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Introduction The Democratic Republic of Congo (DRC) has been endowed with a wealth of biodiversity and natural resources, including the world’s second largest tropical rainforest, making it one of the two great ‘lungs of the earth’ along with the Amazon (Seyler et al. 2010). The country has also been blighted by almost two decades of armed conflict since the spill over from the Rwandan Genocide in 1994 led to an invasion of the DRC in 1996 (see Brisman and South 2013; South and Brisman 2013). Intra- and inter-state conflict has continued since then, including what has been termed ‘Africa’s World War’ (Prunier 2009; Stearns 2011), as well as the recent M23 rebellion in North Kivu. The DRC therefore makes an excellent case study to examine the interaction between the environment, natural resource wealth and conflict. While this interaction has attracted some headline news coverage, reporting has tended to focus on natural resources such as coltan, gold and diamonds, and far less so on nature itself, in the form of wildlife and forestry. The interaction of these living resources and conflict has generally been significantly overlooked. There is a need for the exploitation of ‘nature’ and of ‘natural resources’ to each be studied in their own right. The intention of this chapter is to examine specific issues relating to nature conservation and conflict in the DRC. For too long, the living environment has taken a back seat in studies about conflict, and has usually received attention only from those with a conservationist focus, who have tended to examine the impact of conflict on the environment, rather than the role the environment could play in contributing to conflict (see, e.g., Brisman and South 2013; Clark 2013; Shambaugh et al. 2001). The emergence of green criminology and the growing appreciation of the security threat posed by the illegal wildlife trade and climate change have both helped to rectify this, but there is still a need to mainstream the study of the living environment into conflict studies (Milburn 2012). The chapter begins with a more detailed explanation for the focus on the living environment before examining the different conflicts that have taken place in the DRC and their impacts. The chapter demonstrates that while such impacts have been predominantly detrimental, in some places, particularly with regard to forestry, conflict has simultaneously – and somewhat perversely – acted as effective means of conservation. The chapter then reviews the way in which environmental resources have sustained conflict in the DRC by providing the means for funding of rebel groups and creating incentives to maintain instability. Finally, the chapter examines an often-overlooked area – the impact the environment can have in promoting peacebuilding and post-conflict recovery. It evaluates the environmental peacebuilding work undertaken in the DRC to date and presents further potential approaches that could help to both improve security and protect the environment from unsustainable exploitation. Nature, Not Natural Resources The living environment is often relegated to a low position of importance, subsumed by resources such as diamonds whose role in contributing to conflict is well-known, well studied and well-reported (e.g., Brisman and South 2013; Clark 2013; South and Brisman 2013). Because the living environment does not seem to offer the same potential for monetary profit as some other sources of wealth, such as precious metals and minerals, it is often relegated to a lower position of importance and so the interaction of the living environment and conflict is overlooked. While the living environment could simply receive further study in conjunction with the topic of natural resources, three key distinctions between the living environment and natural resources warrant a separate study focus: first, the renewable nature of the living environment that offers long-term value; second, the valuable ecosystem services provided by the living environment; and third, simply because the living environment has been overlooked for so long, it requires separate study to establish its importance in the study of conflict. These three distinctions are fleshed out below. The first distinction is that the living environment is a renewable rather than non-renewable resource, and, as such, can provide valuable monetary and in-kind value in perpetuity. For example, a forest can provide revenue from the sale of timber as well as function as a habitat for wildlife that can in turn provide a source of protein to local communities in the form of bushmeat, and this can be maintained in the long-term if the forest is well-managed. In contrast, non-renewable resources, such as diamonds or coltan, provide income only from a one-off sale of the resource. As such, the living environment can be considered as an asset that pays ongoing dividends, providing a regular source of income while maintaining its underlying value. It is, therefore, crucial to managing the living environment to allow continued resource extraction in sustainable ways that prevents environmental degradation. While it is common to consider that non-renewable resources, such as gold or coal need to be carefully managed, the same is equally true of the living environment. The living environment has another value in the form of ecosystem services. It provides both in-kind services, such as improved soil-fertility for farmers, as well as monetary benefit from the consumption of resources such as timber (Juniper 2013; Millennium Ecosystem Assessment 2005; ten Brink et al. 2012). In contrast, resources such as diamonds and coltan offer only a monetary benefit. Destruction of the living environment therefore has implications for the long-term ability of a country to recover and prosper in the post-conflict period (Millennium Ecosystem Assessment 2005). Given that the environment is the ‘wealth of the poor’, who are heavily dependent on it for their survival and prosperity, protection of the living environment is thus vital to enable a successful post-conflict recovery process (Mrema et al. 2009). Finally, simply because the living environment has for so long been on the periphery of conflict study there is a need for specific study from a criminological and security perspective to effectively analyse the role that the living environment plays in conflict (Milburn 2012). In addition, far greater cooperation and coordination is required between conservation organisations and humanitarian and development organisations in regions of armed conflict in order to protect the living environment, both for its own sake and to preserve the ecosystem services for people living in these regions in the post-conflict period. Accordingly, work needs to be conducted to improve the perception of the importance of the living environment and subsequently to encourage cooperation between different agencies for its protection (Shambaugh et al. 2001). Conflict in the DRC The conflicts that have affected the DRC remain complex and the reasons behind them remain difficult to fully understand (Prunier 2009; Stearns 2011). A brief summary of the conflicts and most significant remaining rebel forces in the country is set out below. The origins of conflict lie in the spill-over effects of the 1994 Rwandan Genocide, which led to the first invasion of the DRC by Rwandan and Ugandanbacked rebels who took control of the country under the new presidency of Laurent Kabila. A second conflict occurred soon after, which has been termed ‘Africa’s World War’ (Prunier 2009; Stearns 2011) due to the number of African states involved in the conflict. This conflict ended with a 2003 peace accord, but since then, there has continued to be latent insecurity in eastern DRC. In particular, instability has plagued the North and South Kivu provinces, where the remnants of the génocidaires continue to operate in the form of the Democratic Forces for the Liberation of Rwanda (FDLR) rebel group and where Rwanda continues to exert its influence through the support of rebel groups, including the National Congress for the Defence of the People (CNDP) and their most recent incarnation as the M23s.1 This range of conflicts had a significant effect on the environment in the DRC, including the devastation wrought on forests in the Kivus as a result of the refugee camps established there and the subsequent flight of refugees westwards. Accurate figures are difficult to come by and so the exact extent of the impact of conflict on the DRC is hard to measure, but some studies attempt to estimate the effects on the environment. The Impact of Conflict on the Environment in the DRC The effects of conflict on biodiversity in the DRC have been largely, but not wholly, negative. Poaching and deforestation – by armed groups as a source for funding and by communities for bushmeat and firewood – has wrought significant harm on a plethora of species and protected areas. Forestry has nevertheless remained largely well protected, with deforestation levels far below those of neighbouring countries or those experienced as a consequence of the civil war in Liberia and Sierra Leone. Some areas, however, have still been severely deforested as a result of the conflict, particularly those close to the refugee camps in the east of the country. The Virunga National Park suffered especially from the influx of refugees from Rwanda after the genocide in the mid 1990s because the majority of refugees settled in camps in and around Goma, in close proximity to, or inside, the national park. At first, these refugees gathered deadwood from the forest. When this supply was exhausted, they started to cut down trees for firewood. Conservation efforts were futile, not only because of the sheer numbers of refugees, but also because the defeated Rwandan Army was regrouping and taking control of the camps and thus there was little