[Congressional Record (Bound Edition), Volume 150 (2004), Part 12]
[Extensions of Remarks]
[Pages 16727-16728]
[From the U.S. Government Publishing Office, www.gpo.gov]




           A NOBEL LAUREATE'S CRITIQUE OF BUSH TRADE POLICIES

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                           HON. BARNEY FRANK

                            of massachusetts

                    in the house of representatives

                         Tuesday, July 20, 2004

  Mr. FRANK of Massachusetts. Mr. Speaker, one of the most damaging 
myths that people in Washington seek to perpetuate is that opposition 
to recent trade pacts is rooted in isolationism and unreasonable 
protectionism. In fact, many of those who best understand the value of 
international economic cooperation, done properly, reject the 
Administration's approach. Among the most thoughtful advocates of an 
alternative approach to globalization is Joseph E. Stiglitz, a Nobel 
Prize winner in economics in 2001, who also served as Chief Economist 
at the World Bank and in important economic positions in the Clinton 
Administration. In the New York Times for July 10, Professor Stiglitz 
set forward part of the argument against the Bush Administration trade 
policies, and explained exactly why those people most dedicated to 
alleviating worldwide poverty and social distress seek an alternative 
approach. I ask that Mr. Stiglitz's very thoughtful column be printed 
here.

                [From the New York Times, July 10, 2004]

              New Trade Pacts Betray the Poorest Partners

                        (By Joseph E. Stiglitz)

       The United States and Morocco last month signed a new 
     bilateral trade treaty. The Bush administration has been 
     bragging that it exemplifies the way its economic policies 
     can build new ties and new friendships around the world. This 
     is especially important in the Middle East, where, in other 
     respects, America's foreign policy seems to have left 
     something to be desired. The cooperation with moderate Arab 
     governments is meant to demonstrate our broadmindedness, our 
     willingness to offer a carrot (rather than the proverbial 
     stick) to those who behave reasonably.
       But regrettably, in negotiating the trade agreements with 
     Morocco, Chile and other countries, the Bush administration 
     has used the same approach that earned us the enmity of so 
     much of the rest of the world. The bilateral agreements 
     reveal an economic policy dictated more by special interests 
     than by a concern for the well-being of our poorer trading 
     partners. In Morocco, prospects of the trade agreement were 
     greeted by protests--an unusual occurrence in a country that 
     is only slowly moving to democracy. The new agreement, many 
     Moroccans fear, will make generic drugs needed in the fight 
     against AIDS even less accessible in their country than they 
     are in the United States. According to Morocco's Association 
     de Lutte contre le SIDA, an AIDS agency, the agreement could 
     increase the effective duration of

[[Page 16728]]

     patent protection from the normal length of 20 years to 30 
     years.
       Morocco is not the only country that is worrying about 
     access to life-saving drugs. In all its bilateral agreements, 
     the United States is using its economic muscle to help big 
     drug companies protect their products from generic 
     competitors. For a country like Thailand, which is facing a 
     real AIDS threat, these are issues of more than academic 
     concern.
       President Bush's policy, in this area seems puzzling and 
     hypocritical. While he talks about a global campaign against 
     AIDS, and has offered substantial sums to back it up, what he 
     is giving with one hand is being taken away with the other. 
     Most Americans, I believe, would support greater access to 
     life-saving generic drugs. The loss to the drug companies 
     would be small, and must surely be dwarfed by the huge tax 
     breaks they get.
       Nor are drugs the only arena in which the United States has 
     used its economic power to advance some special American 
     interest. The agreement with Chile limited its ability to 
     restrict the inflow of speculative, hot money--money that can 
     come in and out of a country on a moment's notice. Chile had 
     recognized the potential destabilizing effects of these 
     capital movements, and had imposed moderate taxes on these 
     flows. Such restrictions had helped Chile grow a remarkable 7 
     percent a year in the early 1990's. That is because, unlike 
     many of its neighbors in Latin America, Chile did not have to 
     face the economic havoc caused by capital suddenly flowing in 
     and then just as quickly flowing out. Today, even the 
     International Monetary Fund recognizes that capital-market 
     liberalization often leads to more instability instead of 
     faster growth.
       In telecommunications, too, in Morocco and elsewhere, we 
     have put forward demands (for example, concerning the use of 
     transmitting facilities and the wholesaling of transmission 
     capacities) that we would oppose strenuously if someone were 
     to impose them on us. In the view of the developing world, 
     the bargaining has been extraordinarily one-sided--with all 
     the power on America's side.
       The United States and its trade representative, Robert 
     Zoellick, are right that trade policy can be an important 
     instrument for building good will. But when conducted as it 
     has been by the Bush administration, it can be, and is, a way 
     to build ill will, especially among the young, who worry that 
     their elders are selling them short.
       If the trade agreements bring the economic benefits 
     promised, if the lack of access to affordable drugs 
     (including generic drugs) proves less troublesome than the 
     naysayers worry, then all may be forgiven. But there is a 
     good chance that this will not be the case: in Mexico, for 
     example, real wages actually declined in the decade after the 
     North American Free Trade Agreement. And looking ahead, the 
     demands for capital-market liberalization have a good chance 
     of exposing Chile's economy to disruption, while the AIDS 
     epidemic and the need for cheap drugs to fight it are not 
     about to go away.
       The good news is that the damage has been limited so far 
     because we have been able to pressure only a few small 
     countries to sign bilateral trade agreements. The bad news is 
     that the enmity that we are earning through these pacts will 
     only grow.

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