Free Trade for Whom?
An interview with Kristin Dawkins
by David Barsamian
Z magazine, November 1998
Kristin Dawkins is director of the Trade and Agriculture Program
at the Institute for Agriculture and Trade Policy in Minneapolis.
She directs the Institute's work on ecological economics and the
links between trade and environmental policy. She came to the
Institute from Harvard Law School Program in Negotiation, where
she was Senior Writer for the publication Consensus. From 1973
to 1989 she worked in community development in Philadelphia, where
she served as the Executive Director of the Philadelphia Jobs
and Energy Project. She is the author of Gene Wars: The Politics
BARSAMIAN. You write, "The Uruguay Round of the General
Agreement on Tariffs and Trade, known as GATT, and the creation
of the World Trade Organization, WTO, have elevated concerns about
the impacts of global trade rules on rural and urban communities,
family farmers, consumers, indigenous peoples, the environment,
democracy, and human rights. You want to delineate a little bit?
DAWKINS: In general, the objective of globalization, particularly
as it is being driven by trade policy, is the commercialization
of everything. The marketplace determines societal decisions.
Its goal is to have corporate wealth as the measure of human welfare.
This is the general problem that the Uruguay Round and its 28
different trade agreements is exacerbating. Each one of the constituencies
you listed is affected somewhat differently by one or more of
the 28 agreements, according to the part they play in the general
economy and the changes that are driving the way they can or can't
make money in a global economy.
I'm interested that you mention "democracy" and
"human rights" as a constituency.
There are constituencies trying to reinforce democracy and
human rights as alternative frameworks for global policy. The
United Nations and its agencies are not perfectly democratic,
but at least all of the governments of the world do have a vote.
On the other hand, the World Trade Organization, the World Bank,
and the International Monetary Fund are the three institutions
spearheading globalization, often referred to as the Bretton Woods
group. This group is not driven by a voting procedure in which
all governments have a voice or a vote. It is driven by a voting
procedure based on the dollar. The wealthy countries that invest
money in those organizations get to make the decisions. The poorer
nations of the world, who are generally the recipients of the
policy and the actual financial aid, have no voice in the decisions
that are made.
Bretton Woods is in New Hampshire. In 1944 it was the site
of a big power economic summit to shape the postwar economic world.
It was part of the general, movement towards the Marshall
Plan. After the war, the very highly industrialized U.S. economy
no longer had war production to fuel the economy, and so they
were trying to convert to a peacetime agenda. That peacetime agenda
was essentially to rebuild Europe. So they embarked on a series
of institutional design questions, created the World Bank, the
IMF, and what was the GATT up until very recently. It's been converted
into the WTO. In so doing, they poured a lot of money into construction
of harbors, shipping, transport, railroads, and factory development.
All of that was designed to subsidize the reconstruction of Europe.
Once Europe was reconstructed, however, things really changed.
It became a competitor. The industrial sectors of Europe and the
U.S. began to compete with each other and to compete for foreign
markets in the developing world. As a result, over time there's
been a switch in the policies that these three Bretton Woods institutions
embrace. These policies are now designed to move the industrialized
production system into the Third World, exploit the resources
and the labor of the Third World, and make those cheaper imports
available to a globalized economy that is supposedly more efficient,
but definitely more profitable for the transnational corporations.
Perhaps some people are stuck in the quagmire of acronyms
that surround trade issues. We've already mentioned GATT and the
WTO. Then there are NAFTA and MAI and terms like fast track. Could
you sort these out?
GATT is the General Agreement on Tariffs and Trade. At the
time, the Bretton Woods negotiators were really designing something
they called the International Trade Organization. Reading those
original documents, one sees a number of principles that might
be considered valid and important to implement at the international
level, such as antitrust regulation and fair pricing for trade
and international commodities. These parts of the International
Trade Organization, however, did not get implemented into international
law, precisely because the Truman administration at that time
was having a number of partisan disputes with Congress. The only
piece able to emerge from the congressional process was the one
segment of the International Trade Organization that dealt with
commercial trade. So only commercial trade was regulated, and
in those days the regulations were primarily promotion of trade
in order to restimulate investments in Europe. To this day they
remain a promotion of trade more than a regulation of trade.