the park rangers could do in the face of the threat refugees posed (Brauer 2009). The ongoing presence of camps around the park as a result of conflict and insecurity since then have continued to put stresses and strains on the park and it is estimated that at the peak of the crisis, 89 hectares of forest were being lost in the Virungas each day due to firewood harvesting (UNEP 2011). The forest suffered, but the mountain gorilla population in the Virungas2 has increased over the last two decades, although this appears to be more due to growth in the populations in Rwanda and Uganda than in the DRC (Brauer 2009). Congolese gorillas seem to have suffered far more from the Rwandan Civil War and genocide and the subsequent Congo War than those on the Rwandan side, who are generally better studied and protected (Brauer 2009). The threat of violence has restricted access to the gorillas in the DRC, whereas the greater security and successful tourist industry in Rwanda has provided far better access, infrastructure and financial incentives to carry out work to protect the gorillas and promote a growth in numbers. In contrast, several gorillas have been killed in the Congolese section of the gorilla habitat as retaliation for efforts by park rangers to limit the charcoal trade and its resulting deforestation (Nelleman et al. 2010). Another protected area that has been badly affected by conflict has been the Kahuzi-Biega National Park. Much like in the Virunga National Park, refugees from the Rwandan Civil War and genocide set up camps in the Kahuzi-Biega National Park and soon began felling trees for building materials and firewood. One of the differences, however, is that for the Virunga National Park the invasion of Rwanda and the beginning of the first Congolese War provided some respite from the destruction wrought by the camps as the refugees were forced west across the country, whereas the Kahuzi-Biega National Park suffered immensely as refugees fled directly through the park, poaching elephants and decimating the gorilla population. It is estimated that as a result of this movement and the ongoing effects of conflict in the region, the elephant population has declined from 1,350–3,600 to almost zero, and the eastern lowland gorilla population has been reduced from 17,000 to 2,000–3,000 (Brauer 2009). The successful tourist industry has also been decimated by the war, as latent conflict and lack of stability has discouraged visitors to the Kahuzi-Biega National Park, resulting in a loss of funds and thus the ability to further protect against environmental degradation. Better facilities in the Virunga National Park, as well as interest in the popular and better-known mountain gorilla, has also contributed to the loss of interest in and protection for the eastern lowland gorillas in Kahuzi-Biega. The Kahuzi-Biega National Park also faces mining problems, as is the case in many areas of the DRC. Illegal extraction of minerals, such as gold and coltan that occurred under the control of a militia, is frequently accompanied by the felling of trees and poaching of animals for bushmeat to feed those employed in the mines and as a secondary source of income through the provision of charcoal and meat to communities in the area (Nelleman et al. 2010). The presence of valuable natural resources in parts of Kahuzi-Biega National Park and elsewhere, therefore contributes to environmental harm, both from polluted water run-off and destruction caused by the mineral mines themselves, as well as the additional harm caused by the presence of workers there. Because the militias operating in these regions are armed and outnumber the limited number of Congolese Wildlife Service (ICCN) rangers working in these areas, it is especially difficult for the ICCN rangers to prevent the direct and associated environmental harms caused by mining activities. Other protected areas and their wildlife have also suffered huge losses through the course of the conflicts described above. For example, while accurate numbers are difficult to obtain, it is estimated that the number of elephants in Garamba National Park, in the Northeastern part of the DRC, has fallen from 20,000 in the 1970s to fewer than 2,000 today (Agger and Hutson 2013). The Okapi Faunal Reserve, to offer another example, has suffered losses as a result of the conflict as rebel forces have moved into the area, sacked the headquarters of the ICCN, and have started hunting for bushmeat and ivory, both for sale and to feed the soldiers based between Bunia and Kisangani (Beyers et al. 2011). The worst effects of the conflict in this reserve came between 2002 and 2004 as rebel militias fought in areas of high elephant density (Beyers et al. 2011). Since then, there have been periods of respite, as control of the territory has been largely regained by ICCN, with support from the Congolese Army (FARDC), but in 2009, there was another increase in poaching led by the FARDC (Beyers et al. 2011). Throughout the DRC as a whole, it is estimated that elephant populations have fallen from over 100,000 fifty years ago to fewer than 20,000 today, and their numbers continue to drop (Hart 2009). It can therefore be seen that many protected areas have endured significant losses in wildlife and forestry as a result of the conflict and accompanying refugee crisis. But from a purely ecological perspective, conflict itself is not necessarily the only cause of ecological destruction and may in fact have had some protective consequences. While the forestry of the DRC has suffered the effects of conflict, deforestation has been far worse in other nations such as Liberia or Indonesia. In spite of the DRC’s great swathes of forest, which are comfortably the largest in Africa, the current annual logging rate of 0.33 per cent remains far below other states in Central and West Africa, and this can be attributed to the conflict in the DRC, which has largely prevented mass forest exploitation in the country (Seyler et al. 2010). In other words, whereas some countries have experienced mass deforestation (due to a lack of other economic opportunities), conflict in the DRC has prevented deforestation from occurring at the same rate and on the same scale. The number of active timber companies in the DRC declined by around threequarters and many sawmills have closed or reduced their capacity due to insecurity in the DRC and are instead waiting for stability to return to the region so that they can reengage their capital in timber exploitation. Most of the DRC’s export timber is found in northern Equateur and Orientale provinces, both of which are controlled by rebel groups, and Kisangani was the main transfer site for moving it down river to Kinshasa. Somewhat ironically, armed conflict has served to protect some of DRC’s forests by severely restricting the timber trade in some regions (Baker et al. 2003).In addition, the dilapidated state of infrastructure in the DRC has prevented the use of capital for logging and hindered the ability of companies or groups to export timber in great quantities, and rebel forces have been able to prevent transportation on the River Congo – the only other option in the country for transporting goods to markets. While rebel groups have felled trees and exported timber to assist in the funding of their campaigns, the overall effect of the conflict on the DRC’s forests has not been that severe – at least in comparison to the timber exportation for four other African countries: Cameroon, Gabon, the Ivory Coast and Liberia. All four of these countries have a small fraction of the forestry that the DRC contains, and yet each has exported more than double the amount of wood that the DRC has exported in the same time frame (Baker et al. 2003). While overall rates of deforestation in the DRC have been low, conflict in the DRC has forced some companies to log in government-held areas and locations where rebels are absent in order to recoup their investments because they cannot carry on logging in rebel held areas. This has placed greater pressure on the Bas-Congo forest, which has been the worst affected area, because there is both easy access to the forest and it lies in close proximity to the port city of Matadi as well as Kinshasa. Furthermore, when government employees do not receive their wages, they are often instead paid with forest concessions. Additional deforestation and subsequent soil erosion and soil loss has been due to subsistence agriculture on steep slopes. The conclusion, then, is that conflict in some regions of the DRC has reduced deforestation for timber export in those regions, but in so doing has stressed those regions that are conflict-free; those conflict-free regions have experienced even further strain because of deforestation linked to economic instability (e.g., forest concessions in lieu of salary, felling trees for subsistence agriculture) (Baker et al. 2003). While the conflict in the DRC has therefore served as an unfortunate but effective protection mechanism for much of the country’s forestry, severe threats remain. As worldwide forestry declines, the DRC’s well-preserved forests will be of increasing appeal to timber firms. If, as seems likely, the country continues to be afflicted by insecurity and weak and corrupt central and local governments, it will attract the most unscrupulous of logging firms, with little interest in sustainable logging practices. This increases the probability that the DRC’s forests will start to be more adversely affected by logging, both in terms of the number of trees cut down and areas in which they are felled. Companies more interested in shortterm profit than sustainable forestry and that are willing to pay bribes to increase their logging activities and exports will help entrench corruption and prevent a real change to forestry law and the enforcement thereof, thereby threatening the long-term vitality of the DRC’s forests (Baker et al. 2003).

