5 Reasons Americans Should Oppose Free Trade

By Jamie Way, M.A.

While politicians on both side of the aisle push the conservative agenda of cutting government, many Americans are beginning to wonder if anyone in Washington is concerned with jobs. With the exception of the small sliver of our country that controls the majority of our wealth, most of us are or know someone who is out of work or underemployed. The American people regardless of ideology have declared that jobs should be job number one for Washington. All of us are tired of lower earnings, disappointed with the lack of environmental regulation and sick of seeing the death of American manufacturing.

And yet despite the population’s general dislike for outsourced jobs, somehow no one seems to be talking about the three pending free trade agreements with Colombia, South Korea or Panama. Congress is now poised to pass all three in September with virtually no one watching.

While the idea isn’t as clear cut and simple as some of DC’s flashier initiatives, it is at the heart of the jobs debate and must be addressed.

The Basics: What is “Free” Trade?
Free trade is one of the strongest tools in the neoliberal ideological box. Basically, neoliberals argue that the barriers that countries create to trade are always negative. These barriers can include environmental, labor and safety regulation, any protective tariffs on products that make the home country more competitive or subsidies to support an industry. Neoliberals believe that the market knows best and will correct flaws by itself, so they oppose any real government oversight. Therefore, proponents argue that instead of allowing these protections, countries should make “free” trade deals that lift any protections or restrictions on the entrance of foreign goods. The idea is that if all barriers are gone, countries will start to specialize in what they do best. (The US can be a service economy, Japan can make all of our TVs, China can make our clothes, etc.) This is called a “comparative advantage.”

There are a few flaws in this thinking, however. Below are 5 of the biggest issues that the neoliberal theory of “free” trade creates in practice:

1) Environment, Safety and Labor Regulations are Undermined:
Free trade does not allow for environmental labor or safety regulations that might limit profits. This obviously causes everyone’s standards to drop to even out with the country with the lowest standards involved in the trade agreement.

2) Sovereign Governments Cannot Make their own Decisions about their Market:
Free trade does not afford governments the sovereignty to provide support or subsidies to some industries or to tax foreign goods. Therefore, it lowers the ability of the government to regulate the market and lessen the blow of major economic shifts. It also prevents countries from providing incentives in the form of a subsidy for innovations. That is, we cannot subsidize a local green energy company unless we provide the same benefits for foreign companies in countries that are part of our free trade agreement.

3) Foreign Companies can Sue Governments for Loses:
Some free trade agreements include “investor state dispute mechanisms” that can be concerning. These can allow foreign companies to sue a government for changing regulations once a company invests in them. This is the case in El Salvador, where the government is being sued for $100 million by a mining company based on the so-called “reasonable expectation of profit” that the company had. This essentially allows foreign companies to prevent the creation of any effective labor or environmental legislation.

4) Job Loss and Outsourcing:
Free trade supporters argue that in the long run, free trade can create jobs. The problem is, in reality labor often loses out. And even free trade’s strongest proponents admit that there is a painful readjustment period for working people. When NAFTA was signed by the US, Canada and Mexico many textile jobs crossed the US Mexican border heading South in search of cheaper labor. US manufacturing lost jobs and the US labor market was forced to compete on a “equal playing field” with Mexican labor. The problem is, this effectively makes minimum wage in the US the same as that in Mexico for companies that are willing to relocate.

5) Not a Good Deal Abroad:
With all the loses that free trade creates for American workers and citizens, you would assume that those abroad must be winning big. That is not the case, however. All the aforementioned issues can impact our counterparts abroad as well. The impact is mostly on the working class and is focused on particular sectors. For example, Mexico may have gained textile jobs (however exploitative and low-paying) through NAFTA, but massive agribusiness in the US supported by hypocritical subsidies caused many corn farmers in Mexico to lose their jobs as well. Similarly, South Korea originally had issues with the US free trade agreement because the US had lower meat safety and auto standards. Therefore, countries as a whole are not the big winners or losers. Instead, the real winners are the large companies that can penetrate borders at will to find the cheapest labor with the fewest regulations and rights. The losers are all of the people that live and work in those societies without major corporate investments.

Republicans almost always support free trade and Democrats have a mixed record. The irony is that according to a Wall Street Journal/NBC poll over 60% of both tea party sympathizers and union members believe that free trade agreements have hurt the US. It appears then, that despite Washington’s constant support, most Americans (regardless of ideology) do not agree with free trade.

Recently, Democrats have tried to appease their base by throwing in some additional (largely toothless) clauses. The Colombian agreement has a nod toward labor standards, but would still go into effect despite over 50 union killings last year alone. The South Korean agreement has a couple of concessions to appease the auto industry. Most importantly, the Democrats have insisted that the TAA (Trade Adjustment Assistance Act) be passed in conjunction with the South Korea, Colombia and Panama deals. Although this bill may prove to be a glimmer of hope in an otherwise disappointing set of actions, the TAA’s existence alone is quite telling. The purpose of the TAA is to help support workers who are laid off when their industries close down or shrink drastically due to trade agreements. Therefore, the passage of the TAA is an implicit acknowledgment of the suffering and job loss that these agreements will cause.

If we are unable to defeat the free trade agreements, the TAA may provide some safety net for American’s put out of work, but it still would not address a number of critiques. It does not address issues of human and labor rights in Colombia and putting our unions here in the United States in competition with unions operating in an environment of fear and intimidation in Colombia. It also does not address the needs of Colombians, Koreans and Panamanians that would suffer as a result of the agreements.

Please consider visiting your representatives today and demand that they take a stand against free trade. For more information on the specifics on these particular free trade acts, please search “free trade” through our website or visit Public Citizen.