The Fiction of Free Trade 
by Jeff Milchen
November 29, 2003
First Published in Tom Paine.com

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The corporate executives promoting the “Free Trade Agreement of the Americas” (FTAA) and the protesters that marched in the streets of Miami share a common habit: using the term “free trade.” For the former this isn’t surprising; for the latter it’s inexplicable.

Americans like anything that’s free—both literally and rhetorically—and FTAA boosters naturally embrace the term. Yet, opponents of FTAA hurt their cause by conceding to boosters the terms of debate, as they argue they want "fair trade, not free trade."

In most realms of commerce, nothing even approaching free trade is being practiced by the United States, and by allowing so-called free trade supporters to go unchallenged, FTAA opponents help maintain the fiction of an unregulated, open marketplace. Trade treaties erect barriers to trade as often as they remove such barriers. As Wayne Andreas, CEO of Archer Daniels Midland said in 1995: “There is not one grain of anything in the world that is sold in the free market. Not one. The only place you see a free market is in the speeches of politicians.” As someone well-acquainted with both illegal price fixing and the legal exertion of political power to extract taxpayer subsidies, Andreas knows of what he speaks.

Not only do treaties like FTAA outlaw forms of protectionism that serve the public interest—such as safeguards for healthy air, drinkable water and a safe workplace—they preclude or destroy competition in many business realms. FTAA proposals would strengthen some of the most expensive and anti-competitive forms of protectionism—patents, copyrights and other monopolies commonly grouped under the rubric “intellectual property rights.”

Many of these rights are essential to ensure that writers, researchers, musicians and others receive just compensation for their work. More often, though, these monopolies are giveaways of research and assets paid for by our tax dollars.

Take the prescription drug market, for instance, a subject of much recent debate. Eleven of the 14 most medically significant drugs developed in the United States between 1970 and 1995 originated with government research. Developed using $32 million in taxpayer dollars, the cancer drug Taxol became the property of Bristol-Myers Squibb after the government gifted the exclusive patent for the drug to the pharmaceutical giant. Squibb generates close to $2 billion in Taxol sales annually and has charged about 2,000 percent over production cost thanks to a government-created monopoly.

We constantly hear Canadian price controls blamed for the cheaper price of Canadian drugs, when actually price controls imposed by the U.S. government are the primary reason for the obscenely high prices. Why is the U.S. government imposing price controls? To increase corporate profits. The driving force behind the corporate trade agreements is to expand such lucrative forms of protectionism across international borders. And while tariffs rarely increase the price of a product by more than 25 percent, patent-protected monopolies can gouge us with prices 20 times the cost we'd see in a truly “free”—or competitive—market.

Not only do many of the proposed "property rights" undermine the notion that these trade agreements are about meaningful competition, they are unconscionable to any decent society because they effectively mandate suffering and death to bolster corporate profits. For example, poor countries that import generic AIDS drugs that save thousands of lives have been sued to halt the practice as a violation of trade treaties.

While corporate and government officials eagerly pit many relatively prosperous North American workers against poverty-wage workers overseas and allow migrant workers to further depress pay at low-wage jobs, they simultaneously erect barriers to prevent foreign professionals like doctors and lawyers from practicing in the United States. The added costs to Americans of protectionism in these politically influential professions—though they may well be justified for non-economic reasons—dwarf those caused by more controversial protections like U.S. tariffs on steel imports. In our society, political power determines where markets will or will not be free.

Such market distortions also occur in many retail markets. In October, the Consumers Union issued a lengthy report showing that independent pharmacies beat chain competitors on price, service and overall satisfaction. So why have chain drug stores displaced more than one thousand independent shops in the past decade?

Government discrimination is a significant factor. For example, Pennsylvania’s health plan for state workers mandates that they fill prescriptions at Rite Aid or via online vendors. Where are those Republicans who so vocally object to “limiting choice” when it’s small businesses that are disadvantaged? Independent pharmacies also suffer under federal bias such as Congress’ prohibition on Internet sales tax, which forbid states from treating local business and mail order or Internet vendors equally. As a result, local businesses must compete against an effective federal subsidy of 4 to 6 percent in most states.

While the core reason for citizens to reject the FTAA is the ongoing attempt to rewrite international commerce rules in ways that trump democracy, citizens should not concede the premise of its title. We should shift debate to democratic terms and reject language that stacks the deck against us. Too bad “we want democracy, not corporate rule” doesn’t make much of a chant.

Jeff Milchen is the founder of ReclaimDemocracy.org, a non-profit organization dedicated to restoring democratic authority over corporations. This article first appeared in Tom Paine.com.



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