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 between them.
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:

  • The 2002 Farm Bill (another trade policy) gave enormous subsidies - $300 billion dollars of taxpayer money - to U.S. large corporate factory-farms, mainly producing corn and other grains. NAFTA removed the export tariffs on these products, opening the floodgates so grains could be “dumped” into Mexico below the cost of production. It was impossible for small local farmers to compete against abnormally low-cost food, and millions lost their livelihoods and had to move off their land, even when it had been in their family for centuries or was ancestral land. It’s sad - Mesoamerica is the birthplace of corn, and through human husbandry, corn was brought from a weed to a diet staple. Now, most of the nutritious varieties of corn, cultivated over thousands of years, are gone, erased from the gene pool, washed out by cheap GMO yellow corn from Monsanto, ADM, and Cargill.

  • Thousands of Mexican families had to move off the land of their ancestors and into cities or even the US to find work. Urban poverty rose as people crowded in, desperate for work. People found jobs mostly in the informal sector, and a minority found work in maquiladoras producing clothes and goods for the US, where conditions are harsh and pay is low. Immigration to the US rose as people were desperate to get jobs to feed their families back home.

  • U.S. agribusiness profited greatly and gas and food prices in the U.S. lowered.

  • Some scholars believe the 1994 peso crisis, where Mexico’s currency crashed, throwing the country into political turmoil, is related to NAFTA.

  • The Zapatista uprising, where indigenous people in Chiapas, southern Mexico, tried to secede from Mexico so as to not have to adhere to NAFTA and to have the right to be peaceful self-sustaining communities. They are still under attack by the Mexican military.

  • Chapter 11 of NAFTA allows any company to sue any government for “trade barriers”. Law banning toxic elements in gas? Trade barrier. Read this case where Methanex, as a gas company, sued California to reinstate toxic water-polluting elements in the gasoline they sold. Protecting sacred land from environmental destruction? Trade barrier. Read this case where Glamis gold sued to be able to open pit mine on sacred land in California - they later went on to do the same thing in Sipacapa, Guatemala, under CAFTA - Central American Free Trade Agreement. What’s next? State sponsored low-cost pharmaceuticals? Trade barrier! Pregnancy leave rights? Trade barrier! Labor unions? Trade barrier!

  • Mexico’s environmental health rapidly deteriorated as farmers relied on chemicals and fertilizers to attempt to compete with U.S. agribusiness.

  • Mexicans had to move off their land and into the cities or to the US to find work. Urban poverty rose, as people crowded in, looking for work. People found jobs mostly in maquiladoras or the informal sector. Immigration to the US rose as people were desperate to get jobs to feed their families back home.

  • The mostly women workforce of maquilas were exploited. Violence against women commuting to work in Free Trade Zones in cities like the border town of Ciudad Juarez, where more than 450 women have been murdered, rose with industrialization.

  • Immigrant workers were exploited. The fact that they were “illegal” gave employers added leverage to make them work for low wages in harsh and unsafe conditions. Form a union? We’ll call ICE.

  • The bargaining power of unions in the U.S. was weakened, as employers threatened (and did) move factories to Mexico when workers collectively asked for higher wages, or as companies employed the (new) lower-wage immigrant workforce that was desperate for work. It’s really not a scnenario of “US vs. them” between the US and Mexico - it’s a classic “divide and conquer” power tactic - the 1% companies know that both workforces are more vulnerable this way. They split us up, then have their way with both. The quality of jobs gets lower for everyone, and companies make more money. The only way to make jobs better for anyone - US or Mexico - is to join together and start to make them better for everyone by joining together against our common opponent - the corporations lobbying for this assymetrical policy.

  • 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:

  • CAFTA further opened up these countries to importing U.S. agricultural goods (which are heavily subsidized thus impossible for local farmers to compete with), putting more local farmers in Central American countries out of business, just like NAFTA had done years earlier in Mexico.

  • The only legally binding provision for labor is the failure of a country to enforce its own labor laws. Many times, these labor laws fail to comply with International Labour Organization’s labor standards- specifically violating workers’ rights to organize and bargain collectively. Most labor laws in the Dominican Republic aren’t followed anyway the majority of the time.

  • In Costa Rica, workers and citizens have expressed serious concern that CAFTA will privatize the country’s inexpensive and well-functioning telecommunications system. 150,000 took to the streets to try and stop CAFTA, which passed anyway.

  • In El Salvador, the privatization of healthcare was widely and publicly protested against.

  • Numerous demonstrations in Guatemala showed the country’s clear disapproval of CAFTA, and several protesters were killed by the armed forces.

  • Many of these fears were proved legitimate, as CAFTA further suppressed the ability of rural farmers to compete, drove down wages and labor and environmental standards, and increased income inequality.

  • 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.

  • Intellectual property laws in the agreement will roll back public health safeguards and replace them with far-reaching monopolies- making medication inaccessible and unaffordable to many in the Asia-Pacific region.

  • TPP would block ‘Buy American’ provisions, likely ending what is left of U.S. manufacturing.

  • TPP could undermine labor laws, weaken environmental protection, and lower food and consumer safety.

  • It includes provisions that favor banks and weaken oversight of multinational corporations- allowing corporations to sue governments if environmental and labor standards hurt profit.

  • The plan is being “fast tracked” by Congress, this means that the plan cannot be amended by Congress before the plan is put to a vote. This essentially means that the US legislature is given a choice of all or nothing, with no possibility of a more moderate plan. Congress was not involved in the development of the TPP and a clause in the agreement prevents revisions it after it is passed.