by Mark
Weisbrot
“Free
trade” ideologues scoffed at the Teamsters and turtles that converged on
Seattle two years ago protesting the WTO’s disregard for the environment and
labour. The WTO was the last best hope for the world’s poor, they said.
But the
rules of the WTO are, by any honest accounting, a net loss for the developing
countries of the world. In fact, that is one of the main reasons for the lack
of progress at the Ministerial meeting just concluded in Doha, Qatar: these
countries are beginning to defend their interests.
It is
ironic but fitting that one of the major sore points between North and South
was disagreement over “intellectual property rights.” A compromise was reached
at Doha, but it will by no means resolve this contentious issue. The WTO has
presented itself as an organization dedicated to “free trade,” yet its rules on
intellectual property - for example, patents - constitute the most costly and
dangerous form of protectionism in the world.
If we
add up the cost of this protectionism to developing countries, it runs into the
tens of billions of dollars annually - perhaps even more. Even if the United
States, Europe, Japan and other rich countries were to open up their markets
beyond anyone’s expectations to developing countries’ exports, it would not
make up for their losses due to foreign intellectual property claims.
A
growing number of prominent economists have begun to see this protectionism as
unfair and inconsistent with the free trade agenda that most of the profession
supports. These economists include Joseph Stiglitz, winner of this year’s Nobel
Prize; Columbia University’s Jagdish Bhagwati; and senior economists from the
World Bank.
From an
economic point of view, monopolies created by patents or copyrights are
analytically the same as the distortions created by tariffs or import quotas.
The main difference is that patent monopolies raise the price of the protected
product by many times more than a typical tariff. So it is only natural that
economists would oppose rules that extend these government restrictions on
international competition, especially in an organization supposedly dedicated
to spreading the benefits of “free trade.”
On the
other side are trade officials from the United States, Switzerland, Japan and
other nations that are home to major players in the pharmaceutical industry.
Much to their shame, these officials have sought to limit as much as possible
the right of developing countries to increase access to essential medicines
through generic competition.
The
life-and-death consequences of this protectionism have become clear in the last
few years, as it became known that the anti-AIDS drugs that keep people alive
in the US for $10,000 a year are available in generic form for less than $350.
In the last three years, the US government and pharmaceutical companies have
three times been forced by international embarrassment to abandon attempts to
keep these generic drugs from people in developing countries - some 36 million
of whom have HIV or AIDS.
The most
recent instance was a case at the WTO itself. In January the Clinton
administration challenged Brazil’s laws dealing with the manufacture and import
of generic AIDS drugs. These laws formed an important part of Brazil’s
remarkably successful AIDS treatment programme, which has cut by half the
number of AIDS-related deaths there in recent years. The Brazilian government
stood firm, and Washington dropped its case in June.
The
compromise at Doha did not change the WTO’s legal language on pharmaceuticals,
but offered a political declaration that is thought to make it easier for
developing countries to use generic drugs for health emergencies. But there is
no saving a structure that is rotten at its foundations. Even if we were to fix
TRIPS (Trade-Related Aspects of Intellectual Property Rights), there are still
TRIMs (Trade-Related Investment Measures) and the GATS (General Agreement on
Trade in Services). All of this alphabet soup has the same basic function: to
limit the development options available to representative governments, and
subordinate the needs of developing countries to those of transnational
corporations and banks.
It has
become a truism that the WTO must go forward because the poor and the weak need
a “rules-based system” for international commerce. But that depends on the
rules. There may be a way to make expanding international trade and investment
serve the needs of humanity, but it will not be found within the World Trade
Organization.
Mark
Weisbrot is co-director of the Center for Economic and Policy Research (www.cepr.net) in Washington, DC.