by Noam Chomsky
“Free Trade” Agreements
MAN: You mentioned that people with power probably don’t like it that the G.A.T.T. treaty got onto the Internet. It just emphasized for me how these international trade agreements are being forced on us, and yet nobody even knows what they’re about. I’m wondering what you think of that?
Well, plenty of people know what they’re about—there are plenty of people working for big corporations who know what the G.A.T.T. treaty is about, for example. But you’re right, the general population here doesn’t have the slightest idea about it—I mean, overwhelmingly the general population of the United States hasn’t even heard of G.A.T.T., and certainly they don’t know what its likely effects are going to be. [G.A.T.T. was first established in 1947, but the “Uruguay Round” of negotiations to modify it concluded in December 1993; the treaty then was signed in April 1994.]
What do I think of that? I think it’s ridiculous—grotesque, in fact. Look, G.A.T.T. is something of major significance. The idea that it’s going to be rammed through Congress on a fast track without public discussion just shows that anything resembling democracy in the United States has completely collapsed. So whatever one thinks about G.A.T.T., at least it should be a topic for the general public to become informed about, and to investigate, and to look at, and think about carefully. That much is easy.
If you ask what should happen in that public discussion—well, if that public discussion ever comes along, I’ll be glad to say what I think. And what I think is in fact mixed. It’s like N.A.F.T.A.: I don’t know of anyone who was opposed to a North American trade agreement in principle—the question was, what kind? 18 So before N.A.F.T.A. got passed [in 1993], mainstream groups like the Congressional Office of Technology Assessment—can’t get more centrist than that—came out with very sharp and intelligent critiques of the Executive version of N.A.F.T.A., the one that finally went through. And they pointed out that in fact N.A.F.T.A. was designed to be an investor rights agreement, not a “free trade” agreement—and that it was going to drive the economies of each of the three participating countries [the U.S., Canada and Mexico] down towards a kind of low-wage, low-growth equilibrium; they didn’t say it of course, but it’ll also be a high-profit equilibrium. And they suggested very constructive alternatives. 19
Well, those sorts of constructive critiques never even entered the mainstream discussion about N.A.F.T.A. here: all you ever heard in the media was, “Crazy jingoists don’t like Mexican workers.”
The same was true of the American labor movement: its proposals were nothing like what was constantly being denounced in the press with virtually 100 percent uniformity. 20 The Labor Advisory Committee, for example —which by law is required to give its opinion on these things, but was illegally cut out of the discussion—came out with quite a constructive report on N.A.F.T.A.: it wasn’t against an agreement, it was against that agreement. In fact, the story of the Labor Advisory Committee report tells you a lot about the way that N.A.F.T.A. was passed in the U.S., a lot about American democracy.
Twenty years ago, Congress enacted a Trade Act requiring that before any trade-related legislation or treaty is passed, there has to be consultation with a “Labor Advisory Committee” they set up which is based in the unions, such as they are. That’s by law: the Labor Advisory Committee has to give an analysis and a critique of any American trade-related issue, so obviously that would include N.A.F.T.A. 21 Well, the Labor Advisory Committee was informed by the Clinton White House that their report was due on September 9th; they were not given an inkling of what was in the treaty until September 8th—so obviously they couldn’t even convene to meet. Then on top of that, they weren’t even given the whole text of the treaty—it’s this huge treaty, hundreds and hundreds of pages.
But somehow they did manage to write a response to it anyway, and it was a very angry response—both because of the utter contempt for democracy revealed by these maneuvers, but also because from the glimmerings of what they could get out of N.A.F.T.A. when they sort of flipped through it for a couple of hours, it was obvious that this thing was just going to have a devastating effect on American labor, and probably also a devastating effect on Mexican labor too, though of course it will be highly beneficial to American investors, and probably also to Mexican investors. 22 It’s also certain to have a highly destructive effect on the environment—because its laws supersede federal and state legislation. So obviously there are really major issues here, crucially important issues, which in a functioning democracy would have been the subject of intensive public consideration and debate.
Actually, if you looked closely, even N.A.F.T.A.’s advocates conceded that it was probably going to harm the majority of the populations of the three countries. For instance, its advocates in the United States were saying, “It’s really good, it’ll only harm semi-skilled workers”—footnote: 70 percent of the workforce. 23 As a matter of fact, after N.A.F.T.A. was safely passed, the New York Times did their first analysis of its predicted effects in the New York region: it was a very upbeat article talking about how terrific it was going to be for corporate lawyers and P.R. firms and so on. And then there was a footnote there as well. It said, well, everyone can’t gain, there’ll also be some losers: “women, blacks, Hispanics, and semi-skilled labor”—in other words, most of the people of New York. 24 But you can’t have everything. And those were the advocates.
