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The Death of Fair Trade

Much has been said on trade policy since Donald Trump became leader of the free world.  Trump boldly pulled out of the Trans Pacific Partnership – which of course never was ratified and never took effect.  He announced that NAFTA and CAFTA were dead and promptly pulled back from that position by suggesting that everything was open to negotiations.

It is surprising how similar Trump is to Hillary Clinton or Barack Obama on trade issues.  When the rhetoric is swept away and the election promises are buried and forgotten, Fair Trade becomes a concept that no one seems able to define – no less advocate.

Now Trump has opened negotiations with the beast of Free Trade: China.  His demands are all about the numbers.  We demand that the imbalance be rectified to the tune of $200 billion per year.  We demand that government subsidies be reduced if not eliminated.  We demand that the Chinese stop stealing technology developed by American corporations.  We demand that China stop manipulating currency to effect trade imbalance.

The one thing Treasury Secretary Steve Mnuchin and his circle of Trump negotiators never mention are the rights of labor– including the right to a living wage. It has become clear that what the rest of us mean by Fair Trade and what Trump means are separate and distinct concepts. It is therefore necessary to establish the meaning of Fair Trade.  To Trump it is simple mathematics.  If the trade deficit of all nations engaged is at or near zero then the policies governing trade are fair.  If the deficit tips to one side or another then the policies are unfair.

To Fair Trade advocates like Ohio Senator Sherrod Brown this is not what we had in mind.  Maybe it’s not clear what we had in mind.  Maybe the concept is deliberately cloudy so that Democratic candidates can claim to be pro Fair Trade when in fact they fall in line with the Free Trade mandate enacted by Republican Democrat Bill Clinton back in the nineties.  It has taken us decades to challenge that mandate and now we find it is being usurped by a pretender:  a president so clueless he will surely destroy the concept for another quarter century.

For the record here’s what Fair Trade means to me:

First, we need to scrap the entire framework of international trade as it exists today.  We need to dismiss the idea that NAFTA, CAFTA and the Trans Pacific Partnership only require minor revisions to meet the goals of Fair Trade.  A few concessions to labor and a provision for the environment will bring things into balance.  No, they will not.  What we need is wholesale and systemic change.

We must understand that the world has accepted the tenets of Free Trade and will not agree to any systemic change without a fight.  This includes all of Europe and Great Britain as well as China, Russia and less developed nations.

In this sense, America must lead.  There was once hope that the European Union could lead the march to Fair Trade but that hope has faded like a photograph left too long in the sun. European leaders from the socialists of Spain to the progressives of Greece and Italy will tell you that the train has left the station.  Globalization is an indelible fact and its rules are set in concrete.  The World Bank, the World Trade Organization and the International Monetary Fund are the arbiters of trade and cannot be challenged.

It is unthinkable that the very institutions that enforced austerity across the continent are now considered untouchable.  Let us abandon that thinking and demand a new system.

We must establish new criteria for trade by creating and enforcing new tiers of trade status, ranging from preferred to prohibited.

TIER ONE:  PREFERRED TRADE STATUS.  Preferred trading partners would be held to the highest standards of living wages, the right to establish unions, the right to binding arbitration, the right to safe working conditions, as well as retirement and health benefits. Preferred status would be reserved for nations whose governments do not provide subsidies to affect a competitive advantage.  We would also expect exemplary records for human rights, civil rights and environmental protection.  Preferred trading partners would also be expected to enforce the same standards on its trading partners.  Failure to do so would automatically drop a nation from preferred status.

Those nations that are granted Preferred Trade status would be rewarded with unencumbered trade free of tariffs or regulatory barriers.

Clearly, if we are to hold others to a high standard we should be expected to hold ourselves to an equivalent standard.  That is not the case today.  We do not uphold a living wage.  We deny the right to unionize in those states that uphold “Right to Work” laws.  We fail to provide universal healthcare.  We are compromised on human rights (capitol punishment and mass imprisonment) and civil rights (our justice system discriminates on the basis of race and religion; our economic system on the basis of race, religion and gender).  And we do not uphold the highest standards of environmental protection (under Donald Trump it’s not even close).  We have also subsidized industries (auto, steel and banking) in times of economic stress.

But let that go for now.  Let us assume that we are working to improve our own status and stipulate that we cannot hold others to a higher standard than we are able to achieve.

Without detailed analysis the nations that would qualify for preferred trade status under a Fair Trade system would include western European nations, Canada, Japan, Australia, South Korea and perhaps some African and Latin American nations.  It would include none of the Middle Eastern nations and would decidedly exclude China, India, Pakistan and Russia.

