Ethical Trade, Not Protectionism, Is the Answer to Trade Agreement Concerns
The jury is out again on free trade. Donald Trump’s vociferous opposition to the Trans Pacific Partnership (TTP) and his caveats about supporting the respected World Trade Organization may have stoked the debate, but even Hillary Clinton, a longtime supporter of NAFTA, CAFTA and TTP, is now expressing opposition to the latter in its current form.
This should come as no major surprise. On one hand, trade can have a notably positive impact, bringing important goods and services to those who need them and allowing consumers to enjoy a wider variety of both while creating jobs in exporting and importing countries. When well executed, trade can also serve as an instrument for reaching social and political goals by exporting values such as human rights and sustainable development while helping to improve living conditions and general welfare – or the “common good.”
But “free” trade is problematic when it becomes an end rather than a means for achieving these broader goals. It becomes problematic, too, when more trade is always considered better, no matter the consequences. Rather than being improved by trade, employment, fair, viable wages and social cohesion are often its casualties. Yet the term “free trade” makes it all sound so positive; it can be hard to recognize that in fact, in the absence of stipulations about social and environmental protection or labor standards – and without safeguards against aggravating the concentration of wealth and power – “free trade” can actually do more harm than good to the majority of people.
Yes, free trade helps produce larger corporations, more millionaires and more billionaires. But it also creates millions – even billions – of losers. Free trade can slow growth, threaten consumer, environmental, labor, social and taxation standards and can cause unemployment, inequality, poverty and even hunger to rise.
The U.S. has seen hundreds of thousands of well-paid jobs exported to Mexican sweat shops; millions of Mexican farmers have lost their livelihoods, unable to compete in the face of U.S. corn subsidies. The TTP, like the proposed Trans-Atlantic Trade and Investment Partnership (TTIP) between the U.S. and Europe, would have a similar effect, exporting industry and service jobs to lower-wage countries with less-stringent regulations. Cheaper goods produced under far less stringent labor, social, environmental and taxation conditions than in the US will “freely” enter the US market, crowding out products from companies and countries with more conscientious and humane practices.
No wonder Trump supporters are fired up against free trade agreements altogether and even former advocates like Clinton are growing wary.
Yet the overall concept of trade hasn’t been rejected. This suggests that rather than abolishing the international trade system and reverting to blatant protectionism, it’s time for it to undergo a serious reform — one that would make it more fruitful for all.
How might this look?
As a first step, let’s remember: trade should not be construed as an end in and of itself, but rather, as one piece of the bigger picture aimed toward promoting the well-being of all – as well as the health of our natural environment. This is what I refer to as “ethical trade.” For policymakers, this means linking trade agreements directly to these objectives by:
● Giving priority to maintaining the strength of local economies with good sustainability, labor and human rights conditions;
● Banning dumping in all areas and replacing it by an upward spiral;
● Making trade agreements contingent on human and labor rights as well as environmental standards.
● A commitment to helping close the gender gap in terms of income, property ownership and economic influence.
● Protection of cultural diversity.
● Differential treatment of high and low income countries.
● Developing a license system for companies that want to access global markets and enjoy the benefits of free trade – e. g. with a common good balance sheet (that is already implemented by hundreds of European companies).
With the current stalemate in both TTP and TTIP negotiations and widespread agreement about Trump and Clinton’s reservations, it’s clear that U.S. citizens are extremely anxious about the potential consequence of free trade. In the E.U., more than 3.5 million people have signed a petition calling for an end to the mandated for TTIP negotiations. To help make the process itself fairer and more democratic, the content of ethical trade agreements should have the support of each nation’s population prior to any negotiations; for example, through direct ballot questions in the U.S. rather than through the lobbying channels.
In contrast with today’s win-lose or even lose-lose “free trade” system, ethical trade can be a win-win approach – if we could only see it to fruition.
Christian Felber is founder of the The Economy For The Common Good based in Austria, a movement uniting over 10,000 supporters in 40 nations and backed by 2,200 companies whose mission is to eliminate the fundamental contradiction between business’ values and social well-being. He is the author of 15 books, including, most recently, Change Everything: Creating an Economy for the Common Good