Free Trade
I know that free trade is a very unpopular topic at the Cafe. Much to my shock I have been compared to Rush Limbaugh. I see nothing progressive about fair trade or opposing free trade. This quote from Der Spiegel via Salon illustrates why free trade is necessary for the good of the world: Cotton from Burkina Faso doesn't stand a chance against subsidized material from Spain. Sugar from Mozambique, Ethiopia or Malawi cannot compete with heavily supported European beet crops. The criticism that Africans direct at Europe and America is, "we are so poor because you are so rich."
It may make people feel good to side with American Unions or to see trade to be only about GE or Dupont. However, it is about very small and poor farmers trying to find markets and rural workers wanted to make the same move that English peasants did in the 18th Century to go from the farm to the factory. Not because factory life is great, or healthy or wonderful but because it pays more and can make for a better life over time.












The WTO is the least democratic organization holding significant power in the world. The meetings are held in secret. There is no means of input to the people of the world into it's decision making processes.
Any international trade structure based on the WTO is inherently flawed due to the manner in which the WTO makes decisions.
July 6, 2005 9:21 AM | Reply | Permalink
Wait a second...Dan, did you say you "see nothing progressive about fair trade"?
What do you mean by the sort of "fair trade" you think is a bad thing?
July 6, 2005 9:35 AM | Reply | Permalink
And if free trade agreements didn't tend to protect/exempt DuPont, ConAgra, and Nestle from competition with African farmers, I might tend to be more sympathetic to the push for free trade.
As it stands, however, the rank unfairness of "free" trade agreements is enough to make your head spin - particularly if you're looking to free trade to provide opportunity for small farmers and businessmen in the developing world.
July 6, 2005 10:42 AM | Reply | Permalink
"There is no means of input to the people of the world into it's decision making processes."
They are represented by their governments. Kinda like the UN, and every other state-based international organization. If your objection to the WTO is actually an objection to state-level international institutions, then free trade is even more important to you: any fair trade regime must require state-level controls and interventions. Free trade, by contrast, is far more democratic and anti-statist.
July 6, 2005 10:44 AM | Reply | Permalink
You're being rather selective, Daniel. Yes, massive subsidies in the US and Europe to farmers to grow crops that aren't needed are wrong. But so is insisting that India stop making cheap AIDS drugs, even if thousands will die as a result (the US did not honor foreign copyrights or patents for most of its history, after all). And so is allowing Methanex, a Canadian company, to sue California for billions because California banned MTBE, which has contaminated drinking water all over the state, causing a huge cleanup bill. Apparently the way NAFTA is written, nothing trumps trade, even if the traded item is poison.
And thanks to "fast track", it's all or nothing. Bush appoints corporate lawyers to the negotiating team, and they bury their goodies in thousands of pages of fine print, but Congress has to vote the whole thing up or down. Vote it down; the US and Europe can decrease the farm subsidies you rightly complain about independently of these bad agreements.
July 6, 2005 10:47 AM | Reply | Permalink
Dan,
In many ways I think Free Trade agreements are useless. I think we shouold adopt it unilaterally. However, there are some key points to free trade that should at least be understood.
1. Free Trade will always (barring bad decisions on individual transactions*) be to the overall benefit of the entities trading.
2. Those benefits will not be distributed evenly, and in many cases, free trade will be a bad deal for people or groups within those trading entities.
3. There are policies that can be enacted that help those that may get a bad deal from free trade, by spreading the benefits, or by using some of the benefits to transform society so that it is more agile in taking advantage of free trade.
If you agree with those points, it seems obvious that free trade is a political issue, where some constituents prefer unfettered free trade, and other constituents prefermore distribution, or training, etc., but that because of 1) it is always better to have the result end up with free trade. The fault, however, is with the political negotiation process itself. One side or the other or both failed to get the optimal solution negotiated, and the process broke down.
It can be argued which side in CAFTA was at fault, but there is a lot of evidence that the break down in the negotiations on this particular deal, are the fault of the Republicans.
