Free Trade isn’t free. In the wake of current President Trump’s campaign promises to end the Trans-Pacific Partnership and to “do something” with the North American Free Trade Agreement. While he may be putting “America First” it is imperative to determine how free trade often benefits the wealthiest among us, while leaving low to middle income families within member states of the agreements to be disadvantaged.
Winners and Losers
Free trade creates an atmosphere of winners and losers, by and far the losers are the American workforce. In 2003 the Economic Policy Institute notes that job losses were reported in all fifty states as a product of NAFTA. Further, Jeff Madrick a New York Time’s writer reported that American wages have been reduced as a result of outsourcing made easier by such trade agreements. Economists have averaged that between 1993 and 2014 over 600,000 jobs were lost. When NAFTA was signed into agreement, one of the supposed proponents of the plan was suppose to be that of job creation. Yet this creation of jobs took place outside the U.S.
Yet the creation of jobs in member countries often take place inside of free trade zones or export processing zones (FTZ/EPZ). These zones are rife with human rights abuses. While some zones operate according to labor and human rights regulation, a FTZ/EPZ is only beholden to the host countries domestic law an trade regulation. The International Confederation of Free Trade Unions notes that these zones have, “employers [who] pay scant regard to labor laws, employment regulations and health and safety at work” (7). In fact, most of these zones are exempt from labor laws. The ICFTU notes a report by a Mexican NGO that highlights over 1,300,000 workers are paid less than six dollars a day to work in deplorable conditions. This is followed up by a Harvard study in 2010 that notes the track record of many of these zones include mistreatment of workers, denied medical or sick leave, and restrictions on the use of sanitary facilities. When considering the purpose of NAFTA was to integrate Mexico into the high wage economies of the U.S. and Canada, clearly free trade has the opposite effect.
What does this mean for us?
Free Trade has a modest impact on the U.S. economy. In a 2014 report by the Pederson Institute for International Economic found that the United States sees 127 billion dollars in trade grown because of NAFTA. While that number may seem high, it averages to about four hundred dollars a person. These trade agreements work to make the developing member agreement countries look more attractive to U.S. and foreign investors. The Council on Foreign Relations reported in 2017, that its been difficult to tease out if the growing economy is linked to NAFTA’s policy given the rise of technological advancements and increased trade with China.
While we may never know if President Trump withdrew from the TPP or wants to negotiate NAFTA for any of these reasons. Yet, it can not be forgotten that the U.S. plays a major role in trade partnerships and to ignore these issues with free trade, is indicative of a growing compliance with globalization and protectionism than an acknowledgement of human lives.
What can you do?
This is by no means a call to end trade, but these partnerships need to shift to a base of fair and equal trade. When buying a fair trade product, you ensure that your consumer dollars are being paid to producers in developing countries. Look for products with the Fair Trade logo, as these profits go to directly impacting the communities that produced them. Visit fairtradeusa.org to find how you can do your part to help these communities. A good start to pushing against Free Trade is to replace what products you can with Fair Trade Certified ones.