Ninety percent of seafood consumed in the United States is imported. Could a U.S. seafood company prohibit the importation of a Thai competitor’s illegally harvested fish? The vast majority of apparel sold in the United States is imported. Could a clothing company exclude from the U.S. market garments that a competitor in Vietnam made with illegal child labor? The answer to these questions is yes: Section 337 of the Tariff Act of 1930 — a trade statute administered by the U.S. International Trade Commission — could be an effective weapon against these and other unlawful trade practices. Although Section 337 is best known as an intellectual property enforcement mechanism, the statute exists to protect U.S. industries and the American public from a range of unfair acts. The language of Section 337(a)(1)(A) — “[u]nfair methods of competition and unfair acts” incident to the importation of products — is profoundly broad, and “unfairness” is not defined in the statute or its legislative history.[1] The ITC has already construed unfairness to include misappropriation of trade secrets, false designation of origin, false labeling, false advertising, violation of the Digital Millennium Copyright Act and antitrust violations.[2] Section 337 rewards successful complainants with a powerful remedy: an exclusion order blocking the importation of goods associated with the unfairness. The ITC may also issue cease and desist orders that prohibit respondents from marketing, distributing or selling products in the United States. Section 337’s reach is international and its adjudication is fast, making the ITC a compelling venue for a company or interest group opposed to an unlawful practice overseas that affects the United States through trade.[3] Upon institution of an investigation, a complainant can immediately serve the respondents — domestic and foreign — with discovery requests seeking information about their business practices. Respondents failing to appear can be held in default. In this way, Section 337 can leverage the appeal of the U.S. marketplace to promote fairer and freer markets worldwide. Prevailing on Non-IP Claims Under Section 337 To establish a prima facie case under Section 337(a)(1)(A), a complainant must demonstrate: (1) unfair methods of competition or unfair acts; (2) relating to imported merchandise; and (3) injury to a U.S. industry from such imports. Unfair Methods or Acts “What is unfair under Section 337(a)(1)(A)?” is a threshold question for any entity seeking to use the statute to challenge imports that do not infringe statutory IP. Notably, the Senate report accompanying the original passage of the statute explained that “[t]he provision relating to unfair methods of competition in the importation of goods is broad enough to prevent every type and form of unfair practice and is, therefore, a more adequate protection to American industry than any antidumping statute the country has ever had.”[4] The predecessor court to the U.S. Court of Appeals for the Federal Circuit recognized that Section 337’s prohibitions are: broad and inclusive and should not be held to be limited to acts coming within the technical definition of unfair methods of competition as applied in some decisions. The importation of articles may involve questions which differ materially from any arising in purely domestic competition, and it is evident from the language used that Congress intended to allow wide discretion in determining what practices are to be regarded as unfair.[5] The ITC has intervened where alleged unfairness in the importation of articles threatens “the assurance of competitive conditions in the United States economy,”[6] even for the purpose of halting such unfairness in its incipiency.[7] In light of its broad scope as written and interpreted, Section 337(a)(1)(A) is practically unbounded. Bottom line: If unfair methods or acts overseas threaten the free and fair operation of the U.S. marketplace, Section 337 may apply. For example, it would be unfair for a Malaysian manufacturer exporting to the United States to pay its workers a wage so low that it violates Malaysian law. Nexus Between Unfairness and Importation As the ITC has explained: It is obvious from our traditional role, not to mention our remedial provisions, that Congress intended Section 337 to attack only unfair trade practices which relate to imported products. It then becomes crucial to discern some nexus between unfair methods or acts and importation before this commission has power to act. A Chinese company manufacturing widgets for the U.S. market would engage in unfairness by defrauding its suppliers into providing it goods and services for free, and such fraud might allow the manufacturer to import the widgets into the United States at an artificially low price. Yet, if the manufacturer pocketed the ill-gotten gains and imported the widgets into the United States at a fair price, the unfairness, while unfortunate for the foreign suppliers, would be too removed from the United States to justify Section 337’s involvement. Likewise, if a U.S. retailer of the Chinese manufacturer’s widgets committed fraud only in the post-importation sale of widgets, Americans might suffer, but the ITC would stand idle, deferring to the jurisdiction of U.S. federal and state courts. Bottom line: A complainant must connect the alleged unfairness to the importation of articles. For example, show that underpaid workers produced the imported goods, allowing the goods to be sold in the United States at an artificially low price. Injury to a U.S. Industry A complainant under Section 337(a)(1)(A) must have a domestic industry that is the target of the unfair methods or acts. “The commission does not adhere to any rigid formula in determining the scope of the domestic industry as it is not precisely defined in the statute, but will examine each case in light of the realities of the marketplace.”[8] Generally speaking, a company with U.S. employees that expends resources in the United States — whether on manufacturing, customer service, research and development, etc. — should be able to establish a domestic industry under Section 337(a)(1)(A). A complainant must then show substantial injury from the unfairness — either real or threatened. The ITC's injury determinations tend to focus on five factors: (1) the respondent’s volume of imports and penetration into the market; (2) the complainant’s lost sales; (3) underselling by the respondent; (4) the complainant’s declining production, profitability and sales; and (5) harm to goodwill and reputation.