The struggle waged by Pharmaceutical Research and Manufacturers of America (PhRMA) against and Israel and Israeli companies has sharply escalated. On Friday, PhRMA asked the Office of the US Trade Representative (USTR) in writing that the US administration act to keep Israel out of the Organization of Economic Cooperation and Development (OECD). PhRMA alleges that Israel does not provide adequate intellectual property protection for US ethical pharmaceutical companies operating in the country.
Joining the OECD is one of Israel’s top foreign policy goals. In November 2005, Congress passed a non-binding resolution supporting Israeli membership in the OECD.
“Slap in the face for Olmert”
PhRMA also asked the USTR to downgrade Israel to “Priority Foreign Country", the most severe classification under the US Government's "Special 301" program. Currently only Ukraine is listed as a “Priority Foreign Country”.
Israel is currently included on the USTR’s “priority watch list”. In theory, a “Priority Foreign Country" classification could lead to US economic sanctions against Israel. It is hard to imagine Washington imposing economic sanctions against Israel, but lobbyists and Congressional aides say that a “Priority Foreign Country” classification would be highly embarrassing for Israel and Acting Prime Minister Ehud Olmert. One lobbyist said, “This would be a slap in the face for Olmert.”
The USTR reviews its classification of US trade partners once a year, in late April. The coming two weeks will therefore see an all-out battle over Israel’s classification. If the USTR downgrades Israel, it will be a huge victory for PhRMA, and a serious blow for the prestige of Israel and Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA).
A worrying preliminary report
Last Friday, the USTR published its “2006 National Trade Estimate Report on Foreign Trade Barriers” (NTE), which will form the basis of USTR’s decisions. The NTE’s section on Israel bears no good tidings. Although the report notes Israel’s progress in various aspects of intellectual property rights, it writes, “The US government continues to urge the Israeli government and the Knesset to take steps that will provide a reasonable period of non-reliance on confidential data and periods of patent term extension similar to that granted in OECD countries.”
Some sources suggest that this wording implies a possible downgrading in Israel’s classification.
In response, Israel has launched an energetic campaign against its classification as a regular violator of intellectual property rights. Parallel campaigns are being waged by the Israeli Embassy in Washington, Teva, and the US Jewish establishment. The struggle is unique, because it is not directed only against the USTR, but also against PhRMA. PhRMA is being portrayed as the source of evil, while the USTR is accused of merely compliantly capitulating to PhRMA’s steamroller.
Embassy of Israel in Washington minister and deputy chief of mission Jeremy Issacharoff says, “We’re very worried by PhRMA’s campaign against Israel and Israeli companies. The matter is a top priority for the Embassy. We’ve held meetings with the relevant groups in Washington, and we’ll hold more meetings in the coming days.”
The fact that the Israeli Embassy in Washington is willing to speak out publicly against PhRMA indicates Jerusalem’s perception of the severity of the escalation by PhRMA. It is not every day that the Israeli Embassy removes the gloves in a battle against a US public entity. Some sources say that Israel Ambassador to the US Daniel Ayalon will be involved in negotiations to settle the problem.
Teva and Jewish organizations lobby Capitol Hill
Teva and Jewish organizations have launched what sources in Washington are calling a “lobbying blitz” on Capitol Hill. The targets of the campaign are the USTR, the White House, and Congress. Teva and the Jewish organizations’ lobbyists have flooded Capitol Hill and held meetings at the USTR and the White House.
Teva is not a neophyte in lobbying Capitol Hill, but its efforts are dwarfed by those of PhRMA. Capitol Hill newspaper “Roll Call” reports that Teva spent $1.1 million in lobbying Congress between July 2004 and July 2005. PhRMA spent $14 million.
United Jewish Communities (UJC) VP public policy William Daroff said UJC’s 155 chapters have begun organizing to lobby US Trade Representative Rob Portman.
US Senator Sam Brownback (R-Kansas) has already signed a letter to Portman that calls on the USTR not to reclassify Israel. Congressional sources expect more signatures.
Published by Globes [online], Israel business news - www.globes.co.il - on April 3, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006