Trade is one of the most powerful forces that links human beings in the 21st century. The food we eat, the cars we drive, the clothes we wear and countless other products that we consume are easily available because of international trade. These products often travel hundreds, if not thousands, of miles before reaching their destination in our local grocery or department stores.
As corporations and multinational companies get richer, millions of the world’s poorest are being left behind. Thirty thousand children throughout the world die every day from preventable poverty-related illnesses. Global poverty exists in part because of decisions made by the governments of affluent countries. One form of global control by rich nations is through international trade policy.
Trade is not a new phenomenon. The trading of goods and commodities has existed from the earliest of times. In the Bible, King Solomon expanded his rule and wealth by controlling important trade routes in the Ancient Near East.
Today, trade happens on an international scale with nations trading their goods and commodities in the global marketplace through sometimes ambiguous rules, regulations and free trade agreements.
Free trade refers to the movement of goods across national boundaries without government interference. In theory, free trade creates a “level playing field” so that everyone can compete based on the same rules in a free market system. The current form of international trade, however, combined with the free market system produces clear winners and losers.
Since the 1980s International Financial Institutions (IFIs) such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO) have imposed free trade or liberalized economic policies on countries in the global South. These policies translate into corporate consolidation, market control and ballooning profits for companies, while devastating rural communities, displacing small farmers and harming the environment.
U.S. Trade Policy
Trade, as it relates to U.S. policy, is governed through two frameworks. On a multilateral level the U.S. is a member of the WTO, which provides rules and regulation for international trade through negotiations by member states. Since the early 1990s the United States has also pursued bilateral or regional trade agreements such as the North American Free Trade Agreement (NAFTA), the Central American Free Trade Agreement (CAFTA) and other bilateral agreements.
Trade touches almost every aspect of our daily lives and its effects can be devastating to impoverished communities worldwide. While trade policies deal with a wide range of issues, MCC’s analysis of trade policies primarily stem from our work on international debt relief, food/agriculture and migration (see page 8 for an article on trade and migration).
Debt and Structural Adjustment
Unjust trade policy is inextricably linked to international debt and polices imposed by the IMF and the World Bank. The World Bank and the IMF’s loan programs have leveraged and pressured poor countries to implement policies that have a detrimental effect on the poor. Governments from the global South have borrowed from these IFIs to finance domestic programs.
The loans, however, come with harmful conditions, which have often worked to destabilize domestic economies. These conditions are known as Structural Adjustment Programs (SAPs) or so-called “poverty reduction and growth programs,” which forces a government to cut domestic spending on education, health care and other social programs and to privatize these sectors instead; cut support to local farmers; open up markets for trade by reducing import tariffs; and reorient the economy for export.
This forces poor countries to compete in a global market dominated by large corporations from the United States and Europe. As a result, many in the global South have been forced deeper into poverty. (For more information on debt relief see the Fall 2009 issue of the Washington Memo.)
Food and Agriculture
Many of the world’s poor depend on agriculture for their livelihood and food security. Access to food and the self-determination of policies that govern food is a basic human right. However, the growth in trade and the inclusion of food commodities in international trade has devastated rural communities around the globe.
According to the report Trade as if People and Earth Matter by the Interfaith Working Group on Trade and Investment (IWG), “small farmers have no voice during trade negotiations and policy design. This diminishes their right to food sovereignty, market access, access to good livelihoods and rural development.”
Many small and family farmers have lost their livelihood. When a country opens its market to food imports, small farmers are forced to compete in a market that is dominated by just a few multinational corporations. The farmers ultimately lose out when cheap, subsidized imports from rich nations undercut their farm production.
This also has a detrimental effect on food security for local communities because food prices are at the mercy of global prices rather than local production. In 2008 food prices began to rise, resulting in a global food crisis. People in poor countries were at the mercy of the global market for subsistence. (See pg. 7 for an article on food, hunger and debt in Haiti.)
International trade policies are so harmful because they fail to take into account the wellbeing of people and their livelihood. The movement for trade justice calls for trade policies to work for the common good rather than the interests of a few. Trade should work to promote life and dignity for all people.
According to the Ecumenical Advocacy Alliance, “trade justice is people-centered, respects human rights, and guarantees food security, livelihoods and sustainable development for the whole of society. It recognizes the right of all people to have a say regarding their own future, and all governments to determine their own economic and trade policies.”
Global trade policies must adhere to the following seven principles:
- All people–not just elites in the United States and elsewhere–should have a meaningful voice in determining global economic policies and practices.
Public policy decisions should ensure that the benefits of economic activity flow equitably to all people, not to a privileged few. Economic policies should alleviate poverty and advance equitable power relations and fair economic relations among peoples and nations.
- Global economic policies and practices should foster ecological sustainability, not unbridled and wasteful consumption.
- Global economic policies should foster–not undermine–integral human development, nurturing such human values as the family, local communities, education, physical health, dignified labor, and enjoyment of the fruits of science and culture. Economic activity should produce wholesome, life-giving products and services, not those that degrade and destroy.
- Global economic policies should address the imbalance of power between capital and labor, fostering healthy and safe working conditions, worker participation in business decisions, stock ownership and the creation of worker-owned co-operatives. Economic policies should help transform the nature of the relationships between management, workers, the community and the environment from that of exploitation to mutual respect and a more equitable sharing of power.
- Global economic policies should respect the community, or collective, dimensions of economic life. Examples include protecting and fostering co-operative businesses, community-based agriculture, the accountability of corporations to the communities where they operate, and the collective rights of local communities to their biological resources, knowledge and technologies.
- Economic policies and structures must not be imposed on the nations and peoples of the world by dominant nations and institutions. While global links can nurture our common humanity, diverse peoples should be able to adopt a variety of economic models, compatible with their own cultures and consistent with values of freedom and justice. Economic policymakers must be willing to make room for alternative voices and models of finance, commerce and development.
Trade policies have the potential to improve livelihoods and lift communities out of poverty. To do this, policies should focus on people rather than on corporate profits.
Support the TRADE Act
The Trade Reform, Accountability, Development and Employment (TRADE) Act provides a framework for re-evaluating and re-shaping U.S. trade policy so that it serves the common good by providing stable jobs, environmental protections, public health and poverty reduction. The bill sets standards for what must and must not be included in future trade agreements, and requires a comprehensive review of existing trade agreements like NAFTA and CAFTA that are failing to serve the most vulnerable in the U.S. and countries in the global South.
This bill was introduced by Rep. Mike Michaud (Maine) in the House as H.R. 3012 and by Sen. Sherrod Brown (Ohio) in the Senate as S. 2821. As of February 15, 2010, there are 136 cosponsors in the House and six cosponsors in the Senate. See p. 10 for a sample letter to Congress on the TRADE Act.