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#677 - Corporate Rights vs. Human Need, 17-Nov-1999

[Note: Rachel's will not be published the week of November 22.]

For many years, the potential market for baby foods and infant
formula in the "developed" countries has been shrinking because
birth rates have declined. Therefore, to create new demand for
their products, baby food corporations have aggressively sought
to "open new markets" in the Third World.

A key vehicle for "opening new markets" is advertising intended
to convince women that breast-feeding their babies isn't "modern"
and bottle feeding is healthier. Of course the premise of such
advertising is medically false -- breast-feeding provides
superior benefits compared to all synthetic substitutes.
(Breast-feeding provides an infant with significant immunity
against disease; it creates a strong emotional bond between
mother and child; it helps prevent breast cancer in the mother,
and more.) Nevertheless, many women are taken in by the false
advertising; as a result, according to the United Nations
Children's Fund (UNICEF), only 44% of infants in the Third World
are breast-fed. (The proportion is even smaller in "developed"
countries.)

Chiefly because of this false advertising, according to UNICEF,
1.5 million infants die each year because their mothers
unwittingly prepare infant formula with contaminated water,
causing fatal diarrhea.

During the 1970s, a world-wide grass-roots campaign focused
attention on this problem, boycotting products made by Nestle, a
major manufacturer of infant formula.

Partly because of the Nestle boycott, the World Health
Organization (WHO) developed and published a Code on Marketing of
Breast-Milk Substitutes. The WHO code prohibits words like
"humanized breastmilk" and "equivalent to breastmilk."
Furthermore, to protect illiterate women from being duped, the
WHO code prohibits pictures on labels "that idealize the use of
bottle feeding."

In 1983, Guatemala passed a law and regulations incorporating the
WHO code. The goal of the Guatemalan government was to encourage
new mothers (1) to breast-feed their infants and (2) to fully
understand the threats to their babies of using infant formula as
a substitute for breast milk. The Guatemalan law prohibited the
use of labels that associated infant formula with a healthy,
chubby baby; specifically, the law prohibited pictures of
idealized babies on packages of baby food intended for children
younger than 2 years. Furthermore, the Guatemalan law required
labels to carry a statement that breast-feeding is nutritionally
superior.

The law also prohibited baby food manufacturers from providing
free samples of their products (if a baby starts taking free
samples the mother stops lactating, thus converting mother and
infant into full-time, paying customers). And finally the law
prohibited baby food manufacturers from directly marketing their
products to young mothers in the hospital.

The regulations went into effect in 1988 and all domestic and
foreign manufacturers of baby foods -- with one notable exception
-- came into compliance. Infant deaths attributable to bottle
feeding declined, and UNICEF began highlighting Guatemala as a
model for what works.

However, the U.S. baby food manufacturer, Gerber (motto: "Babies
Are Our Business"), objected to Guatemala's new law. Although the
Guatemalan Ministry of Health made numerous attempts to negotiate
with Gerber, the company reportedly continued to market its
infant formula directly to mothers in the hospital, and continued
to give free samples to doctors and day care centers.

Most importantly Gerber refused to remove its trademark picture
of a chubby, smiling baby from its product labels, and it refused
to add a phrase saying breast milk was superior. In sum, Gerber
thumbed its nose at Guatemalan health authorities, who were
trying to protect their most vulnerable citizens, infants,
against harm.

In November, 1993 -- ten years after Guatemala passed its law,
and five years after its regulations went into effect -- Gerber
lost its final appeal. A Guatemalan Administrative Tribunal ruled
in favor of the Ministry of Health and it looked as though even
Gerber would have to comply with the Guatemalan law.

But Gerber opened a new line of attack on Guatemala, arguing that
the Guatemalan law was illegal under international statutes
because the law was really an "expropriation of Gerber's
trademark." This tactic bought Gerber some time while the World
Trade Organization was being created. Then in 1995, when the WTO
came into being, Gerber dropped its claim about illegal
expropriation of its trademark and began threatening to challenge
Guatemala before a WTO tribunal.

Within a short time, Guatemala realized it was now up against
immense power and the Guatemalan government changed its law to
allow Gerber to have its way. Gerber won without ever having to
formally request that the U.S. take its case to the WTO. Just a
few letters containing the WTO threat were sufficient.

This example illustrates another marvelous feature of the WTO --
the ease with which small, poor countries can be intimidated by
transnational corporations into "opening their markets." Under
WTO rules, countries must open their markets to foreign
corporations and governments cannot establish, as a precondition
of doing business, that their domestic laws will be respected. In
effect, the WTO has given corporations a powerful new way to
challenge the laws of any government (federal, state or
municipal).