A number of the regulations that are emerging from the last
couple of rounds of trade negotiations, in particular the Uruguay
Round, which was finished in 1994, require governments to undo
laws that had been made at the national level through processes
of citizen participation, through Congresses or Parliaments, as
the case may be. According to the WTO, which is the new World
Trade Organization created by the Uruguay Round to enforce the
new trade regime, many existing national laws need to be either
changed in order to conform' with international trade law or a
country has to pay a penalty if they prefer to keep what has been
their democratically derived national legislation.
NAFTA, the North American Free Trade Agreement, passed Congress
by a narrow vote.
In 1993, Congress voted in favor of NAFTA, 234200. The vote
was close because of well organized campaigning against the kind
of free trade the U.S. promotes on behalf of corporations. Canadians
can talk at great length about the changes in their economy, none
for the better, that the 1989 Free Trade Agreement with the U.S.
started up there. Then free trade promoters took a number of those
principles, applied them to Mexico, and added another couple of
layers. Free trade means that corporations are allowed to send
goods back and forth across borders, regardless of a number of
policies that at the border used to be considered legitimate protection
for the citizenry. Take, for example, the inspection of meats.
One of the provisions of NAFTA was that the meat industry should
be allowed to ship meat back and forth across the border with
minimal inspection standards.
In the summer of 1997, there was the largest recall of meat
in U.S. history.
There are more and more scares every day. I just read that
the average American has one stomach upset per year as a result
of eating food. There is a general decline in food safety standards.
Meat inspections are way down. So, too, are pesticide standards,
so that the amount of toxic residue on the fruits and vegetables
that we get at the store is often higher than in the past. All
of this is in the interest of promoting trade and commerce, not
in the interest of protecting the public.
When the U. S., which is the prime mover behind these free
trade pacts, crafts them, they are structured as agreements rather
than treaties. Why that distinction ?
This gets us to fast track. Under our Constitution, the Senate
has the obligation to determine what international treaties become
national law. It requires a vote of two-thirds of the Senate for
an international treaty to be implemented as part of U.S. law.
The two-thirds requirement is fairly stiff. In order to evade
that particular requirement, which I would say is a highly democratic
provision, the White House, going back a good 20 years, has used
what is called the fast track process and changed the classification
from treaties to executive agreements requiring just a 51 percent
majority vote of the House or Senate. They claim that it's difficult
to reach a balance with a number of issues having been bargained
back and forth to reach some kind of optimal agreement among many
countries. In order to preserve this delicate balance, the White
House prefers to eliminate through fast track the right and obligation
of the Congress to approve them as treaties. Instead they're obliged
to vote on the entire package as a simple agreement with a majority
vote, up or down, one vote each for the whole package. No debate
and no consideration of the different issues.
The advocates of free trade argue that the world is becoming
a global village and we are interdependent economically, and that's
a good thing. So, for example, you can get a batik sarong from
Indonesia in Minneapolis or you can buy basmati rice from India
in Boulder, Colorado. In return, people in those countries can
get a Madonna video, a Michael Jackson CD, or Nike Air Jordans.
The joys of modern progress. There are definitely some advantages
to trade. I drink coffee. I drink orange juice. Those things aren't
grown in Minnesota where I live, so it is a privilege that I have
as a citizen of the global economy to be able to consume these
products daily. But on the other hand, the premise that trade
generates wealth for all is a bogus argument.
Tetteh Hormeku of the Third World Network in Penang, Malaysia,
in an article in Third World Resurgence magazine, writes that
U.S. trade policy in Africa is "intervention by other means....
President Clinton's offer at the Denver G7 summit in June of 1997
to expand trade to Africa is not designed to build the continent's
economic capacities. Rather the move is part of a multi-pronged
attempt to promote U.S. corporate interests in Africa. "
First let me explain the MAI which you asked about earlier.
The MAI, the Multilateral Agreement on Investment, is the latest
and greatest effort by the transnational corporations to completely
eliminate any regulations that nation-states may have created
to try to make sure that there is some degree of trickle-down.
An investor comes into a country, let's say Zimbabwe, and sets
up shop, develops an enterprise, makes some money, and ships that
money back home to a bank in New York or Switzerland or offshore.