* For example, if I agreed to pay a billion dollars for a mexican-made pinata, that would be a bad deal, but would be atrributable to my negotiating error, rather than free trade itself.
July 6, 2005 10:48 AM | Reply | Permalink
We don't know that. We can't see the meetings for ourselves to determine that. The meetings are all held in secret.
All the WTO trade rulings are also made in secret by gawd knows who.
The WTO needs to come under UN jurisdiction. The UN General Assembly should be able to overturn WTO rulings.
July 6, 2005 10:50 AM | Reply | Permalink
The fair trade I mean is to insist on wage levels and environmental protections that will benefit the people in the development world but will destroy the the benefits of trade for the poor.
American wage levels and concern for the environment are products of long industrial development. We need to be realistic about what conditions are like now in various poor countries.
What needs to be done is to speak out against tyrants who rich off the economic benefits on trade and to work hard with countries to evolve their legal systems to more equally distribute the pluses of trade.
Then over time wage rates and environmental concerns will grow. Afterall Indians and the Chinese do not seem to be working to be the worlds low cost producers any more.
July 6, 2005 11:10 AM | Reply | Permalink
As I just posted above I do not believe that by itsefl free trade will solve all problems or that the benefits of free trade will be equally be distributed. Progressives should fight for free trade and and better infrastruture and legal structures to provide for better distribution. CAFTA is opposed by both the sugar growers and the textile industry because they would rather have Americans pay more for their respective goods. That would suggest that opposing CAFTA is ultimately about making sure Americans pay more.
July 6, 2005 11:15 AM | Reply | Permalink
"Progressives should fight for free trade and and better infrastruture and legal structures to provide for better distribution."
How do you fight for that if you cannot credibly walk away from the agreement if it is not providing those things.
Additionally, as is pointed out in other comments, IP is problematic.
July 6, 2005 11:28 AM | Reply | Permalink
CDR Adama wrote:
The WTO is the least democratic organization holding significant power in the world. The meetings are held in secret. There is no means of input to the people of the world into it's decision making processes.
...
We can't see the [WTO] meetings for ourselves to determine that. The meetings are all held in secret. All the WTO trade rulings are also made in secret by gawd knows who. The WTO needs to come under UN jurisdiction. The UN General Assembly should be able to overturn WTO rulings.
By "least democratic" I presume you mean neither YOU nor I have a vote. Neither do we have a vote in the Electoral College electing the President of the United States - as Al Gore found to his cost. In fact, the WTO makes decisions by consensus among its members. When a consensus can not be reached a decision is made by simple majority on a "one country, one vote" basis.
We do know who makes the WTO Trade Rulings. In the infamous "Import Prohibition of Certain Shrimp and Shrimp Products" case, the ruling was made by Michael Cartland (chairman), Carlos Cozendey, and Kilian Delbr
July 6, 2005 11:48 AM | Reply | Permalink
You expect to have an argument treated seriously in which you point to the Electoral College as the same as the WTO?
July 6, 2005 11:58 AM | Reply | Permalink
Progressives fight for it the same way greater democracy, liberal economics are fought for. Keep showing the benefits of greater legal rights for example. Work with people in our trading partners. As trade expands and countries get wealthier the depand for greater freedom, and the sort of demands we see in the west are likely.
We can't will the poorest people in the world to wage rates of a UAW auto worker. We can help life the quality of life. At the same Americans lives are improved by having the choice to purchase less expensive goods.
July 6, 2005 12:31 PM | Reply | Permalink
Bill Clinton promised us (Rustbelt) prosperity from NAFTA. George Bush tells us outsourcing to China is good for us.
Almost 350,000 former manufacturing workers in Ohio and Michigan got hit by the proverbial bus instead.
If the U.S. government is going to make policies intended to destroy American jobs maybe the feds should help clean up the mess.
July 6, 2005 12:40 PM | Reply | Permalink
A bit of confusion here I think. On one hand we have international politics, and on the other domestic politics.
