by Mark Gardner
The Free Press
Free trade myth: the unrestricted flow of goods across borders allows for an efficient specialization of industrial production, spreading wealth around the globe and providing consumers with the best possible product for their money.Free trade reality: huge and endemic trade imbalances between nations, deindustrialization in the industrial world, declining real wages and/or high unemployment, and the proliferation of environmentally-devastating, unsafe work at subsistence wages across the globe.
The growing divergence between the free trade myth and the free trade reality is forcing a fundamental rethinking of current global economic practices. This growing opposition to the free trade orthodoxy is not advocating protectionism, or the retreat behind high tariff bunkers so vilified by industrial and media elites.
Instead, there is a growing push to create a "fair trade" system which is governed by global standards for safe working conditions, fairer wages, union organizing rights, and less environmentally-destructive factories. This movement is forging alliances between interests - most notably, labor and environmentalists - who are often indifferent or even hostile to one another.
It is not ideology, but the realities of persistent economic stagnation and growing inequalities within and between nations which is driving this movement. Even a nation as wealthy as the U.S. is beset by seemingly intractable problems. We've experienced consistent and very large trade deficits for over a decade. Real hourly wages have dropped for close to two decades. And, although Washington state is supposed to be a shining example of the best possible world created by free trade, the state is second in the nation in filing petitions for job losses resulting from the recent North American Free Trade Agreement (NAFTA).
The growth of new centers of wealth in newly industrialized countries is the flip side of slipping economies in the industrialized world. New populations are adopting industrialized consumption habits. (This can provoke political struggles and labor organizing campaigns which force authoritarian governments and industrialists to share the wealth, as has occurred in South Korea.) But more often than not, the creation of these new pockets of wealth has greatly intensified exploitation of labor and the environment. The relentless search by corporations for low production costs leads to a further expansion of factories in nations with few standards for environmental protection, worker health and safety, and wages and benefits. And, the global search for resources accelerates the devastation of ecosystems.
The mythical benefits promised by free trade recede further as even high skill jobs are placed under the Darwinian pressure of global competition. Wages and job security for even the highly skilled and educated are dropping. Corporate "downsizing" and the shift to insecure temporary and part time employment means pervasive economic uncertainty.
This process shows no sign of slowing. Lester Thurow of MIT has recently noted that integrating the former communist states into the world market means that, "One third of humanity, much of it skilled, is joining the capitalist world. If some of the world's best physicists can be hired in Russia for $100 a month, why should anyone pay a third-rate American physicist $50,000 a year?"
These realities were the underlying causes of the fight over NAFTA. You wouldn't know it from the papers, but those who opposed the Treaty were concerned not about lower tariffs but about the deregulation of finance and industrial ownership in Mexico. Opponents feared NAFTA would intensify capital's exploitation of Mexico's low-wage economy without enforcement of wage, safety, and environmental standards.
To some, the NAFTA vote only illustrates the obvious - that unions are about dead, that environmentalists don't have the power to sway governments, and that free trade and free markets now have an unimpeded path. Indeed, unions now represent only about 12 percent of the U.S. work force, and higher but similarly declining shares elsewhere. They also have less and less entre into government (see cover article). Environmentalist's broad but shallow support wilted in the face of concerted corporate opposition.
There is, however, another side to this story. First, the anti-NAFTA forces were defeated only through extraordinary means: multi-million dollar campaigns by pro-NAFTA corporations, and billions in subsidies doled out by the Clinton administration to the districts of wavering Congressmen. And, the fight over NAFTA has opened up the debate to the point where international labor rights and environmental standards linked to trade can be mentioned in polite company.
The emerging alliance between unions and environmentalists, which also includes women's groups and human rights activists, is spilling over into the politics of the main existing trade organization, the General Agreement on Tariffs and Trade (GATT), and its successor organization, the World Trade Organization (WTO). Environmentalists in particular were galvanized by a recent GATT ruling that U.S. dolphin protection standards for the tuna catch were a protectionist violation of trade rules. Unions are having some success for the first time at pushing labor standards and organizing rights onto the trade agenda.
Global standards are not an unattainable utopian ideal, but are in some instances already beginning to work their way into political institutions. In the European Community, the Social Chapter provides a framework for the creation of social and wage standards. And, former U.S. Congressman Donald Pease introduced a series of labor rights amendments into trade and development law during the 1980's, although these measures are barely enforced. Even Bill Clinton, when he oscillates temporarily out of his "New Democrat" identity, has supported efforts to put labor standards into the new WTO.
There is a growing consensus outside elite quarters that trade ought to enhance social welfare and the quality of life. Without the adoption of rules governing minimum wages, safety standards, and environmental protection, trade creates a "race to the bottom" where the company or country with the most destructive practices wins.
A fairer trading system is more likely to achieve an expansion of trade than a continuation of the present system, which is eroding living standards and generating an upsurge of economic nationalism that brought us Ross Perot and Patrick Buchanan in the last election. As such, if we are really concerned about the expansion of trade we should build a floor under which no company can crawl. Then we can all do well by also doing right.
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Contents on this page were published in the June/July, 1994 edition of the Washington Free Press.
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Copyright © 1994 WFP Collective, Inc.