[9] The ITC considers three additional criteria in assessing threat of substantial injury: (1) foreign cost advantages and production capacity; (2) the ability of the imported product to undersell the complainant’s product; or (3) substantial foreign manufacturing capacity combined with the respondent’s intention to penetrate the U.S. market.[10] While showing injury (or threat thereof) can entail complex economic analyses, in practice, the ITC has not imposed a high threshold for satisfying this element of Section 337(a)(1)(A). Bottom line: Connect the unfairness to real or threatened injury. For example, show that the goods imported at an artificially low price have or will likely erode the market share of a company operating in the U.S. market, regardless of whether that company manufactures here. Hypothetical Cases Under Section 337 Conflict Minerals Many U.S. consumers would be surprised to learn that their smartphone or gaming system may contain raw materials mined by militias in war-torn countries. In August 2012, the U.S. Securities and Exchange Commission issued a rule implementing Section 1502 of the Dodd-Frank Act, requiring all publicly traded companies to disclose their use of certain minerals associated with conflict and used in consumer goods.[11] Failure to comply could give rise to a Section 337 action, to the extent companies save money by not complying and, thus, are able to import and sell products to U.S. consumers at prices below those of their competitors who expend resources complying with the law. Another “unfair act” that could potentially trigger this type of case is the acquisition and use of conflict minerals in derogation of a foreign sovereign’s law. In February 2012, the government of the Democratic Republic of the Congo codified a requirement that all mining and mineral trading companies operating in the country perform supply chain due diligence to ensure their purchases are not supporting warring parties in that country. In theory, Section 337 could reach companies trading in certain minerals mined in Congo without performing the required Congolese compliance, where those activities result in an importation into the United States. Child Labor The illegality of child labor is widely recognized. The United Nations Convention on the Rights of the Child recites basic human rights for all children, including the right to protection from economic exploitation.[12] Additionally, the Minimum Age Convention requires countries to ensure that children below a certain minimum age (which varies depending on the activity) are not employed.[13] Section 337 may be well-situated for claims based on the importation of articles produced with child labor in contravention of these treaties. A violation of the national labor laws of the country-of-origin of imported goods could also trigger a Section 337 case. Indeed, “nations that violate [their own] fair labor laws and accepted standards ... [can] accrue an unfairly gained competitive advantage through unfair reduction of the cost of labor, a major input in the cost of production, thereby distorting trade.”[14] This practice has been labeled “social dumping,” defined as the “export of products that owe their competitiveness to low labor standards.”[15] A Section 337 investigation could improve standards for child workers in poor countries by threatening import-driven segments of the U.S. marketplace that traffic in goods made by such children. Environmental Degradation The Lacey Act is a powerful weapon for demonstrating unfairness related to importation. Incredibly broad, the Lacey Act makes it unlawful — and thus unfair when undertaken for business advantage — “to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce ... any fish or wildlife[,] ... any plant,” or “any prohibited wildlife species” that has been “taken, possessed, transported, or sold in violation of any law or regulation of any state or in violation of any foreign law.”[16] “Taken” encompasses “captured, killed, or collected and, with respect to a plant, also means harvested, cut, logged, or removed.”[17] Collectively, these terms encompass an enormous number of product lines of the Harmonized Tariff Schedule of the United States. A Section 337 investigation could be premised on the unfair act of importing an article in violation of the Lacey Act. Such a case would likely involve an allegation that the complainant’s competitors have flouted U.S. or foreign environmental law for the purpose of bringing a commodity to market at an artificially low price. For example, companies could be accused of importing seafood caught in prohibited waters or in violation of conservation treaties, [18] or of importing lumber harvested in protected forests. Food and Drug Safety Only 2 percent of U.S. seafood imports are inspected by the U.S. Food and Drug Administration before entering the U.S. market.[19] One public interest group found that 33 percent of samples were mislabeled and thus sold to unsuspecting consumers under false, and potentially dangerous, pretenses.[20] Sushi vendors and grocery stores were businesses found most likely to sell mislabeled food. A U.S. seafood company could use Section 337 to challenge the importation of competing, mislabeled fish. U.S. drug products are increasingly imported from emerging economies, such as India and China, yet the FDA cannot conduct sufficient oversight of foreign plants to ensure compliance with U.S. law. [21] To offer competitive pricing and gain market share at the expense of compliant companies, some overseas plants have abdicated good manufacturing practices and, consequently, caused adulteration of the U.S. drug supply. Drug companies who follow the law could use Section 337 to combat the importation of competing drugs made in substandard facilities, thereby protecting U.S. consumers from unsafe medicines. Conclusion Section 337 is a powerful trade remedy administered by a nimble, expert agency. Whether a company or interest group can employ the statute to redress non-IP claims depends on the legal and factual contours of each alleged infraction. If a complainant can establish a prima face case — unfair acts or methods of competition, nexus between unfairness and importation and injury to a domestic industry — the ITC is an excellent forum in which to challenge harmful trade practices and, hopefully, make the world a more equitable place.