I think your argument is that Free Trade is good for Americans domestically, in general at least. And, that there are others things that are important, that should be argued for, but that free trade by itself is good, therefore it should be supported.
What I am saying is that domestically free trade is in general good, but that the distribution is uneven, and that there are policies that can be enacted that help even out the distribution problems (and, I think I may have left out, that roughly speaking these policies that address distibution are favorable to the losers in free trade, and unfavorable to the winners).
To bring it into more abstract terms, lets say you have a Policy A that is good for the US in general, but better for some than others, and simply not helpful for some others.
There is also Policy B, while not strictly related, has benefits that roughly go to the losers in Policy A, but is not beneficial to the winners in Policy A.
For the constituents backing Policy B, what incentive is there to simply agree that Policy A, since it is in general beneficial, should be taken off the negotiating table and agrred to, and that Policy B will be seperately negotiated?
From here, I think you can better see my point about maintaing the need to credibly walk away.
[sorry to get all abstract]
July 6, 2005 1:25 PM | Reply | Permalink
Look, in principle I support free trade, and am by no means a fan of tariffs.
But I think the doctrinaire "Washington consensus" type liberals have their head in the sand on free trade just as much as do people advocating tariffs. In some ways, there worse because they smugly assume they "know better" because they've taken some college level economics courses than "unenlightened" anti-globalization types.
First off, how did the US become a great industrial power? By having a policy of high tariffs - which was a major plank of the GOP between the Civil War and the New Deal. I never see any "free traders" explain this. I'm not saying this should be the US's policy today, but I think this little historical fact is something that really needs to be addressed.
Secondly, just how many countries have succeeded by adopting the provisions mandated by the said "Washington Consensus"? How is Mexico doing since NAFTA - been to Ciudad Juarez or Tijuana recently? Why has virtually all of Latin American turned leftward in the last 10 years?
Finally, lets look at the at those formerly poor countries that have become wealthy in the last 50 years or so. South Korea and Taiwan are two good examples that spring to mind. How did they do? Well, yes, certainly in part through trade: but not through the kinds of trade agreements CAFTA is enshrining or the kinds of economic policies advocated by the WTO and World Bank. These governments have achieved success because they have been able to have a great deal of control over their economies through controlling government spending, labor relations, and infrastructure building, and the kinds of foreign investment they allow. If the government or state into which foreign capital flows is too weak to control what happens once it gets there, the multinationals are simply going to exploit the locals as cheap labor until the cows come home. In other words, free trade's ability to enrich the global poor is always contingent.
July 6, 2005 1:33 PM | Reply | Permalink
"They are represented by their gov't."
In other words, they operate in secret at the best of the rich and powerful who are unaccountable to their electorate, at least in the U.S.
Not that the mouth breathers who compose the electorate are worth much either...
July 6, 2005 2:05 PM | Reply | Permalink
It's not an issue of 'free trade' really because NONE of these type of treaties are actually 'free(uninhibited, without constraint) trade'. They are contracts with very specific provisions within them and the most egregious of them has to do with 'intellectual property'.
It's like saying the U.S. economic system is 'capitalism' when it is anything but true capitalism.
I also suggest that the defenders of CAFTA read 'Confessions of an Economic Hitman' before digging their heels into the dirt.
And today i found that CAFTA somehow got a provision in it that would seem to put the U.S. under the German CODEX regarding multivitamins,vitamins,and supplements.
July 6, 2005 2:15 PM | Reply | Permalink
DanielGree, this is not just a question of protecting blue-collar workers and farmers from competition with Central American workers and laborers (though that element undoubtedly exists), or even just about preventing a "race to the bottom."The important thing to recognize is that Central Americans are as divided about CAFTA as Americans in the US. For one thing, there's the fact that CAFTA deprives these Central-Amercan countries of control over its own investment policies and intellectual property laws. And while I agree with you that American agricultural policies hurt Central American farmers (though I think this is much more complicated than just agriculture subsidies), the reality is that CAFTA will likely harm, not help, these farmers, by forcing Central American countries to open their markers to American imports without a corresponsing guaruantee in American export subsidies. The story of small Mexican farmers after NAFTA is hardly encouraging.
