PROPONENTS OF FREE TRADE AGREEMENTS have often opined that global trade and commerce would transform the social, economic, and political landscape of world — and that this “new global commerce” would be the vehicle of unprecedented economic growth for the poor. When it was presented to the world, Thomas L. Friedman of the New York Times reported that GATT (The General Agreement on Tariffs and Trade) weighed 385 pounds and was over 22,000 pages in length. The trade deal was supposed to “stimulate some $5 trillion in new trade by the year 2005,” in part, according to Friedman, because “it eliminates or freezes so many tariffs around the world.”
In 1994, Mickey Kantor, the top U.S. the trade representative at the time told Friedman that his office had “three independent studies that showed that in the next five years the Treasury would collect about $3 in revenue for every $1 lost in tariffs because of the GATT accord.”
This mantra officially began in 1994 when the Uruguay Round of the GATT treaty was signed and the World Trade Organization (WTO) was born to replace it. In the years that followed, NAFTA (the North American Free Trade Agreement) and CAFTA (Central American Free Trade Agreement) continued the cavalcade of free trade agreements in Canada, Mexico, South America and the United States.
Today, the Canada-Colombia Free Trade Agreement mimics the proposed U.S. - Colombia Free Trade Agreement, while additional trade agreements with Peru and Panama await Congressional and Parliamentary approval in both nations.
Rather than heralding a new day for the poor, however, chaos has increased in Mexico and South America, where millions are protesting the effects of the treaties. The biggest beneficiaries of CAFTA and NAFTA were multinational corporations who, after shutting down small farms and businesses that were the lifeline to their communities, have used the trade agreements to create new monopolies on everything from water to food to energy.
The deals are also blamed for massive unemployment in the U.S., particularly in the manufacturing workforce; and in Canada, NAFTA’s affects have hit non-corporate agriculture hardest. The National Farmers Union concluded in 2002 that free trade agreements, “may increase trade, but much more importantly, they dramatically alter the relative size and market power of the players in the agri-food production chain. Free trade helps Cargill and Monsanto, not farmers.”
After NAFTA was passed, former U.S. Trade Representative Clayton Yeutter said, “The Canadians don’t understand what they signed. Free trade is just the first step in a process leading to the creation of a single North American economy.” In the years to come, that vision could include a North and South American Union, similar to the European Union. President Bush has already set the wheels in motion, so the world must wait to see what President Obama’s legislative position on “free trade” will be.
One thing is certain: as multinational firms compete fiercely for global market shares, they have increasingly abandoned the national interests of their home country — and have largely disregarded any social obligations in return for their billion dollar tax breaks. Short-term profits rule the day and anything, including displacing or exploiting workers, is fair game. Given that significantly lower wages exist in poor countries, multinational companies have become arbitrageurs with workers’ wages — and workers are treated as just another commodity.
It’s a Zero Sum game — and middle class and poor workers don’t matter. By shifting production to lowest-wage countries, the middle class in the “host” country is often decimated — and the poverty class grows. I see it every day in Ohio, where the labor force has been decimated by so-called free trade, but it is rampant in Michigan and Pennsylvania and the Candian Province of Ontario.
And this is so even though many of these giants of world commerce — pharmaceutical and chemical companies, for example, pay miniscule taxes to the government despite the fact that they are among the richest corporations on the planet. In essence, U.S. taxpayers pay for multinational corporations to export homegrown jobs to lower-wage nations.
Even as opposition to FTAs has grown worldwide, the multinational corporations and their host governments here in North America have fought to pass even more free trade deals. The Bush administration still has five weeks to try to exert their will, and they are not going away quietly. “It would be a mistake to not pass the new free trade agreements with Columbia, Panama and Peru,” U.S. Secretary of State Condoleeza Rice said recently. “Trade helps new democracies to consolidate their political transitions and to prevent backsliding. It helps them to build the effective institutions of a free society. And trade helps to give citizens a greater stake in the long-term stability and success of their democracy."
But is that truly so — are we really ‘enabling democracy?’ Have free trade agreements been designed to help lift poor nations and level the playing field — or have we long since passed the time when government can actually function on behalf of the common man and woman?
The evidence from the streets of Mexico, the United States and Canada strongly suggests that those questions aren’t really considered any more. “Free Trade” as it exists today is not free at all.
It’s a Zero Sum game — a global playground for big business — while for billions of others, mere survival is the task at hand.
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Cartoon by Nicholson from "The Australian" newspaper: www.nicholsoncartoons.com.au