Free Trade Agreements That Guarantee Monopolies?

from the that's-not-free-trade dept

Free trade is a good thing. Your basic economics should have taught you that. Division of labor, comparative advantage, supply and demand -- they all combine to allow for better specialization, more productivity and greater output. In general, free markets are a good goal. While it's nice to see governments (especially the US) pushing for free trade agreements, the reality is that these agreements are very often not about free trade at all. There's so much lobbying that the "free trade" isn't just watered down, sometimes it's a complete farce. Witness the New Yorker's coverage of how the US is using free trade agreements around the world to force US-style intellectual property rules on the rest of the world -- often at tremendous harm to those countries. It's doubly ironic when you realize that intellectual property rules are the exact opposite of free markets. They're government-backed monopolies that benefit the monopolists, generally at the expense of everyone else. The New Yorker piece does a good job highlighting Josh Lerner's research that strengthening patent laws has no impact on increased innovation, and there's almost no connection whatsoever between copyright law and creative output. In other words, the exact reason for the laws (to put in place incentives for innovation and more creative content) aren't supported at all by history. Yet, now, we're forcing those same policies on countries where it seems clear to hurt them. The only issue I have with the New Yorker piece is author James Surowiecki's claim halfway through, that "Intellectual-property rules are clearly necessary to spur innovation." The rest of his own article shows how that's simply not true at all. In fact, even going beyond Lerner's research, there's plenty of other support for the idea that intellectual property laws don't actually help grow the markets they're supposed to grow, and in fact that they can do great harm. So, why isn't anyone else noting the irony that US "free trade" agreements include the exact opposite of free trade in a way that clearly harms the countries that agree to these policies?


Reader Comments (rss)

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  1.  
    identicon
    Free Market, May 10th, 2007 @ 4:35am

    Free Market

    Free Market is an lie spoonfed to us.

     

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  2.  
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    CorpsRuleMen, May 10th, 2007 @ 5:26am

    Globalisation is only good for Levi Strauss

    Good: Globalisation allows Levi Strauss to buy it's jeans from factories in Indonesia and sell them to the UK.

    Bad: Tesco's tries to buy in cheap Levi's destined for another market and sell them in the UK. Levi's gets all 'Anti-Globalisation-protester' on us and sues to block it.

    http://news.bbc.co.uk/1/hi/business/1261829.stm

    From the story:
    "Tesco sells an average pair of Levi jeans for £27.99.
    This is almost half the price of the recommended selling price of Levi jeans at approved outlets in the UK.
    The grocery chain was fighting for the right to import designer goods from around the world and sell them at an even greater discount to UK customers."

    This attempt to dish out IP rights per market is really just anti-globalisation disguised as IP rights. For some bizarre reason the UK then built this into law, so that the UK can no longer source the cheapest version of product from the world, the supplier can set the price higher in the UK and UK law will enforce their exclusive contract for that market.

     

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  3.  
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    Ed, May 10th, 2007 @ 5:27am

    The victims of the

    Many years before the "global economy" two people in different parts of the world could produce and sell a similar product, because their markets didn't overlap and they were never likely to cross paths. Ya, even then it didn't stop people from suing others in foreign courts over products sold in markets that they didn't even compete in. Like a US widget maker suing a French widget maker, even though the US maker doesn't even sell his widgets in France! The problem is that even in the "global economy", even though US companies are unlikely to have any indention of every selling most of their products in these foreign markets, they don't want them making anything for themselves either.

    Like we actually make much of anything any more! The fact is that US companies want to exploit them for cheap labor, but they don't want them to ever buy anything of the stuff we force them to make or ever to make any of it for themselves. Seriously, where do you think the Japanese tech industry came from and why it's saturated with cheap clone products?

     

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  4.  
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    Semicharm, May 10th, 2007 @ 5:34am

    Re: Globalisation is only good for Levi Strauss

    Damn. How do you guys afford jeans? At current exchange, that's ~$50 a pair! Here in the US those same Levi's go for ~$20.

     

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  5.  
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    dorpus, May 10th, 2007 @ 5:36am

    If there was true innovation

    If people were really inventing new things all the time, then patent laws shouldn't matter, since people would just make new stuff. The reality is that free trade or not, people are not very creative -- hence, all the whining about patents vs. free trade.

    If free trade is so good, should we turn island countries into lunar landscapes of denuded trees? Should unlicensed "doctors" from 4th world countries be able to go around giving harmful treatments, medications wherever they please? Should slave auctioneers buy and sell children on e-bay?

     

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  6.  
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    CorpsRuleMen, May 10th, 2007 @ 5:46am

    Oh, one more thing, BSA and piracy statistics

    One more point I forgot.

    The BSA counts non compliance with the EULA license as a pirated copy.

    This includes parallel imports, reinstallations of 'install once' software, resales of second hand markets that don't specifically make it legal etc. Anything they can argue is an invalid license is claimed as a pirated copy.