The world is rudely awakening to the dangers of President Donald Trump’s tariffs. Markets are correcting. Countries and industries are scrambling for exemptions. Economists now see greater downside than upside to growth projections for the U.S. economy this year. But the hazards could be even greater than anyone wants to admit. As protectionist sentiment rises, so does the risk of war. The link between international commerce and peace has been apparent for so long that it is sometimes taken for granted. As the German philosopher Immanuel Kant wrote in his 1795 essay, Perpetual Peace, “The spirit of trade cannot coexist with war, and sooner or later this spirit dominates every people.” That sounds like wide-eyed optimism, but the underlying logic is narrow self-interest. Nations are reluctant to jeopardize benefits from international commerce, especially when their leaders are bullish about future gains. Greater trade and investment cannot guarantee peace, but it raises the cost of going to war. World War I appeared to toss that idea out and set history’s dustbin ablaze. Prior to the war, globalization was racing along. Between 1870 and 1914, trade rose to 8.2 percent of global gross domestic product. “The complexity of modern finance makes New York dependent on London, London upon Paris, Paris upon Berlin, to a greater degree than has ever yet been the case in history,” Norman Angell wrote in The Great Illusion, his 1910 opus that declared war obsolete. But Germany’s aggression proves the point. German leaders believed the economic environment was turning against them, as the political scientist Dale Copeland has shown. With protectionist policies ascendant—in Britain and its colonies and in the United States, France, and Russia—Germany feared being squeezed out of global markets. These falling trade expectations made war a more attractive avenue for revising the status quo. As Trump weighs additional protectionist measures, a similar gap is emerging between assumptions about globalization and expectations about trade. Norman Angell might feel at home today in Silicon Valley or on Wall Street, where the prevailing assumption is that the world will only become more connected. But historically, globalization has been a roller coaster rather than a smooth sail. After World War I, it took more than six decades for global trade and investment flows to recover. Proponents of global connectivity would be wise to speak up sooner rather than later. Equally troubling is that trade and investment expectations are starting to sour. Thirty percent of fund managers say a trade war poses the greatest risk to markets. A majority of American voters believe a trade war is likely. Sovereign investors are cutting their exposure to U.S. assets. Competitors and partners alike warn against Trump’s tariffs. Gone are any illusions that the president will not follow through on the spirit of his protectionist promises. These are early and minor bumps in what could be a long and much more dramatic ride. Tit-for-tat trade actions could spiral out of the economic realm and into military confrontation. But the greater danger could be less direct and more insidious: a general weakening of economic incentives for keeping the peace among major powers. That raises the risk that miscalculation leads to escalation—in the South China Sea, the Korean peninsula, or elsewhere. It is impossible to say whether conflict will ignite, let alone when and how. But it is easy to see how rising protectionism, actual and expected, can poison international relations. Any honest reckoning of Trump’s trade policies must take these risks into account.

