FTM-July2017-Issuu

continually seek out lower production costs, is inevitable and
would require agreements that explicitly attempt to counteract
these issues. The second category of problem is caused by the
specific ways that free trade has been negotiated in deals like
the World Trade Organization (WTO) agreements.
The race to the bottom
Many of the problems inherent in free trade can be classified
under the widely used phrase “the race to the bottom.” When
goods are free to move between nations, firms will tend to
produce in the nation that offers them the lowest costs. This
makes it difficult for any nation to impose conditions on firms
that increase their costs, whether through environmental,
health, or safety regulations, or labour standards like
powerful economic and political interests. Free trade deals
are about each country getting a good deal for themselves,
or more specifically, a good deal for powerful political (and
economic) elites within the nation. Our current system of
free trade restricts exports of agricultural products from
poor nations to protect farmers in wealthy countries. Many
agreements include clauses that allow corporations to sue
governments when they pass regulations that restrict profits,
like NAFTA’s Chapter 11. Under its Trade-Related Investment
Measures clause, the WTO restricts nations from imposing
performance criteria (like employing a certain percent of
managers from the domestic economy) on investments from
multinational companies. Current trade agreements represent
the dominance of not only the interests of rich countries over
Virtually no currently affluent country followed a policy of free trade during
its formative years. It seems hardly fair to deny today’s developing nations
the same policy freedom
minimum wages or limits on working hours. Fair trade’s belief
that producers should get a living wage from their labour is
subverted by this problem. Free trade is part of the reason that
the share of wages in the Canadian economy has fallen while
profits of corporations have increased.
Any alleviation of this inevitable trend would require
specific agreements between trading nations to place a
common floor under social and environmental conditions.
While many international trade agreements pay lip service
to the idea of ensuring reasonable environmental and working
conditions, most, like the WTO, oppose trade policy that
attempts to set minimum production standards. According
to a 2001 WTO statement, a trade deal that contains rules
that stipulate how a product is made would constitute an
infringement on a country’s ability to set its own production
standards. So, according to the WTO, a trade deal that requires
a minimum wage among all trading partners would restrict
their freedoms to have lower wages.
Trade deals and politics
The second fairness problem revolves around the specific
nature of free trade agreements, which are subject to
poor but also the dominance of the corporate interests within
the rich countries.
Can free trade be fair?
To make free trade more fair, it would need to be transformed
so that the beneficiaries were shifted from giant firms to actual
citizens, especially those in poorer countries. Recently, the
Trade Justice Network was part of a huge meeting in Mexico
City attempting to use the Trump-driven restructuring of
NAFTA as an opportunity to advocate for trade principles
that should be familiar to supporters of fair trade, like putting
people and the environment at the centre of the deal, while
rejecting the isolationist rhetoric of the current United States
president. In other words, free trade should be more like fair
trade.
This would mean reversing the trend of wealthy countries
restricting trade from poor countries’ producers. It would also
mean allowing poorer nations more latitude to restrict trade
when they think it is harming their domestic economy. South
Korea, and other success stories, may have grown on the back
of export-led trade policy, but its government deliberately
protected its domestic firms from foreign competition during
24 | FAIR TRADE MAGAZINE • CANADA’S VOICE FOR SOCIAL SUSTAINABILITY