    These inflated numbers are then used to lobby the rest of Europe for stronger anti-piracy measures.

    The EULA is not valid in the UK, the Unfair Contract Acts forbid blanket unfair contracts:

    http://www.dti.gov.uk/consumers/buying-selling/sale-supply/unfair-contracts/index.html

    "The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999 No 2083) provide that a term which has not been individually negotiated in a consumer contract is unfair (and hence non-binding on the consumer) if, contrary to the requirement of good faith, it causes a significant imbalance in the rights and obligations of the parties to the detriment of the consumer."

    More to the point, it's a contract after the sale.

     

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  7.  
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    Maxillarypun, May 10th, 2007 @ 5:48am

    Re: If there was true innovation

    Dorpus,

    Are you saying the only way to stay legal and provide better goods/services is to have a monopoly and waaaaay overcharge people?

     

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  8.  
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    dorpus, May 10th, 2007 @ 5:52am

    Re: Re: If there was true innovation

    Unfettered free trade means allowing monopolies and not caring what they do.

     

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  9.  
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    Sanguine Dream, May 10th, 2007 @ 6:52am

    I agree with Ed


    Like we actually make much of anything any more! The fact is that US companies want to exploit them for cheap labor, but they don't want them to ever buy anything of the stuff we force them to make or ever to make any of it for themselves. Seriously, where do you think the Japanese tech industry came from and why it's saturated with cheap clone products?


    US big business owners to control the global economy using the government as a proxy. Isn't amazing how they own some many copyrights, trademarks, and patents in the US for products that aren't even made in the US anymore? The labor is outsourced for cheap and the countries supplying said cheap labor have no say so in how the product/service is used, distributed, or whatever.

    So you have large American companies that owns all sorts of trademarks, copyrights, and patents on things that aren't made in the US and they are trying to use the government to bully foreign nations into doing things their way. Looks like the RIAA has starting a series of seminars.

    Free market...if the market is so free then why do business owners need government protection and "free" tree agreements with other nations? If said free market works like they say it does then wouldn't the simple solution be to just provide the best product/service which would result in the consumers picking them over their competition?

     

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  10.  
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    Wyatt, May 10th, 2007 @ 8:09am

    Hummm

    I'm really curious about dorphus.. more so then the article. How can you possibly believe some of the things you say? Every comment I've read from you has been complete crap. Short sited, close minded and completely off base. Wait, I know, you were you raised by Dick Cheney. You were his prodigy and have completely lost all common sense and ability to think in a logical way. Please, if you can, try to open your mind a little and actually think about things for once. Free trade is a great ideal if it could ever be done without interference from lobbyists and crappy politicians. C'mon man, open your shads and put down your gun. It’s not hard to see things for what they are or could be and not what someone told you to think.

     

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  11.  
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    Alex Hagen, May 10th, 2007 @ 8:58am

    Balance

    What the article says:

    "The benefits of stronger I.P. protection are even less convincing when it comes to copyright: there’s little evidence that writers and artists are made more productive or creative by the prospect of earning profits for seventy years after they die, and the historical record suggests only a tenuous connection between stronger I.P. laws and creative output."

    What Mike reads:

    "there's almost no connection whatsoever between copyright law and creative output."

    The article kept talking about finding a good balance, but when talking about IP laws it is quite clear that Mike has become completely unbalanced.

     

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  12.  
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    wacko92, May 10th, 2007 @ 9:06am

    Big Business Propaganda

    Just to share a little knowledge with you. It's not just an issue of multi continental free trade problems, but an issue of free trade problems in general. On great example is the US's wonderful NAFTA (North American Free Trade Agreement). Under this amazing peice of legislature, UPS was able to sue the Canadian postal service for promoting its mailing service over those of possible competitors. Yes, they were able to sue the CANADIAN GOVERNMENT for promoting ITS NATIONAL POSTAL SERVICE over that based in another country. I'm not exactly sure when this example happened, but I heard about this in one of my sociology classes. I believe it was UPS but I'm not 100% sure since it could have been FedEx. All I remember is that under this agreement cases aren't studied by a court of law but instead by a private tribunal headed by 3 representatives, and the kicker is that these reps are picked by the company suing. Anyway the point of this is that Canada LOST!!! and had to pay out some 100 million dollars or something in that range.
    So now you tell me, has free trade truly been helped by all these wonderful laws and patents we see popping up?

     

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  13.  
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    Chris, May 10th, 2007 @ 9:14am

    Hello, and welcome to NAFTA. Oh, wait... that was years ago.

     

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  14.  
    identicon
    Alex Hagen, May 10th, 2007 @ 9:25am

    Re: Hummm

    "Every comment I've read from you has been complete crap. Short sited, close minded and completely off base. Wait, I know, you were you raised by Dick Cheney."

    Yeah, and your comments are SOOOO much better.

