LECTURELECTURE

GEOG 270GEOG 270Fall 2007Fall 2007

November 26, 2007November 26, 2007

Joe Hannah, PhDJoe Hannah, PhDDepartment of GeographyDepartment of Geography

University of WashingtonUniversity of Washington

Three Criteria for Three Criteria for GMO BusinessGMO Business

Science – Profitability – LawScience – Profitability – Law

Plan for the rest of the Plan for the rest of the quarterquarter

►Today: GMOs: Business criteriaToday: GMOs: Business criteria►Wed: GMOs: Risks and Policy Wed: GMOs: Risks and Policy

responsesresponses►Fri: Biotech and food securityFri: Biotech and food security►Mon: Sustainability (revisited) and Mon: Sustainability (revisited) and

Participatory DevelopmentParticipatory Development►Wed: Course wrap-upWed: Course wrap-up►Fri: Paper due and exam reviewFri: Paper due and exam review

Today’s lecture: Today’s lecture: Three Criteria for GMO BusinessThree Criteria for GMO Business

►Review Keynesian and Neo-liberal Review Keynesian and Neo-liberal Capitalism and International Capitalism and International DevelopmentDevelopment

►Three Criteria:Three Criteria: ScienceScience ProfitabilityProfitability LawLaw

Review of KeynesianismReview of Keynesianism

► Keynes: responding to Great Keynes: responding to Great Depression of 1930sDepression of 1930s

► “ “mixed economy” – gov’t mixed economy” – gov’t andand market market► support support demanddemand by promoting by promoting

employment and controlling inflationemployment and controlling inflation►Basis for social safety nets (welfare, Basis for social safety nets (welfare,

unemployment insurance, etc.)unemployment insurance, etc.)►Basis for Marshall Plan and International Basis for Marshall Plan and International

Development Programs in 1950s-1980sDevelopment Programs in 1950s-1980s

Review of NeoliberalismReview of Neoliberalism

►Adam Smith, “the invisible hand” Adam Smith, “the invisible hand” ►Focus on the benefits of the market – Focus on the benefits of the market –

“most efficient” way to allocate “most efficient” way to allocate resources in societyresources in society

►Reduced (or negligible) role for gov’tReduced (or negligible) role for gov’t►Associated with Regan/Thatcher in 1980sAssociated with Regan/Thatcher in 1980s►Basis for globalization and free trade Basis for globalization and free trade

policies – reduced restrictions on capitalpolicies – reduced restrictions on capital

Three CriteriaThree Criteria

ProfitabilitySc

ienc

e

Law

GMOs

Criteria #1: ScienceCriteria #1: Science

► High TechHigh Tech► Requires scientific Requires scientific

infrastructure (people, infrastructure (people, facilities)facilities)

► Extremely expensive R&DExtremely expensive R&D Economically riskyEconomically risky Few companies can Few companies can

participateparticipate Must recoup costsMust recoup costs

► Science is (for the most Science is (for the most part) located in First Worldpart) located in First World

► Science driven by Science driven by corporations, e.g., corporations, e.g., bundling of technologies, bundling of technologies, such as “Roundup ready”such as “Roundup ready”

Criteria #2: ProfitabilityCriteria #2: Profitability

► Originally, GMOs targeted at richer N. Originally, GMOs targeted at richer N. American farmers American farmers

► Need to recoup high R&D costsNeed to recoup high R&D costs► Business model includes selling inputs Business model includes selling inputs

(Monsanto merged with or bought (Monsanto merged with or bought several agricultural chemical companies)several agricultural chemical companies)

► Intension is to capture market shareIntension is to capture market share► and expand market in Third Worldand expand market in Third World

Criteria #3: LawCriteria #3: Law

► GMO companies need favorable legal GMO companies need favorable legal environment to accomplish business environment to accomplish business goalsgoals

► Extensive lobbying, not only in US and Extensive lobbying, not only in US and other First World countries, but also in other First World countries, but also in Third World:Third World: ““Free trade”Free trade” Intellectual Property Rights (IPR)Intellectual Property Rights (IPR) ““Permissive” vs. “Precautionary”Permissive” vs. “Precautionary”

Law: “Free Trade”Law: “Free Trade”

► What does “free trade” mean?What does “free trade” mean? What policies are not “free trade” What policies are not “free trade”

policies?policies? Is “free trade”neo-liberal or Keynesian Is “free trade”neo-liberal or Keynesian

position?position?► Why is “free trade” a critical part of Why is “free trade” a critical part of

the GMO business?the GMO business?► What do GMO companies want to see What do GMO companies want to see

freely traded?freely traded?► Lobbying: governments and trade Lobbying: governments and trade

organizations (e.g., WTO)organizations (e.g., WTO)

Law: IPRLaw: IPR

► patents protect value of investments in patents protect value of investments in inventionsinventions

► genetic codes (“genomes”) – such as genetic codes (“genomes”) – such as plant varieties – are patentableplant varieties – are patentable Up to $5 billion invested in agricultural crops Up to $5 billion invested in agricultural crops

by private companies through 2004by private companies through 2004►require payments of royalties for require payments of royalties for

replantingreplanting► WTO and bilateral agreements put WTO and bilateral agreements put

increasing pressure on Third World increasing pressure on Third World countries to provide legal IPR protectionscountries to provide legal IPR protections

IPR: continuedIPR: continued

►Remember Remember Percy Schmeiser?Percy Schmeiser? ►Some countries like India have a less Some countries like India have a less

strict system that requires each strict system that requires each plant/genome to be considered plant/genome to be considered individually, and allows for the individually, and allows for the replanting of seeds w/o royalty replanting of seeds w/o royalty paymentspayments

►GMO companies working very hard to GMO companies working very hard to put more stringent IPR policies in place put more stringent IPR policies in place in Third World countriesin Third World countries

Law: “Permissive” Law: “Permissive” vs.vs. “Precautionary” Approaches“Precautionary” Approaches

►““Permissive Approach” favors allowing Permissive Approach” favors allowing an activity to continue until proof of an activity to continue until proof of either no effect or a negative impact is either no effect or a negative impact is obtained. obtained.

► “ “Precautionary” approach favors Precautionary” approach favors constraining an activity when there is constraining an activity when there is high scientific uncertainty regarding its high scientific uncertainty regarding its effects on the natural environment;effects on the natural environment;

GMOs and International GMOs and International EconomicsEconomics

►Do GMO companies want a Keynesian Do GMO companies want a Keynesian or a neoliberal economic environment? or a neoliberal economic environment? Why?Why?

►How about their opponents?How about their opponents?