In fact, it’s kind of striking that about a day or two after N.A.F.T.A. was passed, the Senate approved the most onerous crime bill in U.S. history [the Violent Crime Control and Law Enforcement Act], which the House then made even worse. Now, I don’t know if that was just a symbolic coincidence or what—but it makes sense. I mean, N.A.F.T.A. was clearly going to have the effect of reducing wages for probably three-quarters of the American population, and it’s going to make a lot more of the population superfluous from the point of view of profits—so the Crime Bill just will take care of a lot of them, by throwing them in jail.
Okay, that’s N.A.F.T.A.—what about G.A.T.T.? Well, in India, for example, there were hundreds of thousands of people demonstrating in the streets about some of the G.A.T.T. provisions—which they know about. I mean, we may be very ignorant about it in the United States, but people in the Third World know a lot about G.A.T.T.: Indian peasants understand what’s being done to them, even if people here don’t, which is why G.A.T.T. has to be passed virtually at gunpoint in countries like India. 25
Well, what are those people so upset about? Here’s one thing. One of the protections codified in the current G.A.T.T. agreements, as in N.A.F.T.A., is what’s called “intellectual property rights” [i.e. rights to registered trademarks, patented technologies, and copyrights of valuable “information” products ranging from music to genes]. Intellectual property rights are a protectionist measure, they have nothing to do with free trade—in fact, they’re the exact opposite of free trade. And they’ll do a lot of things, but two really crucial ones.
First of all, they’re going to increase the duration of patents: meaning, if Merck Pharmaceutical patents some drug, thanks to publicly-subsidized work in American universities, for example, now they can get a much longer patent for it under G.A.T.T.—much longer than any of the rich countries ever accepted during the periods when they were developing, incidentally. In fact, it’s only in very recent years that the rich countries have even honored patent rights at all—the United States never did when it was a developing country, for instance. So, point one: patents are being much extended.
Secondly, the nature of patents is being shifted in character. See, up until now, patents have been what are called “process patents”—in other words, if Merck figures out a way to create a drug, the process of making the drug is patented, but not the drug itself. The G.A.T.T. treaty, like N.A.F.T.A., shifts that: now it’s the product that’s patented—meaning the Indian or Argentine pharmaceutical industries no longer can try to figure out a smarter way to produce the same drug at half the co
st, in order to get it to their own populations more affordably. Notice that these are not only highly protectionist measures, but they’re a blow against economic efficiency and technological progress—that just shows you how much “free trade” really is involved in all of this.
Actually, there are significant historical precedents on product patents, and I’m sure that they are perfectly well known to the G.A.T.T. designers. France, for example, once had a chemical industry, but it lost it—most of the French chemical industry moved to Switzerland, which is why Switzerland now has such a large chemical industry. The reason? France happened to have product patents, which were such a barrier to innovation and technical progress that the French chemical companies just decided to go elsewhere. 26 Well, now G.A.T.T. is trying to impose that inefficiency on the entire world. In fact, India already has been forced to accept it: a little while ago they did what’s called “liberalizing” their pharmaceuticals industry, meaning they opened it up to foreign penetration. So now drug prices will shoot sky-high, more children will die, people won’t be able to afford medications they need, and so on. 27
Well, these changes in patents are just one part of G.A.T.T.: they’re one piece of a whole attempt that is now being made to ensure that unaccountable transnational corporations will monopolize the technologies of the future. In my opinion, that’s grotesque—I don’t see any reason to push that through. Certainly anyone who believes in free trade would be opposed to these policies: they’re a high level of protectionism, which in fact is specifically designed to be contrary to even the narrow definitions of economic efficiency they teach you in the University of Chicago Economics Department [home of well-known exponents of free-market theory]. G.A.T.T. is going to cut down on technological innovation, it’s going to cut down on economic efficiency—but by some strange accident, it’ll also happen to increase profits, so of course nobody will pick up on any of the contradictions.
As a matter of fact, it’s not even clear that these so-called “free trade” agreements are going to increase trade at all, in any authentic sense. So there’s a lot of talk in the papers these days about the growth of international trade, which is supposed to show everyone how wonderful the market is. But if you take a look at that international trade, you’ll find that it’s a very curious kind of growth: about 50 percent of U.S. trade now is internal to corporations, which means it’s about as much “trade” as if you move something from one shelf of a grocery store to another, it just happens to cross an international border, so therefore it gets recorded as “trade.” And the figures are comparable for other major countries. 28
That means, for example, that if the Ford Motor Company sends some parts to Mexico to be assembled by super-cheap labor under essentially no environmental regulations and then they ship it back up to the United States to add more value to it, that’s “trade.” But that’s not trade at all: those aren’t exports, they didn’t even enter the Mexican market—they’re centrally-managed interactions by huge institutions, with a very “visible hand” pushing them around, and with all kinds of other market distortions involved that nobody here bothers to study very much but which undoubtedly are severe. And 50 percent is not a small amount—that’s a lot. I mean, at the time that N.A.F.T.A. was passed, there was a lot of talk in the press about U.S. trade with Mexico soaring—but there wasn’t talk about the fact that more than half of U.S. exports to Mexico were internal to corporations. So in fact, N.A.F.T.A. and G.A.T.T. might really end up reducing trade—they’ll probably increase things moving across borders, but that’s not the same as trade: those transfers are not market interactions.
