GLOBALISATION AFTER 9/11
The ’Free trade’ explosion
With the World Trade talks in limbo, the focus remains on aggressively pushing on the bilateral front. What could not be achieved through a multilateral trade regime, is now being pursued by the US through bilateral and regional deals. Devinder Sharma connects the dots.
13 September 2006 — Two days after the third Ministerial Conference of the World Trade Organisation began at Seattle, and that was in 1999, I was caught in the mayhem that erupted after the police fired some teargas shells to disperse the wall of protesters. I recall that it was almost midnight when I was walking back to my hotel in the Capitol Hill. I took a turn on one of the labyrinth of city streets to find myself in the midst of the police action.
Protesters of all ages, a majority of them teenagers, were running away to avoid the pungent fumes. As I stepped back, I came face to face with a reporter from an American television channel. Asked, what as a foreigner I thought of the trade talks in the midst of such massive protests, I replied: "While the strong-arm tactics of the American government in the streets is muffling the voice of the peaceful protesters, the high-handedness of the American bureaucracy in the Convention centre is silencing the voice of the developing countries."
That’s what I wrote after my return from Seattle. As we all know, amidst massive public protests Seattle WTO Ministerial failed. Two years later, the tragic events of 9/11 changed the world in such a dramatic way that globalisation — that links trade with corporate interests — became much easy. With democratically elected governments bending backwards to side with the United States, security forces continue to be increasingly deployed to make it safe for the global capital and investment. From Iraq to Pakistan, and from Korea to Colombia, the ’security concerns’ are essentially aimed at trifling public dissent and furthering the commercial interests of the multinationals.
I’d never been in doubt about the links between globalisation, trade, and corporate interests. But the blatant usurping of human rights and national sovereignty that began some five years back through an unprecedented explosion of discriminatory bilateral and regional trade agreements is something that shocks me. Close to 200 Free Trade Agreements (FTAs) — a misnomer for one-way trade — are being negotiated or have already been signed. A majority of these involves the US, which has either struck a deal or is in a negotiating process in every part of the hemisphere. There is race globally now to seek bilateral and regional agreements as if there is no tomorrow. Many of these, like the Central American Free Trade Agreement (Cafta 2004), are in the name of ’security issues’. Some others come as a ’reward’ to its allies in the Iraq war, like Thailand and Australia.
With the World Trade talks in limbo, the focus remains on aggressively pushing on the bilateral front. What could not be achieved through a multilateral trade regime, and that was peanuts compared to what is now being pursued through bilateral and regional deals. Developing countries have been made to believe, and there seems to be no plausible basis for such flawed thinking, that getting market access to America is the only way to economic nirvana. In return, developing countries (and also some of the economic giants) have buckled under pressure putting their own economies under a perpetual risk.
Country after country has agreed to eliminate tariffs barriers over the next ten years or so, and have already removed technical barriers to imports. Explicit guarantees have been provided on the treatment to American investors and services. Current barriers to agricultural biotechnology are being removed. Specific commitments pertaining to national laws and commitments to strong and transparent disciplines on government procurement procedures, rules of origin and effective enforcement of domestic labour and environmental laws have been sought. In short, all impediments in the march of the multinational companies have been cleared.
And yet, the American and European markets remain impregnable.
The enactment of the US Patriot Act, 2001 made it still more difficult. Take the example of gems and jewellery trade. Considering that diamonds could be used as a replacement for hard cash in arm deals, money laundering and other crimes, the US has used the provisions to restrict gems and jewellery imports. Thailand is the worst affected, with Bangkok’s Anti-Money laundering Office cracking on the domestic gems trade. More than 6000 gold shops and thousands of jewellery shops throughout the country are being targeted. For India, a major player in cutting and polishing of diamonds, the US has threatened to use the same provisions to check the ’blood diamond’ trail.
Returning to bilateral agreements, the common thread that flows through all the FTA is the demand for a stronger Intellectual Property (IP) Protection. No IP means no market access, is the usual American refrain. In addition, generic companies will have to wait until the patent expires before obtaining the marketing approval, which means effectively extending the patent monopoly. Further, in order to delay competition from generic manufacturers, multinational companies have been pushing hard to obtain exclusive rights over their test data. During this period of "data exclusivity", the companies are able to ensure that the generic manufacturers are not able to use the companies research data to produce their own generic version. In turn, ’compulsory licensing’ provisions are rendered useless if generic companies cannot use the ’test data’ of pharmaceutical companies, extended terms for patent protection and restrictions on parallel imports.
The US has already managed to coerce a number of other countries to offer stronger IP protection. Among these are Peru, Morocco, Jordan, Central American nations, Bahrain, and Australia. Between 2004 and 2005, all these countries have been made to agree to a TRIPs-plus agreement (Trade Related Intellectual Property Rights), aimed at blocking generic competition and removing laws and regulations coming in the way of pharmaceutical trade. Although India has still to sign a bilateral trade agreement with the US, the drug companies are exerting considerable pressure in this direction to seek data protection and block generic competition. At the same time, stronger IP protection is also running the risk of free use of traditional knowledge linked to genetic resources by American and other biotechnology companies.
All of this comes with a heavy price for the developing countries that are finding it difficult to make available medicines at affordable prices. In India, consequent to the recent amendments to the Indian Patents Act, medicine prices are on the rise. As per reports, the government is planning to ask 11 pharma companies to roll back prices of key brands of medicines. The prices rise in these medicines had exceeded 20 per cent in a year, with some going as high as 59 per cent. On the same lines, public protests in the past few weeks against the US-Thailand FTA that seeks strong IP protection have been loud.
In almost all these negotiations, the US is unwilling to talk about the massive agricultural subsidies, which make it difficult for the developing countries to find an export niche. Instead of sitting down and talking of a phase out in farm subsidies, the US argument is that agriculture policy is something that cannot be discussed bilaterally and will only be open for negotiation in the WTO. And when it comes to WTO, the US has refused to reduce even a single dollar from its monumental farm subsidies in the past ten years. The WTO talks are in a deadlock because the US is unwilling to cut domestic support in agriculture.
The result is that while the US agriculture exports are on an upswing, the developing countries are turning into food importers. In India, agricultural imports have gone up by 300 per cent in volume since the WTO came into effect. In China, farm imports are increasing at 27 per cent a year. The scenario in the rest of the developing world is no better. On the contrary, US agriculture exports post 9/11 have increased by $10 billion. EU farm exports have gone up annually by 26 per cent.
From agriculture, pharmaceuticals, and services, the US interests is now moving towards energy. Riding on the same bandwagon is the European Union. Aggressive trade interests have topped the EU economic and political agenda. With the developing world increasingly seeing through the mischief of world trade, the focus of the US is to seal as many bilateral and regional trade agreements before civil society in developing nations wakes up.
13 Sep 2006
Devinder Sharma is a food and trade policy analyst. He also chairs the New Delhi-based Forum for Biotechnology & Food Security. Two of his books are GATT to WTO: Seeds of Despair and In the Famine Trap.