     

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  15.  
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    Wyatt, May 10th, 2007 @ 12:20pm

    Re: Re: Hummm

    Nice :) I'm betting the only comment you read was the one on Dorphus.. You must be his brother, or maybe Dorphus with a diff login.

    Sorry if it was off point but technically so was what he said. I thought something needed to be said. If I am short sited or close minded then so be it, but there is no basis for that comment.

     

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  16.  
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    Vincent Clement, May 10th, 2007 @ 12:25pm

    Re: Big Business Propaganda

    UPS Canada sued the Canadian Government because they believed that Canada Post - the national postal service - was using it's monopoly in the letter carrier business to promote and subsidize parcel services provided by Canada Post and courier services through it's Purolator division. I cannot find any reference to UPS winning the case - it appears to be pending.

    In reality, UPS is pissed off that it can no longer get away with charging an arm and leg for 'carrying' a package through customs. Beside the brokerage fee, they would charge you an additional fee (essential a COD fee) for collecting any taxes assessed by Customs plus any other fees they could think of. If you ship a parcel from Canada to the US via USPS, Canada Post charges $5.00 handling fee for packages under a certain declared value.

     

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  17.  
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    Vincent Clement, May 10th, 2007 @ 12:27pm

    Re: Re: Globalisation is only good for Levi Straus

    I suspect that the $20 Levi's you refer to are not red tab or original Levi's which do go for about $50 or so.

     

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  18.  
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    Wacko92, May 10th, 2007 @ 1:00pm

    Re: Re: Big Business Propaganda

    Thanks for the heads up Vincent, I could have sworn that my professor said that they won, but it was a couple of years ago that I heard about it so I might be mistaken.

     

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  19.  
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    dorpus, May 10th, 2007 @ 1:20pm

    oh yeah?

    well, i have no penis.

     

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  20.  
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    Anonymous Coward, May 10th, 2007 @ 1:29pm

    Re: I agree with Ed

    This is basically right. It's really just a new version of the old "sharecropper" model. In this version the land is "intellectual property" and the landlord is the union of US corporations known as the US government. Farming is generalized to "production" and the sharecroppers are the foreign countries doing the production.

    People who bemoan the shifting of production to foreign countries are missing the point: The US doesn't need to be productive any more than the land owner in the sharecropper system needed to work a plow. All the US needs to be able to do is enforce this model globally. That sometimes takes force and is why the US spends more than the whole rest of the world on its military. If any of the sharecroppers start getting "uppity" then they must be made an example of for the others to see. Example: Iraq. One thing the landlord certainly doesn't want to see is the sharecroppers arming themselves. Example: nuclear proliferation.

    What the US needs in order to work this new system is lawyers. Lots of lawyers. You can never have too many lawyers. In fact, the more lawyers you have, the more you need. So to any young people looking for a career with a future I suggest you forget engineering or anything else "productive" (unless you just want to be a sharecropper that is). For those with the means I suggest you go to law school. To those without the means for law school I suggest you consider a career having to do with guns or money. In other words: the military, law enforcement, or banking. Warren Zevon had a popular song in 1978 named "Lawyers, Guns and Money". That phrase pretty much describes the future in the US.

     

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  21.  
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    Nick (profile), May 10th, 2007 @ 3:24pm

    James Surowiecki, author of "The Wisdom of Crowds" said "Intellectual-property rules are clearly necessary to spur innovation?" Very strange. Innovation is spurred by the need to survive and thrive.

     

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  22.  
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    Mike (profile), May 10th, 2007 @ 3:28pm

    Re: Balance

    The article kept talking about finding a good balance, but when talking about IP laws it is quite clear that Mike has become completely unbalanced.

    Indeed. :) I've made it quite clear that the issue of "balance" is a lie when it comes to IP. There's no need for "balance." If you ignore IP and build a serious business model you can do much better without it. There's no need for IP in that situation and everyone wins. If that's "unbalanced" then call me unbalanced.

     

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  23.  
    identicon
    Charles Griswold, May 13th, 2007 @ 5:04pm

    Re: If there was true innovation

    If people were really inventing new things all the time, then patent laws shouldn't matter, since people would just make new stuff. The reality is that free trade or not, people are not very creative -- hence, all the whining about patents vs. free trade.

    So they whine to congress that since they're not creative, they should be able to make money off of those who are. Be still my bleeding heart. :-P

    If free trade is so good, should we turn island countries into lunar landscapes of denuded trees? Should unlicensed "doctors" from 4th world countries be able to go around giving harmful treatments, medications wherever they please? Should slave auctioneers buy and sell children on e-bay?

    Yes, absolutely. What ticks me off the most is that I can't buy small Indonesian children on eBay to use as slave labor in my "Operation Lunar Landscape". *rolls eyes*

     

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  24.  
    identicon
    Vincent Edwards, Oct 7th, 2008 @ 11:32am

    This site's comment's

    This site should talk more about Horizontal and Vertical intrgration

     

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