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?

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  1. identicon
    CorpsRuleMen, 10 May 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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