an argument in opposition to other agreements. It is true that with Australia we have a very similar economy, and that is something that is important for us to recognize. It is also true, as my friend, the gentleman from California (Mr. Rohrabacher), and others have said, and I said when I was standing here this morning, that the alliance between Australia and the United States of America is an extraordinarily important one.

Prime Minister Howard was here on September 11 of 2001. He was going to be addressing a joint session of Congress, and he was here when President Bush addressed the Congress, and he stood with us consistently. In fact, he actually has used this term, he describes Australia as the sheriff for the United States of America. And it does underscore the importance of this agreement, how it will go even further in strengthening this critically important tie.

But as we look at the Australia agreement, how we can all of a sudden say the trade liberalization with countries that are trying to claw themselves onto the first rung of the economic ladder, how we did oppose those based on the fact that we have one structure with the U.S.-Australia agreement, is to me something that is very, very troubling.

I happen to be a strong proponent of the Central American Free Trade Agreement. I believe that it is critical for us, as the trade ministers, all the trade ministers said to me upstairs in the Committee on Rules just several weeks ago from five Central American countries, that to lock in democracy in Central America, to make sure that we improve the standard of living for the people of Central America, we must have the Central American Free Trade Agreement.

Now, many of us were in Seattle. I know I was there with my friend, the gentleman from Michigan (Mr. Levin), in December of 1999, the first week of December, 1999. We all know how that meeting fell apart. And I will never forget the cover of The Economist magazine, that great publication which, for a century and a half, has focused on the issue of trade liberalization as its priority. The cover of that magazine the week after the ministerial meeting broke down in Seattle had a picture of a starving baby in Bangladesh with the caption: ``Who was the real loser in Seattle?''

The reason is that it is important for us, if we are committed to making sure that these developing nations do, in fact, have an opportunity to succeed and, as I said, get onto the first rung of

the economic ladder, we need to work on trade liberalization with them. We need to help them find new opportunities to participate in the global economy. So that is why this is a very good agreement; and, similarly, other free trade agreements that we are going to be putting together that will break down barriers and encourage that free flow of goods and services and capital is something that we absolutely must continue with.

So, yes, we are going to have strong bipartisan support for this measure, but equally important and, in some ways, maybe even more important, Mr. Speaker, we need to have strong bipartisan support when it comes to these further agreements. Why? Because there are countries in this hemisphere and in other parts of the world that would love to have economies like Australia's or like the United States of America, and I happen to believe that the only way that we are going to create an opportunity for them to enjoy the wonderful standard of living that exists in both Australia and the United States of America is for us to have them enjoy the opportunity to participate in our global economy.

So I herald my colleagues who are going to be supporting this. I hope that everyone plays a role in understanding that this is part of our being on the cutting edge of the 21st century global economy. I congratulate President Bush for the leadership that he and Ambassador Zoellick have provided on this issue and my colleagues on both sides of the aisle for doing it. I look forward to a very, very strong vote in just a few minutes.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, will the gentleman yield?

Mr. Speaker, I thank my friend for yielding me the time, and I would simply say that we all want to ensure that we do not see an engagement in the race to the bottom. That is not a goal that we have at all. What we want to do is we want to have in place policies, and the so-called race-to-the-bottom argument is one which was used as we were looking at the passage of fast track several years ago.

I yield to the gentleman from Michigan.

Mr. Speaker, reclaiming my time, let me say that we all want to do everything that we can to ensure that we do not engage in a race to the bottom. What we want to do is we want to make sure that we engage in a race to the top; and to get to the top, there are many countries that today may not be able to comply with every single standard that developed nations like Australia and the United States of America enjoy, and it is for that reason that we need to ensure and recognize that the best way for them to be able to qualify for that status is to see the economies of those countries grow.

Mr. Speaker, I rise in support of the U.S.-Australia Free Trade Agreement, but with strong reservations about the pharmaceutical provisions.

Australia is the 12th largest foreign market for the State of Maine. The State exported $29 million in goods and services to Australia last year. That amount will likely grow with this agreement, which eliminates 99 percent of all tariffs on manufactured goods, including on paper and wood products, and reduces barriers to Maine agricultural and services exporters.

Since Australia is a developed country with strong labor and environmental laws, this FTA does not involve a significant debate over the need to promote effective labor and environmental standards through trade agreements.

On balance, the agreement will benefit consumers and businesses in both countries by lowering barriers to trade in goods and services. However, the administration has included provisions, sought by the drug industry, that raise barriers to free trade in pharmaceuticals. This represents the first trade agreement to force changes in a trading partner's health regulations.

Australia is the first country to implement a comprehensive system that evaluates the comparative effectiveness and cost effectiveness of drugs. Under their innovative Pharmaceutical Benefits Scheme, PBS, the reimbursement rate for pharmaceuticals is based on the therapeutic value of a drug, rather than on the price that the manufacturer wants to charge. The system allows for higher reimbursements for truly innovative drugs. Pharmaceutical manufacturers are given ample opportunity to prove the value of their products, which results in a negotiation over the price at which the government will reimburse the manufacturer.

The U.S. pharmaceutical industry dislikes the Australian system because it shifts decision-making power over drug prices from industry executives to doctors and health professionals. Consequently, the Bush administration signaled that it wanted to make changes to the PBS through the U.S.-Australian Free Trade Agreement.

