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Wednesday, 02 April 2014 14:16

Support fair trade but beware free trade

Written by 

op frBy Doug Wingeier • Columnist

For some years now I have been promoting fair trade products as a means of helping organic farmers and cooperatives in the Third World get just prices and living wages, improve living standards, educate their children, build stable communities, and protect the environment from toxic chemicals destructive use of land and water. 

My wife and I use fair trade coffee, tea, cocoa, and chocolate from farmers in Latin America, Africa, and Asia, and Palestinian olive oil — all organic, high quality, and reasonably priced. I sell it at cost, and have encouraged its use at church functions. My interest in this has grown out of visits to coffee farms in Nicaragua, Colombia and Chiapas, Mexico, where I have seen first-hand the struggles of farmers who operate at the mercy of the fluctuating world market with prices set in New York, unpredictable weather patterns, an invasive and destructive rust, and exploitative middlemen called coyotes who buy cheap at the peak of the season from small farmers with no storage facilities. I encourage you to join me in bringing your purchasing and dietary practices into conformity with the values of compassion and justice for the “least of these.”

 

However, sometimes folks less familiar with these practices refer to this activity of mine as promoting “free trade” rather than “fair trade.” There is a world of difference, however. Free trade refers to the policy of large multinational corporations, giant agribusinesses and First World governments like ours to enter into treaties that pave the way for free-for-all competition by reducing tariff barriers, opening up markets, eliminating protections for laborers and the environment, and compromising the intellectual property rights of indigenous peoples.

Exhibit A for this policy is NAFTA, the North America Free Trade Agreement between the U.S., Canada and Mexico, pushed through by President Clinton 20 years ago. It has been followed by CAFTA-DR (pact with Central American countries and the Dominican Republic) and bilateral trade agreements with Colombia, Korea, Chile and Peru, among others.  Supporters of these “free trade” treaties argue that they promote economic development, create jobs, provide us with cheaper consumer goods, establish a U.S. trade surplus, and reduce barriers to building a world community. After 20 years, however, we have seen the results to be just the opposite. A recent study by Public Citizen has revealed the following about NAFTA:

• Rather than creating jobs, thousands of U.S. manufacturing jobs have been exported to places like Mexico, Haiti, China and Vietnam.

• U.S. trade deficits have increased six-fold, to $177 billion in 2013.

• Foreign competition has exerted a downward pressure on wages for U.S. workers, contributing significantly to our growing income inequality. Two out of every three displaced factory workers who were rehired in 2012 took a pay cut of more than 20 percent, competing for non-offshore-able, low-skill jobs in sectors such as hospitality and food service.

• Many of our environmental and health laws have been challenged in foreign tribunals, resulting in more than $360 million in compensation to investors being assessed against NAFTA governments (federal and state), and toxics bans, land-use, water and forestry rules being voided. Other NAFTA claims currently under dispute threaten medicine patent policies, a fracking moratorium, and a renewable energy program.

• The average annual U.S. agricultural trade deficit with Mexico and Canada in NAFTA’s first 20 years was $975 million, almost three times the pre-NAFTA level. U.S. food exports to these two countries have fallen while food imports have doubled. At the same time, U.S. food prices have risen 67 percent.

• Such reductions in consumer goods prices that have taken place have been more than offset by wage losses. The 63 percent of U.S. workers without college degrees have lost 12.2 percent of their wages, after accounting for cheaper consumer goods — $3,300 per year for those with a median annual wage of $27,500.

• The massive increase in exports of subsidized U.S. corn (i.e., not free trade, in spite of the treaty) destroyed the livelihoods of a million Mexican farmers and another 1.4 million workers whose income depended on agriculture. The resulting desperate migration of people displaced from Mexico’s rural economy has depressed wages in border factories and doubled Mexican immigration to the U.S. Thus, immigration issues in our country are directly traceable to our trade policies.

• More than half the Mexican population falls below the poverty line, contradicting predictions that NAFTA would bring prosperity to Mexicans. A minimum wage worker in Mexico can buy 38 percent fewer consumer goods, which cost seven times as much as before NAFTA.

To sum this all up, the reality is that the grand promises of NAFTA have failed, the opposite has happened and millions of people in all three countries have been severely harmed — by loss of land and jobs, environmental devastation, lowered living standards, family dislocation and separation and increased poverty fostering a bulging rich-poor gap.

Now, the Obama administration is promoting a new trade and investment pact patterned after NAFTA, called the Trans-Pacific Partnership (TPP), which is currently being negotiated among 11 countries that border the Pacific or the South China Sea — Peru, Chile, Australia, New Zealand, Japan, Vietnam, Malaysia, Singapore and Brunei, along with the NAFTA three — but, significantly, not China. Like NAFTA, this pact is being negotiated behind closed doors by government officials with transnational corporations like Monsanto, Wal-Mart, Goldman Sachs, Halliburton and Phillip Morris, but without citizen groups, workers’ representatives, or elected legislators.

The announced aim of TPP is to promote development, create jobs and lift living standards for all. But, following the NAFTA pattern, the results will very likely look very different.

Despite campaign promises to create transparency, the Obama administration has refused to tell us what is in the “classified” treaty texts. And now, they are seeking “fast track” approval, which would bypass Congress and short-change the legislative process so the president could sign the TPP before Congress could review it or make changes to protect the rights of ordinary people like us. The U.S. Constitution gives Congress the authority to review and approve treaties; it’s their job to make sure trade deals work for everyone.

Individually, we can practice consumer habits that support fair trade. Collectively, we can demand that our representatives reject free trade. Fair Trade? Yes! Free Trade? No!

(Doug Wingeier is a retired seminary professor and minister. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .)

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