With his usual bombast, President Trump has called the just-agreed trade deal with Mexico “maybe the largest trade deal ever” (it’s not), and it remains a tossup whether the deal will actually be approved by Congress. A major obstacle is whether Canada can be brought into it, and on the day the deal was announced (Aug. 27), discussions were still in progress. Trump stated that the term “Nafta” needs to go away, and offers USMTA could be the replacement.
Much of the attention (and not a little bit of the politics) pertain to automative trade, with higher levels of US-produced content, and US-friendly payscales for auto workers being required. But the agreement includes expanded intellectual property and “digital trade” (basically, digital media products) protections: the US Trade Representative Office’s Fact Sheet on the deal states that it “Includes 10 years of data protection for biologic drugs and expanded scope of products eligible for protection.” (Details await publication of the full agreement. Also, apparently, “data protection”—of, for example, clinical trial results—is the equivalent of patent protection for such products.)
The 10-year span is more than what had existed before (in the case of Mexico, essentially nothing; with Canada, an eight-year term is on the books) but the biopharma industry has long argued for the same 12-year exclusivity that exists for biologics within the US market. That 12-year span was a key sticking point in the long-ago Trans Pacific Partnership (TPP), which, before it was dumped by the incoming Trump Administration, was an effort to bring some added protection to biopharma products. With the TPP gone, the US reverts to the Trade Act of 1974 and its Section 301 IP protections. And that Section 301 is the exact issue under which the US is considering vastly expanded tariffs against goods from China.
An apparently overlooked nuance in the deal is that it could have set a pattern for another idea that has been tossed around within the Trump Administration—getting foreign countries to pay higher costs for drugs, in an effort to reduce the free ride the rest of the world gets from the high prices paid by consumers for drugs within the US. This rather far-fetched idea is one of the directions that HHS Secretary Alex Azar announced last month with the Administration’s effort to reduce drug costs in the country.
The US stock market celebrated the US-Mexico announcement with a significant jump in the day’s trading; various press reports note that the agreement amounts to an update of Nafta, rather than a wholescale revision, and its passage is not a certainty.