The Zimbabweans may have established some rules governing foreign
investors to ensure that some percentage of the value of what
that enterprise makes is reinvested in the local economy before
the profits are taken out of the country: performance requirements
that an investor has to either hire locally or use locally manufactured
inputs, for example. The draft MAI is a set of rules for governments
requiring them to free investors from the kinds of development
policies that I'm mentioning. As a further violation of democratic
principles, the MAI is being negotiated not at the global level,
but in the Organization for Economic Cooperation and Development
(OECD), which is the grouping of 29 or so of the richest countries
in the world, the industrialized nations' club, as it's sometimes
If the MAI is eventually approved by these 29 rich countries,
then, the draft rules say, other poorer countries can join in,
without having had any access to the negotiations. Africa is considered
a very interesting new market, not so much for the sale of products
but for investors as a source of new raw materials for production
and cheap labor, of course. So the Clinton administration is looking
at a way to get a head start over the rest of the world in setting
up shop for U.S.-based transnationals to penetrate that African
market. There is a bill in Congress that would basically set up
a NAFTA-style arrangement with African countries, but it goes
even farther than NAFTA in that it applies a number of the same
conditions that go along with the so-called structural adjustment
process. These are conditions required of indebted governments
by the IMF and World Bank to restructure their economies so that,
theoretically, they will pay off their debt as the top priority.
One of the conditions is currency devalution. Suppose that on
one day you had $10,000 in the bank and suddenly your currency
is devalued, let's say, 50 percent; that means the next day you
only have $5,000. So for holders of money, devaluing can be a
terrible problem. For people, however, who are exporting, it means
that the price of their goods goes down by half. The sudden cheaper
price in the world marketplace means that they get a step up against
their competitors. So suddenly you see the demand for those products
increasing. Only half of the original value in foreign exchange
is coming into their economy, but they're selling a whole lot
more stuff. The foreign exchange gets banked, and enables the
country to make a debt payment. This result is good for the traders
themselves and the creditors, but bad for the nations and very
bad for the general population. Currency devaluation is one of
the conditions attached to structural adjustment policies in general
and the Africa trade bill in particular.
Structural adjustment also encompasses privatization of the
public sector and shredding of the social safety net.
Those are other conditions that are a general part of structural
adjustment policies and the African trade bill. They are designed
to take as much of the cash that is within an economy as possible,
extract it from the local system, and get it into the big banks
that are presently owed money through a lot of financial mismanagement
over past decades. By privatizing government services, such as
agricultural marketing boards or electricity and telephone services,
governmental expenditures go down so more revenues can go into
debt payments. By cutting back on health and education and other
social services, more government revenues can go into debt payments.
The whole purpose is to extract public wealth for the banking
The Clintonites and those who preceded them argue that free
trade is essential for the future economic well-being and growth
of the U.S. They liken it to a form of national security. They
say that the U.S. must remain competitive in an increasingly tough
global economy. The mantra of jobs, jobs, jobs is intoned by Clinton
and treasury and trade officials.
This is deeply cynical. The jobs that one can point to as
a result of the free trade agreements are in general a matter
of lost jobs. The actual econometric evaluation of NAFTA, for
example, looks at something like 420,000 jobs lost out of the
U.S. economy as a result of the changes in our trading patterns.
The idea that free trade generates jobs is really hard for the
proponents to prove. One of the economists that they cite most
often, who was with the Institute for International Economics,
admitted one year after NAFTA was in place that he had been wrong
and that all of his own projections had been incorrect. The economy,
however, of the transnational corporations has been boosted by
these agreements. It's easy to look at their bottom lines and
see tremendous increases in sales as they've taken advantage of
new markets in other countries, markets that were essentially
stolen from national capital and small, local producers in the
rest of the world.
In the context of the Asian economic meltdown, the International
Monetary Fund has come under rather widespread criticism for the
first time from economists like Jeffrey Sachs and Paul Krugman
for some of its lending and bailout policies.
It's good to see, finally. The original goals of the IMF was
for it to act as a stabilizer of last resort. So that at a much
smaller scale, if this kind of a phenomenon had occurred in the
1940s and the 1950s, the theory was that the IMF would have the
ability to take ,some of its money and invest it in that suddenly
shaky economy and thus keep the amount of cash available to that
system somewhat stable and therefore functional. The result, however,
of the last few decades of IMF policy has been virtually the reverse.
