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Free trade not always fair trade

Posted by Stephen on March 16, 2007

In the early 1990’s President Bill Clinton took great care in advising America that the future existed in free trade in North America. It was a trade agreement that was primarily directed toward open boarder trade with Mexico. The President’s assertion was that free trade with Mexico would increase the flow of capital into Mexico, improve labor conditions, and lead to an eventual improvement in the Mexican economy. The President claimed that it would expand our economy, reduce undocumented migration, and added to the security of the United States by strengthening an impoverished nation.

Critics at the time, many of them Republican, articulated concerns that free trade could expand on a different kind of migration. Many economists and business forecasters were worried that businesses would relocate to Mexico to take advantage of cheap labor and avoid taxes. Clinton and his economic advisers dismissed such criticism.

Less than twenty years have passed and little in the way of the utopian rhetoric that President Clinton described has come to fruition. Mexico’s economy is in shambles, Mexican immigration into the U.S. is at an unprecedented rate, and there is arguably less capital entering the country than there was in the 1990’s.

Trade was supposed to increase jobs. However, if one were to have completed a cost-benefit analysis on the trade movement they would find that our measured costs have outweighed our marginal benefits.

More to the point, NAFTA was the gateway to a trade policy that has seen America forfeit fair trade for the wave of free trade that now dictates business action and progress today. While cooperate profits are at record highs, the trade-off has been the loss of manufacturing jobs and the ability for America to manufacture its own needs. Supporters of unadulterated free trade state that something will come along and take its place, such as the service sector. There is little acknowledgement that free trade needs to be accompanied by fair trade policies.

It is important to note that American trade policies effect more than life within these borders. Trade also affects countries around the world.

South East of Mexico City, Mexico, in the country of Guatemala, workers struggle to find the improvements promised when a landmark trade agreement with the United States was passed by Congress in 2005.

Nearly two years have passed since the countries of Central America vowed to strengthen worker rights as they sought votes in Congress for the Central American Free Trade Agreement, or CAFTA. Yet there has been little if any progress, according to diplomats, labor inspectors, workers and managers.

The Bush administration contends that CAFTA has improved labor standards and working conditions. Yet, labor abuse and lethal violence against trade unionists are still taking place. “The situation is the same now as it was,” said Homero Fuentes, director of the Commission for the Verification of Codes of Conduct, a Guatemalan group hired by multinational companies to inspect local factories and plantations. “The law hasn’t been reformed, and people just don’t obey the law. There’s a culture of impunity.”

American companies have agreed to strict compliance to labor laws and standards, but they have demanded low prices as well. American companies constantly threaten to shift work to China if their demands are not met.

“Your country is pressuring us to respect our own laws, laws that hinder the competitiveness of Guatemala compared to China, which does not have the same respect for labor rights,” said Carlos Arias, a lobbyist for the Guatemalan Chamber of Industry. “When you have to pay the minimum wage and all the fringe benefits, your costs increase.”

The Washington Post is reporting that at a factory run by a company called Avandia on the eastern fringes of Guatemala City, nearly 700 workers make dress pants for the American retailer Jones Apparel Group, which owns the Nine West and Gloria Vanderbilt brands. Five current and former workers said in interviews that factory bosses often forced them to work unpaid overtime. Cristina Perez, a mother of four, said security guards sometimes locked her in the factory late into the night, even as she protested that she was a nursing mother.

The drinking water was dirty, the workers said, and the bathrooms lacked soap and water except on days when someone from Jones came to visit. “All of a sudden, they were giving the appearance that they treat us well,” said Karen Chacon. “Actually, they treat us like animals.”

The Post is also reporting that as officials at the U.S. Embassy cited efforts to improve Guatemala’s labor rights, one sought to discredit the appearance that a union leader had been assassinated for his work. The official, who spoke on condition of anonymity, said the case was “murky,” adding that the U.S. government had learned from Guatemala’s president or vice president that Zamora had been “a violent man” whose actions triggered complaints by women and police. Pressed for details, the official said she had none.

Free trade agreements with Peru, Columbia, and Panama are in the offing, and while they present a favorable improvement for American businesses, the agreements should maintain fair trade over free trade. The loss of the ability to manufacture the products we need to be a self sustaining nation does more to threaten the sovereignty of the United States then homicidal maniacs and religious fanatics that fly airplanes in to towering buildings.

Stephen Winslow is the executive editor of Conservative Viewpoints.

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2 Responses to “Free trade not always fair trade”

  1. I see you wrote this nearly 2 years ago, but I could not agree more. Good post.

  2. Stephen said

    Thank you. I had to read the post again myself. It’s amazing to realize that I could repost it today and the point is still the same. I wonder out loud if the new administration is going to impact this issue in a positive manner. For example, I cannot support throwing a trillion dollars (that’s $1,000,000,000.00) at a problem in the private sector. However, I did notice quite a bit of the money directed toward military contracts to be used to pay private American contractors to rebuild elements of a depleted military force. It has caused me a moment of pause while we assess the possible impact on American industry, even if it’s for a short time.

    I took a short look at your blog as well. I encourage readers to go to Anamericanidiot.com for a look…

    Thanks for the comment.

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