The chemical industry is currently facing several challenges, which will likely still be present in the next few years: China has a strong influence on the global chemical market, while Europe and the US steadily lose their share. Additionally, albeit being necessary, sustainability-driven regulations like the European Green Deal threaten to negatively impact the chemical industry further on their way to reach a net-zero future.

At the same time, many chances are currently present that can be leveraged to overcome or mitigate these problems:

Another hypothesized planetary boundary entails the conversion of natural habitats to agricultural land. The mechanism by which too much agricultural land could cause a crisis is unclear—unless it is because land conversion causes so much biodiversity loss that species extinctions are the proximate cause of an ecocatastrophe. Excessive chemical pollution and excessive atmospheric aerosol loading have each been suggested as planetary boundaries as well. In the case of these pollution boundaries, there are well-documented mechanisms by which surpassing some concentration of a pollutant inflicts severe human health hazards. There is abundant evidence linking chemical and aerosol pollution to higher mortality and lower reproductive success in humans, which in turn could cause a major die-off. It is perhaps appropriate then that when Hollywood envisions an unlivable world, it often invokes a story of humans poisoning themselves. That said, it is doubtful that we will poison ourselves towards extinction. Data show that as nations develop and increase their wealth, they tend to clean up their air and water and reduce environmental pollution (Flörke et al., 2013; Hao & Wang, 2005). In addition, as economies become more circular (see Mathews & Tan, 2016), environmental damage due to waste products is likely to decline. The key point is that the pollutants associated with the planetary boundaries are so widely recognized, and the consequences of local toxic events are so immediate, that it is reasonable to expect national governments to act before we suffer a planetary ecocatastrophe.

Arguably the most damaging byproduct of Khan’s anti-merger overreach is that it is hurting American global competitiveness and innovation, even in fields such as life-saving medicines. For example, when the FTC filed suit against pharmaceutical giant Amgen for its acquisition of Horizon Therapeutics despite the companies having no overlapping products (the first time this has ever happened for any pharmaceutical company) and the FTC was closely scrutinizing Pfizer’s purchase of Seagen to advance no-overlap cancer drugs, even Amgen and Pfizer’s competitors rallied against the FTC.

Pharma industry groups came together to publish a detailed report showing how $18 billion in private venture capital investment and $152 billion in large pharmaceutical company investments into new vaccines and treatments would be practically outlawed overnight, bringing the flow of new drugs to market to a virtual halt and bankrupting thousands of biotech startups overnight. A respected pharmaceutical industry analyst, Jay Olson of Oppenheimer, wrote, “Stop the insanity,” describing the FTC actions as “ludicrous,” echoing the sentiments of many of his peers.

One solution that encourages innovators and entrepreneurs to take the risk of failure has been to allow them to be bought by larger, established corporations. In some sectors, like defense, buying innovative start-ups is a primary source of innovation. Two decades ago, when the United States was more comfortable with the lead it and its allies had over China in technology, dismantling the current innovation system in pursuit of hypnotical gains may have been a tolerable risk, but that is no longer the case. That means the FTC and Department of Justice (DOJ) antitrust effort need to be subsidiary to larger strategic concerns and made as part of decisions on national security, particularly as some actions (such as blocking acquisitions and partnerships between start-ups and big tech firms) will likely have a chilling effect on the U.S. innovation system.

