NAFTA deals and their extensions (of which the Peru deal is one) make it illegal for a company to impose what are called “non-tariff trade barriers” on the importation of goods. Such non-tariff trade barriers include, among other things, environmental, labor, human rights, and consumer health and safety standards. For example, Mexico brought a suit against the United States, pursuant to NAFTA, arguing that the US requirement that all tuna be dophin-safe is a non-tariff trade barrier, and therefore illegal. I guess Bob would say these deals “free people to do what they do best”, but I wasn’t aware that killing dolphins is the Mexican forte.
Advocates of so-called “free” trade agreements argue that it moves the production to the country that can produce the good in the most economically efficient manner, and therefore everyone wins. While it’s true that the nation that wins is indeed the one that produces the product at the cheapest selling price, the cheapest price is achieved usually by lowering the standards of production, not through innovation and genuine efficiency. The low price comes because costs of production are externalized (an effect economists call “externalities”) on to the environment (more pollution), the consumer (less safety), the worker (fewer rights), and the political system (more oppression).
The net effect of these agreements is to create a standards-lowering competition — a “race to the bottom”. Whichever country can create their product in a cheaper fashion, say by not doing proper waste management, by lengthening the work day, by preventing workers from organizing and demanding higher wages, is the country that “wins”. But they’re only the winner until another country lowers its standards even further. Though their often called “free” trade agreements, they clearly make all of us unfree to choose what standards we want on the products we buy.
The impact on American jobs and wages is well-known. In 2001, economists estimated about 3/4 of American workers lost 12% of their wages do to trade deals (1). The data also show that the lower-paying jobs are not being replaced by higher-paying high-tech jobs, nor were the cuts in wages offset by decreases in prices on goods. It allowed companies to threaten unions (“lower your wages or we’ll go overseas”), as well as employees thinking about starting a union.
But doesn’t free trade in the end help developing nations, even if it’s at the temporary expense of the developed nations? That’s an empirical claim that couldn’t be more empirically bankrupt. Almost any country in Latin America makes for a good case study. Over its first 10 years, NAFTA drove 19 million more Mexicans into poverty, for example. At NAFTA’s 10th year, 19 more million Mexicans lived in poverty compared to 20 years ago (2). Latin American countries are now turning towards anti-free-trade leaders so they can begin to turn the tide.
Throughout the post, Bob conflates two different meanings of the term “globalization”: the first definition being “economic integration”, and the second being “cultural internationalization”. Everyone (Pat Buchanan nativists aside) is in favor of internationalization, the sharing of cultures, experiences, and ideas. It is internationalization which “builds bridges between communities”. It is unclear, however, why closing down a factory in the US and reopening it in Peru would do anything to promote the building of said bridges.
What we need are international agreements that create incentives for *higher* standards — stronger environmental regulations, tougher product safety standards, better labor practices, and the like. What we have now are agreements, bought by Big Business, designed to maximize corporate profit at the expense of everything Democrats care about.
Update: Now with citations!
(1) Read this report for more details on NAFTA’s impact on the US economy.
(2) Read this fact sheet for more figures regarding NAFTA’s impact on the Mexican economy, complete with citations.