I am the sponsor, with Representative Jo Ann Emerson, of bipartisan legislation (H.R. 2356) to provide Federal funding for comparative effectiveness studies in the U.S. In October 2003, we sent a bipartisan letter to U.S. Trade Representative, USTR, Robert Zoellick expressing concerns that changes to the PBS could undermine our domestic efforts to promote comparative effectiveness. An exchange of letters followed.

Last winter, USTR offered a proposal to the Australians which, reportedly, would have undermined the pricing structure of the PBS. Fortunately, following objections by Members of Congress, public health groups, and the Government of Australia, that onerous provision was not adopted.

The pharmaceutical provisions that ultimately were included in the FTA were more limited, but not insignificant. My concerns are as follows:

First, Article 17.9.4 grants a patent holder like a pharmaceutical company the right to block re-importation of its patented product into the U.S. by contract or other means. By contrast, S. 2328, the Dorgan- McCain re-importation bill, contains provisions designed to prevent drug companies from restricting the ability of pharmacists or wholesalers to import drugs from approved countries (the bill lists Australia). The Senate re-importation bill, if enacted, could thus be challenged as inconsistent with trade law. The U.S. could be found to be in violation of obligations under

the U.S.-Australia FTA, and subject to sanctions until the re- importation law is repealed.

However, Australian law already prohibits this practice. Thus, the provision is not necessary. So why is it here? To set a precedent.

Deputy USTR Josette Shiner testified before the Senate Finance Committee on April 27 that the pharmaceutical provisions in the Australia FTA ``lay the groundwork for future FTAs,'' which will ``steer us in ongoing and future global, regional and bilateral negotiations--including upcoming FTA negotiations and consultations with Canada and other major trading partners bilaterally and in international fora like the OECD.''

The intent of the Bush Administration is clear. If the provision in this FTA were applied to trade relations with Canada (where re-export is legal), it would permit legal challenges, under trade law, to the re-importation bill that many of us favor as a source of affordable medicines for our constituents.

Second, the FTA opens up our Medicare program for potential changes, a fact acknowledged by USTR. Annex 2-C of the FTA imposes transparency obligations not only on Australia's PBS, but also on the pharmaceutical reimbursement policies of the Medicare Part B program. While USTR claims that these obligations do not require changes in U.S. law or regulation, it does set a worrisome precedent for modifying domestic health policies through trade agreements, where Congress has less say and the pharmaceutical industry has more influence.

Third, there are questions about whether the Australian FTA will affect the Department of Veterans Affairs' prescription drug benefit. An analysis by the Center for Policy Analysis on Trade and Health concludes that the Government Procurement Chapter of the U.S.-Australia FTA grants pharmaceutical companies standing to challenge VA procurement decisions, including decisions about the coverage and pricing of pharmaceuticals, as an unfair trade practice. USTR responds that the FTA imposes no new obligations on the VA beyond those already required by the World Trade Organization's Government Procurement Agreement. This question bears further investigation.

I have met with USTR officials, and came away with the impression that they went to great lengths to ensure that the pharmaceutical provisions in the U.S.-Australia FTA did not force changes to current U.S. health law or regulation. Even with the limited provision in the FTA, which makes relatively minor changes to the Australian PBS, U.S. negotiators couldn't avoid subjecting our Medicare program to the Agreement's obligations. They treaded carefully, but still crossed the line.

By the Administration's own admission, this FTA is part of a larger policy designed to dismantle so-called drug price control/reference pricing systems in other countries. Given the Australian experience, it is inconceivable that more aggressive pharmaceutical provisions in future FTAs won't have reciprocal, and likely adverse, effects on U.S. federal health programs.

Basically, by the same definition that labels the Australian, Canadian or German systems as ``price controls,'' our VA and DOD drug programs are price controls. Those who would use trade policy to dismantle price controls overseas will endanger the prescription drug benefits we offer to American veterans and military personnel.

Regardless of one's position on re-importation, the Australia FTA in general or the pharmaceutical provisions in particular, each of us should question whether it is appropriate to subject U.S. health laws to changes through trade negotiations. Under the Trade Promotion Authority procedure, Congress does not have the ability to amend an agreement once negotiated, and the principal House and Senate health policy committees are given little if any role.

Lastly, I question whether it is appropriate to use trade policy to interfere in other nations' health systems. We certainly wouldn't accept such a demand from other countries. The United States will win no friends if our trade agenda becomes a heavy handed tool to raise drug prices on the citizens of our trading partners.

The Bush Administration's excuse for not insisting on strong labor and environmental standards in trade agreements is that the U.S. has no business dictating other nations' labor and environmental laws. It is hypocritical for the Administration to take the opposite approach when it comes to health laws.

Australians like their PBS and believe it is a balanced and scientifically sound way of assessing value for money for pharmaceuticals. Who are we to conclude otherwise? Australians can get any drug they want that is approved by their equivalent of the Food and Drug Administration. There is a viable private market for the few drugs not listed on the PBS. In my opinion, USTR's cited justification under the Trade Act for the pharmaceutical provisions is wrong. Australians are not denied full market access to U.S. drug products.

The PBS section in the U.S.-Australian FTA has emerged as a major point of contention in Australia. Allegations that it will raise prices have forced a sensitive domestic political debate. This experience leads me to believe that a sure way for the Administration to slow down its trade agenda is to keep insisting on similar pharmaceutical provisions.

To conclude, I support the Australian FTA. This agreement by itself will have little or no impact on U.S. health care laws. But I want to make clear that similar provisions must be kept out of future trade agreements.