Another tradeoff is possible future gain in exchange for potentially immediate loss. There is good research on how antitrust measures can increase innovation, but the effect is not immediate. This makes competition different from early antitrust episodes (Standard Oil or AT&T) in that the issue is not purely domestic, the United States cases an aggressive competitor, and there is risk that in the time it would take for the U.S. innovation system to recover from antitrust action, China would pull irreversibly ahead. This kind of irreversible loss of position has been an element of industrial competition among great powers since the 1900s and must be avoided.

So, how should U.S. policy, particularly antitrust, treat large, sophisticated, and powerful technology firms, given this new fiscal reality? On one side are those who argue that breaking up or taking other aggressive antitrust actions against leading U.S. technology companies will only strengthen China’s hand by enabling its companies to compete against hobbled U.S. technology corporations. The argument goes that big American companies, who have the revenues to fund R&D and other investments, will weaken, if not crumble, if the antitrust cudgel is applied to them, as many have in the past under similar antitrust enforcement.

On the other side are the anti–big business, neo-Brandeisians and their leader, Federal Trade Commission Chair Lina Khan. Khan and her allies seek to transform the U.S. economy into one that is dominated by small and mid-sized firms—or, in industry sectors where scale economies or technological complexity makes that impossible, into one that is operated or heavily regulated by government.

Venture capital is the fuel for high-growth startups that have transformed the world. Recent examples include Moderna and Zoom, and past examples include Genentech and eBay. VCs partner with entrepreneurs to build companies. This includes incubating a company within a venture firm, investing in a founder with merely an idea and a business plan, or providing capital and expertise to propel a company as it grows.

For venture-backed companies there are effectively three outcomes: standalone company (often via initial public offering); merger or acquisition; or bankruptcy. Company failure is the most common outcome, but the success stories are often hypergrowth companies with a big impact. Many entrepreneurs and their investors begin the company building process with the hope of creating a standalone, public company. However, in most cases an IPO is not possible, and the preferred exit opportunity becomes an acquisition by another company, with 58% of startups expecting to be acquired.1 Ultimately, approximately 10 times as many startups are acquired than complete an IPO, with 836 venture-backed companies having been acquired in 2019, whereas 82 went public.2

Out of the frying pan, into the fire. That old refrain describes America’s economy after COVID and during our current wave of inflation. But as companies and entrepreneurs struggle, some politicians are pushing for antitrust laws that would undermine American business competitiveness and security.

The antitrust bills being considered in Congress would, among other things, prohibit select US platforms from promoting their products on their own sites, break up integrated digital tools, require open-door interfaces, and prohibit mergers of a certain size.  

But are these theories correct? Is there really a free-market monopoly problem? Assuming that we can even define what we mean by a “free-market monopoly,” it would certainly follow that firms in a free market would have the freedom to attempt to monopolize (control the entire supply of) some raw material, product or service. But whether they would be able to restrict market output for any reasonable period of time is debatable.

First, such attempts (mergers, buying up available supplies of raw materials) can be prohibitively expensive, even unprofitable, and therefore unlikely.

But those patents didn’t lead to successful products. Commercialization did not increase in the treated markets, (and there was no difference between low- and high-market-share complementors.) What’s more, we found that most everyone’s profits declined — especially those of complementors with low market shares, who, in theory, should have been the beneficiaries of the antitrust action. Despite being the most innovative of the bunch, they failed to thrive. In contrast, the bigger players who had been nipping at Microsoft’s heels did not patent significantly more after the antitrust settlement than they had before, but they didn’t see the drastic profitability decreases either. If anything, because they did not increase their investment in innovation, the big players seem to have benefited most from the antitrust case against Microsoft by becoming more efficient, not more innovative.

And finally, although regulators might have hoped to see new companies enter the treated markets, it didn’t happen. The number of firms moving into the markets, we found, did not increase following the settlement, another consumer-benefiting outcome that failed to materialize.

If firms in free markets can really monopolize in restraint of trade, the empirical evidence should reside in the many classic antitrust cases brought over the last 100 years. Yet an examination of some of the most famous of these classic antitrust cases reveals that the firms indicted and (mostly) convicted were generally increasing market output, lowering market prices, and innovating.

Standard Oil of New Jersey (1911)

Very little evidence, however, indicates that antitrust law affects the rate of innovation. There are three possibilities. Antitrust enforcement could strengthen incentives to innovate. It could, however, also diminish them: If firms believe that aggressive innovation is likely to draw unwanted attention from regulators, their motivation to invent new goods and methods could wane. And as a practical matter, the courts are probably ill equipped to create incentives for technological advancement. The third possibility is that innovation and antitrust have no causal relationship.

In fact, scholarship has often noted how little is known about antitrust’s influence on innovation. Despite the literature’s efforts—employing case studies, formalized logic, and theoretical explorations—“the consensus is that there is no clear answer.” Professor Alan Devlin remarked, “[u]nfortunately, the specific antitrust policies that best promote technological advancement are far from clear.” Professor Marina Lao found that “there is neither empirical nor clear theoretical support for the hypothesis that monopolistic conditions, relative to competition, encourage more innovation.” One commentator summed up these efforts, stating that “we may not be confident that antitrust suits enhance innovation, but we cannot be confident that they retard [harm] it either.”

There is much to criticize about government meddling in the tech market. Tech has spurred productivity growth and created a bounty of new products in recent decades. Many of these products are free and digitization has by and large reduced costs compared to non-internet alternatives or predecessors. Arguments that the U.S. tech sector is not competitive disregard changes in prices across different economic sectors, while government regulatory barriers and labor intensiveness explain high prices in areas like education and housing.