They are still a lender of last resort but only after a country
is in a lot of economic trouble, and the conditions attached to
those loans make things worse: devaluations, the privatization
of much of the fundamental infrastructure in a country, and the
extraction of every available public dollar to pay back those
earlier debts. With new loans being used to pay off old loans,
as Fidel Castro has pointed out, the debt is in many cases actually
mathematically impossible to pay off with the kind of production
systems that drive those economies; that is, the debts and compounded
interest are so great that repayment can never be achieved. A
private debtor would go bankrupt, but a country cannot close its
doors. This is what we're seeing in much of Africa and in other
parts of the Third World, where the debt has grown proportionately
over many years. The IMF has loaned over and over again to keep
some degree of fluidity in these economies, but without forgiving
the debt. So as the debt mounts and mounts, an economy finally
becomes prostrate before international policy. That's when the
conditions swing in. Under IMF-imposed structural adjustment regimes,
governments are forced to eliminate health, safety, education
and food assistance subsidies.
The U.S. is the largest constituent member in the IMF and
clearly calls the shots within that organization. Does that one
dollar of taxpayer-supported money from the U.S. go to the IMF,
then to Indonesia, and come back to pay off a New York bank? Is
that fairly accurate?
It is, more or less. This bailout that is being talked about
in Congress right now, and is the top foreign policy priority
of the Clinton administration, is designed to do essentially that.
The taxpayers' money would be given to the IMF. The IMF would
then lend it to the banking system, the national treasury in these
countries. They would use the treasury of that country, and therefore
the credit-worthiness of the people of that country, to-help buy
out the bankrupt companies in that country, as well as to give
national fluidity to those handful of companies that have managed
to stay afloat. Those companies that have gone bankrupt, oftentimes
their creditors are the banks in New York. So under normal bankruptcy
proceeding, there is the list of creditors who get paid off first
and foremost. They tend to be the big banking names like Chase
Manhattan and Citibank. Those guys then become the ultimate recipients
of the bailout process.
You use the term biopiracy. " What is it?
The normal kind of piracy that we're all familiar with is
when a ship on the high seas back in the 1700s would plunder another
ship and loot it. In modern times the plunderers are going into
wilderness areas in the Third World, the Amazon, some of the Asian
and African tropical belts, and plundering the genetic resources,
which are very prolific in these tropical zones. Modern biopirates
are scientists, anthropologists, botanists, people with that kind
of training who know how to approach a tribal community or a forest-dwelling
community in the tropical forests and find out from their shamans,
their medicine people, their leaders what their use of some of
the focal plants may be. If you look at our modern medicine, some
90 percent of the medications that are prescribed have their active
ingredient derived from plants. These traditional medicine healers
have scientific knowledge. The anthropologists go into villages,
find out about useful plants, take them back to the laboratories
in the U.S. or Europe, develop a new medicine from that knowledge,
patent that medicine with a 20-year monopoly on any use of that
knowledge for that one company to profit from. This is biopiracy.
For example, the aloe plant. It has healing properties for
cuts and burns. Are you saying that a corporation will have an
absolute patent right on that and if you were living in Costa
Rica you could not go into the forest and pick an aloe leaf and
The police aren't lurking behind every aloe plant throughout
the planet. In most cases people will still go out and pick the
leaf and use it. But where there's a real profit to be made, the
private police of that company are monitoring these kinds of activities.
The case I'd like to mention is a practice that used to be very
common in the U. S. and is still common throughout the rest of
the world, and that is for farmers to re-use seeds. They plant
a seed and it grows a crop and they select from that crop some
of the better seed and then use it next year for the next planting
season. But now that they are patenting seeds companies are finding
that some farmers are going ahead and re-planting these patented
seeds anyway, contrary to the terms of the contract that the farmers
sign when they buy it, the companies are actually penalizing those
farmers. You would think seeds are common and available. But when
there is a tremendous market to be kept for the private use of
one company, they will send the police out. Farmers in the U.S.
have been fined and, in some cases, their crops have been burned
as a penalty for re-planting patented seeds.
You talk about some case studies in India, three in particular,
neem, basmati rice, and turmeric.
The basmati case is the most recent. In late 1997, Ricetech,
which is a U.S.-based company, went to the Patent and Trademark
Office of the U.S. government to file for a patent on basmati.
The result means that they are the only company in the world allowed
to use the name "basmati" on a commercially sold package
of rice. In the northern region that straddles India and Pakistan,
basmati rice has been produced for hundreds if not thousands of
years. It is a special form of rice that is particularly sweet,
aromatic, and very popular. This means that Indian farmers, who
developed this rice, who made it sweet and aromatic through cross-breeding
and selection processes, are no longer able to market the rice
from the original region as long as Ricetech owns the patent and
can monopolize use of that name.