For some interesting information:
http://www.oxfamamerica.org/whatwedo/campaigns/mtf_americas/backg
round/ftaa_cafta/?searchterm=cafta
July 6, 2005 2:51 PM | Reply | Permalink
For the most part, the defenses of "free trade" I read are abstract and don't point to real world examples where the lives of poor people in third world countries get better - they just assert that this is the case, that free trade "works" axiomatically. If examples are cited, they are usually the Asians tigers, whose ability to become wealthy were not advanced by the kind of trade agreements that have been in Congress during the last 10 years or so.
Look, in principle, free trade can be a good thing that can benefit producers and consumers alike. But just because CAFTA (or NAFTA) or any policy is deemed a "free trade agreement" does not make it a good thing or even a real expression of fair trade.
July 6, 2005 4:14 PM | Reply | Permalink
in the last sentance.
But the bottom line is this:
The current trading regime does the following -
1) it benefits US consumers through low prices
2) it hurts US manufacturing
3) it decreases the availability of good paying blue collar (and even white collar) jobs
4) its effect on the third world is, at best, uneven, and in many areas of the world has been negative .
I'm most concerned with number 4. I don't think that this is necessarily the fault of free trade as an abstract concept. What it is the fault of is people who are unwilling to acknowledge the very real flaws in which Washington Consensus-style global economics and attendant trade agreements operate and why they often allow more harm than good in third world.
July 6, 2005 4:22 PM | Reply | Permalink
that second-to-last sentence should read, "without a corresponding guaruantee to REDUCE American export subsidies."
Again, I would urge everybody to check out the OXFAM page criticizing CAFTA. It's worth nothing that, like DanielGree, OXFAM has been a strong critic of American trade barriers and farm subsidies (although again, in my opinion, subsidies are more the product of overproduction than the other way around).
July 6, 2005 4:25 PM | Reply | Permalink
Coach
I totally agree with you. I believe trade by itself is a good thing in itself. Trade improves the economic situation of the nation as a whole. However, I also agree with you that economics are not about fairness and that there are losers. Domestically that is what the social safety net is about both protecting people from the severe hardship of being on he losing side of economic changes and also to be willing to take risks.
Internationally, it is in our interest as well as that of foreign nations to help them more fairly distribute the benefits of free trade.
July 6, 2005 4:46 PM | Reply | Permalink
Yeah, and the wages of 140 million US workers will meet those of a billion Chinese and Indian workers about where, do you figure?
July 6, 2005 6:49 PM | Reply | Permalink
Even if it were true, which it is not, that under all conditions free trade would be to the aggregate benefit of the "entities" trading, it simply does not follow that issues about the distribution of benefits and harms should always take second place. Think about it for thirty seconds, for Christ's sake.
July 6, 2005 6:54 PM | Reply | Permalink
^just a link^
It has some interesting stats and additional links that may be usefull.
July 6, 2005 7:32 PM | Reply | Permalink
Well, if you define fair trade in that way the next question this
raises for me is what place, if any, do you see for labor and
environmental agreements in trade agreements you think Congress should approve? Can you give an example of a trade agreement provision that you believe would justify a no vote?
I'd love to see an exchange here featuring Krugman (who said he'd set Michael Moore straight on trade issues when the crisis of democracy in our country was over), Robert Kuttner, Jeff Faux, others on what is the long-term strategy to make this a healthier middle class society again without beggaring our neighbors (ideally, helping them improve living standards, of course), and without destroying the environment.
July 6, 2005 9:09 PM | Reply | Permalink
Yes, and no truly free trade is possible given that even the most "market-oriented" societies (e.g., the US) have (rightly, in my view) some government regulation of their economy. So any kind of trade agreement that seeks to lower barriers between states will have to have some of these kinds of regulations.
The same could be said of an agreement more friendly to labor, e.g., one that mandated greater workers' rights in less developed nations.
July 6, 2005 10:42 PM | Reply | Permalink