Almost a year after Canada and the European Union announced an agreement in principle on the Comprehensive Economic and Trade Agreement, a hefty excerpt of the deal was leaked last week raising red flags in the business community.
The full 1,500-page treaty document was expected to be released at a ceremony in Canada next month. But last Wednesday, a German media outlet leaked more than 500 pages of it online. The document is dated Aug. 5, 2014.
The federal government was not commenting on the leaked document last week.
It tried to quell questions when it released the technical summary back in October, but McCarthy Tétrault LLP international trade lawyer John Boscariol says that was more a promotional summary for the deal.
“It said: ‘Here’s what the Canadians are getting.’ It didn’t say: ‘Here’s what we gave up.’”
“The one thing that has been challenging about this compared to other trade agreements is the government said the deal was done in October 2013 and we’ve had to wait for text for a long time, which is unusual,” says Boscariol. “There is all kinds of speculation about what is or isn’t there.”
One particular chapter of the leaked document has a provision about investment disputes related to intellectual property rights and the roles of the courts, saying parties should be free to have their courts interpret intellectual property rights in accordance with their domestic law. That promoted some to connect that stipulation to the current dispute between Canada and pharmaceutical giant Eli Lilly.
“It seems to be something they put in there because of Eli Lilly but I’m not sure it really changes anything or how substantive it is,” says Boscariol. “It says the parties will work together. It doesn’t seem to change the fact that if the government has taken some form of discriminatory measure against you in the IP area, you can still sue the government under the investment chapter.”
Last fall, Eli Lilly launched a $500-million complaint under the North American Free Trade Agreement claiming Canada violated obligations to foreign investors by allowing its courts to invalidate patents for two of its drugs.
In a statement, The Council of Canadians points out the EU language was adopted on resolution of pharmaceutical patent disputes. They say it will “open the flood gates to pharmaceutical companies’ law suits, lengthen patent lengths and delay generics coming to market. They claim it could increase public health care costs by $900 million to $1.7 billion.”
IP lawyer Andrew Skodyn of Lenczner Slaght Royce Smith Griffin LLP agrees it does appear some of the pharma patent changes that had been talked about are coming to pass.
“In particular, it appears that patent term restoration for time spent in the regulatory approval process is going to be put into place,” he says. “Exactly how substantial an impact this will have going forward remains to be seen, but what is plain is that there is no downside for innovator companies and no upside for generics. It is a clear win for the brand-name pharmaceutical industry.”
Boscariol says while the leaked document is interesting reading, it still leaves many unanswered questions. He says missing schedules would provide more detail in certain areas such as government procurement.
“While we have to be cautious about it — it has some things in it that resolved some of the questions especially around investor state disputes — there is an investor state provision and that was something people were questioning,” says Boscariol. “It certainly isn’t as broad as NAFTA but it’s in there.”
“If we really want to figure out how services have been dealt with, which is a big part of the agreement, and we expect it to go with what we’ve seen at the WTO or under NAFTA, that is all set out in schedules and so are parts on government procurement — those schedules have not been disclosed,” he adds.
Companies wondering what kind of access they will get to the EU market and what kind of access their competitors on the service side will get to the Canadian market are going to have to look at those service schedules to figure that out. However critics like The Council of Canadians issued a statement suggesting it appears there will be limits on federal, provincial, and municipal governments in Canada to favour local companies on a range of construction, supply, and service contracts.
For more, see our story from October.