Untitled Document
It's going to be easier to sell your product to 44 million new customers,"
President Bush proclaimed at a recent media event near Charlotte, N.C. The forum
was designed to create support for passing the Central American "Free Trade"
Agreement before Congress adjourns for summer later this month.
If his aides hadn't hand-screened the crowd to remove the likelihood of hard
questions, someone might have asked just which imported goods Nicaraguans, who
earn an average of about $2,300 annually, are planning to purchase. Or a skeptic
might have questioned how Central America, with a combined economic output less
than many U.S. cities, is going to buy enough goods to help reduce a trade deficit
that has grown from $38 billion to $617 billion under the trade policies of
Presidents Clinton and Bush Jr.
As with the North American Free Trade Agreement, the leading U.S. export will
be jobs. For those who might be willing to sacrifice American prosperity to
benefit our poorer neighbors to the south, it's a false promise. During NAFTA's
12-year influence, Mexicans' real wages have fallen and poverty is rising and
CAFTA would benefit primarily transnational corporations, but not just by reducing
tariffs. In fact, pacts like CAFTA are about erecting barriers to real market
competition and preventing competition as often as lowering barriers. This largely
is due to politically powerful corporations lobbying to expand the most costly
forms of protectionism — patents, copyrights and other monopolies grouped
under "intellectual property rights."
Such rights often are essential to ensure writers, researchers, musicians and
others receive compensation for their work. Often, however, what's patented
is taxpayer-funded research, given away or sold for a pittance to corporations
that reap huge profits thanks to government-created monopolies. In 2003, publicly
financed pharmaceutical research totaled $27 billion — nearly equaling
domestic drug research by all businesses combined. Public investment is even
greater when you disregard "lifestyle drugs." According to a Massachusetts
Institute of Technology study, 11 of the 14 most medically significant drugs
developed in the United States between 1970 and 1995 originated with government-funded
research.
Yet most of this public investment is then privatized in exclusive licenses
to drug companies without fair return to taxpayers. For example, Taxol (the
best-selling cancer drug ever) was developed with $500 million in publicly funded
research and testing, beginning in the 1960s — decades before its commercial
debut.
Yet despite our public investment, we taxpayers got nothing in return. Actually,
less than nothing. First, the National Institutes of Health granted exclusive
production rights to Bristol-Myers Squibb Inc. for a pitiful 0.5-percent royalty.
Then we paid Squibb almost $700 million in just the first five years of Taxol's
production for government health-care programs at markups that would make street
drug dealers blush — up to 2,000 percent over production costs. Such profit
margins would be impossible without government-created and enforced monopolies.
Think "corporate socialism," not free market.
And while import tariffs rarely increase product prices more than 25 percent,
patent-protected monopolies can gouge us for 20 times the cost we'd see in a
competitive market.
Imposing these obscene profit margins abroad (through trade pacts that poor
countries often have little choice but to sign) effectively mandates suffering
and death in many instances. Poor countries that have violated trade agreements
to provide generic AIDS drugs and save thousands of lives have been sued to
halt the practice.
The retail side of the drug trade demonstrates another angle of how corporate
power has distorted market competition. Consumer Reports magazine issued a detailed
report in 2003 showing that independent pharmacies beat chain stores on price,
service and overall satisfaction. So why have more than 10,000 independent pharmacies
disappeared since 1990?
Not only does massive advertising power falsely convince people that chain
stores provide better value, government discrimination also harms independents.
The U.S. Supreme Court ruled in 1992 that states could not collect sales tax
on catalog or Internet sales to in-state residents (unless authorized by Congress).
The Court bizarrely reasoned, essentially, that mail-order businesses should
be protected from having to collect the same taxes as community-based businesses
because they built their operations on the expectation of such favoritism. So
in 45 states, a community-serving business must compete hobbled by a penalty
that averages 8.3 percent of a product's cost.
Some state governments also hinder retail drug competition in this realm by
forcing state employees to fill their health plan prescriptions at chain stores
or on-line vendors. The state government may save a few dollars on the Internet
sales, but employees lose important personal service and communities lose irreplaceable
businesses. Of course, CAFTA and other proposed "free trade" agreements
make no attempt to stop this government discrimination against small businesses.
Where are those "pro-business" politicians and "free market"
think tanks when it's entrepreneurs who are undermined by laws and trade agreements
that benefit their corporate funders? Apparently they don't like to confront
the fact that political power determines which markets will or will not be free.
But distinguishing theoretical free markets from the disturbing realities of
corporate capitalism is a prerequisite for any meaningful evaluation of trade
treaties.
The track record of NAFTA undermines the credibility of almost every supposed
benefit of CAFTA. Don't buy the false premise of these pacts being about "free
trade." They serve to advance the power and profit of the giant corporations
that create them, not the interests of average citizens or business people.