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Division Between Developed and Developing Countries

Why did Copenhagen yield meager results? Divisions between the so-called developed and developing worlds have been cited as one of the major causes, with the developed nations — especially the U.S. — being seen as especially reluctant to reduce their carbon footprint.

Yet in a deeper sense the divisions in Copenhagen reflect a widespread backlash against a multinational corporate “free trade” agenda. That agenda, endorsed by both parties, has not only exacerbated inequalities between developed and developing nations but has also further entrenched inequality here, with attendant bitterness and insecurity.

Developing nations insist that if they are to commit to level or reduce their greenhouse emissions, they must receive assistance to produce or purchase the clean technologies that are more costly in the short run even as they yield long-term economic and environmental benefits. It is all too easy to portray this demand as a request for charity.

Rather than seek charity, however, developing nations are demanding that the U.S. live up to the terms of the free trade principles it so often touts. Genuinely free trade demands at least two minimal principles, that the polluter pays and that trade in all goods and services be unrestricted by tariffs or by other nontariff barriers to trade.

Trade deals orchestrated by the U.S. have observed neither principle.

Tariffs on manufactured goods have been reduced and the flow of goods across borders has increased as free trade advocates expected. Yet environmental standards were treated in effect as illegitimate barriers to trade. Production migrated to nations where environmental restrictions were minimal or not enforced.

Middle class consumers in affluent nations enjoyed the economic benefits of free trade while producing regions within the Third World absorbed the immediate toxic threats. Lawrence Summers once notoriously remarked that the Third World was underpolluted. His trade agreements mitigated that problem. Over the long run, the atmosphere as a whole experienced growing greenhouse concentrations.

Corporate trade agenda’s second departure from free trade principles lies in the way professionals and intellectual property have been treated versus labor and the service sector. The autoworker in Flint, Mich., must compete on an even basis with factory workers in Mexico. Surgeons and lawyers in Flint face no such competition. “Free trade” advocates have not even contemplated proposals that would allow Medicare to be outsourced to India or Canada, even though seniors could receive equal quality care at lower prices and some economists have developed plausible proposals on these lines.

One such economist, Dean Baker, points out that U.S. free trade agreements amount to “selective protectionism, the purpose of which has been to redistribute income from the less educated sector of the workforce to the most highly educated sectors. In addition, its trade policy has helped enhance the profits of the pharmaceutical, entertainment, and software industries by forcing our trading partners to provide stronger protection for patents and copyrights.”

Developing nations must open their financial services to U.S. finance competition and must stop subsidizing national media or peasant farmers. But these nations must observe the U.S. monopoly patent rights over drugs and software, and industrial patents. U.S. patent protections are the most generous in the world and enable profits far in excess of that needed to stimulate development of new technologies. Nobel economist Joseph Stiglitz advocates a system of reward for discoverers of medical breakthroughs that would be a much more cost-effective way to induce innovation.

Environmentalists advocate developing nations bypass the carbon age and develop alternative technologies. Yet adoption of these technologies is cost-prohibitive if they are to be asked to pay a monopoly ransom to the West for their use. Martin Khor, director of the South Centre, points out, “When intellectual property rights attached to a technology becomes a barrier to its transfer, because it increases the costs and it prevents developing countries from making the same technologies, then we have to overcome this barrier in order to have the greater international global good.”

Nonetheless, since U.S. taxpayers already pay the same companies disproportionately through high drug and software prices and for much of the basic research on which discovery depends, they are in no mood to support Third World subsidies — especially to nations whose labor is often now perceived as the source of their economic insecurity.

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