Nonetheless, calls to expand antitrust are growing. One thrust is to promote digital startup competition. In recent years, competitive process scholars like Columbia’s Tim Wu and Lina Kahn (now appointees of the Biden administration), Yale’s Fiona Scott Morton, and former Federal Trade Commission economist Jonathan Baker have written books and articles suggesting that judicial emphasis on price and output in exclusionary conduct cases is particularly ill suited to the digital economy. They propose that courts alter how they weigh procompetitive and anticompetitive effects when evaluating vertical integration and vertical contractual restraints. They also suggest removing the below-cost and recoupment requirements for predatory pricing exclusion claims.

On December 11 of last year, the Federal Trade Commission filed suit to block a partnership between Sanofi and Maze Pharmaceuticals to develop a drug for Pompe disease, a partnership that the government said threatened “to deprive patients of a new, innovative treatment.” In fact, the anti-trust policy, intended to promote innovation, could disrupt the development of “life-saving, essential care.”

It is often said that small companies are not simply miniature versions of their larger brethren. Nowhere is that more clearly demonstrated than in the pharmaceutical industry, where the entrepreneurial community serves as a principal source of new medicines. The commission’s approach, designed to prevent the manipulation of markets by the largest corporations, could have the opposite effect of discouraging competition in the market for innovation.

But the arguments for the role of antitrust law in regulating collusion are not arguments for policing privateering activity in and of itself. This is simply a natural extension of the longstanding proscription against collusion between competitors or anticompetitive mergers - a proscription unique to the specialized laws of antitrust. The fundamental problem with most popular and academic arguments calling for antitrust intervention is that they fail to recognize this distinction, and in turn the limitations inherent to antitrust law. These limitations may be quasi-constitutional, such as the Noerr-Pennington doctrine, 170 or they may be practical, such as proving intent under Section 2. 171 Superimposed on these limitations is the notion - supported not only by academics but also the Supreme Court - that when an alternative regime to antitrust law is available, efficiency considerations dictate that antitrust's role should be minimized. 172

This is to say nothing of the more generalist arguments in favor of a limited role for antitrust law. Antitrust violations are ultimately felonies, after all, so practices condemned by antitrust law "should not be … just over the line," but "so clearly beyond the pale … as to be subjects of strong condemnation." 173 Given the highly broad and open text of the actual antitrust statutes, this is a particularly salient concern for voluntary compliance and clarity. 174 The particularly high cost of false positives - not only the direct costs of treble damages but also the inducement of rent-seeking activities - coupled with judges' lack of economic or industry expertise suggests minimizing the role of antitrust law as mere business regulator. 175 In short, there is good reason to be skeptical "about courts' ability to separate good conduct from bad" and "modest[] about what [antitrust] laws can do well." 176 These arguments are convincing in their own right. But they mostly serve here to highlight the fact that conduct without a clear anticompetitive [*224] valence - such as unilateral usage of privateering - should not be curtailed by antitrust laws where alternatives are available.

But Mr. Biden is missing a crucial opportunity to push back against corporate power. To make a lasting change in the enforcement of antitrust laws, he needs to borrow a page from President Ronald Reagan’s playbook and put antitrust experts on the federal bench.

Mr. Reagan suspended the government’s efforts to check corporate power, adopting instead a policy best described as nonintervention in the life of large corporations. He made it stick, too. Since then, even Democratic administrations have treated antitrust law as obsolete.

Second, antitrust laws are fluid, nonobjective, and often retroactive. Because of murky statutes and conflicting case law, companies never can be quite sure what constitutes permissible behavior. Conduct that is otherwise legal somehow morphs into an antitrust violation. Normal business practices—price discounts, product improvements, exclusive contracting—become violations of law. When they’re not accused of monopoly price gouging for charging too much, companies are accused of predatory pricing for charging too little, or collusion for charging the same.

Third, antitrust is based on a static view of the market. In real markets, sellers seek to carve out mini-monopolies. Profits from market power are the engine that drives the economy. So, what might happen in a utopian, perfectly competitive environment is irrelevant to the question whether government intervention is necessary or appropriate. The proper comparison is with the marketplace that will evolve if the antitrust laws, by punishing success, eliminate incentives for new and improved products. Markets move faster than antitrust laws could ever move. Consumers rule, not producers. And consumers can unseat any product and any company no matter how powerful and entrenched. Just ask WordPerfect or Lotus or Polaroid.

“Do Patents Really Promote Innovation? A Response To The Economist,” Forbes, https://www.forbes.com/sites/marshallphelps/2015/09/16/do-patents-really-promote-innovation-a-response-to-the-economist/?sh=37bb19c31921

Economists have repeatedly demonstrated that inventors are driven primarily by the expectation of profiting from owning the rights to their inventions. Zorina Khan of , whose 2005 classic The Democratization of Invention: Patents and Copyrights in American Economic Development was awarded the prestigious Alice Hanson Jones Prize for outstanding work in economic history, observed that “Ordinary people [are] stimulated by higher perceived returns or demand-side incentives to make long-term commitments to inventive activity.” She also found that “their patterns of patenting were procyclical [and] responded to expected profit opportunities.”