May 5th 2001

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Articles from this issue:

Cover Story: The facts behind the rural revolt

Editorial: Rescuing the airline industry

Canberra Observed: What a Beazley Government means

Agriculture: Dried fruit industry savaged by deregulation

Text: Straws in the Wind: Our new cultural assimiladoes

The Media: A tale of two murders

National Affairs: Behind Costello's veto of Woodside takeover

Defence: Labor's new Maginot Line

Letter: Defence priority

Comment: Why Australia needs a strong manufacturing base

Globalism: Are trade treaties a Bill of Rights for Big Business?

History: Death in Life

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Globalism: Are trade treaties a Bill of Rights for Big Business?

by Bob Browning

News Weekly, May 5, 2001
Will globalisation reduce poverty and spread democracy, as US President George Bush says it will?

When urging leaders of the Western Hemisphere gathered at Quebec to adopt a Free Trade Area of the Americas agreement, Bush claimed:

"We seek freedom ... Free and open trade creates new jobs and new income. It lifts the lives of all our people, applying the power of markets to the needs of the poor. Open trade reinforces the habit of liberty."

While the US President was pleading the case for what he described as free trade, 39 US and other pharmaceutical giants were conducting a campaign to prevent South Africa from getting affordable medicines to treat millions of their citizens suffering from HIV-AIDS.

Only after a sustained international outcry did the drug giants eventually drop their court bid (if not their overall campaign) to bridle the South African and other elected governments.

Obviously, then, worthwhile attempts to assess globalisation will examine what trade agreements like the North America Free Trade Agreement and inter-government agencies like the WTO, IMF and G7 are actually implementing - not what think-tank theorists and corporate lobbyists say globalisation is.

According to its propagandists, globalisation is merely spreading free trade. Critics think it is both more and less than that. In their view, the new trade is not always free or fair. Nor is it always efficient in the way its propagandists claim. If the criteria for assessment of globalism includes public welfare, not just the size of private profits, then unregulated markets frequently bomb out.

Consider, for example, how leaden-footed the drug companies are when it comes to developing the medicines that the bulk of the world's populations need at prices they can afford. The market responds to demand - to the needs and desires only of those with the cash to pay the prices profit-seekers think worthwhile.

Groups like Medicins Sans Frontieres and Oxfam point out that only 11 of the 1223 new chemical entities developed in the two decades to 1996 were for treatment of the diseases afflicting millions in the poor tropical regions with dense populations.

Despite the rise of drug-resistant TB, it is now 30 years since the last new TB drug was developed. Critics want a system that can correct the failure of the free market. They seek a system that will produce the affordable drugs desperately needed to treat the resurgence of TB, malaria, meningitis, sleeping sickness and other chronic epidemics like the AIDS epidemic. In Africa alone an estimated 25 million people are suffering from HIV-AIDS. Last year 2.4 million Africans died from it.

Wealth distribution

The drug giants argue that they must protect their patents in poor countries if they are to make the profits needed to spend the huge amounts required for research and development. Critics wonder how true this is when all of Africa provides only one per cent of global pharmaceutical revenue.

Critics grow sceptical also when they learn that Bristol-Myers Squibb, for example - one of the big three of the multinational drug giants - pays its CEO nearly $40 million a year. This might be considered peanuts compared with the over $200 million that the Disney corporation pays its CEO. But it means that if all the 39 drug corporations waging the South African campaign pay their managers the ways Bristol-Myers Squibb does, that amounts to $1600 million a year going to their 39 top executives. Then there are their other senior managers. No wonder they reportedly spend twice as much on marketing their products as they do on research and development.

Globalisation distributes the new wealth from increased trade and investment heavily in favour of the investor class and the upper executives that manage the big finance houses and corporations. To a lesser extent, it rewards those skilled in applying the new technologies. The rest are left to flounder.

Power distribution

It is also important to realise that globalisation redistributes political power as well as wealth.

Actual globalisation, as against theoretical free trade, redistributes political power away from sovereign peoples and elected governments to much the same minorities as it does wealth. This cannot occur without the co-operation of politicians and major political parties in democratic countries. Many are in thrall to the ruling "neo-liberal" ideology and/or are hooked on big business electoral funding.

The common justification is that exercising consumer choice in the economic market gives people a more effective say than does voting in democratic elections.

Whether the new trade treaties really are a boon to people's well being, as President Bush and others assure us, is obviously a matter of the utmost relevance, particularly for Australians, given their geographical and cultural isolation and dependence on commodities trade.

Given the policy proclivities of their political representatives, Australians would do well to keep their eyes on what they are being committing to.

The GATS Round

The latest round of the General Agreement on Trade and Services opened in Geneva this April. GATS is one of the World Trade Organisation's sets of agreements.

High on GATS' agenda is the "reform" of domestic regulation - more particularly the restrictions that elected national governments establish to protect public services such as those in health and education.

Professor Allyson Pollock, head of University College London's Health Policy and Services Research Unit, recently warned of the implications of the GATT round and WTO trade negotiations (Health Matters, ABC, March 26, 2001).

Pollock noted that, with the decline of new profit opportunities for multinationals in manufacturing, the big US and European corporations were eyeing what they regarded as still unopened great oysters - i.e. services like health, education and prisons - that remain largely within public rather than corporate sector control.

In the present climate, corporations could hardly fail to notice that most of the rich Western countries spend anything from 8 to 13 per cent of their GDP on health and the same on education. Here is a rich source of profit. Big business wants to open up to corporate trade those services which have traditionally been largely in the public sector under the control of elected governments.

Corporations not only lobby WTO and related committees intensively, but frequently sit on those committees. Critics have described WTO trade agreements as a Bill of Rights for corporate business. Pollock commented:

"One of the problems [for the corporations] is that the trade treaties at the moment are not robust enough; they allow governments to exclude their public services voluntarily.

"This is a problem. So now what the industry is doing is focussing on the GATS Articles to actually make them so robust that they will apply top-down across all public services.

"So then governments will have to prove that they are operating pro-competitive and least restrictive trade policies. And if they can1t prove that, then they face the risk of being taken to the WTO courts, and the disputes panel mechanism."

All this may be helping to alleviate poverty and enhance democracy as President Bush and many other world leaders insist. If so, it is far from obvious.

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