Many poor countries, including Guatemala, cannot afford to
support a full-time delegation to monitor the WTO in Geneva,
Switzerland. Nor can they maintain in-house legal expertise on
fast-changing WTO rules. They could legally hire outside counsel
and experts to defend themselves against a WTO challenge but the
cost of such a defense would be several million dollars.
Countries that know the ropes in Switzerland and have money to
burn can use procedural ploys that make the WTO a very expensive
arena in which to litigate. For example, one country can
challenge the credentials of another country's delegation, thus
prolonging the proceedings indefinitely. As Ralph Nader's
organization, Public Citizen, has written, "The WTO practice of
allowing rich adversaries to object to the delegations of poor
countries undermines poor countries' meaningful participation in
the WTO -- and makes threats of WTO challenges enormously
powerful tools to forestall the adoption of public health
safeguards by poor countries that need them the most."[1,pg.117]

The pharmaceutical corporations in the U.S. and Europe evidently
learned an important lesson from Gerber's victory over Guatemala.
The drug corporations have launched a campaign of threats against
countries that are trying to make medicines more affordable and
accessible to their citizens. South Africa, Thailand and India
are examples.

In 1997, under the leadership of Nelson Mandela, South Africa
passed a Medicines Law which has not yet taken full effect. When
all the provisions of the law are implemented, it will encourage
the use of low-cost generic drugs, and it will prohibit drug
companies from paying bounties to doctors for prescribing
particular drugs. The Medicines Law has two additional provisions
that the pharmaceutical corporations find particularly
distasteful:

(1) the law requires drug companies to license their products to
other companies who must then pay a royalty fee to the drug's
developer. Such a law encourages competition in the manufacture
of new drugs, thus making modern drugs available at reduced cost.

(2) The second provision is called "parallel importing" and it
allows a pharmaceutical product to be imported from several
different countries simultaneously, thus taking advantage of the
lowest prices available. For example the antibiotic Amoxicillin
costs 50 cents per tablet in South Africa, 30 cents in New York
and only 4 cents in Zimbabwe.[1,pg.114] South Africa's new law
would make Amoxicillin cheaper and thus more widely available to
the people of South Africa, many of whom are poor.

Transnational pharmaceutical corporations, with assistance from
the Clinton/Gore administration, are now using threats of WTO
action to force South Africa to repeal its Medicines Law. When
AIDS activists protested the Clinton/Gore administration's role
in trying to overturn South Africa's Medicines Law, a "senior
Gore advisor" issued a statement defending Mr. Gore: "Obviously
the Vice President's got to stick up for the commercial interests
of U.S. companies."[1,pg.121] Mr. Gore is doing more than merely
sticking up for U.S. corporations. U.S. State Department memos
describe a "full court press," led by Mr. Gore, to force South
Africa to "repeal, suspend, or terminate" its Medicines Law. As
the U.S. sees it, there is simply no choice -- under WTO rules,
the intellectual property rights of corporations have higher
priority than human health; this is, in fact, a correct
interpretation of WTO rules. However, Mr. Gore seems to recognize
that his campaign against medical care for the poor in South
Africa might come back to bite him. When pressed by the group
ACT-UP in June 1999, Mr. Gore issued a statement denying that he
was pressuring South Africa.[1,pg.123].

The South Africa case is not unique. In 1992, Thailand
established a Pharmaceutical Review Board which established
compulsory licensing for medicines. A firm with an exclusive
patent on a critical medicine was required to license other
companies to manufacture it, with royalties paid to the
patent-holder. This created competition and drove down the price
of critical medicines for the people of Thailand, such as
Pfizer's Flucanazole, used to treat meningitis. After compulsory
licensing, the cost of treatment with Flucanazole dropped from
$14 per day to $1 per day in Thailand. However, the U.S.
pressured Thailand relentlessly for 7 years until the Thai
Pharmaceutical Review Board was formally abolished. The U.S.
argued successfully that such a Board is illegal under WTO
rules.[1,pg.113] Under WTO rules, corporate intellectual property
rights have higher priority than human health.

For many years, India had a law making it illegal to patent a
substance "intended for use, or capable of being used, as a food
or as [a] medicine or drug."[1,pg.105] A WTO tribunal ruled in
1997 that India's law is illegal. Using the WTO as a battering
ram, the U.S. successfully pressured India to abandon its
prohibition against patenting food and pharmaceuticals.

Now W.R. Grace has filed for a U.S. patent on a pesticidal
byproduct made from the Neem tree, which grows only in India.
Neem has been used for centuries in India to make medicines and
bio-pesticides. Indeed, the Neem tree is nicknamed "the village
pharmacy." W.R. Grace claims that it has a new method of
producing the pesticides that indigenous people have produced for
hundreds of years. Grace now says it deserves the exclusive right
to sell the products that were developed by indigenous
communities -- and Grace argues that under WTO rules the
government of India has an obligation to enforce Grace's patent
rights.[1,pg.110]

It appears that the WTO is a nearly-perfect vehicle for extending
corporate dominance into every corner of the world. But the
corporations are not yet satisfied. The purpose of the WTO
meeting in Seattle November 29-Dec. 3 is to consolidate and
extend the WTO's power even further. To get involved, phone
toll-free 1-877-STOPWTO.

--Peter Montague (National Writers Union, UAW Local 1981/AFL-CIO)

=====

[1] Lori Wallach and Michelle Sforza, WHOSE TRADE ORGANIZATION?:
CORPORATE GLOBALIZATION AND THE EROSION OF DEMOCRACY (Washington,
D.C.: Public Citizen, Inc., 1999). ISBN 1582310017; telephone
(202) 588-1000.

Descriptor terms: corporations; wto; world trade organization;
south africa; thailand; guatemala; free trade;