The same with the neem. Neem is a tree that grows everywhere
in India. It happens to have properties that are insecticidal
and antibacterial. People go out in their backyards and pick a
few leaves and use them to brush their teeth with, to wash their
clothes with, to delouse with if they're having a problem with
lice. The W.R. Grace & Company took the neem seed and, through
a number of laboratory processes, developed a certain pesticidal
extract and patented its manufacturing process. All together,
more than a dozen U.S. patents have been taken out by various
companies On uses of the neem. The patents don't mean an Indian
can't use the tree. The neem police aren't watching every backyard.
But they do prevent Indians from competing in the commercial world
using a plant that is from India. It's W.R. Grace and the other
patent-holders' right to commercialize neem in any capacity whatsoever
for 20 years.
Turmeric is used in cooking and it helps in healing as well.
There was a patent applied for in the U.S. which declared all
commercial uses of turmeric would belong to the company. This
one was successfully challenged by the Indian government, which
is very likely to challenge the basmati patent, too. In the case
of turmeric, after a good deal of publicity, the company was forced
by the U.S. to withdraw its patent.
Today three giant corporations dominate agriculture, ConAgra,
Continental Grain, and Archer-Daniels-Midland. The latter, which
calls itself "supermarket to the world, " is a major
sponsor of National Public Radio and PBS. It was convicted of
price-fixing on the international grain market and fined $100
million, the largest amount in history. What kind of impact do
those three corporations have on U.S. agriculture?
What we see in rural America is the result of a couple of
decades of this process in which agribusiness has been lobbying
for low farm prices-cheap raw materials for their industry. During
the 1980s, the combination of low farm prices and high interest
rates forced many farmers to go bankrupt. The number of family
farmers today is roughly about a million, down from something
like six to eight million a couple of decades ago, while the agribusiness
conglomerates have expanded by leaps and bounds. This corporate
windfall is structured in a very clever fashion. Every five years,
the U. S. government produces something that they call "the
farm bill." If you look back five years at a time, you find
a very steady lowering of the legislated "target price."
This is the price farmers get paid and, since the 1950s, it's
been less than their costs of production. The farm bill then offers
a taxpayer subsidy of the difference between this low target price
and what the private sector, the companies that you mentioned,
offer in the market. Thanks to this insulation by taxpayers, the
big companies have gradually been able to offer a lower and lower
market price. The taxpayers' contribution, up to a legislated
target price, still fails to bring the value that the farmer makes
up to the actual cost that the farm entails when it puts a crop
into the ground. That difference, for many years around 25 percent
of real costs, is what led to the bankruptcies of the 1 980s.
Now we're seeing another wave of farm bankruptcies, as the most
recent farm bill eliminated government support for farmers' income
Again, within the context of really existing capitalism, Archer
Daniels Midland is one of the largest recipients of corporate
welfare. This has 'been documented by Public Citizen and United
for a Fair Economy.
This is absolutely true. Yet they go ahead and do their price-fixing
and their market allocations with their subsidiaries in other
countries around the world; The case that they got caught for
had to do with a byproduct of the grains themselves, but they
were colluding with Japanese subsidiaries to affect the international
market for this Iysine product as well.
Where's the USDA in all this ?
ADM, the "supermarket to the world," was caught
and fined a record-breaking $100 million. But compared to the
$15 billion in sales ADM expects to make this year, it's not enough
to eliminate this kind of rogue marketing. There's something like
a couple thousand complaints of various sorts of antitrust violations
that the U.S. government fields every year. They are only able
to investigate something like a few hundred of those. Those few
hundred end up getting mired in enormous bureaucratic procedures,
otherwise we would hear about more ADM-type scandals. But this
is the nature of antitrust enforcement in the government today.
Not to end pessimistically, I'd say the average American is getting
more and more skeptical about corporate welfare, while internationally
there is a lot of resistance to U.S. policy as it is being advanced
by the Bretton Woods Institutions. Campaigns at the WTO this year
are focusing on food safety, meat inspections, and genetically
engineered foods. Next year, we'll see fights at the WTO over
whether Monsanto and Novartis should be allowed monopoly patents
on life and how to stop biopiracy, with Africa leading the opposition.
International organizing isn't very well reported in the news
media, but there's plenty going on.
Kristin Dawkins can be reached at email@example.com; or the
Institute for Agriculture and Trade Policy, 2105 Ist Ave. South,
Minneapolis, MN 55404; 612-870-3410.