Well, okay, these are complicated matters, and you don’t just want to sloganize about them—but in my opinion, all of these international agreements are part of a general attack on democracy and free markets that we’re seeing in the contemporary period, as banks, investment firms, and transnational corporations develop new methods to extend their power free from public scrutiny. And in that context, it’s not very surprising that they’re all being rammed through as quickly and secretly as they are. And whatever you happen to think about the specific treaties that have now been put into place, there is just no doubt that their consequences for most of the people in the world are going to be vast.
In fact, these treaties are just one more step in the process that’s been accelerating in recent years of differentiating the two main class interests of the world still further—far more so than before—so that the Third World wealth-distribution model is being extended everywhere. And while the proportions of wealth in a rich country like the United States will always differ significantly from the proportions in a deeply impoverished country like Brazil, for example (deeply impoverished thanks to the fact that it’s been under the Western heel for centuries), you can certainly see the effects under way in recent years. I mean, in the United States things probably aren’t going to get to the point where 80 percent of the population is living like Central Africa and 10 percent is fabulously wealthy. Maybe it’ll be 50 percent and 30 percent or something like that, with the rest somewhere in between—because more people are always going to be needed in the Western societies for things like scientific research and skilled labor, providing propaganda services, being managers, things like that. But the changes no doubt are happening, and they will be rapidly accelerated as these accords are implemented.
Defense Department Funding and “Clean Money”
WOMAN: Noam, just to go back to freedom of thought for a second—I’m curious what your feeling is about the Defense Department funding so many of our scientists today. Do you see that as a problem in terms of freedom of research and freedom of inquiry? And does it make you feel at all uncomfortable personally to be working at M.I.T.?
To tell you the honest truth, I’ve always thought that’s kind of a secondary issue. For instance, in the late 1960s, M.I.T. was about 80 percent funded by the Defense Department—it’s less than that today, because of things like cancer research money. But what did that mean? Was M.I.T. different from, say, Harvard, which wasn’t so much funded by the Defense Department? Well, about the only major differences between them were that M.I.T. was a little bit more open to radical ideas, and there was more political activism and fewer ideological controls. That’s about it, as far as I could see.
Now, there was once a time when I was being funded by the Air Force myself—to do exactly the same sort of thing that I’m doing now in my scientific work. Right now I’m not, so if you asked me whether I’m funded by the Defense Department, I could in some narrow sense say no. But the fact of the matter is, I am funded by the Defense Department, whether I have a contract with them or not—because if the Defense Department weren’t funding the Electrical Engineering Department, which M.I.T. needs, the Institute would not be able to fund my department. I mean, if you’re teaching music at M.I.T. you’re being funded by the Defense Department, because if somebody they really cared about weren’t being funded by the Defense Department, they wouldn’t have anything left to pay you to teach music. So in part the thing is kind of like a bookkeeping device.
As for its influence on what’s done, that’s very small: the Defense Department doesn’t give a damn what you do most of the time—they just want to fund it, because they want to have a bigger bureaucracy or something like that. So there’s very little reporting back by the scientists, they don’t pay much attention to you, they don’t care whether you did what you said you’d do or something else, and so on. In fact, back in the Sixties, there was a guy in my lab who was working on translating Humboldt [a Prussian philosopher]—he was being funded by the Office of Naval Research, they didn’t care.
As far as the moral issue goes—I mean, it’s not as if there’s some clean money somewhere. If you’re in a university, you’re on dirty money—you’re on money which is coming from people who are working somewhere, and whose money is being taken away, and is going to support things like universities. Now, there are a lot of ways in w
hich that money can be taken away from those working people and get fed into the universities. One way is by diverting it through taxes and government bureaucracies. Another way is by channeling it through profits—like, some rich benefactor gives it as a gift to the university, meaning he stole it from his workers. And there are all sorts of other ways in which it happens too. But it all comes down to the same point: if you’re at a university, you’re there because there is a social structure which commits a certain amount of “surplus product,” if you want to use a Marxist term, to funding people sitting around in universities.
Now, I don’t see a whole lot of difference myself as to whether that money works its way through the Department of Defense or through some other mechanism—that’s why I’ve never made a big fuss about this. I mean, to the extent that the Defense Department influenced what scientists do, it would matter. But good universities don’t permit that, by and large—they don’t permit it just for their own internal reasons: if you started permitting that, you’d lose the ability to do science altogether. Science simply can’t be done under those kinds of ideological constraints.