With “Free Traders” Like This, Who Needs Protectionists?

On November 13 Wikileaks published the leaked “intellectual property” chapter of the draft Trans-Pacific Partnership treaty. The IP section is a bundle of draconian provisions curtailing Internet freedom in the interest of protecting proprietary content industries like movies and music and imposing new restrictions on commerce to enforce corporations’ patent monopolies on genetically modified organisms and drugs.

The leaked provisions were covered in a segment on the November 14 episode of Democracy Now. It’s no surprise that Amy Goodman and Lori Wallach take a jaundiced view of the treaty. Unfortunately, it’s also no surprise that TPP’s chief defender signed on from a “free market” think tank. The Cato Institute’s Bill Watson holds that “when we see some of these reports about the intellectual property chapter, we need to remember that the free trade agreements are about fundamentally something very different:

“They are about free trade. And the value of free trade … is really incontrovertible. The United States has been lowering its barriers for 50 years to engage in the global economy in a way that increases growth economically, that improves the quality of life of people in the United States. We still have a number of protectionist measures in the United States that an agreement like the TPP will address.”

The beauty of bilateral “free trade” agreements like TPP, Watson continues, is that it’s hard to eliminate these protectionist measures within Congress because the “special interests” that benefit from them have so much political clout.

Wallach immediately responded, quite rightly, that “the TPP has very little to do with free trade;” its expanded IP regime, she said, “is protectionism.”

The interesting thing is that Watson didn’t disagree: He actually called TPP’s IP provisions an undesirable “aspecial-interest free-for-all, a grab bag, that U.S. companies are pushing to get what they want in these agreements,” that doesn’t belong in the treaty.

Nevertheless, he says, TPP should be approved, despite the fact that it raises IP trade barriers — because it “lowers trade barriers.” And the U.S. Trade Representative’s negotiation process is a good thing, despite the fact that it’s not only written in secret but damn near dictated to the USTR’s stenographer by industry lobbyists, because it supposedly eliminates the influence of those “special interests” in Congress.

So what Watson’s saying — if we interpret charitably and look for any coherent message at all — is that tariffs are the only trade barriers that really matter. The IP provisions are kinda sorta bad and violate free trade principles, maybe, but aren’t a big deal compared to all those “real” trade barriers like tariffs that are being lowered.

Nonsense. Patents and copyrights do exactly the same thing tariffs do: They confer a monopoly on the right to sell a particular good in a particular market.

The neoliberal move to lower tariff barriers at national borders is really just the reverse of lemon socialism. Instead of the capitalist state taking over a necessary function on behalf of big business because corporations no longer find it profitable to operate on their own nickel, the capitalist state is ceasing to perform a function that no longer serves the interests of big business. A hundred years ago, the dominant American manufacturing firms supported tariff protectionism because it was in their economic interest. U.S. Steel wanted the U.S. government to restrict imports of foreign steel,  protecting its steel monopoly in the domestic market. Today, tariffs no longer serve transnational corporations with production facilities all over the world. They actually impede the transfer of goods between national subsidiaries of corporations, raising the cost of importing goods outsourced on contract to Third World sweatshops.

“Intellectual property,” on the other hand, is a form of protectionism even more important to American global corporations today than tariffs were to U.S. manufacturers a century ago. “Intellectual property” is every bit as much a form of protectionism as the tariff — it’s simply enforced at the corporate boundary, instead of the national boundary. In fact, IP is central to transnational corporate capitalism as we know it. It’s structurally vital to the system.

So it’s just the opposite of what Watson says. TPP is actually a massive net increase in protectionism in trade barriers. It drastically increases the most economically significant form of protectionism that the dominant corporate interests’ business model most heavily relies on, while partially phasing out an obsolete form of protectionism the special interests just don’t much care about any more.

TPP is the Smoot-Hawley Tariff of the 21st Century.

Citations to this article:

Free Markets & Capitalism?
Markets Not Capitalism
Organization Theory
Conscience of an Anarchist