Human Rights January 2008
Shadowy Acronyms
The Dark Side of Free Trade Agreements
by Jessica Mayo
Instigating the outsourcing of jobs from the United States, promoting public health threats, and increased immigration would be political suicide for any politician or political entity. Yet almost every year, Congress passes free trade agreements that create all of these problems and more—and the public is letting them get away with it.
Part of the problem is lack
of awareness. Americans are particularly susceptible to sound bites and
with both major political parties voting in favor of free trade expansion,
legitimate criticism is overshadowed by political spin. While many recognize
the term NAFTA, only a minority can identify it as the North American Free
Trade Agreement. Then there’s the World Trade Organization (WTO), the Central
America Free Trade Agreement (CAFTA), and about a dozen other bilateral
agreements based on similar principles. Their myriad regulations, prohibitions,
and complicated inner workings are even more shadowy. The multi-national
corporations that benefit from them have a huge incentive to keep Americans
in the dark.
Even the simplest explanation requires a dip into the murkiness of economics,
but the premise requires little expertise to grasp. Free trade works on
the principle that eliminating barriers to imports and exports can benefit
everyone. Without tariffs, imported goods are cheaper. We buy more at a
lower cost, benefiting both the U.S. and the other country, which can export
larger quantities of its goods. The system works in reverse as well, and
each country is able to focus on the products it makes most efficiently.
In economic terms, it’s about capitalizing on the “comparative advantage.”
Not all countries are on equal footing when it comes to production and
national economies, however. There are costs to free trade agreements,
and poorer countries often pay the most. Take Mexico, for example. This
country lost 1.3 million agricultural jobs in the first ten years after
signing on to NAFTA. The market was flooded with cheap imports of American
corn and Mexico’s small farmers couldn’t compete. Their country doesn’t
have the same commodity subsidy programs as the United States, making fair
competition impossible.
We’re experiencing the consequences of Mexico’s farm crisis today in the United States, as millions of Mexicans cross the border seeking jobs that our trade policies eliminated from Mexico. At the same time, American jobs are being outsourced to other countries where there are fewer labor standards and environmental regulations. Workers are forced to compete for the lowest possible wages, the fewest benefits, and the cheapest working conditions in order to keep their contracts with large, multi-national corporations. Farmers in the U.S. are struggling to maintain their sovereignty as agribusiness sweeps through the countryside. Commodities like corn, soybeans and cotton typically sell at prices lower than the cost of production, requiring farmers to rely on federal subsidies to finance their operations. Corporate agriculture benefits from the economics of scale, raking in the lion’s share of federal subsidies. More than 38,000 small farmers in the U.S. went broke during the first ten years of NAFTA.
Labor and environmental groups have long fought to reform free trade agreements to include provisions to safeguard local populations and natural resources. NAFTA-style agreements, however, make such regulations illegal. Through investor-to-state lawsuits, corporations can sue the government for instituting any legislation that might diminish industry profits. In Ethyl Corporation vs. Canada (1998), for example, the government was forced to deregulate MMT, a fuel additive that had been banned for its probable linkage to nervous system damage. A NAFTA tribunal ruled that Canada’s policy restricted Ethyl’s profits. Not only was the ban repealed; the government was also forced to apologize and pay millions of dollars in damages. Public health suffers as well from free trade agreements, which often include patent and copyright entitlements. These entitlements allow corporations to monopolize pharmaceuticals, preventing generic competition for prescription drugs. This arrangement poses a huge threat to poorer populations who cannot afford name brand medicines.
Labor, human rights, and environmental groups have long warned that corporate powerhouses are the only real winners of comprehensive free trade agreements. Farmers, workers, and consumers are left to pay the consequences for increased profits among a select few business giants. Corporate rights take precedent over human rights, quality of life, and even health.
So why do free trade agreements keep expanding? Multi-national corporations have a lot to lose if NAFTA-like agreements go out of style. To promote their interests, they use their massive profits to enlist high-powered lobbyists to guarantee passage of new and expanded agreements. Political spin repeatedly claims that free trade agreements will improve the economy, securing passive public acceptance of the policies. Yet the facts don’t support that assertion; the U.S. Census Bureau reports that the price of food purchased and eaten at home in the U.S. rose twenty-two percent between 1994 and 2002 (NAFTA began in 1994). Words are often easier to spin than percentages.
There are solutions. We can buy fair trade items such as coffee, chocolate, and clothing. Free trade is all about profit, but fair trade recognizes that human rights prevail over low prices. The higher cost of such items ensures that workers are paid fairly, that the environment is protected, and that public health does not suffer from the production of such products. Then there are local producers, farmers, artists and trades people in your own area who are seeking to make a living with integrity. Those who live in the community where they produce and sell their products are more likely to conduct their business in a sustainable manner. They care about how the goods they produce affect the economy, environment, and people because it’s their community, too. Finally, we have the benefit of our democratic tradition, which gives us the power to make our views on free trade known to elected officials. With increased awareness, we can mobilize an electorate that will force legislators to create more just and fair legislation. We can make Congress pass laws that focus on people, rather than creating more acronyms like NAFTA that merely maximize corporate profits.
Jessica Mayo is a freelance writer and communications specialist. She and her husband, Ken, are currently working with low income families in Appalachia.