Free Trade Agreement

The following is a response a question posed to MIT professor Noam Chomsky following a lecture he delivered at the University of Illinois at Chicago on October 17, 1994.

Noam Chomsky on India, GATT and Pharmaceutical Patents, and 3rd World

Q. Could you comment on the current policies of GATT, the whole notion of intellectual property rights, and the effect of these policies on food production in the Third World?

A. That’s a really important topic and in fact it was one I had hoped to talk about but didn’t have time for. GATT is called a free trade agreement, just as NAFTA was, but that’s nonsense. These things are not about free trade and they’re certainly not agreements. In fact most of the people in the world are opposed to them. What you mentioned is an extreme case of that. Intellectual property rights have to do with protectionism. The U.S., and in fact the rich countries generally, have led the insistence that the GATT agreement, like NAFTA, include strong intellectual property rights. That’s protectionism. That means increasing the power of patents. Patents are protectionist devices. They are designed to insure that the technology of the future is in the hands of transnational corporations, most of which, incidentally, you guys pay for. Remember they don’t believe in a free market. They want to be publicly subsidized in research and development and controlled markets and so on. The strength of intellectual property rights means longer patents.

Take India for instance. India has a big pharmaceutical industry. They can produce drugs at a fraction of the cost of what Merck wants to sell them for. In fact drug prices are way lower in India than in Pakistan next door because India happened to develop its own pharmaceutical industry. The American corporations don’t like that. They want more children to die in India. It’s not whether they care whether children die. They want more profit, which means more children die in India. They want to make sure India doesn’t produce drugs at less than the cost of American drugs. Now this is done in two ways under GATT. One way is to increase the length of patents. The other is to change their character from process patents to product patents. That’s very crucial. In the past patents were process patents. Like if Merck, thanks to your taxes, designed a way to produce a certain drug, and then say some smart guy in India figured out a cheaper way to produce that drug, that was allowed. We don’t want that. We want to cut down technological innovation, cut back economic process, economic progress, and economic efficiency and increase profit. So now they are product patents. If Merck figures out a certain way to produce a drug they can hold that for twenty years because it’s a product, and they can hold the process for another twenty years. They get forty years of holding on to that drug. By that time everybody’s forgotten about it. There’s some history about this. The developed countries like us never accepted anything like that. Even weak patents on technological development weren’t accepted by the rich countries until just a few years ago. There was one time that I know of that product patents were actually tried, namely in France in the early part of the century that had such patents. That destroyed the French chemical industry. It moved to Switzerland. So Switzerland has a big chemical industry and not France. It’s not a big secret. This is straight history and the people who are planning GATT understand it. They want to make sure that they destroy the Indian or Argentinean pharmaceutical industries the same way that France’s dumb choices destroyed the French chemical industry. The New York Times a couple of weeks ago had a tiny ten line item stating that India (with a gun pointed at its head) agreed finally to liberalize their pharmaceutical industry, meaning sell it to western corporations. So drug prices will shoot sky high in India and children will die but there will be more profits. Now this has nothing to do with free trade. This is a high level of protectionism. In fact it is specifically designed even to be contrary to the narrow definitions of efficiency that they teach at the University of Chicago Economics Department. So it’s going to cut down on technological innovations, efficiency and so on, but it will happen to increase profits by accident. Well, that’s intellectual property rights. I gave one example but there are plenty of others like it. If you look over the whole GATT Agreement this is sort of a complicated array of protectionist and liberalizing devices very carefully geared to the interests of transnationals.

As far as agriculture is concerned, the way of measuring the efficiency of agricultural production, which like most of these measures are just tax-based ideology that don’t have anything to do with science, is to look at certain inputs and outputs and you do some calculations to figure out what the efficiency is. Some things are left out. If you do the calculations their way the cost of environmental pollution doesn’t count. That’s called an externality, which means they worry about it in some other department. There’s another one you don’t count.

It usually turns out to be the case that heavily subsidized western agri-business tend to produce corn more efficiently than, say, Mexican peasants. If you do a narrow measure of the highly ideological type that they teach you about in economics departments it will turn out to be more efficient for the world if American agri-business produces corn with big petroleum inputs than if Mexican peasants do it, but there’s a few things left out of that calculation. One thing that’s left out is that ten to fifteen million Mexican peasants will be driven off the land. They’re going to be driven into cities where they’re going to starve. There’s a lot of costs associated with that. Put aside the human cost which nobody cares about. Just take the straight economic costs like taking care of them somehow. Well, that’s somebody else’s department. We don’t count that one in.

Put all this stuff together and you get particular choices. This is a game of class warfare masked in big words so it sounds like science and mathematical formulas. If you ask common sense questions you see all kinds of things are left out. If you’re sending corn to Mexico you’ve got to put it in trucks. What about transit costs? The purpose of these agreements is to ensure that agricultural production is monopolized by transnationals and that the third world gets nothing. If you read the Indian press you may have noticed that Indian customs officials stopped some alleged German scientists at the border who were leaving India with some funny stuff in their bags, namely a couple hundred thousand bugs. They didn’t know what the hell they’re doing with these things but we know. That’s the gene pool that western pharmaceutical companies are trying to steal from the south. Those are their resources but we get them for free. For thousands of years people in the south have been developing crops. They don’t own them. They don’t get any rights from that. We just go in and steal them. So they have the rich gene pool and the thousands of years of experience in creating hybrids and figuring out what herb works. Then western corporations go in and take it for nothing, just check if they’ve got a piece of paper anywhere that says they own it, stamped by the authorities. Therefore we steal it from them and it appears in some biology lab. We minimally modify it and sell it to them. We patent it. It’s a scam designed to rob the poor and enrich the rich, like most social policy. That shouldn’t surprise you. After all, who made social policy? This was a truism of Adam Smith. The people who make social policy make it in their interest. They wouldn’t be in a position to make social policy if they weren’t rich and privileged. People suffer.