Chalmers Johnson - The Sorrows of Empire - Militarism, Secrecy, and the End of the Republic

The United States was the architect of and main profiteer from these efforts. From 1991 to 1993, Lawrence Summers was the chief economist at the World Bank and the man who oversaw the tailoring of “austerity measures” to each country that needed a loan. He decided exactly what a country had that Washington wanted to open up. On December 12,1991, Summers became notorious for a leaked memo to senior officials of the bank encouraging polluting industries in the rich nations to relocate to the less developed countries. He wrote, “I think the economic logic behind dumping a load of toxic waste in the lowest wage countries is impeccable and we should face up to that.” Brazil’s secretary of the environment, Jose Lutzenburger, replied, “The best thing that could happen would be for the Bank to disappear.” 22

Meanwhile, across town in Washington, at the Department of Commerce, Jeffrey Garten, undersecretary of commerce in the Clinton administration and another author of these schemes, explained, “We had a mission: [Ron] Brown [secretary of commerce] called it ‘commercial diplomacy,’ the intersection of foreign policy, government power, and business deals. We used Washington’s official muscle to help firms crack overseas markets. The culture was electric: we set up an economic ‘war room’ and built a ‘trading floor’ that tracked the world’s largest commercial projects.” Garten acknowledged that many of the business deals, often involving insider trading by high-level government officials, were probably crooked, but he justified them on these grounds: “If you open a wild bazaar, as we did, you have to expect the occasional pickpocket.” 23

What these pickpockets achieved can be illustrated by the plight of the Philippines. Between 1980 and 1999, the country received nine structural adjustment loans from the World Bank and six different balance-of-payments loans from the IMF. Between 1983 and 1993, it recorded exactly zero average growth in GNP. 24Two decades after the first structural adjustment program, the World Bank gave up on the loans for the straightforward reason that, in the words of Walden Bello of the University of the Philippines, “failure, spectacular failure, could no longer be denied at the pain of totally losing institutional credibility.” 25

What began as a poorly conceived program of emergency measures for debtor countries early in the 1980s slowly matured into the hard orthodoxy of the “Washington Consensus” in the 1990s. The U.S. government became determined to impose neoliberal economics on every country on earth. To do so, it unveiled its master plan, the “Uruguay Round” of international trade negotiations (1986 to 1994), and its crown jewel, created on January 1,1995, the World Trade Organization (WTO). Acting in compliance with a seemingly innocent effort to create a common set of trade rules for all and to bring agriculture under such rules for the first time, “many developing countries discovered that in signing on to the WTO, they had,” as Bello put it, “signed away their right to development.” 26

It should be understood that there was no need to create the WTO. There was no crisis in international commerce between 1986 and 1994 that required rectification. International trade was expanding nicely under the GATT formula. The WTO was created because the United States discovered that it could be created. Concretely, it had two objectives: to try to manage the growing trade rivalry among the leading industrial countries, particularly the United States, the European Union, and Japan, and to ensure that the Third World was prevented from using trade as a legitimate instrument for its industrialization, thereby threatening the neoliberal global economic structure. The United States achieved the latter objective through the Agreement on Agriculture and the Trade-Related Intellectual Property Rights Agreement, two of the pacts that the Uruguay Round delivered in 1995 to the WTO to enforce.

Prior to the World Trade Organization, agriculture had for all intents and purposes been outside the purview of GATT because the United States had long threatened to withdraw if it was not allowed to continue protecting domestic sugar, dairy products, and other agricultural commodities. To head off an explosion, GATT simply decided not to enforce any rules on agriculture. By the 1970s, however, Europe had become a net food exporter, and competition between the two agricultural superpowers, the European Union and the United States, was growing ever fiercer. Both wanted to force open the Third World as a new market for agricultural exports. To do this, they had to put the farmers of poor countries out of business and replace them with giant agrobusinesses. In the Uruguay Round of agricultural negotiations, the European Union and the United States excluded all representatives of the Third World and agreed between themselves on rules covering agriculture. In the Blair House Agreement of 1992-93, they prohibited the Third World from protecting its agriculture but exempted their own subsidies because these were already in place before the agreement was concluded. Unsurprisingly, a huge surge of agricultural imports then poured into developing countries without a commensurate increase in their exports. This intrusion produced a flight into Third World cities by displaced agricultural workers, an ever-greater concentration of land holdings, and a marked rise in rural violence as local farmers tried to protect their way of life.

In the late 1990s, under the European Union’s Common Agricultural Program, the fifteen EU countries spent $42 billion annually subsidizing their farmers, while they allocated to the Third World only $30 billion in developmental aid for all purposes. The level of overall subsidization of agriculture in Western countries rose from $182 billion in 1995, when the WTO was born, to $280 billion in 1997, and $362 billion in 1998. By 2002, European Union subsidies to agriculture were six times the total amount of foreign aid that all rich countries gave to the poor. 27The result in the First World was the overproduction of a vast range of agricultural products, including cereals, beef, pork, milk, butter, tomatoes, sunflower oil, and sugar. These commodities were then unceremoniously “dumped” (that is, sold below the costs of production) in developing countries. Joseph Stiglitz’s conclusion is unavoidable: “The well-to-do countries that officially praise free trade frequently use tariffs and subsidies to limit imports from poor countries, depriving them of the trade they need to relieve poverty and pursue their own economic growth.” 28

Having deprived the Third World countries of access to agricultural subsidies and crippled their ability to build competitive industries, the WTO proceeded to prevent them from using the foreign technology employed by the industrialized nations and to lock in the monopoly profits of companies that owned patents on indispensable products such as medicines. The Trade-Related Intellectual Property Rights Agreement (TRIPS), which instituted these barriers, proved to be a gold mine for transnational corporations. Its purpose was to prevent developing countries from copying or stealing proprietary technology in the same manner the currently advanced countries had done in their processes of economic growth. The agreement provides transnational corporations with a minimum patent protection of twenty years and places the burden of proof in a dispute on the presumed violator. It is a clear example of the rich nations kicking away the ladder to keep poor nations from catching up.

The chief profiteers have been American and European pharmaceutical companies and agrobusiness conglomerates. On the drug front, Third World countries have demanded that they be allowed to import or manufacture cheap generic copies of patented medicines to deal with acute public health problems, something currently barred by the WTO. All members of the WTO except the United States have in fact favored relaxing a strict interpretation of TRIPS for medicines. The United States instead demands that exemptions be restricted to treatments for AIDS, malaria, tuberculosis, and a few tropical diseases, claiming that the pharmaceutical industry must continue to receive high prices in order to finance future research. 29With regard to agriculture, the TRIPS system has for the first time given corporations the right to patent life-forms, particularly seeds. Companies that produce genetically modified food (what the Europeans call “Frankenfood”) lobbied strenuously for this provision. Monsanto, for example, holds the patent on Roundup Ready soybean seeds, which, until recently, tolerated Monsanto’s weed-killing herbicide Roundup. 30Monsanto is a major player in the corn and soybean markets in North America, Latin America, and Asia and in the European wheat market; one of the ways it and other companies, such as Novartis and DuPont, use the TRIPS system is to develop and patent genetically modified plants that will not produce seeds for succeeding years’ crops and that must be fertilized with expensive products made by those same companies. These corporations are thus in a position to extract monopoly profits from poor countries by dominating their agricultural sectors and dictating what they will eat, if they eat at all.