Free Trade Agreements and the Trans-Pacific Partnership
What is a Free Trade Agreement?
A Free Trade Agreement or FTA (TLC or “Trato de Libre Commercio” en español)
between countries removes the tariffs and quotas on the goods and services trades
It’s a good idea in theory... Trade is good. More trade is great...
But the problem is, in practice, many of these “Free Trade Agreements” aren’t actually free trade, and they’re not actually agreed to! They’re more like corporate-welfare handouts rebranded and marketed as “free” trade. They’re pushed in behind closed doors with programs like Fast Track (more below), without popular votes, despite a lot of protest. With many “free” trade “agreements”, capital - or businesses - can cross borders, but labor - or human beings - cannot. That’s not a free market! It’s a one-way flow of wealth! Since human beings have to work wherever we are, companies lobby governments and pit one geographic community against another, making a great deal more money while we all make less.
In their quest to get their economies rolling, developing countries compete against each other to attract jobs that multinational corporations provide. So companies have their pick of the litter, and go to the lowest common denominator. Oh, Dominican Republic respects labor laws that lead to increased wages and pregnancy leave that reduces productivity? We’ll go to Bangladesh. Mining in the U.S. means we can’t use cheap and damaging extraction techniques without a lawsuit? We’ll just go to Guatemala. These agreements make it easier for multinational corporations to profit, but provide little to no protection of workers’ rights or environmental health. It’s legal. But is it fair? Companies lobby local governments to change laws and establish conditions that are most conducive to profits - that’s not always the same thing as what’s best for local people.
Free Trade Zones and the “Race to the Bottom”
Free Trade Zones - called “Zona Franca” in espanol and also called “Export Processing
Zones” in English, are areas, usually close to a major airport, border, or seaport, in
developing countries, where raw materials can be dropped off at factories, workers turn
them into finished goods, and they can be shipped back out of that producing country
without being taxed. They also get hella subsidies from the government - free space, free
electricity, lower minimum wages, a blind eye turned to health and safety law
implementation, and so on. It’s a loophole that’s legally like a space isn’t even within the
country where it is geographically, or subject to the local laws.
While this is framed as a means to bring employment to countries where it is needed - and it is! - it’s questionable how mutually beneficial FTZs and FTAs are; how much corporations get out of them, versus where local economies and people are left at the end of the day, when companies bounce to the next cheapest spot. Corporations take advantage of unenforced and lax labor laws in producing countries and use free trade agreements as a tool to reach the lowest production costs possible, in a race to the bottom, exploiting humans and the environment along the way.
We’re not against garment factories. Everyone needs a job with dignity! We’re against inhumane conditions at work, which is where people spend the majority of their life hours. We’re not against markets! We’re for them - we just want markets that include people at the bargaining table!
North American Free Trade Agreement (NAFTA)
The North American Free Trade Agreement (NAFTA) was set up between the United States, Canada,
and Mexico, and enacted in 1994, ending tariffs on many of the goods imported and exported
between these three countries. Following NAFTA, the amount of maquiladoras, or sweatshops, in
Mexico skyrocketed. These factories capitalize off of the cheap labor in Mexico, with little to no
regulation over the treatment and pay of the people they employ and their treatment of the
environment. Furthermore, NAFTA has particularly harmful to farmers in Mexico due to
agricultural dumping, or predatory pricing imports below the average price in the home country,
by the U.S. Finding it impossible to compete with the prices of heavily-subsidized U.S. crops pouring
into the country, many farmers in Mexico were forced out of business.
Some of NAFTA’s implications:
CAFTA and the end of the MultiFibre Arrangement
Having seen the damage to working people, farmers, and the environment implicated by NAFTA, the
resilience to the Dominican-Republic Central American Free Trade Agreement (CAFTA-DR) less than
a decade later was no surprise. People across Central America-, Costa Rica, El Salvador, Guatemala,
Nicaragua, and Honduras- spoke out against this massive free trade agreement. However, the U.S.
approved CAFTA-DR in 2005.
Many of the feared effects of CAFTA-DR are becoming a reality: ending agricultural sovereignty for small farmers, increasing healthcare costs, driving down labor standards in ever-increasing factory jobs, destroying environmental health.
CAFTA further increased what we call the “Race to the Bottom”- where corporations lift up and move production to locations where government regulations don’t interfere with their costs. In other words, while racing for the lowest costs, corporations are racing for the lowest standards, undermining human rights laws, environmental standards, and labor unions. The Multi Fibre Arrangement (MFA) imposed quotas on the amount of textile developing countries could export to developed countries until it was dropped in 2005 with the passing of CAFTA, opening the flood gates for trade in the garment sector. Before, quotas were alright. It meant each country had a certain, balanced, amount of trade with the US. The MFA ensured to some level that Central American clothing and textile producing countries would have access to export fairly to the United States; lifting global quotas made this very difficult and often impossible. The lifting of quotas furthered the race to the bottom. Production was massively shifted to lowest-common denominator countries with the least strict labor laws and environmental regulations, such as China, Cambodia, and Bangladesh. Countries with already weak labor laws and low wages are pressured to lower wages even further to compete even more aggressively with these wages or face massive unemployment. Jobs are good. But at what cost? There have been massive protests to raise the minimum wage in Bangladesh, and the country is home to some of the worst industrial accidents in human history. It’s not a “Jobs or No” dichotomy - it’s entirely possible to have jobs where people work safely, with dignity.
Some of CAFTA’s implications:
What Is the TPP?
Trans Pacific Partnership (TPP) is a massive international Free Trade Agreement
currently being negotiated behind closed doors between Australia, Brunei, Chile, Canada,
Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, Vietnam, and
potentially others. Because of the privacy around its negotiations, many details of the TPP
are unknown. However, some facts and concerns have been made public.