Fair Trade Is Key To Global Economic Sustainability

America Imports Far More Than It Exports

Trade policies have massive long-term ramifications on the strength of a nation's economy. How these policies develop and take shape are generally the result of many factors coming together and not always well planned.  Americans should expect the politically heated debate over trade agreements to continue. Many articles support and praise the way trade has grown over the years and how it has raised many people out of poverty and misery. This does not mean free trade is the answer to all our economic woes. I contend many people fail to note the distinct difference between free and fair trade.

Critics of existing policy say these trade deals over the years have added to environmental problems across the world and exacerbated economic inequality within many economies as manufacturing jobs have been outsourced to low-wage countries. Some activists also weigh in with claims these deals can curb freedom of speech on the internet and other detractors say it incentivizes currency manipulation. As we view the global economy we should consider that much of the "free trade" movement is driven by mega companies desire for larger markets and greed. The desire of companies to both develop and control future rules has caused them to lobby individual governments into giving up control and becoming subservient to corporate “efficiency.” 

In many ways, the global economy has become an ill-regulated business model tilted to favor big business and giant conglomerates. The controversial TPP created as a new U.S. led Pacific trade pact pointedly excluded China, however, that was not just about trade but a tool designed to cause China to lose influence and key export markets. While signatories championing the benefits TPP claimed it would kick-start sluggish global growth, much of America's political motivation revolved around the idea it provided a strategic bulwark to China’s growing economic and military power. It is important to remember that China is a state-run economy based on a business model that is geared to expand by crushing the competition. A key part of China's plan centers around both state-owned and private firms investing in and acquiring foreign companies for the purpose of stealing their technological innovations. Subsidizing those companies working within its system in a multitude of ways helps China achieve this goal and its practice of exporting goods at slightly below cost in exchange for manufacturing jobs is not stupid but it is predatory and we in America are their prey.

The Trade Deficit With China Is A Big Problem

Still, many people viewed the Trans-Pacific Partnership (TPP) that was pushed by the Obama administration and a slew of corporate allies as a blatant attack on labor, farmers, food safety, public health and even national sovereignty. Details of the TPP agreement had broad implications that were kept largely secret and while being negotiated even members of Congress didn't know much of its details because it is mostly the product of corporate lawyers. Making the agreement even more controversial was the belief held by many Americans that bad trade deals with low-wage countries have contributed to our current economic woes.

When Massachusetts Senator Elizabeth Warren, came out strongly against these agreements Obama said the Massachusetts senator was “absolutely wrong” and accused her of speculating about the contents of the emerging 12-nation trade deal for personal gain. Senator Warren and those concerned that a trade agreement with low wage nations will not be a great job creator for America have history on their side. Circling back to the TPP, Economist Dean Baker said of it, “This really is a deal that’s being negotiated by corporations for corporations, and any benefit it provides to the bulk of the population of this country will be purely incidental.” It is worth noting that in 2008, as a presidential candidate, Obama boasted, “I voted against CAFTA, never supported NAFTA, and will not support NAFTA-style trade agreements in the future.”

Trade can be used as a stealth weapon resulting is massive shifts in wealth and jobs that create massive problems. Partisan politics also plays into this, in the past, it has been Republican politicians that have been most inclined to approve these deals while job protecting Democrats backed by unions railed at them. Often those supporting past trade agreements use low consumer prices as a battle flag around which to rally. This is very short-sighted. An article titled; "Higher Prices On Import Goods A Fair Cost For Jobs" points out that trading away jobs for lower prices today is as stupid over time as burning the furniture to keep the house warm.

NAFTA Greatly Altered Our Trade With Mexico

Historically, trade laws are geared to enrich the “mother” country and was often used to build a nation. Following World War II free trade arguably benefited the economies of the countries involved. This changed starting with 1994’s North American Free Trade Agreement (NAFTA), which recognized that capital is now mobile, it moves about the world and owes allegiance to shareholders rather than loyalty to any one country. At least it can be argued that NAFTA was intended to improve our own neighborhood and that as Mexico and Canada benefited, America would gain some degree of "safer borders" and a mutual interest would be served. NAFTA is the paradigm of what are most accurately called deregulation deals. It promised better jobs in both the United States and Mexico.

American trade policies have caused well-paid workers in the United States to lose their jobs to low-paid workers in Mexico. We have also seen badly paid Mexican workers lose their jobs to those in China who would work for even less. This has resulted in a loss of wages and opportunities for workers in the United States. We should not lose sight of the fact that while free trade is important, fair trade is far more critical and must be the goal. Developing a long-term sustainable economic system that is balanced would contribute to both global cohesion and the world economy. Nationalistic exploitation of trade agreements has occurred throughout history and it is naive to think such schemes will suddenly end. It is evident the changes brought about by the development of the global economy have been hard for many and the promise of widespread prosperity has fallen short.

At some point, the damage from continuous massive trade deficits may become irreversible. The trend of businesses and businessmen to cast away our nation's best interest for a place at the table of the global elite has come at a great cost. Considering this, it is little wonder trade has become such a contentious issue. Another system or legal framework for long drawn out arbitration that dispenses solutions that neither thrill or satisfy is not the fix. The promise that increased trade will create new jobs has turned out to be largely a myth and politicians playing the "fear card" with statements such as "We can’t let countries like China write the rules of the global economy” imply we are powerless to control our own fate and are about to be devoured, I reject this premise.