TIER TWO:  CONDITIONAL TRADE STATUS.  Conditional trading partners would be subject to penalties and limitations proportionate to their failures in upholding the standards of Tier One partners.  For example, a nation that upholds standards in all respects except for a temporary subsidy to its auto industry might be subject to a one-time fine or granted an exemption based on exceptional circumstances. A nation that blocks unionization and fails to provide health and retirement benefits would be subject to more severe penalties.  The guiding principle is that it should be to a nation’s advantage to uphold all standards to the highest possible extent.  It would require periodic review and adjustment and that would require a new international institution to adjudicate.  I suggest the International Fair Trade Commission under the auspices of the United Nations.  It is essential that any such body be independent of political influence to the greatest possible degree.

The vast majority of the world’s nations would be placed in the second tier. If we were honest and objective, it would include the United States as well.

TIER THREE:  PROHIBITED TRADE STATUS.  Prohibited trading partners would include any nations with gross violations of labor rights, human rights, civil rights and/or environmental protection.  For example, any nation whose government engages in ethnic cleansing or genocide would be prohibited from trading with the United States or its preferred trading partners.

Prohibited trading partners would likely include such human rights violators as Syria, Saudi Arabia, Somalia, South Sudan, the Philippines, Congo, Myanmar, Turkey and North Korea.

Preferred trading status is not new.  There are a variety of preferential trading zones currently in operation for any number of reasons.  None of these trade agreements, however, are established with Fair Trade standards as the unifying principle.  Consequently, while Fair Trade principles are frequently discussed at trade negotiations, they lack leverage.  Labor representatives are rarely invited to participate and when they are they serve primarily as symbols.

The key difference between Free Trade and Fair Trade is the absence of labor in the former and the prominence of labor in the latter.  That is the imbalance that must be rectified if the divergence of wealth between the haves and the have-nots is to be reduced by any significant margin.

Liberals, neo-liberals, conservative and neoconservatives alike have argued that using trade policy to guide social development would only punish the people who already suffer under oppressive governments.  Such arguments are self-serving and short sighted. America’s middle class did not spring from the air.  It required that the people extract a price from their elected leaders for their defiance of human rights.  It required resistance and establishing institutions like labor unions that stood up for workers against all odds.  Those who fought for unions and labor rights in this country paid a price in blood and sacrifice.  They persisted until political institutions and leaders finally stood up for them.

We are losing our middle class because those institutions that stood with the working people have crumbled.  Unions are in steep decline.  Right to Work laws block union organizers.  Democrats only pretend to be the worker’s party at election time while they collect their share from the corporate coffers and govern very much like the corporate Republicans.

Systemic change never comes easy but it comes.  It comes after years and decades of pushing and refusing to settle for the lesser of evils.  Donald Trump, for all his inadequacies, has tapped the anger of the people and proven that what was once considered extreme is now completely acceptable.  That goes for radical visions for positive change as well as delusional visions of self-aggrandizement.

If we do nothing, Donald Trump will destroy any chance of Fair Trade for the foreseeable future.  He will turn it into something that upends economic gains and turns the stock market downward. He will turn it into nationalism and patriotism, us against them, in a battle of numbers until we no longer care how it affects the poor and the working poor.  Donald Trump doesn’t care about the workers.  He will bring industrial jobs back only if they operate on cheap labor or automation.

The coming world must be planned and plotted to provide for working people. We all have a right to live in dignity and good health.  We have a right to pursue happiness even if we do not have wealth.  Fair Trade is one important step in getting there.

Automation is coming.  The robot labor force is coming.  There is no job on the open market that robots cannot do faster and more efficiently than humans.  The transition will be stunning for industrial labor but it is coming for us all. Unfortunately, we cannot all serve as maintenance workers for a robotic labor force.  We will have to be creative in finding new lines of work and new endeavors for human kind.  In this future world, a world that has already arrived at our door, it will be more important than ever that all of us – not just the CEO’s – are represented.

The pundits and political class will line up against us.  They will bring warnings of global economic collapse. They will predict a market crash. They will tell us that Free Trade brings cheap products to our local Walmart.  They will tell us there is no turning back.

To some degree they are correct.  A transition to Fair Trade will not be easy.  It will mean higher prices for consumer goods.  But it will also bring better paying jobs not only to our nation but to other nations as well.  It will ultimately yield benefits to all people.  It will serve as a warning to the corporate powers that workers will be represented at the global economic bargaining table.  It will serve notice that you cannot build a sustainable economy on the exploitation of the labor force.

Donald Trump had the corporate elites running scared for a while.  The markets reacted like a junkie on his last hit when he threatened to make good on his promise to pull out of NAFTA.  The monetary pundits cried out in horror when he announced in a twit of impulse that he was slapping a tariff on steel and aluminum.  But it turned out he was just another politician who speaks with a forked tongue. Like so many before him, he talks Fair Trade but when it all comes down he doesn’t mean a word of it.

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Jack Random is the author of Jazzman Chronicles (Crow Dog Press) and Ghost Dance Insurrection (Dry Bones Press.)

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