[CTC] Political Corruption and the "Free Trade" Racket

[Dolan Mike]

Excellent piece from Dean Baker.

Pass it on.

MFD, IBT

 

http://blog.ourfuture.org/20130430/political-corruption-and-the-free-tra
de-racket

 

In polite circles in the United States' support for free trade is a bit
like proper bathing habits. It is taken for granted. Only the hopelessly
crude and unwashed would not support free trade.

 

There is some ground for this attitude. Certainly the United States has
benefited enormously by being able to buy a wide range of items at lower
cost from other countries. However this doesn't mean that most people in
the country have always benefited from every opening to greater trade.

 

And it certainly doesn't mean that the country will benefit from
everything that those in power label as "free trade." That is the story
we are seeing now as the Obama administration is pursuing two major
"free trade" agreements that in fact have very little to do with free
trade and are likely to hurt those without the money and power to be
part of the game.

 

The deals in questions, the Trans-Pacific Partnership (TPP) and the
U.S.-European Union "Free Trade" Agreement are both being pushed as
major openings to trade that will increase growth and create jobs. In
fact, eliminating trade restrictions is a relatively small part of both
agreements, since most tariffs and quotas have already been sharply
reduced or eliminated.

 

Rather, these deals are about securing regulatory gains for major
corporate interests. In some cases, such as increased patent and
copyright protection, these deals are 180 degrees at odds with free
trade. They are about increasing protectionist barriers.

 

All the arguments that trade economists make against tariffs and quotas
apply to patent and copyright protection. The main difference is the
order of magnitude. Tariffs and quotas might raise the price of various
items by 20 or 30 percent. By contrast, patent and copyright protection
is likely to raise the price of protected items 2,000 percent or even
20,000 percent above the free market price. Drugs that would sell for a
few dollars per prescription in a free market would sell for hundreds or
even thousands of dollars when the government gives a drug company a
patent monopoly.

 

In the case of drug patents, the costs go beyond just dollars and cents.
Higher drug prices will have a direct impact on the public's health,
especially in some of the poorer countries that might end up being
parties to these agreements.

 

There are also a wide variety of regulatory issues that are being
pursued through these agreements in large part because there would be
difficulty getting them accepted through the normal political process.
For example, the sort of government-mandated Internet policing that was
part of the shipwrecked Stop Online Piracy Act is likely to reappear in
one or both agreements.

 

It is also likely that rules that limit the power of governments to
restrict fracking could be in the agreements. Such rules could prohibit
not only the federal government, but also state or county governments,
from imposing restrictions designed to protect the public's health.

 

These are the sorts of restrictions that may appear in the TPP and
U.S.-EU Free Trade Agreement. The reason for using tentative language is
that none of the specifics of the deal have yet been made public. The
Obama administration is negotiating these pacts in secret. It has made
almost nothing about the negotiating process public and has shared none
of the proposed text with the relevant committees in Congress. 

 

Incredibly, it has shared portions of the proposed TPP with the relevant
industry groups. While elected representatives in Congress may not be
able to find out anything about proposed rules on drug patents or
restrictions on fracking, Pfizer and Merck will have the opportunity to
weigh in on patent rules and the major oil and gas companies will help
to draft language on fracking that serves their interests.

 

The idea is that once a deal is completed there will be enormous
political pressure for Congress to approve it no matter what it
contains. In addition to the campaign contributions that supporters of
the deals will get from the special interest groups who stand to
benefit, news outlets like The Washington Post will use both their news
and opinion sections to bash members of Congress who oppose a deal. They
will be endlessly portrayed as ignorant Neanderthals who do not
understand economics.

 

The reality, of course, is that it is the "free traders" who either do
not understand economics or deliberately choose to ignore it. Many of
the provisions that we are likely to see in these deals, like stronger
patent protections, will slow growth and cost jobs.

 

These deals will also lead to more upward redistribution of income. The
more money that people in the developing world pay to Pfizer for drugs
and Microsoft for software, the less money they will pay for the
products that we export, as opposed to "intellectual property rights."
These payments are great if you own lots of stock in drug or software
companies, but for the vast majority of the nation's workers who are not
big stockholders, extracting money from people in the developing world
for these corporate giants is not good news.

 

This is yet another case where the government is working for a tiny
elite against the interests of the bulk of the population. And it is
doing it in a way that would be difficult to caricature: making powerful
corporate interests direct negotiating partners, while excluding
democratically elected representatives from the process

 

 

Michael F. Dolan, J.D.

Legislative Representative

International Brotherhood of Teamsters

Desk  202.624.6891

Fax    202.624.8973

Cell    202.437.2254

 

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