Free Trade That’s Fair

Feb 052006
Authors: Ben Bleckley

In 1992, President Bush's administration signed the North American Free Trade Agreement. NAFTA was the result of negotiations between Canada, the United States, and Mexico setting up trade agreements that gradually removed most tariffs on imported goods.

In 2004, President George W. Bush signed the Central American Free Trade Agreement, which squeaked through the House with a 217-215 vote.

Free trade is, in theory, a good thing. Countries often place taxes called tariffs on imported goods, making them cost more than the product produced in the country. True free trade allows all countries to get the goods they need without the extra tariff, so that extra revenue can be spent on other expenses.

If the United States produces lots of corn, for example, but not much sugar, and Mexico produces plenty of sugar but not much corn, the U.S. can trade corn for sugar and both countries are happy, able to focus the money they saved on tariffs towards obtaining other goods. In political science it is called comparative advantage.

However, both the U.S. and Mexico produce both corn and sugar. But the difference is that in the U.S. the production is industrialized and in Mexico, at least ten years ago, it was not. So an individual farmer in the U.S. can produce much more corn than an individual farmer in Mexico.

According to Doug Knight, a graduate student in international studies at the University of Denver and a CSU political science graduate, NAFTA called for Mexican corn farmers, who took up 55 percent of the cultivated land, to pull up their roots and move to urban centers where they would get jobs in manufacturing.

Yet in Mexico, corn production isn't an economic industry. It's a basic piece of the indigenous culture. Corn, or maze, has been grown in Mexico since the Aztec Empire.

In the United States, the government provides economic subsides for farmers so they're able to remain competitive with other nations.

"Trade between industrialized countries will always benefit them because they have a huge comparative advantage," said Knight. "By immedietly entering the marketplace before being able to (provide subsides), countries that haven't industrialized yet (like Mexico) may never get to industrialize, and they will always be just a cheap source of labor."

That cheap source of labor is what many U.S. companies can exploit.

"The problem with free trade agreements in general is that, especially with the U.S., they are always structured to benefit consumers, and consumers tend to be more Americans than people from the other countries," Knight said.

With Mexican corn farmers being pushed out of work, they are either unemployed, find jobs in the Mexican economy, or are hired by U.S. companies in Mexico for cheaper labor than in the United States, displacing U.S. jobs. (Or they cross the border into the U.S. to pick oranges and "steal" a job from an indigenous American corn farmer who also has no job training.)

The United States should make free trade agreements with developed countries. But for countries that are still developing, we need to provide fair payment for good we receive from those countries.

Some companies attempt to do so. Ten Thousand Villages in Old Town Fort Collins is a non profit organization that pays third world artisans a living wage for their goods.

"We are working with artisans from a lot of developing countries," said Djuwita Carney, a volunteer at Ten Thousand Villages. "We make sure that they can have a decent life."

If the United States unilaterally removed tariffs from imported goods from third world countries while continuing to provide subsides to U.S. farmers, third world laborers could increase their prices due to the removal of tariffs.

Perhaps we could also reduce the number of U.S. jobs moving over seas if our government required U.S. based companies to provide a minimum wage to workers in any country. Fewer manufactures would move overseas, and those that did would provide a living wage to its workers in developing countries.

Ben Bleckley is a senior majoring in English. His column runs every Monday in the Collegian.

 Posted by at 5:00 pm

Sorry, the comment form is closed at this time.